UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
May 31, 2013
[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _______ to _______
Commission
file number:
000-53284
National
Graphite Corp.
(formerly
Lucky Boy Silver Corp.)
(Exact
name of registrant as specified in its charter)
Nevada
|
26-0665441
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
|
|
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5466 Canvasback Rd.,
|
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Blaine, Washington
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98230
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s
telephone number, including area code:
(702) 839-4029
Securities
registered under Section 12(b) of the Act:
Title
of each class
|
|
Name
of each exchange on which registered
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None
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N/A
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Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock
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(Title
of class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act Yes [ ] No [X]
Indicate
by check mark if the registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Act
Yes [ ] No [X]
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive
Data File required to be submitted and posted pursuant Rule 405 of Regulation S-T (§220.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files. Yes [X] No [ ] Not applicable.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statement incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ x ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ] (Do
not check if a smaller reporting company)
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Smaller reporting company [X]
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of
the registrant’s most recently completed third fiscal quarter.
68,669,881
common shares at $0.05 on August 23, 2013, which is the quotation posted on the Over-the-Counter Bulletin Board (“OTC-BB”
under the symbol “NGRC”).
(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)
Indicate
the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date 68,669,881
common shares issued and outstanding as of August 23, 2013. We have 1,000,000 preferred shares authorized of which 675,000 are
issued and outstanding and held by Kenneth B. Liebscher, our President and CEO with conversion and voting rights of 1 preferred
equals 100 common shares.
DOCUMENTS
INCORPORATED BY REFERENCE
List
hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement and (3)
Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described
for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).
Not applicable.
TABLE
OF CONTENTS
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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4
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GLOSSARY
OF EXPLORATION TERMS
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5
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PART I
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Item 1
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Business
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9
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Item 1A
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Risk Factors
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13
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Item 1B
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Unresolved Staff Comments
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17
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Item 2
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Properties
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18
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Item 3
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Legal Proceedings
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31
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Item 4
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Removed and Reserved
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31
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PART II
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Item 5
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Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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31
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Item 6
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Selected Financial Data
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32
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Item 7
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Management's Discussion and Analysis
of Financial Condition and Results of Operations
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32
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Item 7A
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Quantitative and Qualitative Disclosures
about Market Risk
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36
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Item 8
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Financial Statements and Supplementary
Data
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36
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Item 9
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Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
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38
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Item 9A (T)
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Controls and Procedures
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38
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Item 9B
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Other Information
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39
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PART III
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Item 10
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Directors, Executive Officer and Corporate
Governance
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40
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Item 11
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Executive Compensation
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43
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Item 12
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Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
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45
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Item 13
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Certain Relationships and Related Transactions
and Director Independence
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47
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Item 14
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Principal Accounting Fees and Services
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47
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PART IV
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Item 15
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Exhibits, Financial Statement Schedules
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48
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SIGNATURES
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49
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
annual report contains forward-looking statements. These statements relate to future events or our future financial performance.
Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”,
“anticipate”, “intend”, “project” and similar expressions or words which, by their nature,
refer to future events. In some cases, you can also identify forward-looking statements by terminology such as “may”,
“should”, “plan”, “predict”, “potential” or “continue” or the negative
of these terms or other comparable terminology. Examples of forward-looking statements made in this annual report on Form 10-K
include statements about:
Our
future exploration programs and results,
Our
future capital expenditures, and
Our
future investments in and acquisitions of mineral resource properties.
These
statements are only predictions and involve known and unknown risks, uncertainties and other factors, including
risks
and uncertainties relating to the interpretation of sampling results, the geology, grade and continuity of mineral deposits;
risks
and uncertainties that results of initial sampling and mapping will not be consistent with our expectations;
mining
and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties
with or interruptions in production;
the
potential for delays in exploration activities;
risks
related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses;
risks
related to commodity price fluctuations;
the
uncertainty of profitability based upon our limited history;
risks
related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration project;
risks
related to environmental regulation and liability;
risks
that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and
on-going maintenance may not be sufficient to cover such costs;
risks
related to tax assessments;
political
and regulatory risks associated with mining development and exploration; and
the
risks in the section entitled “Risk Factors”,
any
of which may cause our company’s or our industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking
statements.
Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our
financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles. References to common shares refer to common shares in our capital stock.
As
used in this annual report, the terms “we”, “us”, “our” and “Lucky Boy” mean National
Graphite Corp. unless otherwise indicated.
GLOSSARY
OF EXPLORATION TERMS
The following terms, when used in this report, have the respective meanings specified below:
Amortization
- The gradual and systematic writing off of a balance in an account over an appropriate period.
Amphibolite
- A gneiss or schist largely made up of amphibole and plagioclase minerals.
Anomaly
- Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock.
Assay
- A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained.
Assessment
work
- The amount of work, specified by mining law, that must be performed each year in order to retain legal control of mining
claims.
Base
metal
- Any non-precious metal (e.g. copper, lead, zinc, nickel, etc.).
Bedding
- The arrangement of sedimentary rocks in layers.
Biotite
- A platy magnesium-iron mica, common in igneous rocks.
Chalcopyrite
- A sulphide mineral of copper and iron; the most important ore mineral of copper.
Chip
sample
- A method of sampling a rock exposure whereby a regular series of small chips of rock is broken off along a line across
the face.
Claim
- A portion of land held either by a prospector or a mining company. In Canada, the common size is 1,320 ft. (about 400 m)
square, or 40 acres (about 16 ha).
Clay
- A fine-grained material composed of hydrous aluminum silicates.
Cleavage
- The tendency of a mineral to split along crystallographic planes.
Contact
- A geological term used to describe the line or plane along which two different rock formations meet.
Contact
metamorphism
- Metamorphism of country rocks adjacent to an intrusion, caused by heat from the intrusion.
Country
rock
- Loosely used to describe the general mass of rock adjacent to an orebody. Also known as the host rock.
Crosscut
- A horizontal opening driven from a shaft and (or near) right angles to the strike of a vein or other orebody.
Development
- Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting
and raising.
Diorite
- An intrusive igneous rock composed chiefly of sodic plagioclase, hornblende, biotite or pyroxene.
Drift
- A horizontal underground opening that follows along the length of a vein or rock formation as opposed to a crosscut which
crosses the rock formation.
Exploration
- Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Face
- The end of a drift, crosscut or stope in which work is taking place.
Felsic
- Term used to describe light-colored rocks containing feldspar, feldspathoids and silica.
Fracture
- A break in the rock, the opening of which allows mineral-bearing solutions to enter. A "cross-fracture" is a minor
break extending at more-or-less right angles to the direction of the principal fractures.
Geochemistry
- The study of the chemical properties of rocks.
Geology
- The science concerned with the study of the rocks which compose the Earth.
Gneiss
- A layered or banded crystalline metamorphic rock, the grains of which are aligned or elongated into a roughly parallel arrangement.
Greenstone
belt
- An area underlain by metamorphosed volcanic and sedimentary rocks, usually in a continental shield.
Host
rock
- The rock surrounding an ore deposit.
Igneous
rocks
- Rocks formed by the solidification of molten material from far below the earth's surface.
Intrusive
- A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded
upon the surface.
Lava
- A general name for the molten rock ejected by volcanoes.
Lens
- Generally used to describe a body of ore that is thick in the middle and tapers towards the ends.
Limestone
- A bedded, sedimentary deposit consisting chiefly of calcium carbonate.
Lode
- A mineral deposit in solid rock.
Mafic
- Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.
Magma
- The molten material deep in the Earth from which rocks are formed.
Magnetic
survey
- A geophysical survey that measures the intensity of the Earth's magnetic field.
Metamorphic
rocks
- Rocks which have undergone a change in texture or composition as the result of heat and/or pressure.
Metamorphism
- The process by which the form or structure of rocks is changed by heat and pressure.
Mineral
- A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed
under favorable conditions, a definite crystal form.
Net
smelter return
- A share of the net revenues generated from the sale of metal produced by a mine.
Option
- An agreement to purchase a property reached between the property vendor and some other party who wishes to explore the property
further.
Ore
- A mixture of ore minerals and gangue from which at least one of the metals can be extracted at a profit.
Orebody
- A natural concentration of valuable material that can be extracted and sold at a profit.
Outcrop
- An exposure of rock or mineral deposit that can be seen on surface, that is, not covered by soil or water.
Plug
- A common name for a small offshoot from a large body of molten rock.
Plutonic
- Refers to rocks of igneous origin that have come from great depth.
Pyrite
- A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as "fool's gold".
Pyrrhotite
- A bronze-colored, magnetic iron sulphide mineral.
Quartz
- Common rock-forming mineral consisting of silicon and oxygen.
Quartzite
- A metamorphic rock formed by the transformation of a sandstone by heat and pressure.
Reclamation
- The restoration of a site after mining or exploration activity is completed.
Resource
- The calculated amount of material in a mineral deposit, based on limited drill information.
Rock
- Any natural combination of minerals; part of the earth's crust.
Royalty
- An amount of money paid at regular intervals by the lessee or operator of an exploration or mining property to the owner
of the ground. Generally based on a certain amount per ton or a percentage of the total production or profits. Also, the fee paid
for the right to use a patented process.
Sample
- A small portion of rock or a mineral deposit taken so that the metal content can be determined by assaying.
Sampling
- Selecting a fractional but representative part of a mineral deposit for analysis.
Sandstone
- A sedimentary rock consisting of grains of sand cemented together.
Schist
- A foliated metamorphic rock the grains of which have a roughly parallel arrangement; generally developed by shearing.
Sedimentary
rocks
- Secondary rocks formed from material derived from other rocks and laid down under water. Examples are limestone, shale
and sandstone.
Shaft
- A vertical or inclined excavation in rock for the purpose of providing access to an orebody. Usually equipped with a hoist
at the top, which lowers and raises a conveyance for handling workers and materials.
Shale
- Sedimentary rock formed by the consolidation of mud or silt.
Shear
or shearing
- The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure
and producing such metamorphic structures as cleavage and schistosity.
Shear
zone
- A zone in which shearing has occurred on a large scale.
Silica
- Silicon dioxide. Quartz is a common example.
Siliceous
- A rock containing an abundance of quartz.
Sill
- An intrusive sheet of igneous rock of roughly uniform thickness that has been forced between the bedding planes of existing
rock.
Silt
- Muddy deposits of fine sediment usually found on the bottoms of lakes.
Spot
price
- Current delivery price of a commodity traded in the spot market.
Stope
- An excavation in a mine from which ore is, or has been, extracted.
Strike
- The direction, or bearing from true north, of a vein or rock formation measure
on a horizontal surface.
Sulphide
- A compound of sulphur and some other element.
Trench
- A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
Tuff
- Rock composed of fine volcanic ash.
Vein
- A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.
Volcanic
rocks
- Igneous rocks formed from magma that has flowed out
or has been violently ejected from a volcano.
Zone
- An area of distinct mineralization.
PART
I
Item
1. Business.
Overview
We
were incorporated in the State of Wyoming on October 19, 2006, as Sierra Ventures, Inc. and established a fiscal year end of May
31. Our statutory registered agent's office is located at 153 W. Lake Mead Pkwy., Ste. 2240,
Henderson
NV 89015 and our business office is located at 5466 Canvasback Rd., Blaine, Washington 98230. Our telephone number is (702) 839-4029.
On February 5, 2010 we filed an Amendment to Articles with the Wyoming Secretary of State and changed our name from “Sierra
Ventures Inc.” to “Lucky Boy Silver Corp.” On May 9, 2012 we changed the name of our Company to National Graphite
Corp. We changed the name of our company to better reflect the direction and business of our company.
On
March 22, 2011, the corporation converted from a Wyoming corporation to a Nevada corporation pursuant to Wyoming Statutes Title
17, ch. 16, Sect.(s) 820, 821 and 1114 and Nevada Revised Statutes 92A.205. This conversion did not alter the number
of authorized shares, or the number of issued and outstanding shares, of the corporation. The voting and other rights of the common
and preferred shares of the company’s capital stock remain substantially similar under Nevada law. The powers of the company’s
officers, directors and shareholders also remain substantially the same. Our authorized capital stock continues to consist of
499,000,000 shares of common stock, par value $0.001 per share and 1,000,000 shares of preferred stock, par value $0.001per share.
We
are a start-up, exploration-stage company engaged in the search for gold, silver, graphite and related minerals. Our mineral properties
are without known reserves and our proposed program is explanatory in nature. There is no assurance that commercially viable mineral
deposits exist on our mineral properties. Further exploration and/or drilling will be required before a final evaluation as to
the economic and legal feasibility of our projects is determined.
Effective
April 6, 2010, we conducted a 15:1 forward stock split of our common stock. The split was approved by FINRA for taking effect
on the OTC-BB at the open of business on March 31, 2010. The transfer agent effected the forward split on their records as of
April 6, 2010. Our statements of stockholder’s equity have been retroactively restated to reflect the split.
Our
Current Business – Mineral Exploration
During
the year ended May 31, 2010, the Company issued for cash 425,000 pre-split (6,375,000 post-split) shares of its par value $0.001
common stock for $170,000.
On January
24, 2010 the Company issued 290,000 and 150,000 (10,000 pre-split) shares of the Company’s common stock to a consultant
and two board members for services provided to the Company. The shares were valued at $0.40 per share based on the recent cash
sales price. The Company recorded $120,000 of expense in professional fees.
During
February 2010 the Company entered into two lease agreements for mineral leases located in the Mineral County, Nevada. On
February 8, 2010, we acquired 38 unpatented BLM claims including those known as the Silver Summit and Silver Strike claims and
two historic, silver mine leases (“AG Properties”) known as Lucky Boy Silver Mine and the Black Butte Silver Mine.
The Company issued 150,000 post-split shares of common stock for the mining claims. These shares were valued at $0.40 per share
based on the recent cash sale price.
Under these
agreements the Company committed $17,500 in non-refundable upfront lease payments, $10,000 in future payments to be made every
nine months and $7,500 in future payments to be made annually as long as the lease is in force. In a geological report compiled
by Hunsaker dated May 2010, Hunsaker opined that further work on the Lucky Boy project was not recommended while further exploration
on the Black Butte project was justified. The lease for the Lucky Boy mineral property was not renewed.
On
May 25, 2011 we expanded our claims in the Silver Strike area to 62 unpatented claims renaming them the LAG claims.
On April
20, 2012, the Company entered into an agreement with Habitants Minerals Ltd. (“Habitants”) granting the Company the
sole and exclusive right to purchase 100% right, title and interest in and to the applications and subsequent claims to be issued
by Quebec Ministry of Resources and Fauna for the following applications:
The Quebec
applications cover ground referred to in reports GM19842, GM35169, GM35267, GM19844, GM20308, GM13866, reports which report historic
graphite occurrences on Lot 32 and Lot 33 Range 11 in Low Township, Lot 1 Range 2 in Suffolk Township, Lot 9 and Lot 16 Range
3 and Lot 10 Range 9 all in Clarendon Township, Lot 46 Range 11 in Low Township, and ground in Lochaber Township covering historic
mag anomalies.
APPLICATION
1186716 (29 claims)
APPLICATION
1187995 (14 claims)
APPLICATION
1187994 (12 claims)
APPLICATION
1187992 (10 claims)
65
claims approx., 60 hectares each = 3900 hectares
The consideration
for the transaction was payment by the Company to Habitants a total of Fifty Thousand United States Dollars (US$50,000.00) consisting
of Twenty Five Thousand United States Dollars ($25,000.00) on the date of execution of this Agreement and Twenty Five Thousand
United States Dollars ($25,000.00) upon the issuance of the claims in the Company’s name, and the issuance of 100,000 shares
of the Company’s common stock within 15 days of the date of the closing of the transaction described in the Agreement or
within 15 days of any Regulatory Approvals required for the issuance of the shares.
On April
24, 2012, the Company entered into an agreement with GeoXplor Corporation to purchase a 100% interest in and to the Chedic Graphite
Property consisting of 20 Mineral Lode Claims in Township, 15 North, Range 19 East, Sections 25 & 26 Carson City, NV mining
claims compromising approximately 400 acres.
The purchase
price for the Property is a total of $425,000 in cash, an issuance of 2,500,000 shares of the Company’s Restricted Common
Stock, and a work commitment on the Property of up to $1,000,000 over four years as follows:
a.)
Cash Consideration: Purchaser will pay Seller $425,000 USD in cash consideration as follows :
i)
|
USD $50,000 upon the signing of the Agreement ( the “Effective Date”
),
|
ii)
|
an additional USD $25,000 on or before 6 months from the Effective Date
,
|
iii)
|
an additional USD $25,000 on or before 12 months from the Effective Date,
|
iv)
|
an additional USD $50,000 on or before 18 months from the Effective Date,
|
v)
|
an additional USD $75,000 on or before 24 Months from the Effective Date,
|
vi)
|
an additional USD $50,000 on or before 30 months from the Effective Date,
|
vii)
|
an additional USD $50,000 on or before 36 months from the Effective Date,
|
viii)
|
an additional USD $50,000 on or before 42 months from the Effective Date,
|
ix)
|
an additional USD $50,000 on or before 48 months from the Effective Date ( for a total cash consideration of $425,000 on or before
48 months from and after the Effective Date. )
|
b)
Stock Consideration: (restricted common shares)
|
i)
|
500,000 shares upon the signing of the Agreement (the “Effective Date“),
|
|
ii)
|
500,000
shares on or before 6 months from the Effective Date,
|
|
iii)
|
5
00,000
shares on or before 18 months from the Effective Date,
|
|
iv)
|
500,000
shares on or before 24 months from the Effective Date,
|
|
v)
|
500,000 shares
on or before 48 months from the Effective Date,
|
c)
Work Commitment:
Purchaser
will provide funds for the conduct of a program of work to be undertaken by the Seller for the benefit of the property of not
less than USD $1,000,000 over 4 years as follows:
|
i)
|
$100,000
on
or
before
12
months
from
the
Effective
Date,
|
|
ii)
|
$300,000
on
or
before
24
months
from
the
Effective
Date,
|
|
iii)
|
$300,000
on
or
before
36
months
from
the
Effective
date
,
|
|
iv)
|
$300,000
on
or
before
48
months
from
the
Effective
Date.
|
Our
Proposed Exploration Program – Plan of Operation
Our
business plan is to proceed with exploration on the Black Butte and Silver Strike projects to determine if there are commercially
exploitable deposits of gold and silver, and if we decide not to proceed, to seek other mineral exploration properties.
We
do not have any ores or reserves whatsoever at this time on our optioned property or other mineral properties.
During
February 2010 the Company entered into two additional lease agreements for mineral leases located in the Mineral County, Nevada,
including the Black Butte and Lucky Boy projects. Under these agreements the Company has committed $17,500 in non-refundable up-front
lease payments, $10,000 in future payments to be made every nine months and $7,500 in future payments to be made annually as long
as the lease is in force. Additionally, the Company has committed to spend a minimum of $100,000 over the first three years of
the lease on exploration and property development. The Company also has agreed to pay a total of 3% for each lease net smelter
return production royalty which can be bought out for $2,000,000/ per cent NSR ($1,000,000 per lease) with approval and consent
of the lessor. If payments are in default for 30 days or the work commitment is not completed as agreed, the lessor must vacate
the property immediately and settle all accounts related to the property.
We
retained the services of the Hunsaker Inc., a geological company, to assess the results of our program. In a report compiled by
Hunsaker dated February 2011, Hunsaker concluded that the Silver Strike claims warranted additional exploration whereas the Silver
Summit claims did not. Our mineral properties are currently without known reserves and our proposed programs are exploratory in
nature. On May 25, 2011 we expanded our claims in the Silver Strike area to 66 unpatented claims by staking the LAG claims.
Our
business plan for the Black Butte and Silver Strike projects is to proceed with the initial exploration of the gold and silver
properties to determine if there are commercially exploitable deposits of gold and silver. We retained the services of the Hunsaker
Inc., a geological company, to assess the results of our program.
In
a geological report compiled by Hunsaker dated May 2010, Hunsaker opined that further work on the Lucky Boy project is not recommended
while further exploration on the Black Butte project is justified. We did not renew the Lucky Boy Silver Mine lease.
As
per the purchase agreement of the Nevada graphite property, the Company is committed to an expenditure of at least $100,000 on
the property over the next twelve months.
Competition
We are a
mineral resource exploration company. We compete with other mineral resource exploration companies for financing and for the acquisition
of new mineral properties. Many of the mineral resource exploration companies with whom we compete have greater financial and
technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions
of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In
addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition
could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance
additional exploration and development. This competition could adversely impact on our ability to achieve the financing necessary
for us to conduct further exploration of our mineral properties.
We also
compete with other mineral resource exploration companies for financing from a limited number of investors that are prepared to
make investments in mineral resource exploration companies. The presence of competing mineral resource exploration companies may
impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that
investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price
of the investment offered to investors. We also compete with other mineral resource exploration companies for available resources,
including, but not limited to, professional geologists, camp staff, helicopter or float planes, mineral exploration supplies and
drill rigs.
Government
Regulations
Any
operations at the our mineral properties will be subject to various federal and state laws and regulations in the United
States and laws and regulations in Canada which govern prospecting, development, mining, production, exports, taxes, labor
standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other
matters. We will be required to obtain those licenses, permits or other authorizations currently required to conduct
exploration and other programs. There are no current orders or directions relating to us or our properties with respect to
the foregoing laws and regulations. Such compliance may include feasibility studies on the surface impact of our proposed
operations, costs associated with minimizing surface impact, water treatment and protection, reclamation activities,
including rehabilitation of various sites, on-going efforts at alleviating the mining impact on wildlife and permits or bonds
as may be required to ensure our compliance with applicable regulations. It is possible that the costs and delays associated
with such compliance could become so prohibitive that we may decide to not proceed with exploration, development, or mining
operations on any of our mineral properties. We are not presently aware of any specific material environmental constraints
affecting our properties that would preclude the economic development or operation of property in the United States and in
Canada.
The U.S.
Forest Service requires that mining operations on lands subject to its regulation obtain an approved plan of operations subject
to environmental impact evaluation under the
National Environmental Policy Act
. Any significant modifications to the plan
of operations may require the completion of an environmental assessment or Environmental Impact Statement prior to approval. Mining
companies must post a bond or other surety to guarantee the cost of post-mining reclamation. These requirements could add significant
additional cost and delays to any mining project undertaken by us.
Under the
U.S.
Resource Conservation and Recovery Act
, mining companies may incur costs for generating, transporting, treating, storing,
or disposing of hazardous waste, as well as for closure and post-closure maintenance once they have completed mining activities
on a property. Any future mining operations at our mineral properties may produce air emissions, including fugitive dust and other
air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction
equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality
laws. Permitting rules may impose limitations on our production levels or create additional capital expenditures for pollution
control in order to comply with the rules.
The U.S.
Comprehensive Environmental Response Compensation and Liability Act of 1980
, as amended ("CERCLA"), imposes strict
joint and several liability on parties associated with releases or threats of releases of hazardous substances. Those liable groups
include, among others, the current owners and operators of facilities which release hazardous substances into the environment
and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred.
This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property.
We cannot predict the potential for future CERCLA liability with respect to our mineral properties or surrounding areas.
Employees
At
present, we have no employees. We currently operate with two executive officers, who devote their time as required to our business
operations. Our executive officers are not presently compensated for their services and do not have an employment agreement with
us.
Item
1A Risk Factors
Risks Associated with our Business
We
are an exploration stage company, lack a business history and have losses that we expect to continue into the future. If the losses
continue we will have to suspend operations or cease functioning.
We
were incorporated in the State of Wyoming on October 19, 2006, and have only started our proposed business but have not realized
any revenues. We have no business history upon which an evaluation of our future success or failure can be made. Our net loss
since inception is
$
1,931,241.
Our
ability to achieve and maintain profitability and positive cash flow is dependent upon:
•
|
our
ability to find a profitable exploration property;
|
•
|
our ability to
generate revenues; and
|
•
|
our
ability to reduce exploration costs.
|
Because
of the speculative nature of exploration of mineral properties, we may never discover a commercially exploitable quantity of minerals,
our business may fail and investors may lose their entire investment.
We are in the very early exploration stage and cannot guarantee that our
exploration work will be successful or that any minerals will be found or that any production of minerals will be realized. The
search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that exploration on
our properties will establish that commercially exploitable reserves of minerals exist on our property. Additional potential problems
that may prevent us from discovering any reserves of minerals on our property include, but are not limited to, unanticipated problems
relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the
presence of commercially exploitable reserves of minerals on our property our ability to fund future exploration activities will
be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
Because
of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
Potential investors should be aware of the difficulties normally encountered
by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered
in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the
mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems
relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us
in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected
formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the
results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claims. If this happens,
our business will likely fail.
Because
of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct
our business.
The
search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present
time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on
our financial position.
We
have no known mineral reserves and we may not find any gold, silver or graphite if we find gold, silver or graphite it may not
be in economic quantities. If we fail to find any gold, silver or graphite or if we are unable to find gold, silver or
graphite
in economic quantities, we will have to suspend operations.
We
have no known mineral reserves. Even if we find gold, silver or graphite, it may not be of sufficient quantity so as to warrant
recovery. Additionally, even if we find gold, silver or graphite in sufficient quantity to warrant recovery it ultimately may
not be recoverable. Finally, even if any gold, silver or graphite is recoverable, we do not know that this can be done at a profit.
Failure to locate gold, silver or graphite in economically recoverable quantities will cause us to suspend operations.
The
potential profitability of mineral ventures depends in part upon factors beyond the control of our company and even if we discover
and exploit mineral deposits, we may never become commercially viable and we may be forced to cease operations.
The
commercial feasibility of mineral properties is dependent upon many factors beyond our control, including the existence and size
of mineral deposits in the properties we explore, the proximity and capacity of processing equipment, market fluctuations of prices,
taxes, royalties, land tenure, allowable production and environmental regulation. These factors cannot be accurately predicted
and any one or a combination of these factors may result in our company not receiving an adequate return on invested capital.
These factors may have material and negative effects on our financial performance and our ability to continue operations.
We
may be adversely affected by fluctuations in ore and precious metal prices.
The
value and price of our shares of common stock, our financial results, and our exploration, development and mining activities,
if any, may be significantly adversely affected by declines in the price of precious metals and ore. Mineral prices fluctuate
widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation,
fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political
and economic conditions of mineral producing countries throughout the world.
The
prices used in making resource estimates for mineral projects are disclosed, and generally use significantly lower metal prices
than daily metals prices quoted in the news media. The percentage change in the price of a metal cannot be directly related to
the estimated resource quantities, which are affected by a number of additional factors. For example, a 10% change in price may
have little impact on the estimated resource quantities, or it may result in a significant change in the amount of resources.
Transportation
difficulties and weather interruptions may affect and delay proposed mining operations and impact our proposed business.
Our
mineral properties are accessible by road. The climate in the area is hot and dry in the summer but cold and subject to snow in
the winter, which could at times hamper accessibility depending on the winter season precipitation levels. As a result, our exploration
plans could be delayed for several months each year.
Supplies
needed for exploration may not always be available.
Competition
and unforeseen limited sources of supplies needed for our proposed exploration work could result in occasional spot shortages
of supplies of certain products, equipment or materials. There is no guarantee we will be able to obtain certain products, equipment
and/or materials as and when needed, without interruption, or on favorable terms. Such delays could affect our proposed business
plans.
Management
will devote only a limited amount of time to National Graphite’s business. Failure of our management to devote a sufficient
amount of time to our business plans may adversely affect the success of our business.
Mr.
Kenneth B. Liebscher will be devoting approximately 20 hours per week to National Graphite’s business. Failure of our management
to devote a sufficient amount of time to our business plans may adversely affect the success of our business.
Management
lacks formal training in mineral exploration.
Our
officers and directors have no professional accreditation or formal training in the business of exploration. With no direct training
or experience in these areas our management may not be fully aware of many of the specific requirements related to working within
this industry. Decisions so made without this knowledge may not take into account standard engineering management approaches that
experienced exploration corporations commonly make. Consequently, our business, earnings and ultimate financial success could
suffer irreparable harm as a result of management’s lack of experience in the industry. Thus, we will retain such technical
experts as are required to provide professional and technical guidance.
We
require substantial funds merely to determine if mineral reserves exist on our mineral properties.
Any
potential development and production of our exploration properties depends upon the results of exploration programs and/or feasibility
studies and the recommendations of duly qualified engineers and geologists. Such programs require substantial additional funds.
Any decision to further expand our plans on these exploration properties will involve the consideration and evaluation of several
significant factors including, but not limited to:
Costs
of bringing the property into production including exploration work, preparation of production feasibility studies and construction
of production facilities;
Availability
and costs of financing;
Ongoing
costs of production;
Market
prices for the products to be produced;
Environmental
compliance regulations and restraints; and
Political
climate and/or governmental regulation and control.
Risks
Associated with our Common Stock
There
is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be
unable to sell their shares.
Few
shares of our common stock have been traded on the OTC Bulletin Board. As a result, our stockholders may find it difficult to
dispose of, or to obtain accurate quotations of the price of, shares of our common stock. This severely limits the liquidity of
shares of our common stock and has a material adverse effect on the market price for shares of our common stock and on our ability
to raise additional capital. An active public market for shares of our common stock may not develop, or if one should develop,
it may not be sustained, and as a result, investors may not be able to resell shares of our common stock that they have purchased
and may lose all of their investment.
We
do not intend to pay dividends on any investment in the shares of stock of our company.
We
have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent
that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment
of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through
an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.
Because
we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience
further dilution.
We
are authorized to issue up to 499,000,000 shares of common stock, of which 68,669,881 shares are issued and outstanding as of
August 23, 2013. We have 1,000,000 preferred shares authorized of which 675,000 are issued and outstanding and held by Kenneth
B. Liebscher, our President and CEO with conversion and voting rights of 1 preferred equals 100 common shares. Our board of directors
has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privileges
of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their
ownership of our stock in the future.
A
decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our
ability to continue operations and we may go out of business.
A
prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction
in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct
our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental
to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable
to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and
may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and
continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We
also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock
and we may be forced to go out of business.
Our
stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations
which may limit a stockholder’s ability to buy and sell our stock.
Our
stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock”
to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The
term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with
a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit
the marketability of our common stock.
FINRA
sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
In
addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry
Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of
these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for
at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy
our common stock, which may limit your ability to buy and sell our stock.
Risks
Related to our Financial Results and Need for Additional Financing
Our
auditors’ reports contain a statement that our net loss and limited working capital raise substantial doubt about our ability
to continue as a going concern.
Our
independent registered public accountants have stated in their report, included in this annual report that our significant operating
losses and working capital deficiency raise substantial doubt about our ability to continue as a going concern. We had net losses
of $519,285 and $375,546, respectively, for the fiscal years ended May 31, 2013 and 2012. We will be required to raise substantial
capital to fund our capital expenditures, working capital and other cash requirements since our current cash assets are exhausted.
We are currently searching for sources of additional funding, including potential joint venture partners, while we continue the
initial exploration phase on our mining claims. The successful outcome of future financing activities cannot be determined at
this time and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or
generate positive operational results.
We
will need additional capital to achieve our current business strategy and our inability to obtain additional financing will inhibit
our ability to expand or even maintain our research, exploration and development efforts.
In
addition to our current accumulated deficit, we expect to incur additional losses in the foreseeable future. Until we are
able to determine if there are mineral deposits available for extraction on our properties, we are unlikely to be profitable.
Consequently, we will require substantial additional capital to continue our exploration and development activities. There is
no assurance that we will not incur additional and unplanned expenses during our continuing exploration and development
activities. When additional funding is required, we intend to raise funds either through private placements or public
offerings of our equity securities. There is no assurance that we will be able to obtain additional financing through private
placements and/or public offerings necessary to support our working capital requirements. To the extent that funds
generated from any private placements and/or public offerings are insufficient, we will have to raise additional working
capital through other sources, such as bank loans and/or financings. No assurance can be given that additional financing will
be available, or if available, will be on acceptable terms.
If
we are unable to secure adequate sources of funds, we may be forced to delay or postpone the exploration, development and research
of our properties, and as a result, we might be required to diminish or suspend our business plans. These delays in development
would have an adverse effect on our ability to generate revenues and could require us to possibly cease operations. In addition,
such inability to obtain financing on reasonable terms could have a negative effect on our business, operating results or financial
condition to such extent that we are forced to restructure, file for bankruptcy protection, sell assets or cease operations, any
of which could put your investment dollars at significant risk.
We
are incurring increased costs as a result of being a publicly-traded company.
As
a public company, we incur significant legal, accounting and other expenses that we would not incur as a private company. In addition,
the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, has required
changes in corporate governance practices of public companies. These new rules and regulations have increased our legal and financial
compliance costs and have made some activities more time-consuming and costly. For example, as a result of becoming a public company,
we have adopted policies regarding internal controls and disclosure controls and procedures. In addition, we have incurred additional
costs associated with our public company reporting requirements. These new rules and regulations have made it more difficult and
more expensive for us to obtain director and officer liability insurance, which we currently cannot afford to do. As a result
of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our board of directors
or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public
company or the timing of such costs and/or whether we will be able to raise the funds necessary to meet the cash requirements
for these costs.
Because
we may never earn revenues from our operations, our business may fail and then investors may lose all of their investment in our
company.
We
have no history of revenues from operations. We have never had significant operations and have no significant assets. We have
yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited
operating history and is in the exploration stage. The success of our company is significantly dependent on the uncertain events
of the discovery and exploitation of mineral reserves on our properties or selling the rights to exploit those mineral reserves.
If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors
may lose all of their investment in our company.
Prior
to completion of the exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues.
We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant
revenues from the exploration of our mineral claims in the future, we will not be able to earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no
assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks,
our business will fail and investors may lose all of their investment in our company.
Item
1B. Unresolved Staff Comments.
Not
applicable.
Item
2 Properties.
Principal
Office
Our
principal office is located at 7230 Indian Creek Lane, Las Vegas, Nevada 89149. Our telephone number is (702) 849-4029. On January
1, 2012 our office rental agreement was adjusted to a $500 per month rental fee for office space in Nevada. The term of the agreement
is on a month-to-month basis starting from January 1, 2012.
Our
Mineral Properties
The
Black Butte and Lucky Boy Projects
On
February 8, 2010, we acquired 38 unpatented BLM claims including those known as Silver Strike and 2 historic silver mine leases
("Ag Properties") known as Lucky Boy Silver Mine and the Black Butte Silver Mine. As part of the mining lease proposal
for the Lucky Boy Silver Mine, the Company agreed to pay a $10,000 non-refundable lease payment and an additional $10,000 lease
payment every nine months commencing on November 17, 2010, and every nine months thereafter as long as the lease is in force.
The Company deposited $50,000 in an escrow account to be drawn against invoices for work done on the property including access
upgrading, exploration activities and geological expenses. Upon the recommendation of our consulting geologist, we did not renew
the lease of the Lucky Boy Silver Mine.
On
May 25, 2011 we expanded our claims in the Silver Strike to 66 unpatented claims by staking the LAG claims.
These
mineral properties are without known reserves and the proposed program is explanatory in nature.
The
Graphite Prospects
On April
20, 2012, Lucky Boy Silver Corp. entered into an agreement with Habitants Minerals Ltd. granting Lucky Boy the sole and exclusive
right to purchase 100% right, title and interest in and to the applications and subsequent claims to be issued by Quebec Ministry
of Resources and Fauna for the following applications:
The Quebec
applications cover ground referred to in reports GM19842, GM35169, GM35267, GM19844, GM20308, GM13866, reports which report historic
graphite occurrences on Lot 32 and Lot 33 Range 11 in Low Township, Lot 1 Range 2 in Suffolk Township, Lot 9 and Lot 16 Range
3 and Lot 10 Range 9 all in Clarendon Township, Lot 46 Range 11 in Low Township, and ground in Lochaber Township covering historic
mag anomalies.
APPLICATION
1186716 (29 claims)
APPLICATION
1187995 (14 claims)
APPLICATION
1187994 (12 claims)
APPLICATION
1187992 (10 claims)
65
claims approx., 60 hectares each = 3900 hectares
On April
24, 2012, Lucky Boy Silver Corp. entered into an agreement with GeoXplor Corporation to purchase a 100% interest in and to the
Chedic Graphite Property consisting of 20 Mineral Lode Claims in Township, 15 North, Range 19 East, Sections 25 & 26 Carson
City, NV mining claims compromising approximately 400 acres.
Location
and Means and Access
We
have acquired an interest in the Black Butte and Silver Strike projects in the Mineral County, Nevada. Black Butte is in T7N/R34E
sections 25 and 26. Silver Strike is in T3N/R35E sections 1,2, and 3; T4N/R35E sections 25, 35, and 36 near Candelaria.
Figure
1: Black Butte and Candelaria Location Map
Black
Butte
The Black
Butte Project is approximately 30 miles east of Hawthorne on the east flank of Black Dyke Mountain at the eastern end of the Garfield
Hills. The project can be reached by traveling 29.5 miles east on U.S. Highway 95 to a well-graded dirt road into the project
area. Further access by vehicle is limited to several steep, primitive 4-wheel drive tracks.
The land
position initially consisted of the Black Butte unpatented lode mining claims (Table 1 and Figure 2). Additional lode claims (BB-1
to6) were staked on August 12, 2010 to cover the interpreted extensions of the mineralized zone.
Owner/Claimant
|
Claim
Name
|
Land
Tenure
|
Tenure
Number
|
G.
L. Buffington
|
Black
Butte
|
Unpatented
Lode Mining Claim
|
NMC
95801
|
G.
L. Buffington
|
Black
Butte #1
|
Unpatented
Lode Mining Claim
|
NMC
95802
|
G.
L. Buffington
|
Black
Butte #2
|
Unpatented
Lode Mining Claim
|
NMC
95803
|
G.
L. Buffington
|
Black
Butte #3
|
Unpatented
Lode Mining Claim
|
NMC
95804
|
National
Graphite Corp.
|
BB-1
|
Unpatented
Lode Mining Claim
|
NMC
1026931
|
National
Graphite Corp.
|
BB-2
|
Unpatented
Lode Mining Claim
|
NMC
1026932
|
National
Graphite Corp.
|
BB-3
|
Unpatented
Lode Mining Claim
|
NMC
1026933
|
National
Graphite Corp.
|
BB-4
|
Unpatented
Lode Mining Claim
|
NMC
1026934
|
National
Graphite Corp.
|
BB-5
|
Unpatented
Lode Mining Claim
|
NMC
1026935
|
National
Graphite Corp.
|
BB-6
|
Unpatented
Lode Mining Claim
|
NMC
1026936
|
Table
1:
Black Butte and Lucky Boy Land Description
The claims
Black Butte, Black Butte #1 to #3, BB-1 to BB-6 , and LAG 1 to 66 are valid until September 1, 2013.
National
Graphite Corp.
|
LAG
1
to
LAG
38
|
Unpatented
Lode Mining Claim
|
NMC
1047475
to
NMC
1047512
|
National
Graphite Corp.
|
LAG
39
to
LAG
66
|
Unpatented
Lode Mining Claim
|
NMC
1051010
to
NMC
1051037
|
Figure
2: Black Butte Project Land Map
GEOLOGY
Regional Geology
The Black Butte project area is located in the Walker Lane Mineral Belt in western Nevada (Figure 1). Rocks in the region encompassing
the project areas range from Triassic age sediments to recent alluvium filling the basins. The western side of the region is dominated
by Cretaceous age intrusive rocks forming the Wassuk Range.
The Walker Lane is a major northwest-southeast-trending fault zone which displays right lateral movement that ranges from 30 to
40 miles in its central portion, and hosts a variety of precious metal and base metal mineral deposits (as well as geothermal
activity) along its length. Late Cenozoic faults of the central Walker Lane form a complex array of variably oriented structures
characterized by coeval strike-slip and dip-slip motions.
The rock formations for the project areas fit into the regional setting described for Mineral County (Figure 6, and Ross, 1961):
“About
30,000 feet of structurally complex calcareous, clastic, and volcanic rocks of Triassic and Jurassic age exposed in the central
part of the county are flanked on the south by a few thousand feet of calcareous and clastic rocks of Cambrian, Ordovician, and
Permian age. Intrusive into this sequence are granitic rocks, chiefly quartz monzonite, which are probably satellitic to the composite
Sierra Nevada Batholith of Cretaceous age.”
Black
Butte Project Geology
The
Black Butte Project area lithology is mapped as Triassic Excelsior Formation which is summarized as a sequence of felsic volcanic
rocks, clastic rocks, and tuffs (Figure 7). To the south of the project area the Excelsior is in fault contact with the Triassic
Luning Formation described as a sequence of limestone, dolomite, and shale.
Figure
6: Legend for all Geological Maps
Figure
7: Black Butte Project Geology Map
Figure
8: Looking west at Black Butte Project Area
Figure
9: Looking at Black Butte Vein Zone
MINERALIZATION
Black
Butte Project Mineralization
No historical
data was found for the Black Butte Project area. There are at least four adits that collar on the vein and drive along the strike.
These adits appear to be interconnected by raises and winzes. The lowermost adit (near samples LBR-14 and 21, Figure 11) has power
and lights behind a locked door which services the seismograph equipment located within.
The mineralization
is a quartz vein zone trending northeast-southwest and exposed at the surface for approximately 800 feet in a series of adits
and prospect pits (Figure 7, Figure 8, and Figure 9). To the northeast the vein appears to go under alluvial cover. Going to the
southwest along the strike of the vein the hill becomes higher and beyond the last exposed part of the vein strong, pervasive
zones of iron oxidation are much more prominent as well as a zone of carbonate alteration (calcite veining). These alteration
zones are typical of the uppermost extent of the alteration associated with an epithermal quartz vein system.
The vein
zone is poly-phase, with multiple bands of silica that are sulfide bearing. The vein zone is from two to ten feet wide; within
the wider parts of the zone there are distinct anastomosing quartz veins separated by orange and brown clay/gouge (frontispiece-note
pencil for scale). Sulfides of iron, copper, lead, and silver were obvious on some of the dumps.
Gold values
along the vein are anomalous (2.59, 3.4, and 6.22 ppm gold) to strongly anomalous (46.7 ppm gold) (Figure 12). The 46.7 ppm gold
(1.36 opt) sample was a 10 inch channel sample across the quartz vein. Most of the higher grade gold values appear to be in the
quartz; however the clay/gouge within the vein zone between the quartz does also carry some lesser gold values.
Silver values
along the vein are also highly anomalous (316, 403, 630, 684 ppm silver) (Figure 13). The silver is highly correlative to the
gold. Overall the system appears to be silver dominant with silver to gold ratio equal to 43:1.
Lead, copper,
and zinc values are also anomalous; as might be expected in a silver dominated epithermal vein system (Figure 14 and Table 2).
Black
Butte Rock Geochemical Summary
|
|
Gold
ppm
|
Silver
ppm
|
Lead
ppm
|
Copper
ppm
|
Zinc
ppm
|
High
|
46.7
(1.36 opt)
|
684
(19.94 opt)
|
43,000
(4.3%)
|
9,590
|
2,120
|
Low
|
0.098
|
3.3
|
31
|
177
|
170
|
Average
|
5.525
(0.161 opt)
|
204.4
|
9,529
|
1,916
|
707
|
No.
Samples
|
11
|
11
|
11
|
11
|
11
|
Table
2: Black Butte Geochemical Summary Table
Figure
11: Black Butte Rock Sample Location Map
Figure
12: Black Butte Gold in Rock Map
Figure
13: Black Butte Silver in Rock Map
Figure
14: Black Butte Lead in Rock
Item
3. Legal Proceedings.
We know of no material, existing or pending legal proceedings against us,
nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of
our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest
adverse to National Graphite.
Item
4. (Removed and Reserved).
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market
Information
Our
shares of common stock are quoted on the OTC Bulletin Board under the symbol “NGRC”. Our CUSIP number is 631268 104.
The quotation was first posted at the opening on May 29, 2009 with an opening bid of $0.05 ($0.0033 post-split) and offer at $0.10
($0.0067 post-split).
Holders
of our Common Stock
As
of the date of this report the shareholders' list of our common shares showed 24 registered shareholders. There are 68,669,881
shares outstanding.
Dividends
We
have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Although
there are no restrictions that limit the ability to pay dividends on our common shares, our intention is to retain future earnings
for use in our operations and the expansion of our business.
Securities
Authorized for Issuance under Equity Compensation Plans
We
do not have any equity compensation plans in place.
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered Securities
On October
25, 2010 the Company issued 356,154 units consisting of one share of common stock and one warrant for cash at $0.63 per share. The
attached warrants are exercisable for two years from issuance and have an exercise price of $0.85 per share for one year from
issuance which increased to $1.05 in the second year. The Company used the Black-Scholes option pricing model to value
the warrants based on the terms of the warrant, a volatility of 350%risk free rate of 0.37%, and a stock price and issuance of
$0.65. Based on this calculation, the Company determined that the relative fair value of the warrants is $113,148 and
allocated this amount of the additional paid-in capital to the warrants.
These warrants expired during the year ended May
31, 2013.
On December
15, 2010 the Company issued 47,060 shares of its restricted common stock issued to 20 shareholders subscribed for at a price of
$0.85 per share in private placements for $40,000 cash.
During the
year ended May 31, 2012 the Company issued 500,000 shares of its restricted common stock issued to non-afilliated shareholders
subscribed for at a price of $0.60 per share in private placements for $300,000 cash.
During the
year ended May 31, 2012 the Company issued 500,000 shares of its restricted common stock as consideration for the purchase of
certain mineral interests in Carson City, Nevada. These shares were valued at $0.60 per share, resulting in an aggregate value
of $300,000.
During the
year ended May 31, 2013 the Company issued 416,667 shares of its restricted common stock issued to non-affiliated shareholders
subscribed for at a price of $0.60 per share in private placements for $250,000 cash.
During the
year ended May 31, 2013 the Company issued 500,000 shares of its restricted common stock issued to non-affiliated shareholders
subscribed for at a price of $0.50 per share in private placements for $250,000 cash.
All of these
shares were issued to accredited investors under the exemption from Section 5 of the Securities Act of 1933 (the “Act”)
contained in Section 4(6) of the Act.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item
6. Selected Financial Data.
Not
applicable.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
You
should read the following discussion of our financial condition and results of operations together with the audited financial
statements and the notes to audited financial statements included elsewhere in this report. This discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in
these forward-looking statements.
We
are a start-up, exploration stage company engaged in the search for gold, silver, graphite and related minerals. Our mineral properties
are without known reserves and our proposed program is explanatory in nature. There is no assurance that commercially viable mineral
deposits exist on our mineral properties. Further exploration and/or drilling will be required before a final evaluation as to
the economic and legal feasibility of our projects is determined.
Our
business plan is to proceed with exploration of the Black Butte and our unpatented Silver Strike LAG claims to determine if there
are commercially exploitable deposits of gold and silver, and if we decide not to proceed, to seek other mineral exploration properties.
As per our purchase agreement, the Company is obligated to spend a minimum of $300,000 over the next twelve months on its Chedic
graphite claims in Nevada.
The
Black Butte Project – Our Proposed Exploration Program
Our
business plan for the Black Butte Project is to proceed with the initial exploration of the gold and silver properties to determine
if there are commercially exploitable deposits of gold and silver. We retained the services of the Hunsaker Inc., a geological
company, to assess the results of our program.
In a geological report
compiled by Hunsaker dated May 2010, Hunsaker opined that further exploration on the Black Butte project is justified.
Over
the twelve months ending May 31, 2014 we intend to use almost all available funds to commence exploration of our mineral
properties in Nevada. We anticipate that phase II will not be carried out until 2014 or 2015 and will be contingent upon
favorable results from phase I and specific recommendations in the resulting report. Specifics of the work to be carried out
have not yet been determined and will be delineated as recommendations in the reporting of the results of phase I. The second
phase may require up to six weeks work. Four months may be required for analysis and the preparation of a report and
evaluation on the work accomplished.
Employees
We
intend to continue to use the services of subcontractors for manual labor exploration work and an engineer or geologist to manage
the exploration program. In regards to phase I of the planned exploration program, we have retained Buster Hunsaker as senior
geological consultant.
At
present, we have no employees. We currently operate with two executive officers, who devote their time as required to our business
operations. Our executive officers are not presently compensated for their services and do not have an employment agreement with
us.
We
presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we
may adopt such plans in the future. There are presently no personal benefits available to employees.
Results
of Operations
|
|
Year Ended
|
|
|
May 31,
|
|
|
2013
|
|
2012
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating Expenses
|
|
$
|
519,285
|
|
|
$
|
375,546
|
|
Net Profit (Loss)
|
|
$
|
(519,285
|
)
|
|
$
|
(375,546
|
)
|
Revenue
We
have not earned any revenues since our inception.
Expenses
Our
operating expenses for the years ended May 31, 2013 and 2012 are outlined in the table below:
|
|
Year Ended
|
|
|
May 31,
|
|
|
2013
|
|
2012
|
Professional fees
|
|
$
|
97,544
|
|
|
$
|
256,566
|
|
Exploration of resource property
|
|
|
107,846
|
|
|
|
27,316
|
|
Depreciation
|
|
|
809
|
|
|
|
808
|
|
Impariment of mining claims
|
|
|
171,369
|
|
|
|
—
|
|
General and administrative expenses
|
|
|
141,717
|
|
|
|
90,856
|
|
Total Operating Expenses
|
|
$
|
519,285
|
|
|
$
|
375,546
|
|
Operating
expenses for the year ended May 31, 2013, increased by $143,739 as compared to 2012, primarily as a result of the commencement
of our business plan.
During
the year ended May 31, 2013, National Graphite incurred operating expenses of $519,285 as compared to $375,546 for 2012 and a
total of $1,931,241 for the period from inception on October 19, 2006, to May 31, 2013. The costs incurred can be further subdivided
into the following categories.
PROFESSIONAL
FEES: National Graphite incurred $97,544 in professional fees for the fiscal year ended on May 31, 2013, as compared to $256,566
for the previous fiscal year. From inception to October 19, 2006, we have incurred $1,093,629 in professional fees mainly spent
on legal and accounting matters. This expense category will vary annually depending on corporate capital raising activities.
EXPLORATION
OF RESOURCE PROPERTIES COSTS: We incurred $107,846 in mineral interest acquisition and exploration costs for the year ended May
31, 2013 compared to $27,316 for the year ended May 31, 2012. For the period October 19, 2006 (inception) through May 31, 2013,
$198,991 was recorded for exploration work on our optioned projects. This category will vary from year to year dependent on the
exploration activities of the Company.
IMPAIRMENT
OF MINING CLAIMS: During the year ended May 31, 2013 the Company elected to fully-impair certain mineral claims as no proven reserves
had yet been established. This resulted in the Company recognizing a $171,369 and $-0- impairment charge recorded in operating
expenses for the years ended May 31, 2013 and 2012.
GENERAL
AND ADMINISTRATIVE EXPENSES: National Graphite incurred $141,717 in general and administrative expenses during the fiscal year
ended May 31, 2013 as compared to $90,856 in 2012. Since inception through May 31, 2013 the Company has incurred a total of $350,365.
The Company spent more on officer compensation and travel expenses during 2013 which contributed to the increase in expenses.
RESEARCH
AND DEVELOPMENT: National Graphite has not incurred any expenses for research and development since inception on October 19, 2006.
INCOME
TAX PROVISION: As a result of operating losses, there has been no provision for the payment of income taxes to date in 2008 –
2013 or from the date of inception.
At
the end of the fiscal year under review, May 31, 2013, and as of the date of this report, National Graphite had 68,669,881 common
shares issued and outstanding.
Liquidity
and Financial Condition
Working
Capital
|
May
31,
|
|
2013
|
|
2012
|
Current
Assets
|
$
|
187,622
|
|
$
|
111,709
|
Current
Liabilities
|
|
(9,595)
|
|
|
(1,595)
|
Working
Capital
|
$
|
178,027
|
|
$
|
110,114
|
Cash
Flows
|
|
Year Ended
|
|
|
May 31,
|
|
|
2013
|
|
2012
|
Net Cash Used in Operating Activities
|
|
$
|
(310,608
|
)
|
|
$
|
(239,891
|
)
|
Net Cash Used In Investing Activities
|
|
|
(109,979
|
)
|
|
|
(98,489
|
)
|
Net Cash Provided by Financing Activities
|
|
|
500,000
|
|
|
|
300,000
|
|
Effect of Exchange Rate Changes
|
|
|
—
|
|
|
|
—
|
|
Increase In Cash During The Period
|
|
$
|
79,413
|
|
|
$
|
(38,380
|
)
|
Since
inception we have used common stock to raise money for our optioned mineral acquisition and corporate expenses. Net cash provided
by financing activities in the most recent fiscal year ended May 31, 2013 was $500,000, compared to $ 300,000 during the fiscal
year ended May 31, 2012. Net cash provided by financing activities from inception on October 19, 2006 was $1,400,000.
Presently,
our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and
this is likely to continue through fiscal 2013 - 2014. Management projects that we may require $1,730,000 to fund our ongoing
operating expenses and working capital requirements for the next twelve months, broken down as follows:
General and administrative expenses
|
|
$
|
150,000
|
|
Operating expenses
|
|
|
—
|
|
Future property acquisitions
|
|
|
430,000
|
|
Working capital
|
|
|
150,000
|
|
Development of properties
|
|
|
1,000,000
|
|
|
|
$
|
1,730,000
|
|
As
at May 31, 2013, we had a working capital surplus of $178,027. We plan to raise the additional capital required to meet the balance
of our estimated funding requirements for the next twelve months primarily through the sale of equity based securities or loans
from related parties. We do not anticipate that we will be able to satisfy any of these funding requirements internally until
we significantly generate revenues.
Going
Concern
We
are in the exploration stage, have not yet achieved profitable operations and are dependent on our ability to raise capital from
stockholders or other sources to meet obligations arising from normal business operations when they become due. Therefore, in
their report on our audited financial statements for the year ended May 31, 2013, our independent auditors included an explanatory
paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note
disclosure describing the circumstances that lead to this disclosure.
Future
Financings
We will
require additional financing in order to enable us to proceed with our plan of operations. There can be no assurance that additional
financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we
are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become
due. We are pursuing various alternatives to meet our immediate and long-term financial requirements.
On October
29, 2010 we announced that the Company had entered into an equity financing agreement for up to $2,500,000 from Cardinal Capital
Holdings, Limited. Under the terms of the agreement, the Company may from time to time request a purchase of up to $250,000 per
request. On October 28, 2010 we
received our first draw of $225,000. Under the terms of the agreement, we may draw
up to a total of $1,500,000 through October 19th, 2011. The investment group, at its discretion, may invest an additional $1,000,000
at $.65 when the total first round has been completed.
Based on
our current plan of operations, we have sufficient funds for the next 6 months, after which time we will require additional funds
to continue our exploration operations.
Presently,
our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and
this is likely to continue through fiscal 2012-2013. Management projects that we will require up to $1,730,000 to fund ongoing
operating expenses and working capital requirements for the next 12 months, broken down as follows:
General and administrative expenses
|
|
$
|
150,000
|
|
Future property acquisitions
|
|
|
430,000
|
|
Working capital
|
|
|
150,000
|
|
Development of properties
|
|
|
1,000,000
|
|
|
|
$
|
1,730,000
|
|
We
anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. Issuances of additional
shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of equity
securities or arrange for debt or other financing to fund our planned business activities.
We
presently do not have any arrangements for additional financing and no potential lines of credit or sources of financing are currently
available for the purpose of proceeding with our plan of operations.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk.
Not
applicable.
Item
8. Financial Statements and Supplementary Data.
Our
financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.
The
Reports of the Independent Registered Public Accounting firm by Sadler, Gibb & Associates LLC for the audited financial statements
for the year ended May 31, 2013,
NATIONAL
GRAPHITE CORP.
(FKA
Lucky Boy Silver Corp.)
(An
Exploration Stage Company)
AUDIT
REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL
STATEMENTS
May
31, 2013 and 2012
NATIONAL
GRAPHITE CORP.
(FKA
Lucky Boy Silver Corp.)
(An
Exploration Stage Company)
INDEX
|
|
Page
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
F-2
|
|
|
|
Balance Sheets
|
|
F-3
|
|
|
|
Statements of Operations
|
|
F-4
|
|
|
|
Statements of Changes in Stockholders' Equity
|
|
F-5
|
|
|
|
Statements of Cash Flows
|
|
F-6
|
|
|
|
Notes to Financial Statements
|
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board
of Directors
National
Graphite Corp.
(An Exploration
Stage Company)
We
have audited the accompanying balance sheets of National Graphite Corp. as of May 31, 2013 and 2012 and the related statements
of
operations
, stockholders’ equity
and cash flows for the years then ended and from the period from inception on October 19, 2006 through May 31, 2013. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In
our opinion the financial statements referred to above present fairly, in all material respects, the financial position of National
Graphite Corp. as of May 31, 2013 and 2012 and the results of their operations and cash flows for the years then ended and for
the period from inception on October 19, 2006 through May 31, 2013, in conformity with U.S. generally accepted accounting principles.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company has suffered accumulated net losses of $1,931,241 and will need additional
working capital for its planned business activities. These matters raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements
do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification
of liabilities that might result should the Company be unable to continue as a going concern.
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
August 29, 2013
NATIONAL GRAPHITE CORP.
|
(FKA LUCKY BOY SILVER CORPORATION)
|
(An Exploration Stage Company)
|
Balance Sheets
|
|
|
|
|
May 31,
|
|
|
2013
|
|
2012
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
187,622
|
|
|
$
|
108,209
|
|
Restricted cash
|
|
|
—
|
|
|
|
—
|
|
Prepaid expenses
|
|
|
—
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
187,622
|
|
|
|
111,709
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, net
|
|
|
541
|
|
|
|
1,350
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,400
|
|
|
|
26,400
|
|
Mineral interests
|
|
|
575,000
|
|
|
|
401,389
|
|
|
|
|
|
|
|
|
|
|
Total Other Assets
|
|
|
576,400
|
|
|
|
427,789
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
764,563
|
|
|
$
|
540,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
9,595
|
|
|
$
|
1,595
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
9,595
|
|
|
|
1,595
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, 1,000,000 shares authorized
|
|
|
|
|
|
|
|
|
at par value of $0.001; 675,000 and 675,000
|
|
|
|
|
|
|
|
|
shares issued and outstanding, respectively
|
|
|
675
|
|
|
|
675
|
|
Common stock, 499,000,000 shares authorized
|
|
|
|
|
|
|
|
|
at par value of $0.001; 68,669,881 and 75,153,214
|
|
|
|
|
|
|
|
|
shares issued and outstanding, respectively
|
|
|
68,670
|
|
|
|
75,153
|
|
Additional paid-in capital
|
|
|
2,616,805
|
|
|
|
1,875,322
|
|
Other comprehensive income
|
|
|
59
|
|
|
|
59
|
|
Deficit accumulated during the exploration stage
|
|
|
(1,931,241
|
)
|
|
|
(1,411,956
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
754,968
|
|
|
|
539,253
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
764,563
|
|
|
$
|
540,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATIONAL GRAPHITE CORP.
|
(FKA LUCKY BOY SILVER CORPORATION)
|
(An Exploration Stage Company)
|
Statements of Operations
|
|
|
|
|
|
For the Years Ended
|
|
From Inception on October 19,
2006 Through
|
|
|
May 31,
|
|
May 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration of resource properties
|
|
|
107,846
|
|
|
|
27,316
|
|
|
|
198,991
|
|
Impairment of mineral interests
|
|
|
171,369
|
|
|
|
—
|
|
|
|
286,369
|
|
Depreciation expense
|
|
|
809
|
|
|
|
808
|
|
|
|
1,887
|
|
Professional fees
|
|
|
97,544
|
|
|
|
256,566
|
|
|
|
1,093,629
|
|
General and administrative expenses
|
|
|
141,717
|
|
|
|
90,856
|
|
|
|
350,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
519,285
|
|
|
|
375,546
|
|
|
|
1,931,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(519,285
|
)
|
|
|
(375,546
|
)
|
|
|
(1,931,241
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(519,285
|
)
|
|
$
|
(375,546
|
)
|
|
$
|
(1,931,241
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED WEIGHTED AVERAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES OUTSTANDING
|
|
|
71,144,447
|
|
|
|
74,308,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATIONAL GRAPHITE CORP.
|
(FKA LUCKY BOY SILVER CORPORATION)
|
(An Exploration Stage Company)
|
Statements of Stockholders' Equity
|
|
|
|
Deficit
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
Stock
|
|
Other
|
|
During the
|
|
Total
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Paid-in
|
|
Subscriptions
|
|
Comprehensive
|
|
Exploration
|
|
Stockholders'
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Payable
|
|
Income
|
|
Stage
|
|
Equity
|
|
|
|
|
|
|
|
Balance, October 19, 2006
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
103,500,000
|
|
|
|
103,500
|
|
|
|
(88,500
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency exchange loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed Administrative Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& other services rendered by officers
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,816
|
)
|
|
|
(5,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2007
|
|
|
—
|
|
|
|
—
|
|
|
|
103,500,000
|
|
|
|
103,500
|
|
|
|
(88,400
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(5,816
|
)
|
|
|
9,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed Administrative Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& other services rendered by officers
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency exchange gain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61
|
|
|
|
—
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(56,311
|
)
|
|
|
(56,311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2008
|
|
|
—
|
|
|
|
—
|
|
|
|
103,500,000
|
|
|
|
103,500
|
|
|
|
(88,350
|
)
|
|
|
—
|
|
|
|
59
|
|
|
|
(62,127
|
)
|
|
|
(46,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
70,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(51,056
|
)
|
|
|
(51,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2009
|
|
|
—
|
|
|
|
—
|
|
|
|
133,500,000
|
|
|
|
133,500
|
|
|
|
(18,350
|
)
|
|
|
—
|
|
|
|
59
|
|
|
|
(113,183
|
)
|
|
|
2,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.40 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
6,375,000
|
|
|
|
6,375
|
|
|
|
163,625
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
—
|
|
|
|
—
|
|
|
|
440,000
|
|
|
|
440
|
|
|
|
119,560
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for mining claims
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
150
|
|
|
|
59,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2010
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(264,513
|
)
|
|
|
(264,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2010
|
|
|
—
|
|
|
$
|
—
|
|
|
|
140,465,000
|
|
|
$
|
140,465
|
|
|
$
|
334,685
|
|
|
$
|
50,000
|
|
|
$
|
59
|
|
|
$
|
(377,696
|
)
|
|
$
|
147,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued pursuant to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock subscription payable
|
|
|
—
|
|
|
|
—
|
|
|
|
125,000
|
|
|
|
125
|
|
|
|
49,875
|
|
|
|
(50,000
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrants at $0.63 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
356,154
|
|
|
|
356
|
|
|
|
224,644
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.85 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
47,060
|
|
|
|
47
|
|
|
|
39,953
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for prepaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
services at $0.85 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
660,000
|
|
|
|
660
|
|
|
|
560,340
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
561,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock exchanged for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
preferred stock
|
|
|
675,000
|
|
|
|
675
|
|
|
|
(67,500,000
|
)
|
|
|
(67,500
|
)
|
|
|
66,825
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(658,714
|
)
|
|
|
(658,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2011
|
|
|
675,000
|
|
|
|
675
|
|
|
|
74,153,214
|
|
|
|
74,153
|
|
|
|
1,276,322
|
|
|
|
—
|
|
|
|
59
|
|
|
|
(1,036,410
|
)
|
|
|
314,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.60 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
299,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of mineral claims
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
299,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2012
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(375,546
|
)
|
|
|
(375,546
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2012
|
|
|
675,000
|
|
|
$
|
675
|
|
|
|
75,153,214
|
|
|
$
|
75,153
|
|
|
$
|
1,875,322
|
|
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
(1,411,956
|
)
|
|
$
|
539,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.60 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
416,667
|
|
|
|
417
|
|
|
|
249,583
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of mineral claims
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
100
|
|
|
|
59,900
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,000,000
|
)
|
|
|
(8,000
|
)
|
|
|
8,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.50 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
249,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
mineral claims at $0.35 per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
174,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(519,285
|
)
|
|
|
(519,285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2013
|
|
|
675,000
|
|
|
$
|
675
|
|
|
|
68,669,881
|
|
|
$
|
68,670
|
|
|
$
|
2,616,805
|
|
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
(1,931,241
|
)
|
|
$
|
754,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
NATIONAL GRAPHITE CORP.
|
(FKA LUCKY BOY SILVER CORPORATION)
|
(An Exploration Stage Company)
|
Statements of Cash Flows
|
|
|
|
|
For the Years Ended
|
|
From Inception on October 19,
2006 Through
|
|
|
May 31,
|
|
May 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(519,285
|
)
|
|
$
|
(375,546
|
)
|
|
$
|
(1,931,241
|
)
|
Adjustments to reconcile net loss to
|
|
|
|
|
|
|
|
|
|
|
|
|
net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
809
|
|
|
|
808
|
|
|
|
1,887
|
|
Contributed services by an officer
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
59
|
|
Amortization of prepaid expense
|
|
|
—
|
|
|
|
137,849
|
|
|
|
561,000
|
|
Common stock issued for services
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
Impairment of mineral interests
|
|
|
171,368
|
|
|
|
—
|
|
|
|
286,369
|
|
Changes to operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
—
|
|
|
|
12,786
|
|
|
|
—
|
|
Prepaid expenses
|
|
|
3,500
|
|
|
|
13,801
|
|
|
|
—
|
|
Deposits
|
|
|
25,000
|
|
|
|
(25,200
|
)
|
|
|
(1,400
|
)
|
Accounts payable
|
|
|
8,000
|
|
|
|
(4,389
|
)
|
|
|
6,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
|
|
|
(310,608
|
)
|
|
|
(239,891
|
)
|
|
|
(956,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of computer equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,428
|
)
|
Purchase of mineral interests
|
|
|
(109,979
|
)
|
|
|
(98,489
|
)
|
|
|
(263,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(109,979
|
)
|
|
|
(98,489
|
)
|
|
|
(265,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
Common stock issued for cash
|
|
|
500,000
|
|
|
|
300,000
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
500,000
|
|
|
|
300,000
|
|
|
|
1,410,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
79,413
|
|
|
|
(38,380
|
)
|
|
|
187,622
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
108,209
|
|
|
|
146,589
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$
|
187,622
|
|
|
$
|
108,209
|
|
|
$
|
187,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATIONAL GRAPHITE CORP.
|
(FKA LUCKY BOY SILVER CORPORATION)
|
(An Exploration Stage Company)
|
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
|
|
From Inception on October 19, 2006 Through
|
|
|
May 31,
|
|
May 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income Taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON CASH FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock issued in conversion of common stock
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,500
|
|
Common stock issued for prepaid expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
561,000
|
|
Common stock issued for mineral interests
|
|
$
|
235,000
|
|
|
$
|
300,000
|
|
|
$
|
595,000
|
|
The accompanying notes are an integral part of these financial statements.
NATIONAL GRAPHITE CORP.
(FKA Lucky Boy Silver Corporation)
(An Exploration Stage Company)
Notes to Financial Statements
May 31, 2013 and 2012
NOTE
1 – NATURE OF OPERATIONS
National
Graphite Corporation formerly known as Lucky Boy Silver Corporation, which was formerly known as Sierra Ventures, Inc. (“the
Company”) was incorporated under the laws of the State of Wyoming on October 19, 2006. On May 8, 2012 the Company filed
an Amendment to Articles with and changes its name from “Lucky Boy Silver Corporation” to “National Graphite
Corporation.” On February 5, 2010 the Company filed an Amendment to Articles with the Wyoming Secretary of State and changed
its name from “Sierra Ventures Inc.” to “Lucky Boy Silver Corporation.” On March 22, 2011, the Company
pursuant to Wyoming and Nevada law converted from a Wyoming corporation to a Nevada corporation.
The
Company is an “exploration stage company” as defined in the ASC Topic
Accounting and Reporting by Development Stage
Companies
. The Company is devoting its resources to establishing the new business, and its planned operations have not yet
commenced, accordingly, no revenues have been earned during the period from October 19, 2006 (date of inception) to May 31, 2013.
NOTE
2 – GOING CONCERN
The
Company’s financial statements at May 31, 2013 and 2012 and for the period October 19, 2006 (inception) through May 31,
2013 have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and
commitments in the normal course of business. The Company incurred a loss of $1,931,241 for the period from October 19, 2006 (inception)
through May 31, 2013. In addition, the Company has not generated any revenues and no revenues are anticipated until the Company
begins extracting and selling ore, and there is no assurance that commercially viable deposits exist on the mineral claims that
the Company has under option. These conditions raise substantial doubt as to the Company’s ability to continue as a going
concern.
Management’s
plan to support the Company in its operations and to maintain its business strategy is to raise funds through public offerings
and to rely on officers and directors to perform essential functions with minimal compensation. If the Company does not raise
all of the money it needs from public offerings, it will have to find alternative sources, such as a second public offering, a
private placement of securities, or loans from its officers, directors or others. If the Company requires additional cash and
can’t raise it, it will either have to suspend operations until the cash is raised, or cease business entirely.
The
accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or
the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of
America applicable to exploration stage enterprises. The Company has elected a May 31 fiscal year end.
Use
of Estimates
In
preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities
in the balance sheet and revenues and expenses in the statement of operations. Actual results could differ from those estimates.
Concentration
of Credit Risk
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The
Company places its cash with high quality financial institutions and at times may exceed the FDIC insurance limit.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity
of three months or less to be cash equivalents.
Impairment
or Disposal of Long Lived Assets
In
August 2001, ASC Topic, “Accounting for the Impairment or Disposal of Long-Lived Assets” was issued. It clarifies
the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of
business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying
value of the asset may not be recoverable. When necessary, impaired assets are written down to their estimated fair value based
on the best information available.
Fair
Value of Financial Instruments
Pursuant
to ASC 820,
Fair Value Measurements and Disclosures
, an entity is required to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC
820 prioritizes the inputs into three levels that may be used to measure fair value:
Level
1
Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level
2
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level
3
Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.
The
Company’s financial instruments consist principally of cash, amounts receivable, accounts payable, accrued liabilities,
notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based
on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that
the recorded values of all of our other financial instruments approximate their current fair values because of their nature and
respective maturity dates or durations.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Mineral
Property Acquisition Costs
The
costs of acquiring mineral properties are capitalized and amortized over their estimated useful lives following the commencement
of production or expensed if it is determined that the mineral property has no future economic value or the properties are sold
or abandoned.
Cost
includes cash consideration and the fair market value of shares issued on the acquisition of mineral properties. Properties acquired
under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts at such
time as the payments are made.
The
recoverable amounts for mineral properties is dependent upon the existence of economically recoverable reserves; the acquisition
and maintenance of appropriate permits, licenses and rights; the ability of the Company to obtain financing to complete the exploration
and development of the properties; and upon future profitable production or alternatively upon the Company's ability to recover
its spent costs from the sale of its interests. The amounts recorded as mineral properties reflect actual costs incurred and are
not intended to express present or future values.
The
capitalized amounts may be written down if potential future cash flows, including potential sales proceeds, related to the property
are estimated to be less than the carrying value of the property. Management of the Company reviews the carrying value of each
mineral property interest quarterly, and whenever events or changes in circumstances indicate that the carrying value may not
be recoverable. Reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment
exceeds the estimated future net cash flows.
Exploration
and Development Costs
Exploration
costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced
based on established proven (measured) and probable (indicated) reserves, further exploration costs and development costs incurred
after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility
studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs
will be transferred to the appropriate asset category and amortized over their estimated useful lives. Capitalized costs, net
of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future, will be written
off.
Impairment
of Mineral Rights
The
Company reviews mineral rights for indicators of impairment whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. If the review indicates that the carrying amount of the asset may not be recoverable, the potential
impairment is measured based on a projected discounted cash flow method using a discount rate that is considered to be commensurate
with the risk inherent in the company's current business model. During the years ended May 31, 2013 and 2012, the Company recorded
impairment to mineral rights of $171,369 and $-0-, respectively.
Asset
Retirement Obligations
The
Company has adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations," which establishes
standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other
disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of
such assets. The adoption of this standard has had no effect on the Company's financial position or results of operations. As
of May 31, 2013 any potential costs relating to the ultimate disposition of the Company's mineral property interests have not
yet been determinable.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based
Compensation
The
Company accounts for its stock-based compensation in accordance with ASC 718 “Stock Compensation.” The Company recognizes
in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees
and non-employees.
Income
Taxes
The
Company has adopted the ASC 740 “Income Taxes” as of its inception. The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax
rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation
allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Basic
and Diluted Net Loss Per Share
The
Company computes net income (loss) per share in accordance with ASC 260 “Earnings per Share”. The basic net loss per
common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss
per share gives effect to all dilutive potential common shares outstanding during the period using the “as if converted”
basis. As of May 31, 2013 and 2012, there were -0- and 356,154 common stock warrants outstanding, none of which were considered
“in the money” at May 31, 2013 and 2012.
Recent
Accounting Pronouncements
The
Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact
on the Company’s financial position, or statements.
NOTE
4 – PROPERTY AND EQUIPMENT
The
Company’s property and equipment consist of the following amounts as of May 31, 2013 and 2012:
|
|
May 31,
2013
|
|
May 31,
2012
|
Computer equipment
|
|
$
|
2,428
|
|
|
$
|
2,428
|
|
Accumulated depreciation
|
|
|
(1,887
|
)
|
|
|
(1,078
|
)
|
Total
|
|
$
|
541
|
|
|
$
|
1,350
|
|
Depreciation
expense was $809 and $808, for the years ended May 31, 2013 and 2012, respectively.
NOTE
5 – MINERAL INTERESTS
On February 23, 2010 the Company entered into
an agreement to purchase 38 unpatented BLM claims and two historic silver mine leases located in Mineral County, Nevada. As consideration
for options on the mineral properties, the Company paid $55,000 in cash and issued 150,000 shares at $0.40 for $60,000 for a total
purchase price of $115,000 of the Company’s common stock. During 2010 the Company had a preliminary geology study performed
to assess the potential reserves of these newly acquired claims. Based on this report and managements’ future expectations
of additional capital expenditures and future cash flows of the claims, management determined that the carrying value of the claims
be fully impaired to a net book value of $57,500. In 2011 the Company impaired the remaining claims to $-0 and recorded an impairment
loss of $57,500 for the period ended May 31, 2011. As of the year ended May 31, 2012 and 2013, the Company determined no further
development would be pursed towards the development of these claims.
NOTE
5 – MINERAL INTERESTS (CONTINUED)
Candelaria
Claims
During the year ended May 31, 2012 the Company
incurred various costs of exploration and development on mining claims owned by the Company located in the Candelaria region of
Nevada. The ongoing acquisition costs incurred with respect to these claims were capitalized as mineral interests and totaled $51,389
as of May 31, 2012. The Company capitalized an additional $9,979 in costs during the 2013 fiscal year. During the year ended May
31, 2013 the Company elected to fully-impair these claims as no proven reserves had yet been established. The Company recognized
$61,368 and $-0- of impairment charges recorded in operating expenses during the years ended May 31, 2013 and 2012, respectively.
Canadian Claims
On April 20, 2012, the Company entered into
an agreement to purchase mineral claims in Quebec, Canada. As consideration for the acquisition, the Company agreed to pay $50,000
in cash and issue 100,000 shares of common stock valued at $0.60 per share. The Company has paid the $50,000 in cash, and has issued
the agreed upon shares of common stock valued at $60,000. These acquisition costs totaling $110,000 were capitalized as mineral
interests. The Company has not been able to perform the geological analysis necessary to establish proven mineral reserves within
these claims. Therefore, the Company elected to fully-impair these claims during the year ended May 31, 2013. As a result
the Company recorded impairment expense of $110,000 which is the amount of acquisition costs that had been capitalized for the
claims.
Carson
City Claims
On
April 24, 2012, the Company entered into an agreement to purchase mineral claims in Carson City, Nevada. As consideration for
the purchase, the Company agreed to pay a total $425,000 in cash and to issue a total 2,500,000 shares of common stock. The Company
has also agreed to a work commitment of no less than $1,000,000 in exploration and development costs over the next 48 months.
As of May 31, 2013, the Company has paid $100,000 in cash and has issued 1,000,000 shares of common stock (valued at an aggregate
of $475,000) under the following payment structure:
a)
Cash Consideration:
i)
|
|
USD $50,000 upon the signing of the Agreement (the “Effective
Date” ),
|
ii)
|
|
an additional USD $25,000 on or before 6 months from the Effective
Date ,
|
iii)
|
|
an additional USD $25,000 on or before 12 months from the Effective
Date,
|
iv)
|
|
an additional USD $50,000 on or before 18 months from the Effective
Date,
|
v)
|
|
an additional USD $75,000 on or before 24 Months from the Effective
Date,
|
vi)
|
|
an additional USD $50,000 on or before 30 months from the Effective
Date,
|
vii)
|
|
an additional USD $50,000 on or before 36 months from the Effective
Date,
|
viii)
|
|
an additional USD $50,000 on or before 42 months from the Effective
Date,
|
ix)
|
|
an
additional USD $50,000 on or before 48 months from the Effective Date
(for
a total cash consideration of $425,000).
|
b)
Stock Consideration:
i)
|
|
500,000 shares upon the signing of the Agreement (the “Effective
Date“),
|
ii)
|
|
500,000 shares on or before 6 months from the Effective Date,
|
iii)
|
|
500,000 shares on or before 18 months from the Effective Date,
|
iv)
|
|
500,000 shares on or before 24 months from the Effective Date,
|
v)
|
|
500,000
shares on or before 48 months from the Effective Date, (for a total
stock
consideration of 2,500,000 common shares).
|
NOTE
5 – MINERAL INTERESTS (CONTINUED)
Carson
City Claims (Continued)
c)
Work Commitment:
|
|
The
Company
has
agreed
to
provide
funds
for
the
conduct
of
a
program
of
work
to
be
undertaken
by
the
seller
for
the
benefit
of
the
property
of
not
less
than
USD
$1,000,000
over
4
years
as
follows:
|
i)
|
|
$100,000 on or before 12 months from
the Effective Date,
|
|
ii)
|
|
$300,000 on or before 24 months from
the Effective Date,
|
|
iii)
|
|
$300,000 on or before 36 months from the Effective
Date,
|
iv)
|
|
$300,000 on or before 48 months from
the Effective Date.
|
|
NOTE
6 – STOCKHOLDERS’ EQUITY
The
Company’s authorized capital consists of 1,000,000 preferred shares with 675,000 preferred shares issued and outstanding
at a par value of $0.001 per preferred share. Common stock consists of 499,000,000 authorized shares of $0.001 par
value common stock. As of May 31, 2013 and 2012 there were 68,669,881 and 75,153,214 shares issued and outstanding, respectively.
Common
Stock Activity, Fiscal Year Ended May 31, 2013
The
Company issued 916,667 shares of common stock for cash of $500,000.
The
Company issued 600,000 shares of common stock for the acquisition of mineral claims. The shares were valued at fair market value
of $235,000.
On
October 17, 2012 the Company entered into a Share Issuance Agreement with an unrelated third party entity. Pursuant to the terms
of the agreement, the third party agreed to provide a financing line to the Company of no greater than $2,500,000, from which
the Company can receive advances of no more than $250,000 per advance. In exchange for any advances made, the Company agrees to
issue shares of its common stock. The number of shares to be issued shall be based upon a ten percent discount to the average
of the closing trading prices of the five day period immediately prior to issuance. As of May 31, 2013 no advances have been received
by the Company.
On
October 19, 2012 the Company cancelled 8,000,000 shares of common stock held by a director of the Company who is a related party.
Common
Stock Activity, Fiscal Year Ended May 31, 2012
The
Company issued 500,000 shares of its common stock at $0.60 per share for $300,000 cash.
The
shares issued were valued at the cash price per share received. T
he Company also issued 500,000 shares of its common stock
at $0.60 for acquisition of mineral interests in Carson City, NV.
The shares
issued were valued at the value of the most recent issuance of common stock for cash.
NOTE
7 – STOCK OPTIONS AND WARRANTS
The
Company utilizes the Black-Scholes option-pricing model for calculating the fair value of the options granted as defined by ASC
Topic 718, which is an acceptable valuation approach under ASC 718. This model requires the input of subjective assumptions, including
the expected price volatility of the underlying stock.
Projected
data related to the expected volatility and expected life of stock options is based upon historical and other information, and
notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect
the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value
of the Company's employee stock options.
On
October 25, 2010 the Company issued 356,154 units consisting of one share of common stock and one warrant for cash at $0.63 per
share. The attached warrants are exercisable for two years from issuance and have an exercise price of $0.85 per share for one
year from issuance which increased to $1.05 in the second year. The Company used the Black-Scholes option pricing model to value
the warrants based on the terms of the warrant, a volatility of 350 percent, risk free rate of 0.37 percent, and a stock price
and issuance of $0.63. Based on this calculation, the Company determined that the relative fair value of the warrants is $136,699
and allocated this amount of the additional paid-in capital to the warrants. These warrants expired during the year ended May
31, 2013.
A
summary of all warrants outstanding and exercisable as of May 31, 2013 and changes during the year then ended is set forth below:
|
|
|
|
|
|
|
|
|
Options
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding at the beginning of period
|
|
|
356,154
|
|
|
$
|
0.38
|
|
|
|
0.40
|
|
|
$
|
136,699
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Expired
|
|
|
356,154
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding at the end of Period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercisable at the end of Period
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
A
summary of all employee options outstanding and exercisable under the plan as of May 31, 2012 and changes during the year then
ended is set forth below:
|
|
|
|
|
|
|
|
|
Options
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding at the beginning of period
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
356,154
|
|
|
|
0.38
|
|
|
|
1.41
|
|
|
|
136,699
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding at the end of Period
|
|
|
356,154
|
|
|
|
0.38
|
|
|
|
1.41
|
|
|
|
136,699
|
|
Exercisable at the end of Period
|
|
|
356,154
|
|
|
$
|
0.38
|
|
|
|
1.41
|
|
|
$
|
136,699
|
|
NOTE
8 – INCOME TAXES
The
Company follows ASC 740, under which deferred income taxes reflect the net effect of (a) temporary difference between carrying
amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating
loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because
no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward
has been recognized, as it is not deemed likely to be realized.
The
cumulative tax effect at the expected rate of 34 percent of significant items comprising our net deferred tax amount is as follows:
Income
tax benefit attributable to:
|
|
May
31,
|
|
May
31,
|
2013
|
2012
|
Net
operating loss
|
|
$
|
118,016
|
|
$
|
127,411
|
Change in valuation
allowance
|
|
|
(118,016)
|
|
|
(127,411)
|
Net refundable
amount
|
|
$
|
-
|
|
$
|
-
|
The
cumulative tax effect at the expected rate of 34 percent of significant items comprising our net deferred tax amount is as follows:
Deferred
tax asset attributable to:
|
|
May
31,
|
|
May
31,
|
2012
|
2011
|
Net
operating loss carryover
|
|
$
|
327,075
|
|
$
|
209,058
|
Valuation allowance
|
|
|
(327,075)
|
|
|
(209,058)
|
Net deferred
tax asset
|
|
$
|
-
|
|
$
|
-
|
NOTE
9 – SUBSEQUENT EVENTS
In
accordance with ASC 855 Company management reviewed all material events through filing of these financial statements and there
are no material subsequent events to report.
Item
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
On
April 15, 2010 our Board of Directors approved of the engagement of Sadler Gibb & Associates LLC,
PO
Box 411, Farmington UT, 84025,
as its independent auditor. None of the reports of Sadler Gibb &
Associates LLC on the Company's financial statements for either of the two most recent fiscal years, contain an adverse opinion
or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that the
Registrant's audited financial statements contained in its Form 10-K for the fiscal year ended May 31, 2012, a going concern qualification
in the registrant's audited financial statements.
There were no disagreements related to accounting principles or practices,
financial statement disclosure, internal controls or auditing scope or procedure during the past two fiscal years and interim
periods.
Item
9A(T). Controls and Procedures.
As
of May 31, 2013, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities
Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b)
of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.
The
Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by
us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods
specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring
that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation
of Internal Control Over Financial Reporting
Management
conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of May 31, 2013. In
making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s
internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities,
(iv) information and communication, and (v) monitoring. In management’s assessment of the effectiveness of internal
control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) as required by Exchange Act Rule 13a-15(c), our management
concluded as of the end of the fiscal year covered by this Annual Report on Form 10-K that our internal control over financial
reporting has not been effective.
As
defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit
of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting
Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that results more than
a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.
In connection with the assessment described above, management identified the following control deficiencies that represent material
weaknesses as of May 31, 2013:
i)
|
Lack of segregation of duties. At
this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate
segregation of duties within our internal control system. Management will periodically reevaluate this situation.
|
ii)
|
Lack of an independent audit committee.
Although we have an audit committee it is not comprised solely of independent directors. We may establish an audit committee
comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified
independent directors and to maintain such a committee.
|
iii)
|
Insufficient number of independent
directors. At the present time, our Board of Directors does not consist of a majority of independent directors, a factor that
is counter to corporate governance practices as set forth by the rules of various stock exchanges.
|
Our
management determined that these deficiencies constituted material weaknesses. Due to a lack of financial resources,
we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able
to do so until we acquire sufficient financing to do so. We will implement further controls as circumstances, cash
flow, and working capital permit. Notwithstanding the assessment that our ICFR was not effective and that there were
material weaknesses as identified in this report, we believe that our financial statements fairly present our financial position,
results of operations and cash flows for the years covered thereby in all material respects.
Changes in Internal Control over Financial Reporting
There
was no change in our internal controls over financial reporting that occurred during the period covered by this report, that has
materially affected, or is reasonable likely to materially affect, our internal controls over financial reporting.
The
Company has not taken any steps at this time to address these weaknesses but will formulate a plan before fiscal year ending May
31, 2014.
Changes
in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter ended May
31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item
9B. Other Information.
At
a shareholders meeting held in December 2009, the stockholders approved the election of director, Kenneth B. Liebscher, to serve
until the next Annual General Meeting of Shareholders or until his respective successor is elected or appointed;
At
a shareholders meeting held in January 2010, the stockholders approved the name change of the corporation from Sierra Ventures
Inc to Lucky Boy Silver Corp. and the forward split of our company stock of 15:1. On May 9, 2012 the stockholders approved the
name change of our Company to National Graphite Corp.
Change
of Jurisdiction
On March
22, 2011, the corporation converted from a Wyoming corporation to a Nevada corporation pursuant to Wyoming Statutes Title 17,
ch. 16, Sect.(s) 820, 821 and 1114 and Nevada Revised Statutes 92A.205. This conversion did not alter the number of
authorized shares, or the number of issued and outstanding shares, of the corporation. The voting and other rights of the common
and preferred shares of the company’s capital stock remain substantially similar under Nevada law. The powers of the company’s
officers, directors and shareholders also remain substantially the same. Our authorized capital stock continues to consist of
499,000,000 shares of common stock, par value $0.001 per share and 1,000,000 shares of preferred stock, par value $0.001per share.
Name
Change
On
February 5, 2010 we filed an Amendment to Articles with the Wyoming Secretary of State and changed our name from “Sierra
Ventures Inc.” to “Lucky Boy Silver Corp.” On May 9, 2012 we changed the name of our Company to National Graphite
Corp. Our shares of common stock are quoted on the OTC Bulletin Board under the symbol “NGRC”. Our CUSIP
number is 631268 104. The quotation was first posted at the opening on May 29, 2009 with an opening bid of $0.05 ($0.0033 post-split)
and offer at $0.10 ($0.0067 post-split).
Letter
Agreement
On
February 8, 2010, Ken Liebscher, our President, Chief Executive Officer, signed a letter agreement with Monte Cristo Projects
LLC and Alan Chambers, whereby Mr. Liebscher has agreed to acquire 38 unpatented BLM claims including those known as Silver Summit
and Silver Strike and two historic silver mine leases known as Lucky Boy Silver Mine and the Black Butte Silver Mine (“AG
Properties”), all located in Mineral County, State of Nevada.
In
consideration for the claims, Mr. Liebscher has agreed to pay US$55,000 to Monte Cristo Projects LLC and issue 75,000 shares of
common stock of our company to Monte Cristo Projects LLC and 75,000 shares of common stock of our company to Alan Chambers.
On
February 23, 2010, Mr. Liebscher assigned all of his right, title and interest in and to the letter agreement and the AG Properties
to our company in consideration for $1.00. Our company will carry out the obligations and take the benefit of the letter
agreement.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance.
The
following individuals serve as the directors and executive officers of our company as of the date of this annual report. All directors
of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified.
The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or
removal from office.
|
Position Held with Our
|
|
Date First Elected
|
Name
|
Company
|
Age
|
or
Appointed
|
Kenneth
B. Liebscher
Fortunato
Villamagna
Howard
Bouch
|
Chief
Executive Officer
President/Director
Secretary
Director
Chief
Financial Officer
Director
|
70
54
67
|
December
15, 2009
January
5, 2010
November
1, 2012
|
None of the directors or officers has professional
or technical accreditation in the exploration, development or operations of mining or mining related projects. During the past
year, our president, Mr. Liebscher, spent approximately 50% of his time (approximately 20 hours per week) on the affairs of National
Graphite. For the coming year, it is anticipated that time commitment and requirement will remain approximately the same.
Business
Experience
The
following is a brief account of the education and business experience during at least the past five years of each director and
executive officer of our company, indicating the person’s principal occupation during that period, and the name and principal
business of the organization in which such occupation and employment were carried out.
Kenneth
B. Liebscher, Chief Executive Officer, President, Director
Ken
Liebscher was appointed as our President, Chief Executive Officer and a director of our company on December 14, 2009. Mr. Liebscher
was our Chief Financial Officer and Secretary from December 14, 2009 to January 5, 2010.
Mr.
Liebscher is a seasoned international businessman with over 35 years of securities and executive management experience. Mr. Liebscher
is a graduate of St. George's School, Vancouver, British Columbia and also attended the University of British Columbia.
Mr. Liebscher
held executive level positions while at the world's largest dental products manufacturer, Dentsply International Inc., where he
spent over 22 years in positions culminating as the Manager of their West Coast Division, headquartered in San Francisco, California.
Mr. Liebscher was recruited by a major Europe-based competitor, Ivoclar Liechtenstein in 1990 to lead their entry into the
North American market and, from 1990 to 1992, became Executive Vice President of Sales and Marketing and helped expand this company’s
sales to $300M US.
Mr. Liebscher
became a director of a publicly held company called E.T.C. Industries Ltd. in 1992 and became President of its wholly owned subsidiary,
THE ELECTRIC CAR COMPANY and, in 1994, led a team that developed the MI-6 prototype electric car from the ground up.
Mr.
Liebscher served as a director on Belmont Resources Inc (TSX BEA), a mining exploration company from 1992 until November 2009.
He served as an officer and director of Highbank Resources Inc (TSX HBK) from 1992 through 2002. This experience has resulted
in his involvement in mineral exploration projects in Peru, Eastern Europe (Slovak Republic), and British Columbia, Ontario, Quebec
and New Brunswick (Canada).
Mr. Liebscher
currently also serves on the Board of Directors of Tiger Oil & Energy, Inc. (TGRO.OTC BB).
We believe
Mr. Liebscher is qualified to serve on our board of directors because of his knowledge of our company’s history and current
operations in addition to his education and business experiences as described above.
Dr. Fortunato
Villamagna, Secretary, Director
Dr. Fortunato
Villamagna was appointed as Secretary and a director of our company on January 5, 2010.
Dr. Villamagna
has over 25 years of domestic and international experience in the mining services, specialty and bulk chemicals, capital equipment,
bioenergy, aerospace and energetic materials businesses used in the mining industry. Dr. Villamagna holds a PhD in Chemistry and
MBA in Global Management, and has worked throughout North America, Europe, Australia and West Africa. In addition to joining National
Graphite, Dr. Villamagna also served as CEO of UTEC Inc. Prior to the role Dr. Villamagna served as President of BioEnergy Systems,
a technology company serving the biofuels industry. Prior to that Dr. Villamagna was Vice President – Business Development
for American Pacific Corporation (AMPAC), a publically listed company with divisions and subsidiaries that manufacture active
pharmaceutical ingredients and registered intermediates, energetic products used primarily in space flight, aerospace and defense
systems, clean fire- extinguishing agents and water treatment equipment. Prior to that Dr. Villamagna was the Vice President Technology,
Americas and Europe for Orica Inc., an Australian-owned, publicly-listed global company, and global leader in mining products
and services. Prior to that Dr. Villamagna was the Director of Bulk Delivered Products for Energetic Solutions, Inc., a part of
UK Based ICI Explosive.
Dr. Villamagna
currently also serves on the Board of Directors of Northumberland Resources Inc. (NHUR.OTC BB).
We believe
Dr. Villamagna is qualified to serve on our board of directors because of his knowledge of our company’s history and current
operations in addition to his education and business experiences as described above.
Howard
Bouch,
Chief Financial Officer, Director.
Howard
Bouch, age 67, is a Private Practice Chartered Accountant with over 36 years of Public and Private international experience. Mr.
Bouch originally qualified as a Chartered Accountant (English and Wales Institute) in 1968. Mr. Bouch started his career in the
Mining Sector when he joined Deloitte & Co, Lusaka, Zambia from 1970 - 1972. Mr. Bouch joined Anglo American Corp, Zambia
working as Head Office Chief Accountant for Nchanga Consolidated Copper Mines (world's 2nd largest) from 1972 - 1976. In 1976,
Mr. Bouch returned to the UK and joined Babcock and Wilcox, Engineers, Nottinghamshire, England as Chief Accountant for one of
their subsidiaries. Mr. Bouch was Chief Accountant of a private building firm in Cumbria, England from 1978 - 1984. In 1984
Mr. Bouch established a Private Practice as a Chartered Accountant and continues to provide professional services to Cumbrian
firms to the present. Mr. Bouch is also a Director of Viavid Broadcasting Inc., (symbol VVDB), Tiger Oil and Energy, Inc. (symbol
TGRO), Universal Potash Corp., (symbol UPCO), and Black Hawk Exploration (symbol BHWX).
We believe
Mr. Bouch is qualified to serve on our board of directors because of his knowledge of our company’s history and current
operations in addition to his education and business experiences as described above.
Family
Relationships
There
are no family relationships between any of our directors or executive officers.
Involvement
in Certain Legal Proceedings
During
the past ten years, none of our executive officers or directors have had any of the following events occur:
a
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at
the time of the bankruptcy or within two years prior to that time;
conviction
in a criminal proceeding or being subject to a pending criminal proceeding, excluding traffic violations and other minor offenses;
being
subject to any order, judgment or decree, not substantially reversed, suspended or vacated, of any court of competent jurisdiction,
permanently enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking
business;
being
found by a court of competent jurisdiction, in a civil action, the SEC or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;
Being
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or
regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with
any business entity; or
being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary
authority over its members or persons associated with a member.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Section
16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of our common stock
to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning
their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors
and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that
they file.
Based
solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we
believe that during the fiscal year ended May 31, 2013, all filing requirements applicable to our officers, directors and greater
than 10% percent beneficial owners were complied with, with the exception of the following:
Name
|
Number
of Late Reports
|
Number
of Transactions Not Reported on a Timely Basis
|
Failure
to File
Requested Forms
|
Kenneth
B. Liebscher
|
1
|
3
|
2
|
Fortunato
Villamagna
|
None
|
1
|
1
|
Ian
Jackson
|
None
|
1
|
1
|
Howard
Bouch
|
None
|
None
|
None
|
Code
of Ethics
Our
board of directors on March 22, 2007, adopted a formal written Code of Business Conduct and Ethics and Compliance Program for
all officers, directors and senior employees. Our Code of Business Conduct and Ethics and Compliance Program was filed as an exhibit
to our Form SB-2 filed with the SEC on October 12, 2007.
Audit
Committee and Audit Committee Financial Expert
Our
board of directors has determined that we do not have an “audit committee financial expert” as defined in Item 407(d)(5)(ii)
of Regulation S-K under the Exchange Act.
We
believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements
and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director
who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted
in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to
date. In addition, we currently do not have an audit committee or committee performing similar functions nor do we have a written
audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes
the functions of such committee can be adequately performed by our board of directors.
Nominating
and Compensation Committees
We
do not have nominating or compensation committees, or committees performing similar functions. Our board of directors believe
that it is not necessary to have a compensation committee at this time because the functions of such committee are adequately
performed by our board of directors. Our board of directors has not adopted a charter for the compensation committee.
Our
board of directors also is of the view that it is appropriate for us not to have a nominating committee because our board of directors
has performed and will perform adequately the functions of a nominating committee. Our board of directors has not adopted a charter
for the nomination committee. There has not been any defined policy or procedure requirements for shareholders to submit recommendations
or nomination for directors. Our board of directors does not believe that a defined policy with regard to the consideration of
candidates recommended by shareholders is necessary at this time because we believe that, given the early stages of our development,
a specific nominating policy would be premature and of little assistance until our business operations are at a more advanced
level. There are no specific, minimum qualifications that our board of directors believes must be met by a candidate recommended
by our board of directors. The process of identifying and evaluating nominees for director typically begins with our board of
directors soliciting professional firms with whom we have an existing business relationship, such as law firms, accounting firms
or financial advisory firms, for suitable candidates to serve as directors. It is followed by our board of directors’ review
of the candidates’ resumes and interview of candidates. Based on the information gathered, our board of directors then makes
a decision on whether to recommend the candidates as nominees for director. We do not pay any fee to any third party or parties
to identify or evaluate or assist in identifying or evaluating potential nominee.
Item
11. Executive Compensation.
General
The
particulars of the compensation paid to the following persons:
our
principal executive officer;
each
of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended May
31, 2013, and 2014; and
up
to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was
not serving as our executive officer at the end of the years ended May 31, 2013, and 2012,
whom
we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose
total compensation did not exceed $100,000 for the respective fiscal year.
SUMMARY COMPENSATION TABLE
|
Name
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock Awards
|
|
Option Awards
|
|
Non-Equity Incentive Plan Compensation
|
|
Nonqualified Deferred Compensation Earnings
|
|
All Other Compensation
|
|
Total
|
and Principal Position
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken Liebscher
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Executive Officer, and
|
|
|
2013
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
7,000
|
|
|
$
|
7,000
|
|
Director
|
|
|
2012
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fortunato Villamagna
(2)
|
|
|
2013
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
7,000
|
|
|
$
|
7,000
|
|
Secretary and Director
|
|
|
2012
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard Bouch
(3)
|
|
|
2013
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
|
$
|
7,000
|
|
|
$
|
7,000
|
|
Chief Financial Officer, and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
Mr.
Liebscher
was
appointed
as
our
President,
Chief
Executive
Officer
and
a
director
of
our
company
on
December
14,
2009.
Mr.
Liebscher
was
our
Chief
Financial
Officer
and
Secretary
from
December
14,
2009
to
January
5,
2011.
|
(2)
Dr.
Villamagna was appointed as our Chief Financial Officer, Secretary and a Director on January 5, 2010.
(3)
Howard
Bouch was appointed as our Chief Financial Officer and a Director November 1, 2012.
On
November 5, 2012 the Board of Directors authorized payments of $1,000 per month to Directors as Directors Fees.
Options
Grants During the Last Fiscal Year / Stock Option Plans
We
do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual
grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been
made to any executive officer or director since our inception; accordingly, no stock options have been granted or exercised by
any of the officers or directors since we were founded.
Aggregated
Options Exercises in Last Fiscal Year
No
individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs
have been made to any executive officer or any director since our inception; accordingly, no stock options have been granted or
exercised by any of the officers or directors since we were founded.
Long-Tem
Incentive Plans and Awards
We
do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual
grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any
director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or
agreements have been granted or entered into or exercised by any of the officers or directors or employees or consultants since
we were founded.
Compensation
of Directors
On
January 24, 2010, we issued 150,000 post-split (10,000 pre-split) shares of our common stock to Ken Liebscher and 30,000 post-split
(2,000 pre-split) shares of our common stock to Fortunato Villamgna as director compensation.
On
November 5, 2012 the Board of Directors authorized payments of $1,000 per month to Directors as Directors Fees.
Except
as disclosed above, the members of the Board of Directors are not compensated by National Graphite for acting as such. Directors
are reimbursed for reasonable out-of-pocket expenses incurred. There are no arrangements pursuant to which directors are or will
be compensated in the future for any services provided as a director.
Employment
Contracts, Termination of Employment, Change-in-Control Arrangements
There
are no employment
contracts
or other contracts or arrangements
with our officers or directors other than those disclosed in this report. There are no compensation plans or arrangements, including
payments to be made by National Graphite, with respect to the officers, directors, employees or consultants of National Graphite
that would result from the resignation, retirement or any other termination of such directors, officers, employees or consultants.
There are no arrangements for directors, officers or employees that would result from a change-in-control.
Indebtedness
of Directors, Senior Officers, Executive Officers and Other Management
None
of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has
been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding
currently outstanding.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors,
named executive officers and current executive officers, individually and our directors and current executive officers as a group,
and the present owners of 5% or more of our total outstanding shares. The shareholder listed below has direct ownership of his
shares and possesses sole voting and dispositive power with respect to the shares.
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
(1)
|
Percentage of Class
(2)
|
Common
|
Kenneth B. Liebscher
|
22,650,000
(5)
|
Direct
|
31.30%
|
5466 Canvasback Rd,
|
560,000
(3)
|
Indirect
|
Blaine, WA 98230
|
|
|
Preferred
|
Kenneth B. Liebscher
|
675,000
|
Direct
|
100%
|
5466 Canvasback Rd,
|
Blaine, WA 98230
|
Common
|
Fortunato Villamagna
|
30,000
(6)
|
Direct
|
*
|
10805 Bernini Dr.,
|
Las Vegas, NV 89141
|
Common
|
Ian Jackson
|
Nil
|
Direct
|
*
|
1685 H Street, No. 155
|
Blaine, WA 98230
|
Common
|
Directors and Executive Officers as a Group
|
23,240,000
|
Direct
|
31.34%
|
(2 persons)
(4)
|
Notes:
* Less
than 1%.
|
(1)
|
Beneficial
owner
of
a
security
includes
any
person
who,
directly
or
indirectly,
through
any
contract,
arrangement,
understanding,
relationship,
or
otherwise
has
or
shares:
(i)
voting
power,
which
includes
the
power
to
vote,
or
to
direct
the
voting
of
shares;
and
(ii)
investment
power,
which
includes
the
power
to
dispose
or
direct
the
disposition
of
shares.
Certain
shares
may
be
deemed
to
be
beneficially
owned
by
more
than
one
person
(if,
for
example,
persons
share
the
power
to
vote
or
the
power
to
dispose
of
the
shares).
In
addition,
shares
are
deemed
to
be
beneficially
owned
by
a
person
if
the
person
has
the
right
to
acquire
the
shares
(for
example,
upon
exercise
of
an
option)
within
60
days
of
the
date
as
of
which
the
information
is
provided.
In
computing
the
percentage
ownership
of
any
person,
the
amount
of
shares
outstanding
is
deemed
to
include
the
amount
of
shares
beneficially
owned
by
such
person
(and
only
such
person)
by
reason
of
these
acquisition
rights.
As
a
result,
the
percentage
of
outstanding
shares
of
any
person
as
shown
in
this
table
does
not
necessarily
reflect
the
person’s
actual
ownership
or
voting
power
with
respect
to
the
number
of
shares
of
common
stock
actually
outstanding
on
the
date
of
this
report
as
of
which
there
were
75,669,881
shares
of
our
common
stock
issued
and
outstanding.
|
|
(2)
|
Based
on
75,669,881
number
of
shares
of
common
stock
issued
and
outstanding
as
of
the
date
of
this
report.
|
|
(3)
|
These
shares
are
held
of
record
by
Wannigan
Consulting
Corp.,
a
private
company
of
which
Mr
Liebscher
is
also
President
and
CEO.
|
|
(4)
|
Does
not
include
Ian
Jackson
who
resigned
as
our
President,
Chief
Executive
Officer,
Chief
Financial
Officer
and
Secretary
on
December
14,
2009
and
as
a
director
of
our
company
on
January
5,
2010.
|
|
(5)
|
Includes
10,000
pre-split
(150,000
post-split)
shares
issued
to
Mr.
Liebscher
for
compensation.
|
|
(6)
|
Consists
of
2,000
pre-split
(30,000
post-split)
shares
issued
to
Mr.
Villamagna
for
compensation.
|
Changes
in Control
We
do not anticipate at this time any changes in control of National Graphite. There are no arrangements either in place or contemplated
which may result in a change of control of National Graphite. There are no provisions within our Articles or Bylaws that would
delay or prevent a change of control.
Item
13. Certain Relationships and Related Transactions, and Director Independence.
Transactions
with Related Persons
Except
as disclosed herein, there has been no transaction, since June 1, 2008, or currently proposed transaction, in which we were or
are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets
at year end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect
material interest.
|
|
any director
or executive officer of our company;
|
|
|
any beneficial
owner of shares carrying more than 5% of the voting rights attached
to our outstanding shares of common stock; and
|
|
|
any
member of the immediate family (including spouse, parents, children,
siblings and in-laws) of any of the foregoing persons.
|
Director
Independence
Our
board of directors consists of Kenneth B. Liebscher, Dr. Fortunato Villamagna and Howard Bouch. Our securities are quoted on the
OTC Bulletin Board which does not have any director independence requirements. According to the definition of “independent
director” used in NASDAQ rule 5605(a)(2), Mr. Liebscher,Dr. Villamagna and Howard Bouch are not independent directors as
Mr. Liebscher is our President and Chief Executive Officer and Dr. Villamagna is our Secretary and Howard Bouch is our Chief Finacial
Officer.
Item
14. Principal Accounting Fees and Services.
The
aggregate fees billed for the most recently completed fiscal year ended May 31, 2013, and for fiscal year ended May 31, 2012,
for professional services rendered by the principal accountants for the audit of our annual financial statements and review of
the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountants
in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows: Sadler, Gibb &
Associates LLC.
|
|
Year Ended
|
|
|
May 31,
|
|
|
2013
|
|
2012
|
Audit Fees
|
|
$
|
11,500
|
|
|
$
|
9,500
|
|
Audit Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
11,500
|
|
|
$
|
9,500
|
|
Policy
on Pre-Approval by Audit Committee of Services Performed by Independent Registered Public Accounting Firm
Our
board of directors, which acts as our audit committee, pre-approves all services provided by our independent registered public
accounting firms. All of the above services and fees were reviewed and approved by our board of directors before the respective
services were rendered.
Our
board of directors has considered the nature and amount of fees billed by our independent registered public accounting firms and
believes that the provision of services for activities unrelated to the audit is compatible with maintaining their independence.
PART
IV
Item
15. Exhibits, Financial Statement Schedules.
Exhibit
Number
|
Description
|
(3)
|
Articles of Incorporation
and By-laws
|
3.1
|
Articles of Incorporation
(incorporated by reference to an exhibit to our registration statement on Form SB-2 filed on October 12, 2007).
|
3.2
|
Bylaws (incorporated
by reference to an exhibit to our registration statement on Form SB-2 filed on October 12, 2007).
|
3.3
|
Amendment to Articles
filed with the WY Secretary of State on February 5, 2010 (incorporated by reference to an exhibit to our current report on
Form 8-K/A filed on April 2, 2010).
|
3.4
99.1
|
Certificate
of Name Change filed with the WY Secretary of State on February
5, 2010 (incorporated by reference to an exhibit to our
current report on Form 8-K/A filed on April 2, 2010).
Certificate
of Change of domicile with the Nevada Secretary of State March 22, 2011 (filed herewith).
|
(10)
|
Material Contracts
|
10.1
|
Escrow Agreement
dated November 25, 2008 between Ian Jackson, Lucky Boy Silver Corp. (formerly Sierra Ventures, Inc.) and Harcourt Chan (incorporated
by reference to an exhibit to our registration statement on Form S-1/A filed on January 14, 2009).
|
10.2
|
Form of Private Placement
Subscription Agreement (incorporated by reference to an exhibit to our current report on Form 8-K filed on December 31, 2009).
|
10.3
|
Letter Agreement
dated February 8, 2010 between Ken Liebscher, Monte Cristo Projects LLC and Alan Chambers (incorporated by reference to an
exhibit to our current report on Form 8-K filed on March 1, 2010).
|
10.5
10.6
10.7
|
Assignment
Agreement dated February 23, 2010 with Ken Liebscher (incorporated by
reference to an exhibit to our current report on Form 8-K filed on March
1, 2010).
Purchase
Agreement dated 4/20/12 with Habitants Minerals Ltd. (incorporated by reference to an exhibit to our current report on
Form 8-K filed on April 23, 2012).
Purchase
Agreement dated 4/20/12 with GeoXplor Corp. (incorporated by reference to an exhibit to our current report on Form 8-K
filed on May 2, 2012).
|
|
Code
of Ethics
|
10.8
|
Code of Business
Conduct and Ethics & Compliance Program (incorporated by reference to an exhibit to our registration statement on Form
SB-2 filed on October 12, 2007).
|
(31)
|
Section 302 Certifications
|
31.1
*
|
Section 302 Certification
of Kenneth B. Liebscher
|
31.2
*
|
Section 302 Certification
of Howard Bouch
|
(32)
|
Section 906 Certifications
|
32.1
*
|
Section 906 Certification
of Kenneth B. Liebscher
|
32.2
*
|
Section
906 Certification of Howard Bouch
|
|
|
|
|
*
Filed herewith
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
NATIONAL
GRAPHITE CORP.
/s/
Kenneth B. Liebscher
By: Kenneth
B. Liebscher
President,
Chief Executive Officer and Director
(Principal
Executive Officer)
Date: August
27, 2013
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
/s/
Kenneth B. Liebscher
By: Kenneth
B. Liebscher
President,
Chief Executive Officer and Director
(Principal
Executive Officer)
Date: August
27, 2013
/s/
Fortunato Villamagna
By: Fortunato
Villamagna
Secretary
and Director
Date: August
27, 2013
/s/
Howard Bouch
By: Howard
Bouch
Chief Financial
Officer and Director
(Principal
Financial Officer and Principal Accounting Officer)
Date: August
27, 2013
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