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EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATIONS - GRAPHITE CORPf10q093012_ex32z1.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATIONS - GRAPHITE CORPf10q093012_ex31z2.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATIONS - GRAPHITE CORPf10q093012_ex31z1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

_______________


 FORM 10-Q

_______________

 

  X . QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2012


      . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______


Commission File Number 000-54336


GRAPHITE CORP.

(Name of small business issuer in its charter)

 

Nevada

 

26-0641585

(State of incorporation)

  

(I.R.S. Employer Identification No.)

 

1031 Railroad Street, Suite 102A

Elko, NV 89801

 (Address of principal executive offices)

 

(775) 473-1355

 (Registrant’s telephone number)

 

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.

  X . Yes           . 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 to Rule 405 of Regulation S-T (§232.405 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 required)


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

      .                                      

Accelerated Filer  

      .   


Non-Accelerated Filer

      .                 

Smaller Reporting Company  

  X .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        .  Yes    X .    No


As of November 12, 2012, there were 28,700,000 shares of the registrant’s $0.0001 par value common stock issued and outstanding.









GRAPHITE CORP.*


TABLE OF CONTENTS

 

 

 

  

Page

 

 

PART I.              FINANCIAL INFORMATION

3

  

 

ITEM 1.

FINANCIAL STATEMENTS

3

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

13

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

15

ITEM 4.

CONTROLS AND PROCEDURES

15

  

 

PART II.            OTHER INFORMATION

16

  

 

ITEM 1.

LEGAL PROCEEDINGS

16

ITEM 1A.

RISK FACTORS

16

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

16

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

16

ITEM 4.

MINE SAFETY DISCLOSURES

16

ITEM 5.

OTHER INFORMATION

16

ITEM 6.

EXHIBITS

16


Special Note Regarding Forward-Looking Statements


Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Graphite Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.


*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "GRPH" refers to Graphite Corp.



2




PART I - FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS



Graphite Corp.

(An Exploration Stage Company)

September 30, 2012


Index


Balance Sheets (unaudited)

4


Statements of Operations (unaudited)

5


Statements of Stockholders’ Equity (Deficit) (unaudited)

6


Statements of Cash Flows (unaudited)

7


Notes to the Financial Statements (unaudited)

8





3





Graphite Corp.

 (formerly First Resources Corp.)

(An Exploration Stage Company)

Balance Sheets

(Unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

 

 

 

2012

 

 

2011

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash

 

$

        310,364

 

$

                70

 

 

Prepaid expenses

 

           4,725

 

 

                -   

 

 

 

Total Current Assets

 

        315,089

 

 

                70

 

NON CURRENT ASSETS

 

 

 

 

 

 

 

Website

 

         20,000

 

 

                -   

 

 

Mineral property

 

        353,500

 

 

                -   

 

 

 

 

 

 

        373,500

 

 

                -   

 

 

 

TOTAL ASSETS

$

        688,589

 

$

                70

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

$

         18,591

 

$

          10,880

 

 

Related party payable

 

         14,776

 

 

          56,572

 

 

 

Total Current Liabilities

 

         33,367

 

 

          67,452

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock: $0.0001 par value, 300,000,000 shares

  authorized, 28,700,000 and 12,700,000 issued and outstanding

  as of September 30, 2012 and December 31, 2011, respectively

 

           2,870

 

 

           1,270

 

 

Additional paid-in capital

 

     2,245,516

 

 

     1,297,116

 

 

Deficit accumulated during the exploration stage

 

    (1,593,164)

 

 

   (1,365,768)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity (Deficit)

 

        655,222

 

 

      (67,382)

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS'

 

 

 

 

 

 

 

 

  EQUITY (DEFICIT)

$

        688,589

 

$

                70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 



4









Graphite Corp.

(formerly First Resources Corp.)

(An Exploration Stage Company)

Statements of Operations (Unaudited)

 

 

 

 

For the

 

For the

 

For the

 

For the

 

From Inception

 

 

 

 

Three Months

 

Three Months

 

Nine Months

 

Nine Months

 

on August 3,

 

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

2007 Through

 

 

 

 

September 30

 

September 30

 

September 30

 

September 30

 

September 30

 

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral claims and exploration

 

 

31,172

 

 

575

 

 

32,373

 

 

575

 

 

59,202

 

General and administrative

 

 

112,173

 

 

2,352

 

 

195,023

 

 

11,314

 

 

1,533,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

 

143,345

 

 

2,927

 

 

227,396

 

 

11,889

 

 

1,593,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(143,345)

 

 

(2,927)

 

 

(227,396)

 

 

(11,889)

 

 

(1,593,164)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(143,345)

 

$

(2,927)

 

 

(227,396)

 

 

(11,889)

 

$

(1,593,164)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER SHARE

 

$

(0.01)

 

$

(0.00)

 

 

(0.01)

 

 

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED

 

 

16,956,204

 

 

12,700,000

 

 

19,685,401

 

 

12,700,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 



5







Graphite Corp.

(formerly First Resources Corp.)

(An Exploration Stage Company)

Statements of Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

During the

 

Total

 

 

Common Stock

Paid-in

 

Development

 

Stockholders'

 

 

Shares

 

Amount

Capital

 

Stage

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at inception, August 3, 2007

 

-

 

$

-

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash per share

 

1,500,000

 

 

150

 

14,850

 

 

-

 

 

15,000

Net loss from inception on August 3, 2007 through December 31, 2007

 

-

 

 

-

 

-

 

 

(19,589)

 

 

(19,589)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

 

1,500,000

 

 

150

 

14,850

 

 

(19,589)

 

 

(4,589)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

1,000,000

 

 

100

 

39,900

 

 

-

 

 

40,000

Net loss for the year ended December 31, 2008

 

-

 

 

-

 

-

 

 

(34,552)

 

 

(34,552)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

2,500,000

 

 

250

 

54,750

 

 

(54,141)

 

 

859

Imputed interest

 

 

 

 

 

 

576

 

 

 

 

 

576

Net loss for the year ended December 31, 2009

 

-

 

 

-

 

-

 

 

(19,409)

 

 

(19,409)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2009

 

2,500,000

 

 

250

 

55,326

 

 

(73,550)

 

 

(17,974)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued to President for Cash

 

10,000,000

 

 

1,000

 

24,000

 

 

-

 

 

25,000

Stock based compensation

 

-

 

 

-

 

875,000

 

 

-

 

 

875,000

Stock issued for services

 

200,000

 

 

20

 

339,980

 

 

-

 

 

340,000

Imputed interest

 

-

 

 

-

 

1,450

 

 

-

 

 

1,450

Net loss for the year ended December 31, 2010

 

-

 

 

-

 

-

 

 

(1,246,808)

 

 

(1,246,808)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2010

 

12,700,000

 

 

1,270

 

1,295,756

 

 

(1,320,358)

 

 

(23,332)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

-

 

 

-

 

1,360

 

 

-

 

 

1,360

Net loss for the year ended December 31, 2011

 

-

 

 

-

 

-

 

 

(45,410)

 

 

(45,410)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2011

 

12,700,000

 

 

1,270

 

1,297,116

 

 

(1,365,768)

 

 

(67,382)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

15,000,000

 

 

1,500

 

748,500

 

 

-

 

 

750,000

Shares granted for mineral options

 

1,000,000

 

 

100

 

199,900

 

 

-

 

 

200,000

Net loss for the nine months ended September 30, 2012

 

-

 

 

-

 

-

 

 

(227,396)

 

 

(227,396)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2012

 

28,700,000

 

$

2,870

$

2,245,516

 

$

(1,593,164)

 

$

655,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




6







Graphite Corp.

(formerly First Resources Corp.)

(An Exploration Stage Company)

Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

 

For the

 

From Inception

 

 

 

 

 

Nine Months

 

 

Nine Months

 

on August 3,

 

 

 

 

 

Ended

 

 

Ended

 

2007 Through

 

 

 

 

 

September 30

 

 

September 30

 

September 30

 

 

 

 

 

2012

 

 

2011

 

2012

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(227,396)

 

 

$

(11,889)

 

$

(1,593,164)

 

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

-

 

 

 

-

 

 

1,215,000

 

 

Imputed interest on shareholder loan

 

-

 

 

 

1,020

 

 

3,386

 

 

Operating expenses paid by related party loans

 

9,204

 

 

 

-

 

 

9,204

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in prepaid expenses

 

(4,725)

 

 

 

-

 

 

(4,725)

 

 

Increase (decrease) in accounts payable

 

7,711

 

 

 

6,633

 

 

18,591

 

 

 

Net Cash Used in Operating Activities

 

(215,206)

 

 

 

(4,236)

 

 

(351,708)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Cash paid for website

 

(20,000)

 

 

 

-

 

 

(20,000)

 

 

Cash paid for mineral property

 

(153,500)

 

 

 

-

 

 

(153,500)

 

 

 

 

 

 

(173,500)

 

 

 

-

 

 

(173,500)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Proceeds from related party loans

 

3,500

 

 

 

24,224

 

 

60,072

 

 

Repayments on related party loans

 

(54,500)

 

 

 

-

 

 

(54,500)

 

 

Common stock issued for cash

 

750,000

 

 

 

-

 

 

830,000

 

 

 

Net Cash Provided by Financing Activities

 

699,000

 

 

 

24,224

 

 

835,572

 

 

NET DECREASE IN CASH

 

310,294

 

 

 

19,988

 

 

310,364

 

 

CASH AT BEGINNING OF PERIOD

 

70

 

 

 

216

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AT END OF PERIOD

$

310,364

 

 

$

20,204

 

$

310,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF

 CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

 

 

 

 

 

Interest

$

-

 

 

$

-

 

$

-

 

 

Income Taxes

$

-

 

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCASH FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Operating expenses paid by related party loans

$

9,204

 

 

$

-

 

$

9,204

 

 

Stock issued for mineral option

$

200,000

 

 

$

-

 

$

200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.



7






GRAPHITE CORP.

(Formerly First Resources Corp.)

(An Exploration Stage Company)

Notes to Financial Statements

September 30, 2012

(unaudited)


NOTE 1 – NATURE OF OPERATIONS


Graphite Corp. (formerly First Resources Corp.) (the “Company”) was organized on August 3, 2007, under the laws of the State of Nevada to engage in any lawful activity. The Company intends to engage in the exploration of certain mineral interests in the state of Arizona. The Company is in the exploration stage.


On August 19, 2010, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State. As a result of the Amendment the Registrant, among other things, has: (i) changed its name to “First Resources Corp.;” and, (ii) increased the aggregate number of authorized shares to 310,000,000 shares, consisting of 300,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share.


On June 14, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from First Resources Corp. to Graphite Corp.


The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year end.

 

NOTE 2 - GOING CONCERN


The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.


In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.


The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.


Cash and Cash Equivalents


The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of September 30, 2012 and December 31, 2011, the Company had no cash equivalents.



8







Mineral Properties


Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred.  Mineral property acquisition costs are capitalized including licenses and lease payments.  Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.  Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Impairment of $134,213 was recorded in 2011 relating to the abandonment of some mineral claims.


Basic and Diluted Net Loss Per Share


The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.


Income Taxes


Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.


Comprehensive Loss


ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2012 and December 31, 2011, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.


Financial Instruments


ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It 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. It 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.



9







The following table presents the Company’s assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of September 30,2 012 and December 31, 2011:


 

Level 1

Level 2

Level 3

Assets and Liabilities – 2012

-

-

-

Assets and Liabilities – 2011

-

-

-


The Company’s financial instruments consist principally of cash, accounts payable, and amounts due to related parties. Pursuant to ASC 820 and ASC 825, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe 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.


Recently Adopted Accounting Pronouncements


In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.


In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.


In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.


In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income” in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.


In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.


NOTE 4 – RELATED PARTY PAYABLES


As of September 30, 2012 and December 31, 2011, the Company has received cash advances from a shareholder or related party of $14,776 and $56,572, respectively. The advances are non-interest bearing, unsecured and due upon demand. Imputed interest in the amount of $0 and $1,450 is included in additional paid in capital for the periods ended September 30, 2012 and December 31, 2011, respectively.



10







NOTE 5 – MINERAL PROPERTY


On June 1, 2012, the Company entered into an option agreement whereby it could earn a 100% interest (less a net smelter royalty of 2%) in the Carr and Cahaba Forest Management Leases.


In order to exercise its option, the Company must:


Due Date

Consideration

 

 

 

 

 

 

June 1, 2012

$150,000

 

(paid)

June 1, 2012

1,000,000

shares

(issued)

June 1, 2013

$50,000

 

 

June 1, 2013

500,000

shares

 

June 1, 2014

$50,000

 

 

June 1, 2014

500,000

shares

 

June 1, 2015

$50,000

 

 

June 1, 2015

1,000,000

shares

 


NOTE 6 – WEBSITE


The cost of developing the Company website has been capitalized and is being amortized over a 2 year period following its launch on September 20, 2012. To date, no amortization has been taken on the website as it is immaterial.


 

2012


Website development costs


$20,000

Less: accumulated amortization

-


Website, net


$20,000


NOTE 7 – STOCKHOLDERS’ EQUITY


During the year ended December 31, 2007, the Company issued 1,500,000 shares of its par value $0.0001 common stock for cash at $0.01 per share.  


During the year ended December 31, 2008, the Company issued 1,000,000 shares of its par value $0.0001 common stock for cash at $0.04 per share.  


During the period ended June 30, 2010, the Company issued to the President of the Company, 10,000,000 shares of its par value $0.0001 common stock for cash at $0.0025 per share. Stock based compensation in the amount of $875,000 was recorded because the Company issued the stock to a related party.  The stock based compensation on the issuance to a related party was based on the quoted trading value of the shares on the date of issuance being $0.09 per share.


During the period ended September 30, 2010, the Company issued 200,000 shares of its par value $0.0001 common stock for services valued at $340,000 based on the quoted trading value of the shares on the date of issuance being $1.70 per share.


During the period ended June 30, 2012, the Company issued 10,000,000 shares of its par value $0.0001 common stock for cash at $0.05 per share.  


On September 6, 2012, the Company sold 5,000,000 shares of its par value $0.0001 common stock and an equal number of warrants, exercisable at $0.10 per share over a two year period pursuant to a unit offering in exchange for total proceeds of $250,000.


A total of 28,700,000 shares of common stock were issued and outstanding at September 30, 2012.



11







NOTE 8 - WARRANTS


On September 6, 2012, the Company issued warrants to purchase 5,000,000 shares of its par value $0.0001 common stock at $0.10 per share, exercisable for 24 months in exchange for cash proceeds of $250,000 in conjunction with the sale of 5,000,000 shares of its par value $0.0001 common stock.


The relative fair value of the warrants attached to the common stock issued was estimated at the date of grant using the Black-sholes pricing model. The relative fair value of warrants attached to common stock issued is $214,445 and the relative fair value of the common stock is $35,555 as of September 30, 2012.  The Black-Sholes pricing model assumptions used are as follows: expected dividend yield, 0%; risk-free interest rate, 0.23%; expected volatility, 151%, and expected warrant life, 2 years.


The following table summarizes the continuity of the Company’s share purchase warrants:


 

Number of Warrants

Weighted average exercise price

Weighted average remaining contractual life (in years)

Balance at December 31, 2011

-

 

 

Issued

5,000,000

$0.35

2

Exercised

-

 

 

Balance at September 30, 2012

5,000,000

$0.35

2


NOTE 9 - INCOME TAXES


The Company has a net operating loss carry forward of $202,980 available to offset taxable income in future years which commence expiring in fiscal 2027.


The Company is subject to United States federal and state income taxes at an approximate rate of 34%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:


 

 

Nine Months ended

September 30, 2012

$

 

Nine Months ended

September 30, 2011

$

 

 

 

 

 

Income tax recovery at statutory rate

 

77,315

 

4,042

 

 

 

 

 

Valuation allowance change

 

(77,315)

 

(4,042)

 

 

 

 

 

Provision for income taxes

 

 


The significant components of deferred income tax assets and liabilities at September 30, 2012 and December 31, 2011 are as follows:


 

 

September 30,

2012

$

 

December 31,

2011

$

 

 

 

 

 

Net operating loss carried forward

 

128,576

 

51,261

 

 

 

 

 

Valuation allowance

 

(128,576)

 

(51,261)

 

 

 

 

 

Net deferred income tax asset

 

 


NOTE 10 – SUBSEQUENT EVENTS


In accordance with ASC 855, we have evaluated subsequent events through the issuance date, and did not have any material recognizable subsequent events.



12






ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS


This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.


RESULTS OF OPERATIONS


Working Capital


  

September 30, 2012

December 31, 2011

Current Assets

$315,089

$       70

Current Liabilities

$  33,367

$67,452

Working Capital (Deficit)

$281,722

$67,382


Cash Flows


  

September 30, 2012

September 30, 2011

Cash Flows from (used in) Operating Activities

$(215,206)

$(4,236)

Cash Flows from (used in) Investing Activities

$(173,500)

$0

Cash Flows from (used in) Financing Activities

$699,000

$24,224

Net Increase (decrease) in Cash During Period

$310,294

$19,988


Operating Revenues


Operating revenues for the period ended September 30, 2012 was $Nil.


Operating revenues for the period ended September 30, 2011 was $Nil.


Operating Expenses and Net Loss


Operating expenses for the three and nine month period ended September 30, 2012 was $143,345 and $227,396, respectively, and is comprised of expenses related to mineral claims and general and administrative expenses.


Operating expenses for the three and nine month period ended September 30, 2011 was $2,927 and $11,889, respectively, and is comprised of expenses related to mineral claims and general and administrative expenses.


Net loss for the three and nine month period ended September 30, 2012 was $143,345 and $227,396, respectively, and is comprised of expenses related to mineral claims and general and administrative expenses.  


Net loss for the three and nine month period ended September 30, 2011 was $2,927 and $11,889, respectively, and is comprised of expenses related to mineral claims and general and administrative expenses.


Liquidity and Capital Resources


As at September 30, 2012, the Company’s cash and total asset balance was $688,589 compared to $70 as at December 31, 2011. The increase in total assets is attributed to cash.  


As at September 30, 2012, the Company had total liabilities of $33,367 compared with total liabilities of $67,452 as at December 31, 2011. The increase in total liabilities was attributed to increased funding received by a related party of the Company.




13






As at September 30, 2012, the Company had working capital of $281,722 compared with a working capital deficit of $67,382 as at December 31, 2011.


Cashflow from Operating Activities


During the period ended September 30, 2012, the Company used $215,206 of cash for operating activities compared to the use of $4,236 of cash for operating activities during the period ended September 30, 2011. The change in net cash used in operating activities is attributed to increase in activity within the Company resulting in increased losses. 


Cashflow from Investing Activities


During the period ended September 30, 2012, the Company used $173,500 of cash from investing activities compared to $nil for the period ended September 30, 2011.


Cashflow from Financing Activities


During the period ended September 30, 2012, the Company received $699,000 of cash from financing activities compared to $24,224 for the period ended September 30, 2011.  


Quarterly Developments


On July 9, 2012, Ms. Gloria Ramirez-Martinez (“Ms. Ramirez-Martinez”) resigned from her positions as President, Chief Financial Officer, Chief Financial Officer and Treasurer of the Company and appointed Mr. Brian Goss (“Mr. Goss”), to serve as the Company’s President, Chief Financial Officer, Chief Financial Officer, Treasurer and Director.  Mr. Goss has accepted such appointments.  As of July 9, 2012, Ms. Ramirez-Martinez shall continue in her capacity as a Director of the Company.


On July 9, 2012, Mr. Steven Radvak (“Mr. Radvak”) resigned as the Company’s Secretary and Ms. Ramirez Martinez was appointed to serve as the Company’s Secretary.  Ms. Ramirez-Martinez has accepted such appointment.


On September 21, 2012, Ms. Ramirez-Martinez resigned from her positions as Secretary and Director of the Company and appointed Ms. Jeanne Goss (“Ms. Goss”), to serve as Secretary of the Company. Ms. Goss accepted such appointment.  Ms. Goss is married to Mr. Brian Goss, the Company’s current President, Chief Executive Officer, and Director.  


Subsequent Developments


On October 31, 2012, the Board of Directors of the Company appointed Mr. Jason Babcock (“Mr. Babcock”) as a Director of the Company to serve until the next annual meeting of the shareholders or until his successor is duly elected and appointed. On October 31, 2012, Mr. Babcock accepted such appointment.


Going Concern


We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.


Off-Balance Sheet Arrangements


We have no significant 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 are material to stockholders.


Future Financings


We will continue to rely on equity sales of our common shares in order to continue 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 the equity securities or arrange for debt or other financing to fund our operations and other activities.



14







Critical Accounting Policies


Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.


Recently Issued Accounting Pronouncements


The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial statements.    


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4. 

CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2012, due to the material weaknesses resulting from no director on the Board of Directors qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on March 30, 2012, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.



15







PART II - OTHER INFORMATION


ITEM 1. 

LEGAL PROCEEDINGS


We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.


ITEM 1A.

RISK FACTORS


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


1.

Quarterly Issuances:


During the quarter, we did not issue any unregistered securities other than as previously disclosed.


2.            Subsequent Issuances:


Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4.  

MINE SAFETY DISCLOSURES


Not Applicable.


ITEM 5.

OTHER INFORMATION


None.


ITEM 6.

EXHIBITS


Exhibit Number

Description of Exhibit

Filing

3.01

Articles of Incorporation

Filed with the SEC on January 17, 2008 as part of our Registration Statement on Form SB-2.

3.01(a)

Amended and Restated Articles of Incorporation

Filed with the SEC on September 3, 2010 as part of our Current Report on Form 8-K.

3.01(b)

Certificate of Amendment to Articles of Incorporation

Filed with the SEC on June 28, 2012 as part of our Current Report on Form 8-K.

3.02

Bylaws

Filed with the SEC on January 17, 2008 as part of our Registration Statement on Form SB-2.

10.01

Stock Purchase Agreement between Gloria Ramirez-Martinez and Daniel MacLean dated December 3, 2009.

Filed with the SEC on March 15, 2011 as part of our Amended Registration Statement on Form S-1/A.

10.02

Consulting Agreement between the Company and Steve Radvak dated September 10, 2010.

Filed with the SEC on September 13, 2010 as part of our Current Report on Form 8-K.

10.03

Property Option Agreement between the Company and MinQuest, Inc. dated October 22, 2011

Filed with the SEC on October 27, 2011 as part of our Current Report on Form 8-K.

10.04

Material Option Agreement between Company and Stanley Smith dated June 1, 2012.

Filed with the SEC on June 7, 2012 as part of our Current Report on Form 8-K.

10.05

Minerals Lease Agreement between the Company and Mr. Jonathan B. Smith, Mr. James I. Smith and Ms. Celinda S. Hicks dated July 11, 2012

Filed with the SEC on August 1, 2012 as part of our Current Report on Form 8-K.



16







10.06

Settlement Agreement between the Company and Ms. Gloria Ramirez-Martinez dated July 26, 2012

Filed with the SEC on August 1, 2012 as part of our Current Report on Form 8-K.

16.01

Letter from Moore & Associates, Chartered dated August 11, 2009

Filed with the SEC on August 12, 2009 as part of our Current Report on Form 8-K.

16.02

Letter from Seale & Beers, CPAs dated September 15, 2009

Filed with the SEC on September 16, 2009 as part of our Current Report on Form 8-K.

31.01

Certification of Principal Executive Officer Pursuant to Rule 13a-14

Filed herewith.

31.02

Certification of Principal Financial Officer Pursuant to Rule 13a-14

Filed herewith.

32.01

CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

Filed herewith.

101.INS*

XBRL Instance Document

Filed herewith.

101.SCH*

XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document

Filed herewith.

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.




SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

 

 

  

  

GRAPHITE CORP.


Dated:     November 15, 2012

 


/s/ Brian Goss

  

  

BRIAN GOSS

  

  

Its: President, Chief Executive Officer,

Chief Financial Officer, Chief Accounting Officer and Treasurer


In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

  


Dated:     November 15, 2012


/s/ Brian Goss



By:  Brian Goss

Its:  Director



Dated:     November 15, 2012


/s/ Jason Babcock

  

By:  Jason Babcock

Its:  Director




17