XOTC:NGRC Quarterly Report 10-Q Filing - 8/31/2012

Effective Date 8/31/2012

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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 (the “Exchange Act”)

For the quarterly period ended August 31, 2012

 

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from _______ to _______

 

Commission file number: 333-146675

 

NATIONAL GRAPHITE CORP.

(Exact name of small business issuer in its charter)

 

Nevada   27-3787574
(State  or  other  jurisdiction  of   (I.R.S.  Employer
incorporation  or  organization)   Identification  No.)

 

7230 Indian Creek Ln., Ste 201,
Las Vegas, NV
  89149
(Address  of  principal  executive  offices)   (Zip  Code)

 

Issuer’s telephone number: (702) 839-4029

 

(Former name, former address and former fiscal year, if changed since last report)

 

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 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 [   ]

 

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 [    ] (Do  not  check  if  a  smaller  reporting  company) 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 [   ] No [ X ]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

State the number of shares outstanding of each of the issuer’s classes of common and preferred equity, as of the latest practicable date: 75,669,881 shares of common stock and 675,000 preferred shares each carrying a 100:1 voting and conversion right as of August 31, 2012.

 

 

 

 
 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION    
     
ITEM 1. FINANCIAL STATEMENTS   3
     
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.   4
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   11
     
ITEM 4. CONTROLS AND PROCEDURES   11
     
PART II – OTHER INFORMATION    
     
ITEM 1. LEGAL PROCEEDINGS   13
     
ITEM 1A. RISK FACTORS   13
     
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   18
     
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   20
     
ITEM 4. [REMOVED AND RESERVED]   20
     
ITEM 5. OTHER INFORMATION   20
     
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K   21
     
SIGNATURES   22

 

- 2 -
 

   

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

    Page
     
Condensed Balance Sheets  – August 31, 2012 (Unaudited) and May 31, 2012   F-1
     
Condensed Statements of  Operations for the three months ended August 31, 2012 and 2011, and for the  period October 19, 2006 (Inception) to August 31, 2012 (Unaudited)   F-2
     
Condensed Statements of Stockholder’s Equity for the period October 19, 2006 (Inception) to August 31, 2012  (Unaudited)   F-3
     
Condensed Statements of Cash Flows for the three months ended August 31, 2012 and 2011, and for the period October 19, 2006 (Inception) to August 31, 2012 (Unaudited)   F-5
     
Notes to Condensed Financial Statements   F-7 - F-9

_______________________________________

 

- 3 -
 

   

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Balance Sheets

 

    August 31, 2012     May 31, 2012  
    (unaudited)        
ASSETS            
CURRENT ASSETS                
Cash   $ 194,624     $ 108,209  
Prepaid expenses     3,500       3,500  
                 
Total Current Assets     198,124       111,709  
                 
PROPERTY AND EQUIPMENT, net     1,147       1,350  
                 
OTHER ASSETS                
                 
Deposits     1,400       26,400  
Mineral interests     521,368       401,389  
                 
Total Other Assets     522,768       427,789  
                 
TOTAL ASSETS   $ 722,039     $ 540,848  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
CURRENT LIABILITIES                
                 
Accounts payable and accrued expenses   $ 1,594     $ 1,595  
                 
Total Current Liabilities     1,594       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; 75,669,881 and 75,153,214 shares issued and outstanding, respectively     75,670       75,153  
Additional paid-in capital     2,184,805       1,875,322  
Other comprehensive income     59       59  
Deficit accumulated during the exploration stage     (1,540,764 )     (1,411,956 )
                 
Total Stockholders’ Equity     720,445       539,253  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 722,039     $ 540,848  

 

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

 

F-1
 

 

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Statements of Operations

 (unaudited)

 

    For the Three Months Ended     From Inception on October 19, 2006  
    August 31,     Through  
    2012     2011     Aug 31, 2012  
                   
REVENUES   $ -     $ -     $ -  
                         
OPERATING EXPENSES                        
                         
Exploration of resource properties     56,998       25,147       148,143  
Impairment of mineral interests     -               115,000  
Depreciation expense     202       202       1,280  
Professional fees     29,238       85,497       1,025,323  
General and administrative expenses     42,370       30,107       251,018  
                         
Total Operating Expenses     128,808       140,953       1,540,764  
                         
LOSS FROM OPERATIONS     (128,808 )     (140,953 )     (1,540,764 )
                         
PROVISION FOR INCOME TAXES     -       -       -  
                         
NET LOSS   $ (128,808 )   $ (140,953 )   $ (1,540,764 )
                         
BASIC AND DILUTED LOSS PER SHARE   $ (0.00 )   $ (0.00 )        
                         
                         
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING     75,402,671       74,153,214          

  

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

 

F-2
 

  

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Statement 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  

 

 

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

  

F-3
 

  

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Statement of Stockholders’ Equity

  

                                              Deficit        
                                              Accumulated        
                            Additional     Stock     Other     During the     Total  
    Preferred Stock     Common Stock     Paid-in     Subscription     Comprehensive     Exploration     Stockholders'  
    Shares     Amount     Shares     Amount     Capital     Payable     Income     Stage     Equity  
                                                       
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 (unaudited)     -       -       416,667       417       249,583       -       -       -       250,000  
                                                                         
Common stock issued for acquisition of mineral claims (unaudited)     -       -       100,000       100       59,900       -       -       -       60,000  
                                                                         
Net loss for the Three Months ended August 31, 2012  (unaudited)     -       -       -       -       -       -       -       (128,808 )     (128,808 )
                                                                         
Balance, August 31, 2012 (unaudited)     675,000     $ 675       75,669,881     $ 75,670     $ 2,184,805     $ -     $ 59     $ (1,540,764 )   $ 720,445  

  

 

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

 

F-4
 

 

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Statements of Cash Flows

(unaudited)

 

                From  Inception on  
    For the Three Months Ended     October 19, 2006  
    August 31,     Through  
    2012     2011     August 31, 2012  
                   
CASH FLOWS FROM OPERATING ACTIVITIES                        
Net loss   $ (128,808 )   $ (140,953 )   $ (1,540,764 )
Adjustments to reconcile net loss to  net cash used in operating activities:                        
Depreciation expense     202       202       1,281  
Contributed services by an officer     -       -       150  
Other comprehensive loss     -       -       59  
Amortization of prepaid expense             67,874       561,000  
Common stock issued for services     -       -       120,000  
Impairment of mineral interests     -               112,101  
Changes to operating assets and liabilities:                        
Restricted cash     -       12,786       -  
Prepaid expenses     -       (17,535 )     (3,500 )
Deposits     25,000       -       (1,400 )
Accounts payable     (1)     (3,173)     1,594  
                         
Net Cash Used in Operating Activities     (103,606 )     (80,799 )     (749,479 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES                        
Purchase of computer equipment     -               (2,428 )
Purchase of mineral interests     (59,978 )     (8,296 )     (213,469 )
                         
Net Cash Used in Investing Activities     (59,979 )     (8,296 )     (215,897 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES                        
Capital contributions     -       -       10,000  
Common stock issued for cash     250,000       -       1,150,000  
                         
Net Cash Provided by Financing Activities     250,000       -       1,160,000  
                         
NET INCREASE (DECREASE) IN CASH     86,415       (89,095 )     194,624  
CASH AT BEGINNING OF PERIOD     108,209       146,589       -  
                         
CASH AT END OF PERIOD   $ 194,624     $ 57,494     $ 194,624  

 

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

 

F-5
 

 

NATIONAL GRAPHITE CORP.

(FKA LUCKY BOY SILVER CORPORATION)

(An Exploration Stage Company)

Statements of Cash Flows

(unaudited)

 

    For the Three Months Ended     From Inception on October 19, 2006  
    August 31,     Through  
    2012     2011     August 31, 2012  
                   
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   $ 60,000     $ -     $ 420,000  

 

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

 

F-6
 

  

NATIONAL GRAPHITE CORPORATION

(FKA Lucky Boy Silver Corporation)

(An Exploration Stage Company)

Notes to Condensed Financial Statements

August 31, 2012 and May 31, 2012

 

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at August 31, 2012, and for all periods presented herein, have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s May 31, 2012 audited financial statements. The results of operations for the periods ended August 31, 2012 and 2011 are not necessarily indicative of the operating results for the full years.

 

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 and no revenues are anticipated until the Company begins extracting and selling gold, and there is no assurance that a commercially viable deposit exists 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. 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.

 

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 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 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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.

 

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.

 

F-7
 

  

NATIONAL GRAPHITE CORPORATION

(FKA Lucky Boy Silver Corporation)

(An Exploration Stage Company)

Notes to Condensed Financial Statements

August 31, 2012 and May 31, 2012

  

NOTE 4 – MINERAL INTERESTS

 

As of May 31, 2012 the Company had capitalized $401,389 of costs related to the acquisition of mineral interests on mineral properties located throughout the United States. During the three months ended August 31, 2012, the Company capitalized $34,979 of additional cash expenditures and $60,000 in stock issuances related to the acquisition of mineral interests. The Company also reclassified $25,000 of cash payments previously recorded as deposits to mineral interest as the terms of the deposit were fulfilled during the three month period, leaving a balance of capitalized mineral interests of $521,368 as of August 31, 2012.

 

NOTE 5 – STOCKHOLDERS’ EQUITY

 

Three Months Ended August, 2012

 

On April 20, 2012, the Company entered into an agreement to purchase mineral claims in Quebec, Canada. The purchase was not complete due to the fact that the Company was waiting for registration approval from the Quebec government. The company completed the purchase during the three month period ended August 31, 2012. As consideration for the acquisition, the Company agreed to pay $50,000 in cash and issue 100,000 shares of common stock. The Company had paid $25,000 of the $50,000 in cash, which was held in a deposit until the purchase was closed. On July 18, 2012 the company made its second $25,000 payment to complete the agreed upon $50,000 payment. On July 23, 2012 the Company issued the agreed upon 100,000 shares of common stock to complete the purchase of mineral claims in Quebec, Canada. The shares were valued at $0.60 per share, which was equal to the most recent price per share of common stock issued for cash.

 

On July 18, 2012 the Company issued 416,667 shares of common stock for $250,000 cash.

 

Fiscal Year Ended May 31, 2011

 

On January 3, 2011 the Company exchanged 67,500,000 common shares for 675,000 preferred shares with 1 to 100 voting and conversion ratio preferred to common shares.

 

On December 29, 2010, the Company issued 360,000 common shares to a consultant for services to be rendered from the date of issuance to March 31, 2011. On the same date the Company issued 300,000 common shares to a consultant for services to be performed from the date of issuance for a twelve month period with automatic renewal for another twelve month period unless notice of termination is received by either party 30 days in advance. The consulting services have been recorded as a prepaid expense and are being amortized over the life of the contracts.

 

On December 15, 2010, the Company issued 47,060 common shares for $40,000 cash.

 

NOTE 6 – 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.

 

F-8
 

  

NATIONAL GRAPHITE CORPORATION

(FKA Lucky Boy Silver Corporation)

(An Exploration Stage Company)

Notes to Condensed Financial Statements

August 31, 2012 and May 31, 2012

  

 NOTE 6 – STOCK OPTIONS AND WARRANTS (CONTINUED)

 

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.

 

A summary of all warrants outstanding and exercisable as of August 31, 2012 and changes during the year then ended is set forth below:

 

   Shares   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Life (Years)
   Aggregate
Intrinsic
Value
 
Outstanding at May 31, 2012   356,154   $0.38    0.40   $136,699 
Granted   -    -    -    - 
Expired   -    -    -    - 
Exercised   -    -    -    - 
Forfeited   -    -    -    - 
Outstanding at August 31, 2012   356,154    0.38    0.15    136,699 
Exercisable at August 31, 2012   356,154   $0.38    0.15   $136,699 

   

NOTE 7 – SUBSEQUENT EVENTS

 

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. In connection with the Agreement, an officer of the Company agreed to cancel 8,000,000 shares of common stock held by the officer.

 

In accordance with ASC 855 Company management reviewed all material events through filing of these financial statements and there are no other material subsequent events to report. 

 

F-9
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This quarterly report contains forward-looking statements. These forward-looking statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. 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”, “will”, “should”, “plans”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in Item 1A. Risk Factors on page 15 that may cause our 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.

 

General Information

 

Our financial statements are stated in United States Dollars (USD or US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common shares” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our”, “National Graphite Corp and or Lucky Boy Silver Corp.” and “Lucky Boy” or National Graphite mean National Graphite Corp., unless otherwise indicated.

 

Our company is an exploration stage company. There is no assurance that commercially viable mineral deposits exist on the mineral property that we have under option. Further exploration will be required before a final evaluation as to the economic and legal feasibility of the claim is determined.

 

The following analysis of the results of operations and financial condition of the corporation for the period ending August31, 2012, should be read in conjunction with the corporation’s financial statements, including the notes thereto contained elsewhere in this form 10-Q and in our annual report filed on form 10-K.

 

Overview

 

We are a start-up, exploration stage, company engaged in the search for gold, silver and related minerals. Currently our business plan calls for development of our 100% interest in and to the Chedic Graphite Property consisting of 20 U.C. Mineral Lode Claims in Township, 15 North, Range 19 East, Sections 25 & 26 Carson City, NV mining claims compromising approximately 400 acres. On Sept 17th 2012, the Company expanded its interests with the acquisition of 15 additional Lode Claims thus expanding the Chedic holdings to 700 acres. The Company will continue toproceed with exploration on the Company’s 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 as more fully described under the section entitled “The Business”.Our mineral properties are without known reserves and our proposed program is exploratory 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.

 

- 4 -
 

  

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. 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.” 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 andNevada 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. Our statutory registered agent’s office is located at 701 N. Green Valley Pkwy, Ste 200-238, Henderson, NV 89074. Our telephone number is (702) 839-4029.

 

On March 22, 2007, as amended on May 15, 2009, we optioned a 25 percent interest in a gold exploration property referred to as the Zhangjiafan Mining Property located in Jiangxi Province, People’s Republic of China, by entering into an Option to Purchase and Royalty Agreement with JiujiangGaoFeng Mining Industry Limited Company of Jiangxi City, Jiangxi Province, China (“Jiujiang”), the beneficial owner of the property, an arms-length Chinese corporation, to acquire an interest in the property by making certain expenditures and carrying out exploration work. At the completion of the field work on this property, management determined that further expenditures or issuance of stock for this property was not in the best interest of the Company and the project was abandoned.

 

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.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 and the lease for the Lucky Boy mineral property was not renewed.

 

In the same geological report compiled by Hunsaker dated May 2010, further exploration on the Black Butte project was justified, and defined by Hunsaker in their follow up work Summary Report and Update with Recommendations for the Candelaria Project, Esmeralda County, Nevada - December 2011 delivered to the Lucky Boy December 20th, 2011

 

The Candelaria Project is comprised of 68 unpatented lode mining claims in Esmeralda and Mineral County Formerly reported on as the Silver Strike project the broader program is now referred to as the Candelaria Project and currently covers 1363 acres in the Candelaria District immediately east of Silver Standard Resources Northern Belle and Mount Diablo open pit silver mines in sections 25, 35, 36, 1, 2, 3, 10, and 11 T 3 & 4N/R35E. The property is approximately 45 miles west of Tonopah, Nevada

 

Between June and September, 2011 68 new lode claims were located. The claims cover the ground from which high-grade silver samples were taken. The geologic setting of the samples extends from the open pit mines controlled by Silver Standard Resources onto the LAG claims (Table 1 and Figure 2).

 

Claim    Date  Located    County    BLM-NMC  Number 
LAG  1  to  38    April  8,  2011    Esmeralda    1047475-1047512 
LAG  39  to  50    May  25,  2011    Esmeralda  &  Mineral    1051010-1051021 
LAG  50  to  66    June  4,  2011    Esmeralda  &  Mineral    1051022-1051037 
LAG  67  to  68    September  20,  2011    Esmeralda    1060537-1060538 

 

On September 27th, 2011 the shares of National Graphite Corp (formerly Lucky Boy Silver Corp.) became Depository Trust Corp. (DTC) eligible for electronic transfer.

 

- 5 -
 

 

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

 

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) 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,

 

- 6 -
 

  

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.

 

On Sept 17th 2012, the Company expanded its interests with the acquisition of 15 additional Lode Claims thus expanding the Chedic holdings to 700 acres.

 

Our Current Business – Mineral Exploration

 

Our current business plan is to return the Chedic property to full production and has authorized the Management of the Company to proceed with the development of the Chedic mine property and complete a evaluation of the available graphite tonnage. The company has approved expenditures for the next phase of development.

 

The Company will continue its exploration and expansion of the Black Butte and Candelaria propertiesand 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 report compiled by Hunsaker dated February 2011, Hunsaker concluded that the Candelaria claims warranted additional exploration whereas the Silver Summit claims did not. The development of these properties was additionally defined in Hunsaker’s December 2011 update. Our mineral properties are currently without known reserves and our proposed programs are exploratory in nature.

 

Our Proposed Exploration Program – Plan of Operation

 

We have reviewed the Company’s geologist Report on the Chedic Mine viability and believe further expenditures are warranted. The work to date has discovered a second viable vein of graphite ore and commissioned a drill program to further outline the length and depth of the existing veins.

 

We will review the Summary Report and Update with Recommendations for the Candelaria Project, Esmeralda County, Nevada - December 2011 and proceed with exploration on the Black Butte and Candelaria 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 properties.

 

Competition

 

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.

 

- 7 -
 

  

Government Regulations

 

Any operations at the our mineral properties will be subject to various federal and state laws and regulations in the United States 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.

 

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.

 

Results of Operations

 

Our comparative periods for the period ended August 31, 2012 and May31, 2011 are presented in the following discussion.

 

Since inception, we have used our common stock to raise money for our optioned acquisitions and for corporate expenses. Net cash provided by financing activities (less offering costs) from inception on October 19, 2006 to August 31, 2012, was $1,160,000, with $1,150,000 as proceeds received from sales of our common stock and $10,000 of contributed capital.

 

- 8 -
 

  

Three Months Ended August 31, 2012 and August 31, 2011.

 

Revenues

 

We did not generate any revenues from operations for the three month periods ended August 31, 2012. To date, we have not generated any revenues from our mineral exploration business.

 

Expenses

 

The table below shows our operating results for the three month periods ended August 31, 2012 and 2011.

 

   Three  months
Ended
August  31,  2012
   Three  months
Ended
August  31,  2011
 
Professional  fees   29,238    85,497 
Depreciation   202    202 
Exploration  of  resource  property   56,998    25,147 
General  and  administrative   42,370    30,107 
Total  operating  expenses   128,808    140,953 

 

Operating expenses have and will vary from quarter to quarter based on the level of corporate activity, exploration operations and capital-raising. Operating expenses in the most recently completed quarter decreased relative to the comparable period of the prior year due primarily to the fact that we have significantly decreased the professional expenses incurred. This decrease in professional fees was partially offset by increases in exploration expenses and general and administrative expenses.

 

We continue to carefully control our expenses and overall costs as we move our business development plan forward. We do not have any employees and engages personnel through outside consulting contracts or agreements or other such arrangements, including for legal, accounting and technical consultants.

 

Plan of Operation and Anticipated Cash Requirements

 

On October 17, 2012 we announced that the Company had entered into an equity financing agreement for up to $2,500,000. Under the terms of the agreement, the Company may from time to time request a purchase of up to $250,000 per request at price of 10% discount to the average price of our shares over the previous five trading days. As part of the terms of the financing, management have agreed to cancel 8,000,000 of their common shares in order to minimize dilution as a result of this transaction.

 

Based on our current plan of operations, we have sufficient funds for approximately the next six 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 $1,410,000 to fund ongoing operating expenses and working capital requirements for the next 12 months, broken down as follows:

 

General  and  administrative  expenses  $80,000 
Future  property  acquisitions   180,000 
Working  capital   50,000 
Development  of  properties   1,100,000 
   $1,410,000 

 

- 9 -
 

 

Going Concern

 

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ended May 31, 2012, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional notes describing the circumstances that lead to this disclosure by our independent auditors. Our issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

There are no assurances that we will be able to obtain further funds required for continued operations. We are pursuing various financing alternatives to meet immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it could 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 obligations as they come due.

 

Liquidity and Capital Resources

 

As of August 31, 2012, we have yet to generate any revenues.

 

Since inception, we have used our common stock and loans or advances from our officers and directors to raise money for our optioned acquisition and for corporate expenses.

 

Working Capital

 

As of August 31, 2012, we had $196,530 in unallocated working capital.

 

   August  31   May  31 
   2012   2011 
Current  Assets  $198,124    111,709 
Current  Liabilities   1,594    1,595 
Working  Capital  $196,530    110,114 

 

We have incurred recurring losses from inception. Our ability to meet our financial obligations and commitments is primarily dependent upon continued financial support of our shareholders, directors and the continued issuance of equity to new and existing shareholders.

 

Cash Flows

 

   Three months   Three  months 
   Ended   Ended 
   August  31,   August  31, 
   2012   2011 
Net  cash  used  in  operating  activities  $(103,606)   (80,799)
Net  cash  used  in  investing  activities   (59,979)   (8,296)
Net  cash  provided  by  financing  activities   250,000    - 
Net  increase  (decrease)  in  cash  $86,415    (89,095)

 

Net cash used in operating activities

 

Net cash used in operating activities from inception on October 19, 2006, to August 31, 2012 was $749,479. This negative cash flow from operations is due to the fact that the Company has not generated revenue to date.

 

- 10 -
 

  

Net cash used in investing activities

 

Net cash used in investing activities from inception on October 19, 2006, to August 31, 2012, was $215,897 as a result of the purchase of additional mining claims and computer equipment.

 

Net cash provided by financing activities

 

Net cash provided by financing activities from inception on October 19, 2006, to August 31, 2012, was $1,160,000 as a result of gross proceeds received from sales of our common stock and capital contribution from Company officers.

 

Inflation / Currency Fluctuations

 

Inflation has not been a factor during the recent quarter ended August 31, 2012. Although inflation is moderately higher than it was during 2012 the actual rate of inflation is not material and is not considered a factor in our contemplated capital expenditure program.

 

Subsequent Events

 

In accordance with ASC 855 Company management reviewed all material events through the date of this report and there are no material subsequent events to report.

 

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable

 

ITEM 4. CONTROLS AND PROCEDURES

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

As of October 18th, 2012, 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.

 

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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 August 31,2012. 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 October 18, 2012:

 

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  re-evaluate  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 CONTROLS.

 

There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control 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, 2013.

 

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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 any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. 

 

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 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 have no business history upon which an evaluation of our future success or failure can be made. As of August 31, 2012 our net loss since inception was $1,540,764. 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 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 commercial quantities of graphite,gold or silver if we find graphite,gold or silver it may not be in economic quantities. If we fail to find any graphite, gold or silver or if we are unable to find graphite, gold or silver in economic quantities, we will have to suspend operations.

 

We have no known mineral reserves. Even if we find gold or silver, it may not be of sufficient quantity so as to warrant recovery. Additionally, even if we find gold or silver in sufficient quantity to warrant recovery it ultimately may not be recoverable. Finally, even if any gold or silver is recoverable, we do not know that this can be done at a profit. Failure to locate gold or silver in economically recoverable quantities will cause us to suspend operations.

 

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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 our 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 Lucky Boy’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 Lucky Boy’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.

 

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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

 

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 75,669,881 shares are issued and outstanding as of August 31, 2012 and 1,000,000 shares of preferred stock, of which 675,000 shares are issued and outstanding as of August 31, 2012. Each share of preferred stock is convertible into 100 shares of common stock (1:100) and each share of preferred stock is entitled to 100 votes and thus the conversion of our preferred stock would result in significant dilution to holders of our common stock. 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.

 

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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 $375,546 and $658,714, respectively, for the fiscal years ended May 31, 2012 and 2011. 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.

 

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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.

 

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the past five years,National Graphite Corp (formerly Lucky Boy Silver Corp.) has sold the following securities which were not registered under the Securities Act:

 

October 31, 2006

 

We issued 90,000,000 (6,000,000 pre-split) shares of restricted common stock at a price of $0.001 per share through a Section 4(2) exemption to Ian Jackson our founder, officer and director on October 31, 2006 for cash consideration of $6,000.

 

Mr. Jackson is a sophisticated investor and was in possession of all material information relating to Lucky Boy. Further, no commissions were paid in connection with the sale of the shares and no general solicitation was made. These shares were subsequently purchased by Kenneth B. Liebscher, our President and CEO. The purchase price of the shares was $200,000, which was paid in cash and by the personal funds of Mr. Liebscher.

 

November 30, 2006

 

We issued 13,500,000(900,000 pre-split) shares of restricted common stock at a price of $0.01 per share through a Rule 504D offering in November, 2006 for cash consideration of $9,000 to four (4) individuals.

 

Name and Address  Date   Shares   Consideration 
             
Ray  Urquhart 
155  Tyee  Drive,  No.  428 
Point  Roberts,  WA  98281
   November 14, 2006     3,750,000
(250,000 pre-split)
   $2,500 
                
Elizabeth  O’Connor 
174  Gulf  Road,  No.  34, 
Point  Roberts,  WA  98281
   November 16, 2006     2,250,000
(150,000 pre-split)
   $1,500 
                
John  McNulty 
P.O.  Box  4370 
Seattle,  WA  98194
   November 14, 2006     3,000,000
(200,000 pre-split)
   $2,000 
                
Troy  Jackson, 
1685  H  Street,  No.  155, 
Blaine,  WA  98230
   November 14, 2006     4,500,000
(300,000 pre-split)
   $3,000 

 

None of the above are deemed to be accredited investors and each was in possession of all material information relating to

 

National Graphite (Lucky Boy). Further, no commissions were paid to anyone in connection with the sale of the shares and no general solicitation was made to anyone. All of the purchasers are known to our directors

 

We completed the offering pursuant to Regulation D of the Securities Act. Each purchaser represented his intention to acquire the securities for investment only and not with a view toward distribution. Appropriate legends were affixed to the stock certificate issued to each purchaser in accordance with Regulation D. Each investor was given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers.

 

The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) or Rule 504D of the Securities Act as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.

 

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May 31, 2008

 

We issued 30,000,000 (2,000,000 pre-split) shares of unrestricted common stock at a price of $0.05 per share between March 01 and May 31, 2008 for cash consideration of $100,000 to thirty (30) individuals. In addition, four selling shareholders resold 900,000 shares, acquired as outlined above, to four arms length individuals. We sold the shares or acknowledged the resale of the selling shareholder’s shares prior to the declaration of an effective date for our SB-2 registration statement filed on October 11, 2007 under our mistaken assumption that the registration statement had become effective through the passage of time after its filing.

 

Selling shares prior to the establishment of an effective date can result in potential violations of federal and state securities laws. As a result, these stock issuances and resales may have violated the Securities Act of 1933. Rescission offers for such potential violations are commonly made by companies in these situations and the filing of a registration statement is a normal part of the rescission offer process. We have previously disclosed in our regulatory filings that all of the subscribers had been informed of this situation. As a result, we were prepared to refund part or all associated monies and to cancel part or all associated common shares that could have been tendered for rescission.

 

On February 27, 2009, we filed an S-1 rescission offering registration statement which became effective on March 5, 2009, and which addressed federal and state securities laws compliance issues by allowing the holders of the shares covered by the rescission offer to rescind the underlying securities transactions and sell those securities back to us or the selling shareholders. In addition, we conducted the offering in order to be able to reduce our contingent liabilities.

 

The rescission offer process closed on April 24, 2009, with no shares being submitted for rescission. When the rescission offer expired, any person who did not accept the offer received freely tradable stock.

 

On January 24, 2010 the Company issued 290,000 and 150,000 (10,000 pre-split) shares of its common stock to officers of the Company for services provided. The fair value of the shares was determined based on the market price of $0.40 per share on the date of issuance. The Company recorded $120,000 of professional fees in conjunction with this issuance.

 

On January 27, 2010 the Company issued 5,625,000 (375,000 pre-split) shares of its common stock for $150,000 cash.

 

On January 27, 2010 the Company issued 750,000 (50,000 pre-split) shares of its common stock for $20,000 cash.

 

On February 8, 2010 the Company issued 150,000 post-split shares of its common stock in exchange for mineral claims. The fair value of the shares was determined based on the market price of $0.40 per share on the date of issuance.

 

On March 12, 2010 the Company’s board of directors approved a 15:1 forward stock split. This change has been retroactively applied to the Company’s statement of stockholder’s equity.

 

On May 17, 2010 the Company received a $50,000 payment for 125,000 shares of common stock. As of May 31, 2010, the Company had not issued these shares and has recognized a stock subscription payable for the $50,000 deposit. These shares were issued on August 28, 2010.

 

On October 25, 2010 the Company issued 356,154 units consisting of one share of common stock and one warrant for cash at $0.65 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

 

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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.

 

On December 29, 2010 the Company issued 300,000 of its restricted common stock to a related party at $0.001 per share for consulting services valued at $255,000.

 

On December 31, 2010 the Company issued 360,000 of its restricted common stock for investor relation services at $0.001 valued at $306,000.

 

On January 3, 2011 the Company exchanged 67,500,000 common shares for 675,000 preferred shares with 1 to 100 voting and conversion ratio preferred to common shares.

 

On January 6, 2012 the Company issued 83,334 shares of its common stock for $50,000 cash.

 

On February 14, 2012 the Company issued 416,667 shares of its common stock for $250,000 cash.

 

On July 18, 2012 the Company issued 416,667 shares of its common stock for $250,000 cash.

 

On July 23, 2012 the Company issued 100,000 shares of its common stock to complete the acquisition of certain mineral claims in Quebec, Canada.

 

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.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not Applicable

 

ITEM 4. [REMOVED AND RESERVED]

 

ITEM 5. OTHER INFORMATION

 

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.” Our shares of common stock were quoted on the OTC Bulletin Board under the symbol “LUCB”. Our CUSIP number was 549517 100. 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). On September 27, 2011 the Company’s common shares became eligible for DTC electronic trading.

 

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On May 9, 2012 the Company changed its name to National Graphite Corp. to more accurately reflect the focus of the Company. Our shares of common stock are now quoted on the OTC Bulletin Board under the symbol “NGRC”. Our new CUSIP number is 636268 104.

 

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 agreed to pay US$55,000 to Monte Cristo Projects LLC and we issued 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.

 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

 

Exhibit  No.   Description
3.1    Articles  of  Incorporation  filed  as  an  exhibit  to  our  Form  SB-2  filed  on  October  12,  2007 
3.2    Bylaws  filed  as  an  exhibit  to  our  Form  SB-2  filed  on  October  12,  2007 
3.3   Filed  Articles  of  Conversion  and  Corporate  Charter  issued  by  the  Secretary  of  State  of  the  State  of
Nevada  filed  as  an  exhibit  to  our  Form  8-K  on  April  5,  2011
3.4   Filed  Amended  Articles  changing  name  to  National  Graphite  Corp.filed  as  an  exhibit  to  our 
Form  8K  on  9/04/12. 
10.1    Option  to  Purchase  and  Royalty  Agreement  dated  March  22,  2007  with  JiujiangGaoFeng  Mining 
Industry  Limited  Company  filed  as  an  exhibit  to  our  Form  SB-2  filed  on  October  12,  2007 
10.2    Form  of  Private  Placement  subscription  agreement  attached  as  an  exhibit  to  our  Form  SB-2  filed  on
October  12,  2007
10.3    Escrow  Agreement  dated  November  25,  2008  between  Ian  Jackson,  Sierra  Ventures  Inc.  and  Harcourt 
Chan  filed  as  an  exhibit  to  our  Form  S-1/A  filed  on  January  14,  2009 
10.4    First  Amendment  to  Option  to  Purchase and  Royalty  Agreement)  between  Sierra  Ventures,  Inc.  and 
JiujiangGaoFeng  Mining  Industry  Limited  Company  dated  May  15  2009  filed  as  an  exhibit  to  our 
Form  10-K  filed  on  September  8,  2009 
10.5    Form  of  Private  Placement  subscription  agreement  filed  as  an  exhibit  to  our  Form  8-K  filed  on 
December  31,  2009 
10.6   Letter  Agreement  dated  February  8,  2010  between  Ken  Liebscher,  Monte  Cristo  Projects  LLC  and  Alan 
Chambers  filed  as  an  exhibit  to  our  current  report  on  Form  8-K  filed  on  March  1,  2010
10.7   Assignment  Agreement  dated  February  23,  2010  with  Ken  Liebscher  filed  as  an  exhibit  to  our 
current  report  on  Form  8-K  filed  on  March  1,  2010
10.8   Business  Consulting  Agreement  dated  December  21,  2009  with  Wannigan  Consulting  Corp.
(incorporated  by  reference  to  an  exhibit  to  our  annual  report  on  Form  10-K  filed  September  14,  2010.
10.9   Share  Issuance  Agreement  dated  October  25,  2010  between  Lucky  Boy  Silver  Corp.  and  Cardinal 
Capital  Holdings  Limited  (incorporated  by  reference  to  an  exhibit  to  our  current  report  on  Form  8-K 
filed  October  29,  2010)
10.10   Investor  Relations  Agreement  dated  December  31,  2010  with  International  IR,  Inc.  (incorporated  by
reference  to  an  exhibit  to  our  current  report  on  Form  10Q  filed  January  17,  2012)
10.11*   Share  Issuance  Agreement  dated  October  16,  2012  between  National  Graphite  Corp.  and  Calypso 
Financial  Limited  with  addendum. 
14.1    Code  of  Ethics  filed  as  an  exhibit  to our Form SB-2 filed on October 12, 2007 
31.1*    Certification Pursuant to Section 302 of  the Sarbanes-Oxley Act Of 2002 
31.2*    Certification Pursuant to Section 302 of  the Sarbanes-Oxley Act Of 2002 
32.1*   Certification Pursuant to Section 906 of  the Sarbanes-Oxley Act Of 2002 
99.0   Form 14c authorizing change in Company shares authorized from 500,000,000 common to 499,000,000 common and 1,000,000 preferred with conversion and voting rights of 1:100 files on Form  8-K filed  on  December  27,  2010
99.1   Purchase  Agreement  with  Habitant  Minerals  filed  as  an  exhibit  to  our  current  report  on  Form  8K  filed  on  April  23,  2012.
99.2   Purchase  Agreement  with  GeoXplorInc.  filed  as  an  exhibit  to  our  current  report  on  Form  8K  filed  on  May  02,  2012.

 

*attached herewith

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NATIONAL GRAPHITE Corp.

(Registrant)

 

Date:October 18, 2012

 

By:  /s/  Kenneth  Liebscher   By: /s/  FortunatoVillamagna
    KENNETH  B.  LIEBSCHER,      DR.  FORTUNATO  VILLAMAGNA, 
    President,  Chief  Executive  Officer      Secretary,  Treasurer,  Chief  Financial  Officer 
    Principal  Executive  Officer      Principal  Financial,  Officer  and 
            Principal  Accounting  Officer 

 

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SHARE ISSUANCE AGREEMENT

 

SHARE ISSUANCE AGREEMENT dated the 17th day of October, 2012, BETWEEN:

 

CALYPSO FINANCIAL LTD., a corporation organized under the laws of the Belize C-A-, (hereinafter, the “SUBSCRIBER”)

 

AND:

 

NATIONAL GRAPHITE CORP., a Nevada domestic corporation, with a corporate office on 5466 Canvasback Rd. Blaine WA 98230

(hereinafter, the “COMPANY”)

 

NOW THEREFORE THIS SHARE ISSUANCE AGREEMENT (“AGREEMENT-) WITNESSES that the parties hereto agree as follows:

 

ARTICLE I - INTERPRETATION

 

SECTION 1.1. DEFINITIONS. When used in this Agreement (including the recitals and schedules hereto) or in any amendment hereto, the following terms shall, unless otherwise expressly provided, have the meanings assigned to them herein:

 

“BANKING DAY” shall mean any day other than a Saturday. Sunday, public holiday under the laws of the State of Nevada or other day on which banking institutions are authorized or obligated to close in Nevada

 

“CHARTER DOCUMENTS” means constating documents and by-laws, and all amendments thereto;

 

“CONSENT” means any permit, license, approval, consent, order, right, certificate, judgment, writ, injunction, award, determination, direction, decree, authorization, franchise, privilege, grant, waiver, exemption and other concession or by-law, rule or regulation;

 

“UNIT PRICE” means a price of a 10% discount to the previous five day trading average.

  

“DOLLAR” or “$” means the currency of the United States of America.

 

ARTICLE 2 - THE SHARE ISSUANCE

 

SECTION 2.1. SHARE ISSUANCE. The Subscriber shall make available to the Company in accordance with, and subject to the terms and conditions of, this Agreement, until October 17, 2014 (the “COMPLETION DATE ), up to $2,500,000 by way of Advances in accordance with this Sections 2.2,2.3 and 2.4 of this Agreement The Completion Date may be extended for an additional term of up to twelve months at the option of the Company or the Subscriber upon written notice on or before the Completion Dale in accordance with the notice provisions in Section of this Agreement.

 

 
 

 

SECTION 2.2. THE ADVANCES. On the terms and conditions set forth herein the Subscriber, from time to time, on any Banking Day. prior to the Completion Date. Agrees, at it$ sole discretion, to make advances to the Company (“ADVANCES”). Each Advance shall be in an aggregate amount of not more than S250,000.

 

SECTION 2.3. PROCEDURE TO REQUEST ADVANCES. Each Advance shall be made on or before five Banking Days following notice from the Company. Each such notice shall be given by a notice to the Subscriber in the form substantially the same as the form attached hereto in Schedule A (each a “NOTICE”).

 

SECTION 2.4. SUBSCRIPTION AGREEMENT. Upon making each Advance, the Subscriber shall provide an executed Subscription Agreement, in a form acceptable to both parties to this Agreement, to the Company.

 

SECTION 2.5. USE OF PROCEEDS The Company shall use all Advances to fund operating expenses, acquisitions, working capital and general corporate activities.

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Subscriber:

Organization and Corporate Power. The Company has been duly incorporated and organized and is validly subsisting and in good standing under the laws of its jurisdiction and has full corporate right, power and authority to enter into and perform its obligations under the Agreement to which it is or shall be a party and has full corporate right, power and authority to own and operate its properties and to carry on its business;

 

ARTICLE 4 - MISCELLANEOUS

 

SECTION 4.1. NOTICES, ETC. Except as otherwise expressly provided herein, all notices, requests, demands, directions and communications by one party to the other shall be sent by hand delivery or registered mail or fax, and shall be effective when hand delivered or when delivered by the relevant postal service or when faxed and confirmed, as the case may be. All such notices shall be addressed to the President of the notified party at its address given on the signature page of this Agreement, or in accordance with any unrevoked written direction from such party to the other party.

 

SECTION 4.2. JURISDICTION. (1) Each of the parties hereby irrevocably attorns to the nonexclusive jurisdiction of the Courts of the State of Nevada in any action or proceeding arising out of or relating to this Agreement. The Company agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law; and (2) nothing in this Section 5.1 shall affect the right of the Subscriber to serve legal process in any other manner permitted by Law or affect the right of the Subscriber to bring any action or proceeding against the Company or its property in the courts of other jurisdictions.

 

 
 

 

SECTION 4.3. SUCCESSORS AND ASSIGNS. The Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Subscriber, which consent may be arbitrarily withheld.

 

SECTION 4.4. SEVERABILITY. If one or more provisions of this Agreement be or become invalid, or unenforceable in whole or in part in any jurisdiction, the validity of the remaining provisions of this Agreement shall not be affected. The parties hereto undertake to replace any such invalid provision without delay with a valid provision which as nearly as possible duplicates the economic intent of the invalid provision.

 

SECTION 4.5. COUNTERPARTS. This Agreement may be executed in counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.

 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

NATIONAL GRAPHITE CORP.   CALYPSO FINANCIAL LTD.
     
/s/ Ken Liebscher  
By: Authorized Signatory   By: Authorized Signatory

 

 
 

 

ADDENDUM

 

This addendum modifies that Share Issuance Agreement dated October 17, 2012 by and between National Graphite Corp., a Nevada corporation (“Pubco”) on one hand and Calypso Financial Ltd., a Belize corporation (die “Company”) and Ken Ucbscher, a shareholder of Pubco(“Liebscher”).

 

Section 2.6 is hereby added to the Share Issuance Agreement.

 

SECTION 2.6 CANCELATION OF SHARES. It is agreed that as consideration for the financing provided under this agreement. Ken Liebscher, shall return to Pubco for cancellation and Pubco shall thereby immediately cancel, 8,000,000 common shares of Pubco now held by Liebscher. It is understood and agreed that this will be considered a tax free transaction with no tax implications to Liebscher.

 

  Pubco:
   
  National Graphite Com,
   
  By: /s/ Ken Liebscher
    Ken Liebscher
    President and Chief Executive Officer
     
  Company:
   
  Calypso Financial Ltd.
     
  By:  
     
  Liebscher
   
  By: /s/ Ken Liebscher

 

 
 

 

XOTC:NGRC Quarterly Report 10-Q Filling

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XOTC:NGRC Quarterly Report 10-Q Filing - 8/31/2012
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