UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED December 31, 2013
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________________ to ___________________________ |
Commission file number 000-54665
WESTERN GRAPHITE INC.
(Exact name of registrant as specified in its charter)
| Nevada | 20-8055672 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1045 East Washington Street, Monticello, FL 32344
(Address of principal executive offices, including zip code.)
(850) 270-2808
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
Prepared By:
Sunny J. Barkats, Esq.
JS Barkats, PLLC
18 East 41st Street, 14th Floor
New York, NY 10017
P: (646) 502-7001
F: (646) 607-5544
www.JSBarkats.com
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES ¨ NO x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
YES ¨ NO x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer ¨ |
| Non-accelerated filer ¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 28, 2013 (the last business day of the registrant’s most recently completed second fiscal quarter), based on a closing price of $0.61, was approximately $34,770,000.00.
Indicate the number of shares outstanding of each of the registrant's classes of common equity, as of the latest practicable date: 71,666,667 shares as of December 31, 2013.
Explanatory Note
The purpose of this Amendment No. 1 to Western Graphite Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013 is to amend the financial statements and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and to add Item 1. – Item 5. and Item 9. - Item 14., which were not included in the original Form 10-K.
We are filing this Amendment No. 1 to reflect the restatement of our financial statements contained herein. On October 17, 2014, management concluded that, because of an error identified in the Company's previously issued financial statements for the year ended December 31, 2013, the Company should restate its previously issued financial statements for the relevant periods. Accordingly, investors should no longer rely upon the Company's previously released financial statements and related auditors' reports for these periods or any earnings releases or other communications relating to these periods.
Please see Note 2 – Restatement contained in the Notes to Financial Statements appearing later in this Form 10-K/A Amendment No. 1 which further describes the effect of these restatements.
On October 15, 2014, we notified George Stewart, CPA (the “Former Auditor”) that it has been dismissed for no cause as our independent registered public accounting firm effective as of the date of such notice. On October 14, 2014, we engaged RBSM LLP (“New Auditor”) as our independent registered public accounting firm for our fiscal year ending December 31, 2014. The financial statements contained in this Amendment No. 1 have been audited by the New Auditor. All disclosure in this Amendment No. 1 pertaining to our auditors in Items 9 and 14 pertain to the Former Auditor and are as of the date of the filing of the original Form 10-K. See the Company’s Current Report on Form 8-K, filed on November 7, 2014, for disclosure regarding our change in auditors.
No other changes have been made to the Form 10-K. This Amendment No. 1 to the Form 10-K speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-K.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 10-K/A includes new certifications by our principal executive officer and principal financial officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Except for the items noted above, no other information included in the Company’s original Form 10-K is being amended by this Form 10-K/A.
WESTERN GRAPHITE INC.
FORM 10-K/A
DECEMBER 31, 2013
INDEX
Western Graphite Inc., a Nevada corporation (formerly Lucky Strike Explorations Inc.), was incorporated under the laws of the State of Nevada on December 15, 2006 (“Western Graphite” or the “Company”). We were formed to engage in the acquisition, exploration and development of natural resource properties. We are in the exploration stage. Our activities to date have been limited to capital formation, organization and development of our business plan. We have performed limited exploration work and we are currently seeking new mining properties for exploration.
Recent Developments
On February 27, 2013, the Company acquired all the rights, title and interest in certain lands covering approximately 495 hectares known as the Amorf Graphite property located in the district of Bozyazi, in the village of Cabukkoyaoi, Mersin Province, Turkey. The Company acquired the rights to the property pursuant to an agreement with Dr. Ahment Unsai in exchange for 3,000,000 shares, of the Company’s common stock valued at $0.50 per shares for a total of $1,500,000, along with two future payments totaling $1,500,000. As of February 27, 2013, the Company does not have control of the property and therefore has accounted for the acquisition as an investment. The Company no longer is pursuing the purchase of the Amorf Graphite property, and thus the remaining terms of the deal have nullified.
On March 4, 2013, the Company entered into an agreement with Seyit Kucuk for the acquisition of five claims located in the Omineca Mining Division of the Province of British Columbia. The claims, which cover approximately 2,524 hectares, are known as the Pure Flake Graphite property and are subject to a 2% net milling royalty. In consideration for the acquisition of these claims, the Company issued 10,000,000 shares, valued at $0.50 per shares for a total of $5,000,000, of the company’s restricted common stock.
On August 7, 2013, the Company acquired mining claims for mineral tenures which cover approximately 2,464 hectares, in British Columbia, Canada, from a related party through the issuance of a $15,000 unsecured promissory note.
Competition
We will not compete directly with anyone for the exploration or removal of minerals from any property on which we may carry out exploration activities in the future as we plan to hold all interest and rights to the claims. Readily available commodities markets exist in the U.S. and around the world for the sale of gold, silver and other minerals. Therefore, we would likely be able to sell any minerals that we are able to recover.
Bankruptcy or Similar Proceedings
There has been no bankruptcy, receivership or similar proceeding.
Reorganization, Purchase or Sale of Assets
There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals where the claims are located.
Patents, Trademarks, Franchises, Concessions, Royalty Agreements or Labor Contracts
We have no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. We will assess the need for any copyright, trademark or patent applications on an ongoing basis.
Need for Government Approval for its Products or Services
We are not required to apply for or have any government approval for our products or services.
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Research and Development Costs During the Last Two Years
We have not expended funds for research and development costs since inception. We paid $3,500 for the geology report and $3,500 for the staking of the Acid claims in 2012. The consulting geologist was paid $8,500 for Phase 1 of the exploration program on the claims in 2012.
Employees and Employment Agreements
There are no formal employment agreements between the Company and any current employee as of December 31, 2013.
Reports to Security Holders
We provide an annual report that includes audited financial information to our shareholders. We make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of Regulation S-K for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements, including filing Form 10-Ks annually and Form 10-Qs quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
As a smaller reporting company, the registrant is not required to provide the information required by this Item 1A.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
As described the “Recent Developments” Section of Item 1 of this Annual Report, we have interests in the following real properties:
| (1) | Five claims located in the Omineca Mining Division of the Province of British Columbia. The claims, which cover approximately 2,524 hectares, are known as the Pure Flake Graphite property and are subject to a 2% net milling royalty. In consideration for the acquisition of these claims, the Company issued 10,000,000 shares, valued at $0.50 per shares for a total of $5,000,000, of the company’s restricted common stock; and |
| (2) | Mining claims for mineral tenures which cover approximately 2,464 hectares, in British Columbia, Canada, from a related party through the issuance of a $15,000 unsecured promissory note. |
We occupy office space at Hudson Bay Center, 2 Bloor Street East, Suite 3500, Toronto, Ontario M4W 1A8.
From time to time, we are involved in various legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, operating results or financial condition.
ITEM 4. Mine Safety Disclosures
None.
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ITEM 5. Market for Common Equity and Related Stockholder Matters
Our common stock has been eligible for quotation on the OTC Markets Pink Sheets under the symbol “WSGP” since April 2013. Prior to that date, our common stock was traded under the symbol “LCKY” on the Over-the-Counter Bulletin Board (“OTCBB”) and the OTC Markets. However, there was no active trading market prior to March 31, 2013. The table below lists the high and low closing prices per share of our common stock since our stock has traded under the symbol “WSGP”.
| Fiscal 2013 | Low | High | ||||||
| First Quarter | $ | - | $ | - | ||||
| Second Quarter | 0.38 | 1.76 | ||||||
| Third Quarter | 0.19 | 0.55 | ||||||
| Fourth Quarter | 0.09 | 0.19 | ||||||
As of December 31, 2013, we had 10 record holders of our common stock. We have paid no cash dividends and have no outstanding options.
Penny Stock Rules
The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
A purchaser is purchasing penny stock which limits the ability to sell the stock. Our shares constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:
- contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;
- contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended;
- contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" price for the penny stock and the significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary actions;
- defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
- contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the transaction;
- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
- monthly account statements showing the market value of each penny stock held in the customer's account.
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In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.
Transfer Agent
The company has retained Holladay Stock Transfer, Inc. of 2939 North 67th Place, Suite C, Scottsdale, Arizona, as transfer agent for the year ended December 31, 2013.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Forward Looking Statements
This annual report on Form 10-K/A and other reports filed by Western Graphite Inc. (“we,” “us,” “our,” or the “Company”) from time to time with the SEC contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates. This discussion and analysis should be read in conjunction with the Company’s financial statements and accompanying notes to the financial statements for the year ended December 31, 2013.
Company Overview
Western Graphite Inc., a Nevada corporation (formerly Lucky Strike Explorations Inc.), was incorporated under the laws of the State of Nevada on December 15, 2006 (“Western Graphite” or the “Company”). We were formed to engage in the acquisition, exploration and development of natural resource properties. We are in the exploration stage. Our activities to date have been limited to capital formation, organization and development of our business plan. We have performed limited exploration work and we are currently seeking new mining properties for exploration.
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Recent Developments
On February 27, 2013, the Company acquired all the rights, title and interest in certain lands covering approximately 495 hectares known as the Amorf Graphite property located in the district of Bozyazi, in the village of Cabukkoyaoi, Mersin Province, Turkey. The Company acquired the rights to the property pursuant to an agreement with Dr. Ahment Unsai in exchange for 3,000,000 shares, of the Company’s common stock valued at $0.50 per shares for a total of $1,500,000, along with two future payments totaling $1,500,000. As of February 27, 2013, the Company does not have control of the property and therefore has accounted for the acquisition as an investment. The Company no longer is pursuing the purchase of the Amorf Graphite property, and thus the remaining terms of the deal have nullified.
On March 4, 2013, the Company entered into an agreement with Seyit Kucuk for the acquisition of five claims located in the Omineca Mining Division of the Province of British Columbia. The claims, which cover approximately 2,524 hectares, are known as the Pure Flake Graphite property and are subject to a 2% net milling royalty. In consideration for the acquisition of these claims, the Company issued 10,000,000 shares, valued at $0.50 per shares for a total of $5,000,000, of the company’s restricted common stock.
On August 7, 2013, the Company acquired mining claims for mineral tenures which cover approximately 2,464 hectares, in British Columbia, Canada, from a related party through the issuance of a $15,000 unsecured promissory note.
Results of Operations
Revenue:
We have generated no revenues to date.
Operating Expenses:
Impairment of investments and mining properties $6,546,809 for the year ended December 31, 2013, an increase of $6,546,809 from $0 for the year ended December 31, 2012. The increase is primarily due to a $6,539,014 impairment of assets in 2013 related to the mining properties.
General and administrative expenses were $431,636 for the year ended December 31, 2013, an increase of $401,504 or approximately 1332%, from $30,132 for the year ended December 31, 2012. The increase is primarily due to a $290,000 increase in stock based compensation, along with a $65,983 increase in officer compensation.
Other Expenses:
Other expenses were $7,795 for the year ended December 31, 2013, an increase of $7,795 from $0 for the year ended December 31, 2012. The increase is primarily due to $7,795 of interest accrued on notes payable.
Net Loss:
As a result of the above factors, we recognized net loss of $6,978,445 for year ended December 31, 2013, as compared to a net loss of $30,132 for the year ended December 31, 2012, an increase of $6,948,313 or approximately 23060%.
Liquidity and Capital Resources
As of December 31, 2013, the Company had a stockholders’ deficit of $190,820. For the year ended December 31, 2013 and 2012, the Company had a net loss of $6,978,445 and $30,132, respectively. At December 31, 2013, the Company had working capital deficit of $175,820 compared to $27,375 at December 31, 2012.
Net cash used in operating activities was $137,759 for the year ended December 31, 2013 as compared to net cash used in operating activities of $31,269 for the year ended December 31, 2012. The increase of $106,490 was primarily due to an increase in administrative expenses.
Net cash used in investing activities was $0 for the years ended December 31, 2013 and 2012.
Net cash provided by financing activities amounted to $156,000 for the year ended December 31, 2013, compared to $31,325 net cash provided by financing activities for the year ended December 31, 2012 representing an increase of $124,675. This was due to proceeds from notes payable in the amount of $150,000, and proceeds from a related party loan of $6,000.
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Going Concern Matters
The Company’s financial statements have been 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 incurred net losses of $6,978,445 and $30,132 during the years ended December 31, 2013 and 2012, respectively. Cash on hand will not be sufficient to cover debt repayments scheduled as of December 31, 2013 and operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. As of December 31, 2013 and 2012, the Company had working capital deficits of $175,820 and $27,375, respectively. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to seek equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described 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.
Critical Accounting Policies and Estimates
Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.
We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this report. Please refer Note 3 Summary of Significant accounting Policies in the notes to financial statements.
Our financial statements have been prepared in conformity with GAAP. For a full description of our accounting policies as required by GAAP, refer to our financial statements for the year ended December 31, 2013, that are included in this Annual Report on Form 10-K. We consider certain accounting policies to be critical to an understanding of our financial statements because their application requires significant judgment and reliance on estimations of matters that are inherently uncertain. The specific risks related to these critical accounting policies are described in our financial statements for the year ended December 31, 2013.
Recently Issued Accounting Pronouncements
In June 2014 the Financial Accounting Standards Board issued Accounting Standards Update ASU 2014-10, “Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 remove the definition of a development stage entity from the master glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
The Company has elected to adopt the provisions of ASU 2014-10 for the current fiscal year ending December 31, 2013. The adoption of ASU 2014-10 did not have a significant impact on our results of operations, financial condition or cash flow.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2014 and the Company will continue to assess the impact on its financial statements.
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Contractual Obligations
On May 10, 2013, the Company issued an unsecured promissory note for $50,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand. Accrued interest was $3,220 as of December 31, 2013.
On July 18, 2013, the Company issued an unsecured promissory note for $100,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand. Accrued interest was $4,575 as of December 31, 2013.
On August 7, 2013, the Company issued an unsecured promissory note for $15,000 to the CEO of the Company in exchange for the acquisition of mining deeds. There is no interest associated with this note and the note matures on August 7, 2015.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Inflation
We believe that inflation has not had, and is not expected to have, a material effect on our operations.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Western Graphite, Inc.
(formerly Lucky Strike Explorations, Inc.)
We have audited the accompanying balance sheets of Western Graphite, Inc. (formerly Lucky Strike Explorations, Inc.) (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, stockholders’ equity and cash flows for the two years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Western Graphite, Inc. (formerly Lucky Strike Explorations, Inc.) at December 31, 2013 and 2012, and the results of its operations and its cash flows for the two years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has sustained net losses from operations, working capital deficit and stockholder’s deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 2 to the financial statements, the 2013 financial statements have been restated to correct the accounting for investments and certain other errors.
/s/ RBSM LLP
January 7, 2015
New York, New York
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Western Graphite, Inc. (formerly Lucky Strike Explorations, Inc.) BALANCE SHEETS |
| December 31, | ||||||||
| 2013 | 2012 | |||||||
| (Restated) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 18,314 | $ | 73 | ||||
| Prepaid expenses | - | 3,937 | ||||||
| Investments, net | 986 | - | ||||||
| Total Current Assets | 19,300 | 4,010 | ||||||
| Property and equipment, net | - | - | ||||||
| TOTAL ASSETS | $ | 19,300 | $ | 4,010 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | - | $ | 60 | ||||
| Loan payable - related party | 37,325 | 31,325 | ||||||
| Accrued interest | 7,795 | - | ||||||
| Notes payable | 150,000 | - | ||||||
| Total Current Liabilities | 195,120 | 31,385 | ||||||
| Non-Current Liabilities | ||||||||
| Note payable - related party | 15,000 | - | ||||||
| TOTAL LIABILITIES | 210,120 | 31,385 | ||||||
| Commitments and contingencies | - | - | ||||||
| STOCKHOLDERS' DEFICIENCY | ||||||||
| Common stock, $0.001 par value; 750,000,000 and 75,000,000 shares authorized, respectively, 71,667,667 and 58,000,000 shares issued and outstanding, respectively | 71,667 | 58,000 | ||||||
| Additional paid-in capital | 6,817,333 | 16,000 | ||||||
| Accumulated deficit | (7,079,820 | ) | (101,375 | ) | ||||
| TOTAL STOCKHOLDERS' DEFICIENCY | (190,820 | ) | (27,375 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ | 19,300 | $ | 4,010 | ||||
The accompanying notes are an integral part of these financial statements
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| Western Graphite, Inc. |
| (formerly Lucky Strike Explorations, Inc.) |
| STATEMENTS OF OPERATIONS |
| Years Ended December 31, | ||||||||
| 2013 | 2012 | |||||||
| (Restated) | ||||||||
| REVENUES | ||||||||
| Revenues | $ | - | $ | - | ||||
| TOTAL REVENUES | - | - | ||||||
| OPERATING EXPENSES | ||||||||
| Impairment of investments and mining properties | 6,539,014 | - | ||||||
| General and administrative expenses | 431,636 | 30,132 | ||||||
| TOTAL OPERATING EXPENSES | 6,970,650 | 30,132 | ||||||
| LOSS FROM OPERATIONS | (6,970,650 | ) | (30,132 | ) | ||||
| OTHER EXPENSE | ||||||||
| Interest expense | (7,795 | ) | - | |||||
| TOTAL OTHER EXPENSE | (7,795 | ) | - | |||||
| NET LOSS | $ | (6,978,445 | ) | $ | (30,132 | ) | ||
| Basic and diluted net loss per share | $ | (0.10 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding | 68,952,055 | 58,000,000 | ||||||
The accompanying notes are an integral part of these financial statements
| 10 |
Western Graphite, Inc. (formerly Lucky Strike Explorations, Inc.) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) |
| Additional | ||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| BALANCE, DECEMBER 31, 2011 | 58,000,000 | $ | 58,000 | $ | 16,000 | $ | (71,243 | ) | $ | 2,757 | ||||||||||
| Net loss | - | - | - | (30,132 | ) | (30,132 | ) | |||||||||||||
| BALANCE, DECEMBER 31, 2012 | 58,000,000 | 58,000 | 16,000 | (101,375 | ) | (27,375 | ) | |||||||||||||
| Common stock issued for investments and mining purchases | 13,000,000 | 13,000 | 6,487,000 | - | 6,500,000 | |||||||||||||||
| Common stock issued for stock based compensation | 500,000 | 500 | 289,500 | - | 290,000 | |||||||||||||||
| Common stock issued for services rendered | 166,667 | 167 | 24,833 | - | 25,000 | |||||||||||||||
| Net loss | - | - | - | (6,978,445 | ) | (6,978,445 | ) | |||||||||||||
| BALANCE, DECEMBER 31, 2013 (RESTATED) | 71,666,667 | $ | 71,667 | $ | 6,817,333 | $ | (7,079,820 | ) | $ | (190,820 | ) | |||||||||
The accompanying notes are an integral part of these financial statements
| 11 |
Western Graphite, Inc. STATEMENTS OF CASH FLOWS |
| Years Ended December 31, | ||||||||
| 2013 | 2012 | |||||||
| (Restated) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (6,978,445 | ) | $ | (30,132 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock issued for services | 25,000 | - | ||||||
| Stock based compensation | 290,000 | - | ||||||
| Impairment on investments | 1,514,014 | - | ||||||
| Impairment on asset purchase | 5,000,000 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Deposits | 3,937 | 463 | ||||||
| Accrued interest | 7,795 | - | ||||||
| Accounts payable and accrued liabilities | (60 | ) | (1,600 | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | (137,759 | ) | (31,269 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from note payable | 150,000 | - | ||||||
| Proceeds from loans payable, related party | 6,000 | 31,325 | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 156,000 | 31,325 | ||||||
| Net increase in cash | 18,241 | 56 | ||||||
| Cash, beginning of year | 73 | 17 | ||||||
| Cash, end of year | $ | 18,314 | $ | 73 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Common stock issued for investment | $ | 1,500,000 | $ | - | ||||
| Common stock issued for asset purchase | $ | 5,000,000 | $ | - | ||||
| Promissory note issued for acquisition of mining deeds | $ | 15,000 | $ | - | ||||
The accompanying notes are an integral part of these financial statements
| 12 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
NOTE 1. DESCRIPTION OF BUSINESS
Western Graphite Inc. (f/k/a Lucky Strike Explorations Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on December 15, 2006. The Company was formed to engage in the acquisition, exploration and development of natural resource properties.
NOTE 2. RESTATEMENT
The Company has restated herein its audited financial statements as of December 31, 2013 and for the year ended December 31, 2013, as well as its unaudited interim financial statements as of and for the quarters and year to date periods ended March 31, 2013, June 30, 2013 and September 30, 2013. The Company is no longer pursuing the acquisition of the mines stated in Note 5, therefore management has determined that the investments in the mining properties have been impaired due to inability of the Company to reliably determine the fair market value of the investments in the mining properties. The Company has reviewed all accounting transactions for the quarters and year ended December 31, 2013, to determine the effects of these impairments on the financial statements. As a result of reviewing all accounting transactions for the quarters and year ended December 31, 2013, the Company has determined that cash, deposits, accounts payable, note payable – related parties, and additional paid in capital needed to be restated as well due to findings in the documentation for all transactions reviewed related to the accounting for the investments in mining properties.
The following represents the changes to the restated financial statements as of and for the year ended December 31, 2013:
| Balance Sheets | ||||||||||||
| Restated | As previously reported | |||||||||||
| December 31, 2013 | December 31, 2013 | Differences | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash | $ | 18,314 | $ | 27,781 | $ | (9,467 | ) | |||||
| Deposit | - | 1,209 | (1,209 | ) | ||||||||
| Investments, net | 986 | - | 986 | |||||||||
| Total Current Assets | 19,300 | 28,990 | (9,690 | ) | ||||||||
| Fixed Assets | ||||||||||||
| Mining properties | - | 1,513,000 | (1,513,000 | ) | ||||||||
| Total Assets | $ | 19,300 | $ | 1,541,990 | $ | (1,522,690 | ) | |||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued expenses | $ | - | $ | 116 | $ | (116 | ) | |||||
| Loan payable - related party | 37,325 | 37,325 | - | |||||||||
| Accrued interest | 7,795 | 7,819 | (24 | ) | ||||||||
| Note payable | 150,000 | 150,000 | - | |||||||||
| Property payments due | - | 1,500,000 | (1,500,000 | ) | ||||||||
| Total Current Liabilities | 195,120 | 1,695,260 | (1,500,140 | ) | ||||||||
| Non-Current Liabilities | ||||||||||||
| Note payable - related party | 15,000 | - | 15,000 | |||||||||
| Total Liabilities | 210,120 | 1,695,260 | (1,485,140 | ) | ||||||||
| Stockholders' Deficiency | ||||||||||||
| Common stock, $0.001 par value; 750,000,000 shares authorized, 71,667,667 shares issued and outstanding | 71,667 | 71,667 | - | |||||||||
| Additional paid-in capital | 6,817,333 | 120,333 | 6,697,000 | |||||||||
| Accumulated deficit | (7,079,820 | ) | (345,270 | ) | (6,734,550 | ) | ||||||
| Total Stockholders' Deficiency | (190,820 | ) | (153,270 | ) | (37,550 | ) | ||||||
| Total Liabilities and Stockholders' Deficiency | $ | 19,300 | $ | 1,541,990 | $ | (1,522,690 | ) | |||||
| 13 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
| Statements of Operations |
| Restated | As previously reported | |||||||||||
| December 31, 2013 | December 31, 2013 | Differences | ||||||||||
| Revenues | ||||||||||||
| Revenues | $ | - | $ | - | $ | - | ||||||
| Total Revenues | - | - | - | |||||||||
| Operating Expenses | ||||||||||||
| Mineral property expenditures | - | 10,711 | (10,711 | ) | ||||||||
| Impairment of investments and mining properties | 6,539,014 | - | 6,539,014 | |||||||||
| General and administrative expenses | 431,636 | 225,365 | 206,271 | |||||||||
| Total Operating Expenses | 6,970,650 | 236,076 | 6,734,574 | |||||||||
| Loss from Operations | (6,970,650 | ) | (236,076 | ) | (6,734,574 | ) | ||||||
| Other Expense | ||||||||||||
| Interest expense, net | (7,795 | ) | (7,819 | ) | 24 | |||||||
| Total Other Expense | (7,795 | ) | (7,819 | ) | 24 | |||||||
| Net Loss | $ | (6,978,445 | ) | $ | (243,895 | ) | $ | (6,734,550 | ) | |||
| Basic and Diluted Net Loss per Share | $ | (0.10 | ) | $ | (0.00 | ) | $ | (0.10 | ) | |||
| Weighted average number of common shares outstanding | 68,952,055 | 71,666,667 | (2,714,612 | ) | ||||||||
| 14 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
| Statements of Cash Flows |
| Restated | As previously reported | |||||||||||
| December 31, 2013 | December 31, 2013 | Differences | ||||||||||
| Cash Flows From Operating Activities: | ||||||||||||
| Net Loss | $ | (6,978,445 | ) | $ | (243,895 | ) | $ | (6,734,550 | ) | |||
| Adjustments to reconcile net loss to net cash used in operations | - | |||||||||||
| Stock issued for services | 25,000 | - | 25,000 | |||||||||
| Stock based compensation | 290,000 | - | 290,000 | |||||||||
| Impairment on investment | 1,514,014 | - | 1,514,014 | |||||||||
| Impairment on asset purchase | 5,000,000 | - | 5,000,000 | |||||||||
| Changes in operating assets and liabilities: | - | |||||||||||
| (Increase) decrease in deposit | 3,937 | 2,728 | 1,209 | |||||||||
| Increase (decrease) in accrued interest | 7,795 | - | 7,795 | |||||||||
| Increase (decrease) in accounts payable and accrued liabilities | (60 | ) | 7,875 | (7,935 | ) | |||||||
| Net Cash Used In Operating Activities | (137,759 | ) | (233,292 | ) | 95,533 | |||||||
| Cash Flows From Investing Activities: | - | - | - | |||||||||
| Cash Flows From Financing Activities: | ||||||||||||
| Proceeds from notes payable | 150,000 | 150,000 | - | |||||||||
| Proceeds from loans payable - related party | 6,000 | 6,000 | - | |||||||||
| Issuance of common stock | - | 105,000 | (105,000 | ) | ||||||||
| Net Cash Provided by Financing Activities | 156,000 | 261,000 | (105,000 | ) | ||||||||
| Net Increase / (Decrease) in Cash | 18,241 | 27,708 | (9,467 | ) | ||||||||
| Cash at Beginning of Period | 73 | 73 | - | |||||||||
| Cash at End of Period | $ | 18,314 | $ | 27,781 | $ | (9,467 | ) | |||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest | $ | - | $ | - | $ | - | ||||||
| Cash paid for income taxes | $ | - | $ | - | $ | - | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||
| Increase (decrease) in property payments due | $ | - | $ | 1,500,000 | $ | (1,500,000 | ) | |||||
| Acquisition of mining properties | $ | - | $ | (1,513,000 | ) | $ | 1,513,000 | |||||
| Issuance of common stock | $ | - | $ | 13,000 | $ | (13,000 | ) | |||||
| Common stock issued for investment | $ | 1,500,000 | $ | - | $ | 1,500,000 | ||||||
| Common stock issued for asset purchase | $ | 5,000,000 | $ | - | $ | 5,000,000 | ||||||
| Promissory note issued for acquisition of mining deeds | $ | 15,000 | $ | - | $ | 15,000 | ||||||
| 15 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Company’s policy is to maintain its books and prepare its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments with original maturities of three months or less when purchased as cash equivalents. At times throughout the year, the Company might maintain bank balances that may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. Periodically, the Company evaluates the credit worthiness of the financial institutions, and has not experienced any losses in such accounts. As of December 31, 2013 and 2012, the Company did not have bank balances that exceeded the FDIC insured limits.
EARNINGS PER SHARE
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
For the years ended December 31, 2013 and 2012, the Company had no potentially dilutive commitments to issue common stock.
LONG-LIVED ASSETS
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s long-lived assets may be impaired. An asset’s value may be impaired only if management’s estimate of the aggregate future cash flows, on an undiscounted basis, to be generated by the asset are less than the carrying value of the asset.
If impairment has occurred, the loss is measured as the excess of the carrying amount of the asset over its fair value. The Company’s estimates of aggregate future cash flows expected to be generated by each long-lived asset are based on a number of assumptions that are subject to economic and market uncertainties. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved. As of December 31, 2013, total asset impairment was $5,000,000.
FAIR VALUE MEASUREMENT
The carrying amounts reported in the Company’s financial statements for prepaid expenses, accounts payable and accrued expenses, and loans payable approximate their fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported in the balance sheet for its notes payable approximates fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in the market place.
| 16 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
STOCK BASED COMPENSATION
On July 30, 2013, the Company’s Board of Directors approved the adoption of the 2013 Stock Option Plan, which permits the Company to issue up to 10,665,000 shares of common stock to directors, officers, employees and consultants upon the exercise of stock options granted under the 2013 Stock Option Plan.
The Company follows ASC 718, “Compensation – Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity–based Payments to Non-Employees”. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Through newly issued restricted common stock, we pay qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services.
For the years ended December 31, 2013 and 2012, the Company charged to operations stock based compensation totaling $290,000 and $0, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014 the Financial Accounting Standards Board issued Accounting Standards Update ASU 2014-10, “Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 remove the definition of a development stage entity from the master glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
The Company has elected to adopt the provisions of ASU 2014-10 for the current fiscal year ending December 31, 2013. The adoption of ASU 2014-10 did not have a significant impact on our results of operations, financial condition or cash flow.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.
| 17 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2014 and the Company will continue to assess the impact on its financial statements.
There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
NOTE 4. GOING CONCERN
The Company’s financial statements have been 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 incurred net losses of $6,978,445 and $30,132 during the years ended December 31, 2013 and 2012, respectively. Cash on hand will not be sufficient to cover debt repayments scheduled as of December 31, 2013 and operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. As of December 31, 2013 and 2012, the Company had working capital deficits of $175,820 and $27,375, respectively. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to seek equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described 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 5. INVESTMENT IN MINING PROPERTIES
On February 27, 2013, the Company acquired all the rights, title and interest in certain lands covering approximately 495 hectares known as the Amorf Graphite property located in the district of Bozyazi, in the village of Cabukkoyaoi, Mersin Province, Turkey. The Company acquired the rights to the property pursuant to an agreement with Dr. Ahment Unsai in exchange for 3,000,000 shares, of the Company’s common stock valued at $0.50 per shares for a total of $1,500,000, along with two future payments totaling $1,500,000. As of February 27, 2013, the Company does not have control of the property and therefore has accounted for the acquisition as an investment. The Company no longer is pursuing the purchase of the Amorf Graphite property, and thus the remaining terms of the deal have nullified. The Company has determined that the fair market value of the Amorf Graphite property cannot be reliably determined and therefore it has deemed a total impairment of $1,500,000 and corresponding impairment expense on the rights to the property.
On March 4, 2013, the Company entered into an agreement with Seyit Kucuk for the acquisition of five claims located in the Omineca Mining Division of the Province of British Columbia. The claims, which cover approximately 2,524 hectares, are known as the Pure Flake Graphite property and are subject to a 2% net milling royalty. In consideration for the acquisition of these claims, the Company issued 10,000,000 shares, valued at $0.50 per shares for a total of $5,000,000, of the company’s restricted common stock. The Company has determined that the fair market value of the Pure Flake Graphite property cannot be reliably determined and therefore it has deemed a total impairment of $5,000,000 and corresponding impairment expense on the property.
On August 7, 2013, the Company acquired mining claims for mineral tenures which cover approximately 2,464 hectares, in British Columbia, Canada, from a related party through the issuance of a $15,000 unsecured promissory note. The Company has determined that the fair market value of the deeds cannot be reliably determined and the only value that can be supported for these deeds is the acquisition fee price paid initially by the original owner of the deeds. The acquisition price at the time of original purchase on March 29, 2012 was $0.40 per hectare, or $986, resulting in an impairment of $14,014. The value of the mining deeds at December 31, 2013 is $986.
| 18 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
NOTE 6. LOAN PAYABLE – RELATED PARTY
As of December 31, 2013 and 2012, $37,325 and $31,325, respectively, is owed to an ex-officer and director of the Company and is non-interest bearing with no specific repayment terms. The Company plans to repay this loan through stock issuances, or through funding from the next round of financing.
NOTE 7. NOTE PAYABLE – RELATED PARTY
On August 7, 2013, the Company issued an unsecured promissory note for $15,000 to the CEO of the Company in exchange for the acquisition of mining deeds. There is no interest associated with this note and the note matures on August 7, 2015.
NOTE 8. NOTES PAYABLE
On May 10, 2013, the Company issued an unsecured promissory note for $50,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand. Accrued interest was $3,220 as of December 31, 2013.
On July 18, 2013, the Company issued an unsecured promissory note for $100,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand. Accrued interest was $4,575 as of December 31, 2013.
NOTE 9. INCOME TAXES
Reconciliation between the statutory United States corporate income tax rate (35%) and the effective income tax rates based on continuing operations is as follows:
| For the years ended December 31, | 2013 | 2012 | ||||||
| Income tax benefit at Federal statutory rate of 35% | $ | (153,801 | ) | $ | (10,546 | ) | ||
| State Income tax benefit, net of Federal effect | - | - | ||||||
| Permanent and other differences | - | - | ||||||
| Change in valuation allowance | 153,801 | 10,546 | ||||||
| Total | $ | - | $ | - | ||||
The Company did not have deferred tax assets or liabilities for the years ended December 31, 2013 and 2012.
At December 31, 2013, the Company has available net operating losses of approximately $541,000 which may be carried forward to apply against future taxable income. These losses will expire in 2031. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.
The provisions of ASC 740 require companies to recognize in their condensed consolidated financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the condensed consolidated financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s condensed consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.
| 19 |
WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
The Company has not filed its applicable Federal and State tax returns for the year ended December 31, 2012 and may be subject to penalties for noncompliance. The Company has filed an extension for the 2013 filings.
NOTE 10. STOCKHOLDERS’ EQUITY
The stockholders equity section of the Company contains the following classes of capital stock as of December 31, 2013 and 2012: Common Stock, $0.001 par value, respectively: shares issued and outstanding of 71,667,667 and 58,000,000.
Transactions, other than employee’s stock issuance, are in accordance with ASC 505. These issuances shall be accounted for based on the fair value of the consideration received. Transactions with employee’s stock issuance are in accordance with ASC 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
On February 27, 2013 the Company effected a 10 for 1 forward split of its issued and outstanding share capital such that everyone’s share of common stock issued and outstanding prior to the split was exchanged for ten post-split shares of common stock. The number of shares referred to in these financial statements reflect a post-split number of shares. The Company’s post-split authorized capital has increased to 750,000,000 shares of common stock with a par value of $0.001 per share. All share amounts have been retroactively adjusted for all periods presented.
On March 6, 2013 the Company issued a total of 3,000,000 shares of common stock to one individual for consideration for the rights to purchase the Amorf Graphite property, valued at $0.50 per share for a total of $1,500,000.
On March 6, 2013 the Company issued a total of 10,000,000 shares of common stock to one individual for the acquisition of the Pure Flake property, valued at $0.50 per share for a total of $5,000,000.
In July 2013, the Company issued a total of 500,000 shares of common stock, valued at $0.58 per share totaling $290,000, to two unrelated third parties as stock based compensation.
On November 25, 2013, the Company issued a total of 166,667 shares of common stock, valued at $0.15 per share totaling $25,000, to a company owned by the CEO of the Company for services rendered.
NOTE 11. SUBSEQUENT EVENTS
On April 3, 2014, the Company issued a convertible promissory note for $63,000 to an unrelated party for consulting services. The note accrues interest at 12% per annum, compounded monthly and matures on October 3, 2014. In the event of default, any overdue amounts will accrue interest at 20% per annum, compounded monthly. The principal balance of the note is convertible to common stock at the lower of either 0.03, or 50% of the lowest traded price 20 days prior to conversion, and is limited to 4.99% of the Company’s outstanding common stock at the time of conversion. All interest that accrues is convertible at $0.0001.
On May 1, 2014, the Company issued a convertible promissory note for $50,000. The note was issued for $30,000 in cash and $20,000 in payments towards services rendered. The note is due on demand and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 10% of the average of the three lowest trading prices for the ten days prior to conversion, and can be converted at any time at the option of the holder.
On August 15, 2014, the Company issued 62,000,000 shares of common stock, valued at $0.0002 per share totaling $10,000 to a related party, for cash.
In addition, in a private sale, on July 29, 2014, Lauren Notar, former Chief Executive Officer, sold to the Guelph Partners, LLC 10,000,000 shares of common stock out of her personal ownership which, when combined with the Stock Purchase Agreement of August 20, 2014, grants the Purchaser an aggregate of seventy two million (72,000,000) shares, representing fifty four percent (54%) of the issued and outstanding shares of the Company, on a fully-diluted basis.
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WESTERN GRAPHITE INC.
(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)
Notes to Financial Statements
For the Years Ended December 31, 2013 and 2012
On August 26, 2014, the Chairman and Chief Executive Officer (“CEO”) of the Company, Lauren Notar, resigned and David Wimberly became the new Chairman and CEO of the Company.
On August 26, 2014, the Company issued a convertible promissory note for $120,000 for consulting services. The note is due on August 26, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of the note is convertible at X-(X*25%), where X is the lesser of the closing price on date of conversion, or the closing price on date the note was executed multiplied by 1.25, and can be converted at any time at the option of the holder of the note.
On September 3, 2014, the Company issued a convertible promissory note for $60,000 for consulting services. This note is due on March 3, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0037 or the closing price on the date of conversion, and can be converted at any time at the option of the holder.
On September 10, 2014, the Company issued a convertible promissory note for $52,500 for consulting services. The note is due on April 10, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0025 or the closing price on the date of conversion, and can be converted at any time at the option of the holder.
On September 18, 2014, the Company issued 4,500,000 shares of common stock, valued at $0.0044 per share totaling $19,800 to an unrelated third party for legal services rendered.
On November 13, 2014, the Company issued 2,430,000 shares of common stock to a related party for consulting services regarding the financing and management of the Company’s business.
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ITEM 9. Changes in and Disagreements WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9a. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer (our president), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as a whole, and that the deficiency involving internal controls constituted a material weakness as discussed below.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of December 31, 2013, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.
Management assessed the effectiveness of the Company's internal control over financial reporting as of evaluation date and identified the following material weaknesses:
Insufficient Resources
We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
Inadequate Segregation of Duties
We have an inadequate number of personnel to properly implement control procedures.
Lack of Audit Committee and Outside Directors on the Company’s Board of Directors
We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
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Management, including our president, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of the members of the Company’s Board of Directors (the “Board”) and executive officers, and the positions held by each:
| Name | Age | Position | Director/Officer Since | |||
| Lauren Notar | 53 | President, Principal Executive Officer, Secretary, Treasurer and Director | March 6, 2013 | |||
| Harry Bygdnes | 73 | Director | July 1, 2013 |
There are no family relationships among the Company’s Board and executive officers. None of the directors of the Company is a director of any company registered pursuant to Section 12 of the Exchange Act, or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended.
No executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him or her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.
Business Experience
LAUREN NOTAR was an Investment Executive at Canaccord Capital Corp. in Vancouver British Columbia, Canada from March 2004 to June 2006. Her duties and responsibilities included to procuring potential wealth management clientele and raising capital for various public companies. From June 2007 to February 2008, Ms. Notar was employed at Ryland Oil and Gas, an oil and gas exploration company in Vancouver, British Columbia, Canada, wherein she was responsible for the company's investor relations activities. From April 2008 to August 2009, Ms. Notar was self-employed and was contracted out by Dolphin Enterprises, a mortgage software company and by Peach Facial Products, a start-up health products company, wherein she helped to construct marketing and sales programs to ensure financial growth and success for these companies. From September 2009 to February 2013, Ms. Notar was the president at Source Gold Corp., a gold mining exploration company. As President, her duties were to manage the company's day-to-day operations and all SEC regulations. Ms. Notar resigned from Source Gold Corp. to join our company. Ms. Notar majored in Education at the York University in Ontario in 2000 and studied at Niagara College in the field of business management, in 1997.
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HARRY BYGDNES graduated from the University of British Columbia in 1967 with a Bachelor of Science degree in physics and mathematics. Upon completion of his formal education Mr. Bygdnes joined Texaco Canada in Calgary Alberta where he held the position of Assistant to the Chief Geophysicist for Canada. In his role as Geophysicist his responsibilities included acquisition and interpretation of seismic data, mapping and joint recommendations for well site locations in conjunction with company geological personnel, and field supervision of seismic crew operations as company representative. Mr. Bygdnes left Texaco in 1971 and joined a small Calgary firm called Explor-Alta to become Field Supervisor of Arctic marine operations in summer and Operation Manager for land seismic operations in winter. Explor-Alta was able to provide important seismic data for companies such as Texaco, Exxon and Gulf Oil. In 1973, Mr. Bygdnes left Explor-Alta to set up his own private company specializing in acquisition and computer processing of seismic data. In 1980 Mr. Bygdnes moved to Vancouver to form a small public company called Consort Energy Corp. The company originally participated in small joint venture oil well drilling operations in Texas, Oklahoma and Kansas. When the oil business faltered in the early nineteen-eighties Mr. Bygdnes turned the attention of the company to mineral exploration and conducted an extensive joint venture drilling program with major mining company adjacent to the Echo Bay Lupin Goldmine in the NWT. In 1988, Mr. Bygdnes and a partner purchased the rights to a patented ice replacement product from an inventor in San Diego. The previous exploration programs had limited results so Mr. Bygdnes consolidated the company and formed Cryopak Industries Inc. Mr. Bygdnes acted as President, and Chief Executive Officer of Cryopak for 12 years at which time he retired to the position of Chairman of the Board bringing his considerable expertise into the company. During this time with the company, Mr. Bygdnes was able to raise in excess of CDN$12,000,000 largely through European investors. In 2002, Mr. Bygdnes and a partner formed B&K Productions Inc., a production company focused on entering into the television-programming field. B&K Productions produced three episodes of the TV show “Hook Line and Supper” a show that combines fishing with gourmet cooking. Mr. Bygdnes participated as host of the show as well as producer. Bygdnes introduced the show at the MIPTV festival in Cannes France in 2003. Although the show received much interest it has not sold at present. Mr. Bygdnes presently holds the position of President of County Line Energy Corp., a start-up over-the-counter trading US company seeking opportunity in the resource sector. Mr. Bygdnes presently consults to several junior companies in the resource field.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our members of our Board and executive officers, and persons who own more than ten percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of our common stock. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied, except that (i) Harry Bydgnes did not file a Form 3 upon becoming a director of the Company on July 1, 2011, which was required to be filed by July 11, 2013 and (ii) Harry Bydgnes did not file a Form 4 for 250,000 shares of common stock issued to him on July 1, 2013.
Code of Ethics
The Company’s executive officers are held to the highest standards of honest and ethical conduct when conducting the Company’s affairs. All such individuals must act ethically at all times in connection with services provided to the Company. We have not, however, adopted a formal, written corporate code of ethics that applies to our executive officers. We are evaluating the implementation of a formal code of ethics in the near future.
Corporate Governance
Committees
The Company does not have any committees of the board of directors at this time. The Board does not have a nominations committee because there is only one (1) director and shareholder suggestions would be known to the entire Board. As such, the Board believes there will be sufficient communication by shareholders with the Board about matters and nominees to be brought to its attention.
The Board functions as an audit committee and performs some of the same functions as an audit committee including: (1) selection and oversight of the Company's independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; and (3) engaging outside advisors. The Company, the Board has determined that its directors are not an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. The Board has determined, however, that its directors are able to read and understand fundamental financial statements and has business experience that results in that member's financial sophistication. Accordingly, the Company and the Board has directed that, in light of the material weaknesses identified in our disclosure controls and procedures and internal control over financial reporting, that the CEO become more familiar with the SEC Filing requirements and the Company will seek additional outside assistance as funding becomes available to provide such a service.
The directors will serve as directors until our next annual shareholder meeting or until a successor is elected who accepts the position. Directors are elected for one-year terms. Officers hold their positions at the will of the Board of Directors, absent any employment agreement. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the Company’s affairs.
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ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
During 2013, we did not pay any compensation to any of our executive officers, except that we agreed to provide Ms. Notar with monthly compensation of $6,500 for her services as an officer and director of the Company. There have been no annuity, pension or retirement benefits paid to our officers or directors during the past two fiscal years.
Outstanding Equity Awards at Fiscal Year End
We did not have any equity awards issued to executive officers during the fiscal year ended December 31, 2013.
Director Compensation
During the fiscal year ended December 31, 2013, we agreed to provide Mr. Bygdnes with monthly compensation of $2,000 and will issue to him 100,000 shares of our common stock. On July 1, 2013, the company issued a total of 250,000 shares of common stock to Harry Bygdnes as compensation as a member of the Western Graphite Board. We also agreed to provide Ms. Notar with monthly compensation of $6,500 for her services as an officer and director of the Company.
Stock Option and Stock Bonus Plans. On July 30, 2013 our directors approved the adoption of the 2013 Stock Option Plan which permits our company to issue up to 10,665,000 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2013 Plan.
Long-Term Incentive Plans. We do not provide our officers or employees with pension, stock appreciation rights or long-term incentive plans.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.
Compensation of Directors. During the year ended December 31, 2013, we did not compensate our directors for acting as such except for the compensation paid to Harry Bygdnes as described above.
ITEM 12. sECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership of our common stock as of December 31, 2013 and immediately after the completion of this offering by each person, or group of affiliated persons, known by us to be the beneficial owner of 5% or more of our outstanding common stock.
To our knowledge, each person named in the table has sole voting and investment power with respect to all of the securities shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. The number of securities shown represents the number of securities the person “beneficially owns,” as determined by the rules of the SEC. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after that date through (1) the exercise of any option, warrant or right, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement, or (4) the automatic termination of a trust, discretionary account or similar arrangement.
The following table sets forth the beneficial ownership of our capital stock by each executive officer and director, by each person known by us to beneficially own more than five percent (5%) of any class of stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares of common stock are owned directly and the percentage shown is based on 71,666,667 shares of Common Stock issued and outstanding as of December 31, 2013.
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| Title of Class | Name and Address | Current Ownership | Current Ownership Percentage (1) | |||||||
| Current Executive Officers & Directors: | ||||||||||
| Common Stock | Lauren Notar, 905 Pine Cove Road, Burlington A6: Ontario Canada L7N 1W1 | 14,000,000 | 19.5 | % | ||||||
| Common Stock | Harry Bygdnes c/o Western Graphite Inc. Hudson Bay Center, 2 Bloor Street East, Suite 3500, Toronto, Ontario M4W 1A8 | — | * | |||||||
| Total of All Current Officers and Directors | 14,000,000 | 19.6 | % | |||||||
| 5% Beneficial Owners: | ||||||||||
| Common Stock | - | - | ||||||||
| Total of All Current Officers, Directors and 5% Owners | 14,000,000 | 19.6 | % | |||||||
* Less than 1%
| (1) | This percentage is based on 71,666,667 shares of common stock outstanding as of December 31, 2013. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 2013 we owed $37,325 to Michael Noble, a former officer and director of the Company. The amount owed is non-interest bearing with no specific repayment terms. Mr. Noble made the loan to us in 2012 while he was an executive officer and director of the Company.
ITEM 14. pRINCIPAL ACCOUNTING FEES AND SERVICES
For the year ended December 31, 2013, the total fees charged to the Company by George Stewart, CPA for audit services were $9,400, for audit-related services were $0, for tax services were $0 and for other services were $0.
For the year ended December 31, 2012, the total fees charged to the Company for audit services by George Stewart, CPA were $9,000, for audit-related services were $0, for tax services were $0 and for other services were $0.
Audit Committee’s Pre-Approval Practice
Prior to our engagement of our independent auditor, such engagement was approved by our board of directors. The services provided under this engagement may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Pursuant our requirements, the independent auditors and management are required to report to our board of directors at least quarterly regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. Our board of directors may also pre-approve particular services on a caseby- case basis. All audit-related fees, tax fees and other fees incurred by us for the year ended December 31, 2013, were approved by our board of directors.
The following exhibits are included with this Annual Report on Form 10-K/A:
| Exhibit No. | Description | |
| 31 | Sec. 302 Certification of Principal Executive Officer and Principal Financial Officer | |
| 32 | Sec. 906 Certification of Principal Executive Officer and Principal Financial Officer | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf on December 22, 2014 by the undersigned thereunto duly authorized.
| Western Graphite Inc. | ||
| Dated: January 8, 2015 | By: /s/David Wimberly | |
| David Wimberly, Chief Executive Officer and Chief Financial Officer | ||
| (Principal Executive Officer and Principal Financial & Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated
| /s/ David Wimberly | January 8, 2015 | ||
| David Wimberly, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial & Accounting Officer) |
Date |
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