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American Graphite Technologies Inc. (AGIN) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2015

American Graphite Technologies Inc.

CIK: 1497316 Ticker: AGIN
Document and Entity Information
9 Months Ended
Mar. 31, 2015
May 15, 2015
Document and Entity Information:    
Entity Registrant Name AMERICAN GRAPHITE TECHNOLOGIES INC.  
Entity Central Index Key 0001497316  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Type 10-Q  
Document Period End Date Mar. 31, 2015  
Document Fiscal Year Focus 2015  
Document Fiscal Period Focus Q3  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   96,083,348dei_EntityCommonStockSharesOutstanding


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended March 31, 2015
   
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from __________ to __________

000-54521
Commission File Number
 
American Graphite Technologies Inc.
(Exact name of registrant as specified in its charter)
   
Nevada
27-2841739
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
3651 Lindell Rd., Ste D#422, Las Vegas, NV
89103
(Address of principal executive offices)
(Zip Code)
 
(702) 473-8227
(Registrant’s  telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
 Yes [X]  No [  ]

 
 

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
 Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
[  ]
Accelerated filer
[  ]
       
Non-accelerated filer
[  ]
Smaller reporting company
[X]
(Do not check if a smaller reporting company)
     
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 
Yes [  ] No [ X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 
Yes [  ]  No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

96,083,348 common shares outstanding as of May 15, 2015
(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)
 
 
2

 

AMERICAN GRAPHITE TECHNOLOGIES INC.

   
Page
 
PART I – Financial Information
 
Financial Statements
  4
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  5
Quantitative and Qualitative Disclosures About Market Risk
10
Controls and Procedures
10
     
 
PART II – Other Information
 
Legal Proceedings
11
Risk Factors
11
Unregistered Sales of Equity Securities and Use of Proceeds
11
Defaults Upon Senior Securities
11
Mine Safety Disclosures
11
Other Information
11
Exhibits
12
 
13

 
3

 
PART I – FINANCIAL INFORMATION
 
ITEM 1.                 FINANCIAL STATEMENTS
 
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  All such adjustments are of a normal recurring nature.  Operating results for the nine month period ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2015.  For further information refer to the financial statements and footnotes thereto included in our company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014 as filed with the Securities and Exchange Commission on October 14, 2014.
 
REPORTED IN UNITED STATES DOLLARS

 
 
4

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
 
   
March 31,
2015
(Unaudited)
   
June 30,
2014
(audited)
 
Assets
           
CURRENT ASSETS
           
Cash
 
$
139,047
   
$
307,693
 
Prepaid expenses
   
336,494
     
336,494
 
TOTAL CURRENT ASSETS
   
475,541
     
644,187
 
TOTAL ASSETS
 
$
475,541
   
$
644,187
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
               
Accounts payable and accrued liabilities
 
$
43,640
   
$
32,795
 
TOTAL CURRENT LIABILITIES
   
43,640
     
32,795
 
                 
Derivative warrant liabilities (Notes 2, 6)
   
568,234
     
554,828
 
                 
TOTAL LIABILITIES
   
611,874
     
587,623
 
                 
STOCKHOLDERS’ EQUITY(DEFICIT)
               
Capital stock
Authorized   -  200,000,000 shares of common stock, $0.001 par value
Issued and outstanding
96,083,348 shares of common stock  as at March 31, 2015 and June 30, 2014
   
96,083
     
96,083
 
Additional paid in capital
   
1,357,448
     
1,357,448
 
Other Comprehensive income (loss)
   
(59
)
   
-
 
Accumulated deficit
   
(1,589,805
)
   
(1,396,967
)
TOTAL STOCKHOLDERS’ EQUITY(DEFICIT)
   
(136,333
)
   
56,564
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
 
$
475,541
   
$
644,187
 

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

 
F-1

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
UNAUDITED
 
   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
   
March 31,
   
March 31,
 
   
2015
   
2014
   
2015
   
2014
 
                             
REVENUE
 
$
-
   
$
-
   
$
-
   
$
-
 
                                 
OPERATING EXPENSES
                               
Exploration expenses
   
-
     
-
     
25,648
     
-
 
Research and development expenses
   
-
     
700
     
-
     
45,532
 
Office and general
   
7,951
     
25,002
     
24,765
     
108,513
 
Stock based compensation
   
-
     
45,313
     
-
     
87,313
 
Management fees
   
15,000
     
37,500
     
78,750
     
85,400
 
Consulting fees
   
5,232
     
22,714
     
25,468
     
122,040
 
Professional fees
   
6,159
     
8,756
     
24,801
     
38,666
 
OPERATING LOSS
   
(34,342
)
   
(139,985
)
   
(179,432
)
   
(487,464
)
                                 
OTHER EXPENSE
                               
Change in the fair value of warranty liability
   
(5,909
)
   
(189,680
)
   
(13,406
)
   
(159,681
)
                                 
NET LOSS
 
$
(40,251
)
 
$
(329,665
)
 
$
(192,838
)
 
$
(647,145
)
                                 
NET LOSS PER COMMON SHARE - BASIC
 
$
(0.00)
   
$
(329,665
)
 
$
(0.00
)
 
$
(0.01
)
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC
   
96,083,348
     
85,130,539
     
96,083,348
     
82,577,917
 
                                 
COMPREHENSIVE LOSS
                               
Net loss
 
$
(40,251
)
 
$
(329,665
)
 
$
(192,838
)
 
$
(647,145
)
Foreign currency translation adjustment
   
(93
)
   
-
     
(59
)
   
-
 
TOTAL COMPREHENSIVE LOSS
 
$
(40,344
)
 
$
(329,665
)
 
$
(192,897
)
 
$
(647,145
)

The accompanying notes are an integral part of these financial statements.
 
F-2

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
 
   
Nine Months ended
March 31,
 
   
2015
   
2014
 
OPERATING ACTIVITIES
           
Net loss
 
$
(192,838
)
 
$
(647,145
)
Adjustments to reconcile net loss to net cash used by
               
Stock-based compensation
   
-
     
87,313
 
Change in the fair value of warrant liability
   
13,406
     
159,681
 
Changes in operating assets and liabilities:
               
   Increase in accounts payable and accrued liabilities
   
(4,155
)
   
(293
)
   Increase in accounts payable – related party
   
15,000
     
10,114
 
   Increase in prepaid expenses
   
-
     
(116,494
)
NET CASH USED IN OPERATING ACTIVITIES
   
(168,587
)
   
(506,824
)
                 
FINANCING ACTIVITIES
               
   Proceeds from sale of common stock
   
-
     
799,500
 
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
-
     
799,500
 
                 
Effect of foreign exchange on transactions
   
(59
)
   
 
                 
NET INCREASE (DECREASE) IN CASH
   
(168,646
)
   
292,676
 
                 
CASH BEGINNING OF PERIOD
   
307,693
     
116,588
 
                 
CASH, END OF PERIOD
 
$
139,047
   
$
409,264
 
                 
 Supplemental cash flow information and noncash financing activities:
               
   Cash paid for interest
 
$
-
   
$
-
 
   Cash paid for income taxes
 
$
-
   
$
-
 
                 
Non-cash transactions
               
Stock based compensation
 
$
-
   
$
87,313
 

The accompanying notes are an integral part of these financial statements.
 
F-3

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
(Unaudited)

NOTE 1 – NATURE OF OPERTIONS AND BASIS OF PRESENTATION

American Graphite Technologies Inc. (Formerly Green & Quality Home Life, Inc.) (the “Company”) was incorporated on June 1, 2010 in the State of Nevada and established a fiscal year end at June 30. The Company was originally organized to offer a portfolio of products and services to provide solutions for every family to automate domestic activities, making them less time consuming, easy to manage and leveraging the quality of life of every member of a family.

On May 23, 2012, Rick Walchuk, acquired a total of 12,000,000 pre-forward split shares of the Company’s common stock from Fabio Alexandre Narita, the Company’s former director and officer, in a private transaction for an aggregate total of $350,000. The funds used for this share purchase were Mr. Walchuk’s personal funds. Mr. Walchuk’s 12,000,000 shares amounted to approximately 98% of the Company’s then currently issued and outstanding common stock.  This transaction effected a change in control of the Company.  With the change in control of the Company management determined to abandon the original business plan and has determined to enter into the business of exploration and development of mining projects and technology related to graphite and grapheme.  

As part of the sale of his shares Mr. Narita agreed to extinguish all debts owed to him by the Company.

Also on May 23, 2012, Fabio Alexandre Narita resigned as a director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company. In connection with the resignation of Mr. Narita, Rick Walchuk was appointed President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, Secretary and a director. On December 13, 2013, the Board of Directors of the Company appointed Con Evan Anast to the Board of Directors of the Company and elected him Secretary of the Company, having received the resignation of Mr. Walchuk as Company Secretary.

On June 11, 2012, the Company’s Board of Directors unanimously approved the following items:

1. an amendment to the Company’s Articles of Incorporation to change its name to “American Graphite Technologies Inc.” (the “Name Change”);

2. an amendment to the Articles of Incorporation to increase our authorized capital from 75,000,000 to 200,000,000 shares of common stock, $0.001 par value; and

3. an authorization by the Board of Directors to effect a forward split of the Company’s common stock, par value $0.001 per share at an exchange ratio of one hundred and twenty-five (125) for one (1) and to file such amendments as may be required with the requisite regulatory bodies to effect the Forward Split, so that every one (1) outstanding share of Common Stock before the forward split shall represent one hundred and twenty-five (125) shares of common stock after the forward split.

On June 11, 2012, our majority stockholder executed written consent in lieu of a special meeting approving the Amendments.

Pursuant to these actions to be undertaken by the Company, Mr. Walchuk returned a total of 11,640,000 pre-forward split shares of common stock which were cancelled by the Company and returned to treasury.

Effective July 18, 2012, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), the Company changed its name from Green & Quality Home Life, Inc. to American Graphite Technologies Inc. and increased its authorized capital from 75,000,000 to 200,000,000 shares of common stock, par value of $0.001. In addition, the Compan’s issued and outstanding shares of common stock increased from 619,500 to 77,437,500 shares of common stock, par value of $0.001 on the basis of a 125:1 forward split of the Company’s issued and outstanding shares of common stock. The forward split has been retroactively applied to all shares and per share figures in these financial statements.
 
 
F-4

 
 AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
(Unaudited)

NOTE 1 – NATURE OF OPERTIONS AND BASIS OF PRESENTATION (continued)
 
On October 16, 2014, the Company incorporated a wholly owned subsidiary, 9311-2571 Québec Inc. in order to stake additional mineral claims in the Province of Quebec.

Unaudited Interim Financial Statements
The unaudited interim consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended June 30, 2014, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending June 30, 2015.

Going Concern
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have material assets aside from cash and prepaid expenses, nor does it have operations or a source of revenue sufficient to cover its operating costs.  While there are sufficient funds to carry out the current operations of the Company, with no revenue generating operations there remains substantial doubt about our ability to continue as a going concern. As at March 31, 2015, the Company has an accumulated deficit of $1,589,805. While the Company presently has cash on hand, the Company may be dependent upon the raising of additional capital through placement of its common stock in order to fully implement its business plan, or merge with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on attaining profitable operations, accordingly there remains substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amount and classification of liabilities that might cause results from this uncertainty.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principle of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, 9311-2571 Québec Inc.  All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
 
F-5

 
 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Warrants
The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815 “Derivatives and Hedging – Contracts in Entity’s Own Equity”(ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement.  The Company classifies derivative warrant liabilities on the balance sheet as a current liability, which is revalued at each balance sheet date, subsequent to the initial issuance.  The Company uses the Monte Carlo Options Lattice model, depending on the applicable terms of the warrant agreement, to value the derivative warrant liabilities.  Changes in the fair value of the warrants are reflected in the statement of operations as “Change in the fair value of warrant liability.”  See, Note 6 – financial agreement – (3) Securities Purchase Agreement, for a detailed description of our accounting for derivative warrant liabilities.
 
Income Taxes
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.  Accounting guidance now codified as FASB ASC Topic 740-20, “Income Tax – Intra-period Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets.

Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
 
The Company had the following potential common stock equivalents at March 31, 2015:

Warrants
4,012,500
 
Since the Company reflected a net loss in the three and nine month periods ended March 31, 2015 and 2014, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive.  A separate computation of diluted earnings (loss) per share is not presented.
 
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2015 and 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

 
 
F-6

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

As set forth in the Statement of Financial Accounting Standard No.  820-10-35-37 Fair Value in Financial Instruments (previously and herein referenced as “157”) to increase consistency, a fair value hierarchy was developed to rank the reliability of inputs that reflect assumptions, used as a basis for determining fair value. FAS 157 emphasizes that valuation techniques (income, market, and cost) used to measure the fair value of an asset or liability should maximize the use of observable inputs, that is, inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. The FAS 157 accounting standard requires companies use actual market data, when available or models, when unavailable. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available, except when it might not represent fair value at the measurement date. When using models, FAS 157 provides guidance on appropriate valuation techniques and addresses the inherent valuation issue of risk. A fair value measurement should include an adjustment for risk if market participants would include one in pricing the related asset or liability, even if the adjustment is difficult to determine.

The Company analyzed the derivative financial instruments, in accordance with EITF 07-05 and FAS 133. EITF 07-5 is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. It should be applied to outstanding instruments as of the beginning of the fiscal year in which it is adopted. Any adjustment would be recognized in the opening balance of retained earnings. The objective of EITF 07-5 is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of FAS 133 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A nonderivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions.

Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60. In determining the fair value of the derivatives we assumed that the Company’s business would be conducted as a going concern. These derivative liabilities will need to be marked-to-market each quarter with the change in fair value recorded in the income statement. The FASB and IRS have provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60.

 
 
F-7

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)

Our opinion of Fair Value relied on a “value in use” or “going concern” premise. To properly apply this fair value standard, we gave consideration to the Holder’s intentions regarding whether or not the Securities purchased were to be held, sold, or abandoned. Our analysis also reflects assumptions that would be made by market participants if these market participants were to buy or sell each identified asset on an individual basis.

The Warrants issued with debt contain derivatives and require accounting under FAS 133 until exercised or expired. The derivative liability is marked to market each subsequent reporting period.

The following table summarizes the components of the derivate liabilities:

Warrant liability:
 
March 31,
2015
   
June 30,
2014
   
March 14,
2014
   
September 9,
2013
 
4,000,000 common stock purchase agreement dated September 9, 2013 *
  $ -     $ -     $ 1,482,326     $ 1,243,455  
3,750,000 common stock purchase agreement dated March 14, 2014
    568,234       554,828       562,761       -  
    $ 568,234     $ 554,828     $ 2,045,087     $ 1,243,455  

*On March 14, 2014, the 3 subscribers, who were subscribers in an offering undertaken by the Company on September 9, 2013, along with 2 subscribers that did not elect to participate in this offering, executed a waiver and consent in regard to their rights under the September 9, 2013 offering (the “Original SPA”), whereby they waived the rights to receive any additional shares of common stock under the Original SPA agreements and the Company and the 5 investors agreed to a re-pricing of the warrants issued under the Original SPA from an exercise price of $0.30 per share to $0.0724 per share and that such reduction of the Exercise Price was deemed a reduction in connection with a Dilutive Issuance (as defined in the Warrants) and the number of Warrant Shares that may be purchased upon exercise of the Warrants increased.  On March 14, 2014 through March 21, 2014, the Company received notices and executed cashless exercise from the subscribers under the Original SPA.

The following table summarizes the number of common shares indexed to the derivative financial instruments as of March 31, 2015 and June 30, 2014:
 
   
Warrant
Derivatives
 
4,000,000 common stock purchase agreement dated September 9, 2013
   
-
 
3,750,000 common stock purchase agreement dated March 14, 2014
   
4,012,500
 
     
4,012,500
 

The following table summarizes the effects on our income (expense) associated with changes in the fair values of our derivative financial instruments by type of financing:
 
   
Nine months ended
 
   
March 31,
 
     
2015
     
2014
 
4,000,000 common stock purchase agreement dated September 9, 2013
 
$
     
$
176,853
 
3,750,000 common stock purchase agreement dated March 14, 2014
   
13,406
     
(17,172
)
   
$
13,406
   
$
159,681
 

 
F-8

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.  Parties are also considered to be related if they are subject to common control or common significant influence.

Stock-based Compensation
Stock-based compensation is accounted for using the Equity-Based Payments to Non-Employees Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company determines the value of stock issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.

Recent Accounting Pronouncements

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs.  The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts.  Currently, debt issuance costs are presented as a deferred asset.  The recognition and measurement requirements will not change as a result of this guidance.  The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis.   This amendment will not have a material impact on our financial statements. 
 
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of March 31, 2015, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

NOTE 3 – TECHNOLOGY AGREEMENTS

On December 3, 2012, the Company entered into and executed a non-exclusive technology license agreement for patent and trade secret technology in the field of graphene oxide or “Bucky” paper with Cheap Tubes, Inc.  Pursuant to the terms of the agreement, the Company acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the manufacturing processes for graphene products, including graphene paper, also known as Bucky Paper.  The Company agreed to fund commercial development activities based on the payment schedules defined below and it received a license for the rights on a nonexclusive basis for marketing products and/or services.   Pursuant to the terms of the agreement, the Company agreed to provide the following payments to Cheap Tubes:

A minimum of $250,000 over 18 months, payable as follows: 

 
-
$10,000 on the execution of the agreement; (paid) 
 
 
-
$40,000 per quarter on January 1, 2013, April 1, 2013, July 1, 2013 and October 1, 2013 and on January 1, 2014 and April 1, 2014.

 
F-9

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 3 – TECHNOLOGY AGREEMENTS (continued)

Under the terms of the agreement, Cheap Tubes was to incorporate a new corporation (“Newco”) and assign all rights and obligations of the agreement with the Company as well as the patent agreement.  The newly formed corporation would then become the party to this agreement.   Until such time as Newco was formed all funds paid were to remain in an attorney escrow.  Further, in order to have funds released from escrow the parties were to formulate and agree to a milestone schedule to be met by Cheap Tubes or Newco as the case may be.   Each quarter the milestones from the prior quarter must be met as a pre-condition to the upcoming quarterly funding.   Under the agreement the Company was granted a non-exclusive license to market and distribute Bucky Paper using the patents, trade secrets and knowhow (the “Proprietary Rights”) throughout the world.   Newco or Cheap Tubes will manufacture the Bucky Paper products and the Company shall have no rights to sublicense the Proprietary Rights to a third party.  As the agreement is non-exclusive, Cheap Tubes will also have the right to market and distribute Bucky Paper products, subject to our ongoing fees, as described below.

As consideration for funding, the Company will receive 40% of the Net Sales Revenue for Bucky Paper until the amount it has received equals its capital investment regardless of whether the Company, Cheap Tubes or CTI are the ultimate vendors on the sale.  Thereafter, the Company will receive 30% of its capital investment until such time as it has received an amount equal to 20% of the capital invested, 25% for the next five years and 20% for the remaining five years, at which time all obligations to the Company from Cheap Tubes or CTI shall cease.

Under the agreement, any new opportunities presented to the Company or Mike Foley (the shareholder of Cheap Tubes), Cheap Tubes or CTI are to be negotiated and if agreement is reached then shall be formalized in a mutually acceptable definitive agreement; with no obligation upon either party to enter into an agreement should they not be able to negotiate mutually acceptable terms.  However, it is the intent of the parties to work toward furthering the business of Cheap Tubes, CTI, our business and any new business that may present itself.

As at June 30, 2014, the Company has paid cash in the amount of $335,000 pursuant to the agreement, and recorded the amount as prepaid expense - advances on future revenue under the licensing agreement.  All payments due under the licensing agreement are current per the terms of the agreement.  

During the period ended September 30, 2014, CTI provided the Company with a notice claiming that additional payments are due under the terms of the agreement with them.  The Company has responded advising that all payments required pursuant to the terms of the agreement have been paid in full.  As at March 31, 2015 the Company has not made any further expenditures on this project.

Technology Development Agreement

On April 24, 2013 the Company signed a letter of intent (LOI) with the National Academy of Science of Ukraine; National Science Centre; Kharkov Institute of Physics and Technology (“KIPT”), Kharkov, Ukraine in regard to a research project dubbed “P-600”.

P-600 will research the properties of nanocarbon contained matter (graphene) as working material for 3D printing. The project will be a partnership between the Company, Science and Production Establishment “Renewable Energy Sources and Sustainable Technologies” (“RESST”) National Science Center “KIPT” National Academy of Science of Ukraine and Institute of Solid State Physics and Material Science National Science Center “KIPT”  National Academy of Science of Ukraine.

On October 17, 2013, the Company finalized an intellectual property agreement for its 3D Project P-600 (the “Agreement”) with the project manager and National Science Centre KIPT of the National Academy of Sciences of Ukraine and remitted the funds to allow commencement of the Project.

Under the agreement, the Company agreed to Project costs of $42,697. Changes to the proposed budget could be made based on agreement of both sides. During the fiscal year ended June 30, 2014, the Company has paid a total of $44,832 as Project costs which have been recorded as research and development expenditures.

 
 
F-10

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 3 – TECHNOLOGY AGREEMENTS (continued)

Technology Development Agreement – Cont’d

On November 1, 2014, the Company entered into an amendment to the Agreement for a term of six months at no additional cost to the Company in order to allow completion of the research as outlined in the Agreement resulting from certain unforeseen delays experienced at the National Science Centre KIPT of the National Academy of Sciences of Ukraine as reported by the project manager.  The Agreement will continue until April 30, 2015 at which time a full report of results will be made available. The full report has not yet been received as at May 15, 2015.

NOTE 4 – MINERAL PROPERTIES

During January, 2013, the Company engaged the services of Geomap Exploration Inc. (“Geomap”) to identify and stake certain mineral claims in an area in Quebec, Canada that has existing exploration for graphite being undertaken by adjacent companies.  The staking has been completed and a total of 100 mineral claims have been staked for transfer to the Company. The mineral claims encompass an area of approximately 5,400 hectares (13,343 acres) in Quebec, Canada.  They are located in the vicinity of an identified high grade graphite deposits, the Lac Gueret project belonging to Mason Graphite Corp., and new discoveries recently announced by Focus Graphite.  Geologically, the property has mineralization similar to other graphite deposits/discoveries in the area.  The mineral claims are in an area where the property has been designated by the Quebec Government for major economic, social and environmental development.  The mineral claims are 100% owned by the Company with no royalty or net smelter return requirements.  
 
The costs for staking of $7,179 and fees of $17,289 for geological services rendered to stake the claims were recorded as exploration expenses in the fiscal year ended June 30, 2013.  The Company is required to expend a total of $120,000 in exploration costs prior to January 2015 in order to keep the claims in good standing.

During the nine month period ended March 31, 2015 and fiscal year ended June 30, 2014 the Company was unable to organize a suitable exploration program and did not make any expenditure on the claims resulting in their expiry during the quarter ended March 31, 2015.

On October 24, 2014, the Company entered into a  further consulting services agreement with Geomap whereunder Geomap was retained to acquire further graphite exploration property(ies) for a total cost of USD$24,502 (CDN$27,300) including applicable taxes.  The Company paid a further $1,146 to transfer all staked claims to its wholly owned Quebec subsidiary. The total amount of $25,648 was recorded as exploration expenses during the nine month period ended March 31, 2015.   The 84 staked mineral claims known as the The Lac Rouge Graphite Property is one contiguous block totaling 4,982 hectares (12,311 acres) of land near the town of Mont-Laurier in southern Québec. The mineral claims are 100% owned by the Company with no royalty or net smelter return requirements and will remain in good standing until the close of 2016.    The Company is presently working with Geomap on the scope of an exploration work program for the current year.
 
NOTE 5 – PREPAID EXPENSES AND ADVANCES

The following table provides detail of the Company’s prepaid expenses as of March 31, 2015 and June 30, 2014:

   
March 31, 2015
   
June 30, 2014
 
News releases
 
$
1,494
   
$
1,494
 
Advances related to technology agreement – Note 3
   
335,000
     
335,000
 
   
$
336,494
   
$
336,494
 

 
F-11

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)


NOTE 6 – SECURITIES PURCHASE AGREEMENT

On March 14, 2014, the Company closed a financing with three subscribers, whom had previously completed a financing with the Company.  Under this Securities Purchase Agreement (SPA) the Company raised a total $300,000 with three accredited investors introduced by Palladium to the Company.   Under the terms of the SPA, the purchasers subscribed for a total of 3,750,000 shares of the common stock of the Company at $0.08 per share and an equal number of warrants exercisable at $0.15 per share for a period of five years.    Under the SPA the purchasers have the option to purchase up to an equal number of shares and warrants as those purchased on the initial closing for a period of nine months from the initial closing date.  Each purchaser shall be entitled to one closing on the exercise of the subsequent closing and option warrants have piggy back registration rights.   Subject to no effective registration statement registering the warrants within 180 days after the initial exercise date of the warrants, then the warrants shall have a cashless exercise provision. The warrants further have exercise limitations of 9.99% as a beneficial ownership limitation which the holder may increase or decrease upon 61 days prior notice to the Company, however, the beneficial ownership limitation shall not exceed 9.99% of the number of shares held by the holder.

Under the terms of the SPA, the purchasers that hold outstanding stock or warrants at the time of any subsequent funding have the right to participate in any subsequent financing up to 100% of the subsequent financing on the terms negotiated with any funders for a period of eighteen months from the date of the SPA,   Further, the shares of common stock issued under the SPA have a purchase price reset until the sooner of (i) the purchaser no longer holds and securities, and (ii) five years after the initial closing date whereby should the Company issue or sell any shares of common stock or any common stock equivalent at a price less than the per share purchase price (the Dilutive Financing”), then the Company shall issue additional shares of common stock to the purchasers who hold outstanding shares on the date of such Dilutive Financing for no additional consideration.  The warrants also have a warrant dilution adjustment which requires the issuance of additional warrant shares to reflect any dilutive financing undertaken by the Company whereby the holders of any outstanding warrants shall receive additional warrants based on the price of the Dilutive Financing.

The following table summarizes the number of common shares indexed to the derivative financial instruments as of March 31, 2015 and June 30, 2014:

   
June 30,
2014
   
March 31,
2015
 
3,7500,000 common stock purchase agreement dated March 14, 2014
   
3,750,000
     
3,750,000
 
 
Information and significant assumptions embodied in our valuations (including ranges for certain assumptions during the subject periods that instruments were outstanding) as of March 31, 2015 and June 30, 2014 are illustrated in the following tables:
 
Warrant Derivative
 
 
Revaluation
Date
(June 30,
2014)
   
Revaluation Date
(March 31,
2015)
 
Warrants to purchase common stock:
         
  Strike price
 
$
0.15
   
$
0.15
 
  Volatility
   
121.01
%
   
159.40
%
  Term (years)
   
4.70
     
3.95
 
  Risk-free rate
   
1.62
%
   
1.37
%
  Dividends
   
-
     
-
 

 
F-12

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)
 
NOTE 6 – SECURITIES PURCHASE AGREEMENT (continued)

On March 31, 2015 as a result of the revaluation of the warrant derivatives the Company recorded a loss of $13,406 in respect of the change in the fair value of the warrant liability.

NOTE 7 – COMMITMENTS

On August 1, 2014, the Company entered into a consulting agreement with Jim Matthew whereby Jim Matthew will provide the Company with services to include telephone and email investor inquiry responses; dissemination of the Company’s public information upon request to investors and third party; and maintenance of the Company’s investors database and circulation of all press releases or other announcements to the membership list. The agreement is for a term of twelve months until July 31, 2015.    The Company shall pay $1,500 per month, payable in advance on the 1st of each month.

During the period ended March 31, 2015, the Company paid $12,000 to Jim Matthew pursuant the agreement.

NOTE 8 – CAPITAL STOCK
 
As of March 31, 2015 and June 30, 2014, 96,083,348 shares of common stock were issued and outstanding.

NOTE 9 – SHARE PURCHASE WARRANTS

On March 14, 2014, the Company entered into securities purchase agreements to raise a total $300,000 with three accredited investors introduced by Palladium to the Company.   Under the terms of the SPA, the purchasers subscribed for a total of 3,750,000 shares of the common stock of the Company at $0.08 per share and an equal number of warrants exercisable at $0.15 per share for a period of five years.  (see note 6 above).

As at March 31, 2015, the Company had the following warrants outstanding:

Exercise Price
 
Expiry Date
 
Weighted Average Remaining Contractual Life (Years)
   
Outstanding
at June 30, 2014
   
Issued
   
Exercised
   
Waived
   
Expired
   
 
Outstanding
at March 31, 2015
 
$ 0.15  
March 14, 2019
    3.9       4,012,500       -       -       -       -       4,012,500  
 
NOTE 10 – RELATED PARTY TRANSACTIONS

Rick Walchuk

On May 1, 2012, the Company entered into a consulting agreement with Rick Walchuk, a director of the Company, for management services. The consulting agreement became effective as of May 1, 2012 and shall continue to May 1, 2015. Under the consulting agreement, the Company shall pay $2,500 a month for the first six months, $5,000 a month for the next six months and $7,500 for the balance of the agreement payable on the 1st of each month. On October 8, 2014, Rick Walchuk resigned from all officer positions and remains as a director of the Company, and his management fee decreased to $3,750 a month commence on October 1, 2014. Effective January 5, 2015, Rick Walchuk resigned as a director of the Company.  Mr. Walchuk's resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.

 
 
F-13

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 10 – RELATED PARTY TRANSACTIONS (Continued)

Rick Walchuk (cont’d)

During the six months ended December 31, 2014, Mr. Walchuk invoiced the Company a total of $33,750 (December 31, 2013 - $45,000). As at March 31, 2015, no amounts are owing to Mr. Walchuk.

Con Evan Anast

On December 13, 2013, the Board of Directors of the Company appointed Con Evan Anast to the Board of Directors of the Company.

On October 8, 2014, the Company appointed Con Evan Anast as its President, Chief Executive Officer, Chief Financial Officer and Treasurer.

On January 5, 2015, Mr. Con Evan Anast acts as our president, chief executive officer, chief financial officer, secretary, treasurer and sole director.

On December 15, 2013, the Company entered into a consulting agreement with Mr. Anast for the provision of services to the Company as Secretary and management consultant.  Under the terms of the consulting agreement, Mr. Anast has agreed to provide a minimum of 40 hours per month to the Company’s business operations.   The contract is for a term of three years commencing on December 15, 2013 for a monthly consulting fee of $5,000 per month, of which a total of $2,000 is payable and $3,000 per month is to be accrued monthly. Effective May 1, 2014 it was agreed that Mr. Anast would be paid $3,000 per month and $2,000 would be accrued as a result of increased hours required to be devoted to corporate efforts. During the nine months ended March 31, 2015 and March 31, 2014, Mr. Anast invoiced the company for the services in the amount of $45,000 and $17,900, respectively, of which a total of $30,000 was paid in full and $38,740 was accrued ($23,740 – June 30, 2014).

NOTE 11 – PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. 
 
Operating loss carry-forwards generated during the period from June 1, 2010 (date of inception) through March 31, 2015 of approximately $1,069,000, will begin to expire in 2030.   The Company applies a statutory income tax rate of 35%. Accordingly, deferred tax assets related to net operating loss carry-forwards total approximately $374,150 at March 31, 2015. For the nine month periods ended March 31, 2015 and 2014, the valuation allowance increased by approximately $67,500 and $140,053, respectively. 
 
The Company has no tax positions at March 31, 2015, or June 30, 2014, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. 
 
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties since inception. 
 
The tax returns for the years from inception to March 31, 2015 are subject to examination by the Internal Revenue Service.
 
 
F-14

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
 (Unaudited)

NOTE 12 – OTHER EVENTS

On April 28, 2014, Rick Walchuk, a director of our company, was arrested in Palaio Faliro, Greece under an international arrest warrant issued in connection with claims asserted against Mr. Walchuk by the United States District Court for the Eastern District of Pennsylvania, in regards to an unaffiliated company.  Mr. Walchuk has not been found guilty of any claim asserted against him and denies any allegations against him. Mr. Walchuk intends to vigorously defend all claims asserted against him and presently remains in custody in the State of Pennsylvania awaiting the commencement of hearings set for October 20, 2014.  As at the date of this report Mr. Walchuk has agreed to enter into a plea agreement, the terms of which have not yet been made public.

NOTE 13 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there were no subsequent events to disclose.

 
 
F-15

 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
FORWARD-LOOKING STATEMENTS
 
This quarterly report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.
 
In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares of our capital stock.
 
The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
 
As used in this quarterly report, the terms "we", "us", "our", and "our company" means American Graphite Technologies Inc. and our wholly owned subsidiary, 9311-2571 Québec Inc., a Quebec, Canada corporation, unless otherwise indicated.
 
Corporate Information
 
The address of our principal executive office is 3651 Lindell Road, Ste. D#422, Las Vegas, Nevada. Our telephone number is (702) 473-8227. Our website is http://americangraphitetechnologies.com.
 
Our company was incorporated in the State of Nevada on June 1, 2010 under the name Green & Quality Home Live, Inc.
 
On May 23, 2012, we underwent a change of control and on June 11, 2012, our company’s newly appointed sole director and majority shareholder approved a name change to American Graphite Technologies Inc. and a 125 new for 1 old forward stock split of our company’s issued and outstanding shares of common stock. Concurrent with the forward split we amended our authorized capital from 75,000,000 to 200,000,000.
 
Effective July 12, 2012, we filed the Certificate of Amendment with the State of Nevada and effective July 18, 2012 in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we changed our name from Green & Quality Home Life, Inc. to American Graphite Technologies Inc. and increased our authorized capital from 75,000,000 to 200,000,000 shares of common stock, par value of $0.001. In addition, our issued and outstanding shares of common stock increased from 619,500 to 77,437,500 shares of common stock, par value of $0.001 on the basis of a 125:1 forward split of our issued and outstanding shares of common stock.
 
 
5

 
New management of our company determined to change the direction of our company and to enter into mining exploration and development related to graphite and the acquisition and development of technologies related thereto. Our company has several projects, a mineral exploration project whereby we intend to explore for graphite, a technology development project to research the properties of nanocarbon contained matter (graphene) as working material for 3D printing, and a licensing agreement for the development and marketing of a technology related to the graphene industry.
 
On October 16, 2014, we incorporated a wholly owned subsidiary, 9311-2571 Québec Inc., in order to stake additional mineral claims in the Province of Quebec, Canada for future exploration work.
 
Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
 
Previous Business
 
Before we went through a change of control and business focus, we were a development stage company intending to create a portfolio of products and services (controlling heating, ventilation and air conditioning) and develop a set of solutions which would automate these domestic activities. The lack of funds and the present economy prevented that from happening. As we were unable to raise the capital necessary to develop our business plan, we began a search for other business opportunities which may benefit our shareholders and allow us to raise capital and operate.
 
Current Business
 
Shortly after changing out business focus to exploration stage properties, we identified certain opportunities to engage in the development of technologies relate to graphite and graphene and determined to pursue that business. We entered into negotiations on projects, both graphite properties and technologies. On July 31, 2012, our company entered into a Letter of Intent with a private US company for an option to participate in a 100% interest in all of certain property rights held by the U.S. private company. We were unable to close that acquisition. Subsequently, we identified the opportunities for entry into our business by way of an agreement for the licensing and marketing of Bucky Paper, which is a product currently under development that is produced from graphene. On December 3, 2012, we entered into and executed a non-exclusive technology license agreement for patent and trade secret technology in the field of graphene oxide or “Bucky” paper with Cheap Tubes, Inc. Pursuant to the terms of the agreement, we acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the manufacturing processes for graphene products, including as Bucky Paper. We agreed to fund commercial development activities and we received a license for the rights on a nonexclusive basis for marketing products and/or services. Up to June 30, 2014, our company has funded a total of $335,000 in respect of this commercial development project, and Cheap Tubes has set up a production line and research and development facility in its new facility in Vermont, and with this process ongoing, our company hopes to be fully functional soon.
 
During the month of January 2013, our company undertook the staking of certain mining claims in the Province of Quebec, Canada. In order to hold the property in the Province of Quebec, either a principal of our company or our company must have a prospector’s license. The prospector’s license was granted to our director, Rick Walchuk on February 2, 2013 and the mineral concession is held in the name of Mr. Walchuk under a trust agreement with our company. The mining claims are in an active area of graphite exploration and production. We had intended to undertake an exploration program on the claims during the year ended June 30, 2014, but were delayed in getting a proposal underway by a qualified geologist. Additionally, we focused the majority of our efforts funding the Bucky Paper commercialization project, as well as research project for 3D printing, as described below. We are currently awaiting a program to be presented by a geologist in regard to the initial work program to be undertaken on the mineral claims for spring 2015, and are also pursuing the staking of additional claims in the fall of 2014.
 
 
6

 
During the month of April, 2013, we met with representatives of the National Academy of Science of the Ukraine National Science Center – Kharkov Institute of Physics and Techniques (the “Kharkov Institute”) in regard to the establishment of a collaboration between the Kharkov Institute and our company on a project for the research of the properties of grapheme contained matter as a working material for 3D-printing and other uses. Our company and the Kharkov Institute will be working under the auspices of the Science and Technology Center in the Ukraine, which is an intergovernmental organization founded by the governments of the Ukraine, Canada, the EU and the USA which supports research and development activities for peaceful applications by Ukrainian, Georgian, Uzbekistani, Azerbaijani, and Moldovan scientists and engineers. The project requires the approval of the U.S. Department of State, Bureau of International Security and Nonproliferation Office of Cooperative Threat Reduction. On April 1, 2013, we submitted the documents to the U.S. Department of State. On October 1, 2013, the project was granted live status and our company can now commence the research project. The project is called P600 and is a collaboration between our company and the Kharkov Institute.
 
On October 17, 2013, we finalized an intellectual property agreement for our 3D Project P-600 with the project manager and Kharkov Institute and remitted the funds to allow commencement of the project.
 
Under the agreement, we agreed to Project costs of $42,697. Changes to the proposed budget could be made based on agreement of both sides. During the fiscal year ended June 30, 2014, our company has paid a total of $44,832 as project costs which have been recorded as research and development expenditures.
 
On November 1, 2014, we entered into an amendment to the intellectual property agreement for a term of six months at no additional cost to our company in order to allow completion of the research as outlined in the agreement resulting from certain unforeseen delays experienced at the Kharkov Institute as reported by the project manager.  The agreement will continue until April 30, 2015 at which time a full report of results will be made available. As at the date of this filing the Company has not yet received the final report.
 
The project is designed to research the properties of nanocarbon contained matter as a working material for 3D printing. The project team will consist of 8 scientists and doctors with experience in the fields of nanotechnology, 3D printing, solid state physics, physical materials and thermal physics.
 
The mandate of the project is to research the properties of materials containing nanostructured carbon, primarily graphene, to research the existing and prospective methods of 3D printing and analyze the possibility of applying the techniques to create 3D objects using nanocarbon material. During the year ended June 30, 2014, we paid a total of $44,832 as project costs in order to fully fund the program as required, and are awaiting project results in order to determine next steps.  On November 1, 2014 we entered into an amendment to the original project agreement in order to allow the project manager a further 6 months to complete the project scope and provide results.   The Company will not incur any further costs as a result of the extension.
 
During the month of October 2014, we entered into a consulting agreement with Geomap Exploration Inc., pursuant to whichGeomap would stake additional prospective graphite exploration claims in the Province of Quebec, Canada.  Under the terms of the agreement we paid Geomap a lump sum of CAN$26,000 plus GST.  The term of the agreement was three months. Through the efforts of Geomap, our company acquired a 100% interest in additional mineral claims, totalling approximately 4,982 hectares, through a wholly owned Quebec subsidiary which was incorporated concurrently in order to hold the claims and undertake further exploration activities.

The Lac Rouge Graphite Property consists of 84 mineral claims in one contiguous block totaling 4,982 hectares of land near the town of Mont-Laurier in southern Québec. It has excellent infrastructure support and is easily accessible from a provincial highway (Route 117) from Montréal. The town of Mont-Laurier is located about 20 kilometres to the north, Montréal is 150 kilometres to the southeast, and Ottawa 125 kilometres to the south of the Property. Mon-Laurier is also connected to Montreal via rail. Water, electricity and mining related work force are available locally.
 
 
7

 
We are presently working with a geological consulting firm to determine the scope and costs of an exploration program to be undertaken during the current year.
 
Liquidity and Capital Resources
 
The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended June 30, 2014, along with the accompanying notes.  
 
Cash on hand at March 31, 2015 was $139,047 as compared to $307,693 as of June 30, 2014. We had a total of $336,494 in prepaid expenses on March 31, 2015 and June 30, 2014.  Prepaid expenses relate to amounts totaling $335,000 paid against the licensing agreement with Cheap Tubes and the balance are prepaid expenses related to general and administration costs in the amount of $1,494.
 
Our total current liabilities at March 31, 2015 were $43,640 as compared to $32,795 as at June 30, 2014. The total long term liabilities at March 31, 2015 were $568,234 as compared to $554,828 at June 30, 2014.
 
During our fiscal year ended June 30, 2014, our company was successful in raising the required funding for operations by way of private placements which amounts were sufficient to allow our company to progress certain of its projects.  We have been unable to raise the additional capital required during the nine months ended March 31, 2015 in order to undertake exploration work on certain of our mineral claims, and certain of those claims expired in January 2015.  Our company continues to seek additional financing by way of equity financing and or loans in order to fully undertake project work planned for the current fiscal year.  While we have sufficient funds to meet our ongoing operations and overhead, we will require additional funds to carry out all of our planned exploration on our mineral claims, should we determine to commence exploration.  Additionally we believe we may require additional funds should there be additional cash requirements for the Cheap Tubes project and the development of the P600 project during the current fiscal year.   At this time, the additional cash requirements for the Cheap Tubes project and the P600 projects cannot be estimated.   Operating costs for our company over the next twelve months for general and administrative expenses, including contractual expenses and fees for legal, accounting, audit and filing fees are estimated to be approximately $150,000.    Our company will need to raise additional capital for mineral exploration activities, further P600 operations and for operations of Cheap Tubes, if warranted.   We have warrants outstanding pursuant to our recent financings, however, there can be no assurance that our company will raise any funds from warrant exercises and our company currently has no other financing agreements under which it can raise funding.
 
There can be no assurance that such funding, if required, will be available and if available it will be on favorable terms.  You may face substantial dilution in your share holdings on any ongoing financings which our company may negotiate.  Should we not be able to raise additional funding if and when required, we may have to delay or terminate our ongoing technology development.   At this time, our company cannot state with certainty that we will be able to raise sufficient funding to continue with all of our intended projects.
 
Results of Operations
 
We have not generated any revenues during the nine months ended March 31, 2015.
 
Three Month Period Ended March 31, 2015 Compared to Three Month Period Ended March 31, 2014
 
We have a net loss of $40,251 for the three months ended March 31, 2015 as compared to a net loss of $329,665 for the same period ended March 31, 2014 and operating losses of $34,342 for the three months ended March 31, 2015 as compared to operating losses of $139,985 for the three months ended March 31, 2014.  
 
There was significant reduction in our operational losses, period over period as the Company is seeking financing in order to continue to execute its business plan, including certain mineral exploration programs.  Research and development expenses for the three months ended March 31, 2015 were $nil, with $700 in research and development expense during the three months ended March 31, 2014. Office and general administrative expenses decreased to $7,951 from $25,002 (2013), consulting fees decreased to $5,232 from $22,714 (2013) and professional fee decreased to $6,159 from $8,756 (2013). Management fees decreased to $15,000 from $37,500 (2013).

 
 
8

 
Basic and diluted losses per share for the respective three month periods ended March 31, 2015 and March 31, 2014 was ($0.00).
 
Nine month Period ended March 31, 2015 Compared to Nine month Period Ended March 31, 2014
 
We have a net loss of $192,838 for the nine months ended March 31, 2015 as compared to a net loss of $647,145 for the same period ended March 31, 2014 and operating losses of $179,432 for the nine months ended March 31, 2015 as compared to operating losses of $487,464 for the nine months ended March 31, 2014.  
 
There was significant reduction in our operational losses, period over period as the Company is seeking financing in order to continue to execute its business plan, including certain mineral exploration programs. Exploration expenses for the nine months ended March 31, 2015 were $25,648, with no comparable expense during the nine months ended March 31, 2014. Research and development expenses for the nine months ended March 31, 2015 were $nil, with $45,532 in research and development expense during the nine months ended March 31, 2014. Office and general administrative expenses decreased to $24,765 from $108,513 (2013), consulting fees decreased to $25,468 from $122,040 (2013), and professional fees decreased to $24,801 from $38,666 (2013). Management fees decreased to $78,750 from $85,400 (2013).
 
Basic and diluted losses per share for the respective nine month periods ended March 31, 2015 and March 31, 2014 was ($0.00) and ($0.01), respectively.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
 
Critical Accounting Policies and Estimates
 
The preparation of our financial statements 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. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements, included herein.
 
Recent Accounting Pronouncements
 
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs.  The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts.  Currently, debt issuance costs are presented as a deferred asset.  The recognition and measurement requirements will not change as a result of this guidance.  The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis.   This amendment will not have a material impact on our financial statements. 

 
 
9

 
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by our company. As of March 31, 2015, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of our company.
 
ITEM 3.                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
A smaller reporting company is not required to provide the information required by this Item.
 
ITEM 4.                CONTROLS AND PROCEDURES
 
Management’s Report on Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
 
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. Our company is in the process of adopting specific internal control mechanisms with our board and officers’ collaboration to ensure effectiveness as we grow. We have engaged an outside consultant to assist in adopting new measures to improve upon our internal controls. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over company activities as well as more stringent accounting policies to track and update our financial reporting.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
10

 
PART II – OTHER INFORMATION
 
ITEM 1.                LEGAL PROCEEDINGS
 
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
 
ITEM 1A.             RISK FACTORS
 
A smaller reporting company is not required to provide the information required by this Item.
 
ITEM 2.                UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.
 
ITEM 3.                DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4.                MINE SAFETY DISCLOSURES
 
Not Applicable.
 
ITEM 5.                OTHER INFORMATION
 
Effective January 5, 2015, Rick Walchuk resigned as a director of our company. Mr. Walchuk's resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.

Mr. Con Evan Anast acts as our president, chief executive officer, chief financial officer, secretary, treasurer and sole director.

 
 
11

 
ITEM 6.                 EXHIBITS
 
Exhibit Number
Description
 
(3)
Articles of Incorporation; Bylaws
 
3.1
Articles of Incorporation
Incorporated by reference to the Registration Statement on Form S-1 filed on August 4, 2010.
3.1 (i)
Certificate of Amendment to the Articles of Incorporation as filed with the State of Nevada on July 12, 2012
Incorporated by reference to the Current Report on Form 8-K filed on July 13, 2012.
3.2
Bylaws
Incorporated by reference to the Registration Statement on Form S-1 filed on August 4, 2010.
(10)
Material Contracts
 
10.1
Share Purchase Agreement between Rick Walchuk and Fabio Alexandre Narita
Incorporated by reference to our Form 8-K filed with the SEC on May 29, 2012.
10.2
Patent and Technology License Agreement between our company and Cheap Tubes, Inc. dated December 3, 2012
Incorporated by reference to our Form 8-K filed with the SEC on December 18, 2012.
10.3
Schedule 2 to the Patent and Technology License Agreement between our company and Cheap Tubes, Inc.
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.4
Consulting Agreement between our company and Rick Walchuk
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.5
Form of Private Placement Units Subscription Agreement
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.6
Agency Agreement between our company and Palladium Capital Advisors LLC.
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.7
Form of Securities Purchase Agreement
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.8
Form of Warrant
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.9
Subscription Agreement between our company and Big North Graphite Corp.
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.10
Consulting Agreement between our company and Con Anast
Incorporated by reference to our Form 8-K filed with the SEC on December 17, 2013
10.11
P-600 Partner Project Agreement dated October 1, 2013
Incorporated by reference to our Form 10-Q filed with the SEC on February 13, 2014
10.12
P-600 Project Intellectual Property Agreement executed October 17, 2013
Incorporated by reference to our Form 10-Q filed with the SEC on February 13, 2014
10.13
Form of Securities Purchase Agreement
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.14
Form of Warrant
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.15
Form of Waiver and Consent
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.16
Consulting Services Agreement with Geomap Exploration Inc. dated October 24, 2014
Incorporated by reference to our Form 10-Q  filed with the SEC on February 23, 2015
(21)
Subsidiaries of the Registrant
 
21.1
9311-2571 Québec Inc., a Quebec, Canada corporation (wholly owned)
 
(31)
Rule 13a-14(a)/15d-14(a) Certifications
 
31.1
Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed Herewith
(32)
Section 1350 Certifications
 
32.1
Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed Herewith
101
Interactive Data File (Form 10-Q for the nine months ended March 31, 2015 furnished in XBRL).
 
101.INS
XBRL Instance Document
Filed Herewith
101.SCH
XBRL Taxonomy Extension Schema
Filed Herewith
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
Filed Herewith
101.DEF
XBRL Taxonomy Extension Definition Linkbase
Filed Herewith
101.LAB
XBRL Taxonomy Extension Label Linkbase
Filed Herewith
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
Filed Herewith
 
 
12

 
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
  AMERICAN GRAPHITE TECHNOLOGIES INC.
       
Date:
May 15, 2015
By:
/s/ Con Evan Anast
   
Name:
Con Evan Anast
   
Title:
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
 
 
13

 

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Ticker: AGIN
CIK: 1497316
Form Type: 10-Q Quarterly Report
Accession Number: 0001594062-15-000117
Submitted to the SEC: Fri May 15 2015 8:22:34 AM EST
Accepted by the SEC: Fri May 15 2015
Period: Tuesday, March 31, 2015
Industry: Auto Controls For Regulating Residential And Comml Environments

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