UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  February 28, 2015

Commission File Number     000-53284

NATIONAL GRAPHITE CORP.
 (Exact name of Registrant as specified in its charter)
 
Nevada
  
27-3787574
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
 
Immermannstr. 65A, Dusseldorf, Germany 40210
 (Address of principal executive offices, Zip Code)

49 211 699380
 (Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o   No x

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 o

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 definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 o
Accelerated filer
 o
Non-accelerated filer
 o
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 o No x

As of August 28, 2015 there were 105,804,441 shares of the registrant’s common stock issued and outstanding.

 
 
 


TABLE OF CONTENTS
 
 
  Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
  
Condensed Consolidated Balance Sheets as of February 28, 2015 (Unaudited) and May 31, 2014
3
Condensed Consolidated Statements of Operations for the three and  nine months ended
February 28, 2015 and February 28, 2014 (Unaudited)
4
Condensed Consolidated Statements of Cash Flows for the nine months ended
February 28, 2015 and February 28, 2014 (Unaudited)
5
Notes to the Condensed Consolidated Financial Statements
6
Item 2. Management’s Discussion and Analysis of the Financial Condition and Results of Operations
11
Item 3. Quantitative and Qualitative Disclosures about Market Risk
15
Item 4. Controls and Procedures
16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
16
Item 1A. Risk Factors
16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
16
Item 5. Other Information
17
Item 6. Exhibits
17
 


 
Page 2
 

 
NATIONAL GRPHITE CORP.
 
Condensed Consolidated Balance Sheets
  
             
ASSETS
            
             
   
February 28,
    
May 31,
  
   
2015
    
2014
  
   
(Unaudited)
        
CURRENT ASSETS
            
Cash
   $ 76     $ 4,893  
Deposits
     24,096       -  
Current portion of debt issuance costs
     67,462       -  
Total Current Assets
     91,634       4,893  
                 
Debt issuance costs, net of current portion and amortization
     243,789       -  
                 
TOTAL ASSETS
   $ 335,423     $ 4,893  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                 
CURRENT LIABILITIES
                
                 
Accounts payable and accrued expenses
   $ 86,841     $ 13,732  
Notes payable - related parties
     598,678       253,000  
Short-term notes payable
     568,232       673,269  
Convertible notes payable
     495,994       4,109  
Total Current Liabilities
     1,749,745       944,110  
                 
Long-term notes payable
     868,620       -  
                 
Total Liabilities
     2,618,365       944,110  
                 
STOCKHOLDERS' DEFICIT
                
                 
Preferred stock; 1,000,000 shares authorized,
                
   at $0.001 par value, -0- and 675,000 shares
                
   issued and outstanding, respectively
     -       675  
Common stock; 500,000,000 shares authorized,
                
   at $0.001 par value, 105,364,441 and 25,000,000
                
   shares issued and outstanding, respectively
     95,116       25,000  
Additional paid-in capital
     (60,795 )     1,000  
Stock subscriptions receivable
     470,906       (10,000 )
Other comprehensive income (loss)
     147,730       (23,007 )
Accumulated deficit
     (2,935,899 )     (932,885 )
                 
Total Stockholders' Deficit
     (2,282,942 )     (939,217 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
   $ 335,423     $ 4,893  
                 
The accompanying notes are an integral part of these condensed consolidated financial statements.


 
Page 3
 

NATIONAL GRAPHITE CORP.
  
Condensed Consolidated Statements of Operations
  
(Unaudited)
  
                         
   
For the Three Months Ended
    
For the Nine Months Ended
  
   
February 28,
    
February 28,
  
   
2015
    
2014
    
2015
    
2014
  
                         
REVENUES
   $ -     $ -     $ -     $ -  
                                 
OPERATING EXPENSES
                                
                                 
Research and development
     395,160       41,204       1,041,533       41,204  
General and administrative
     211,216       45       963,345       121  
                                 
Total Operating Expenses
     606,376       41,249       2,004,878       41,325  
                                 
LOSS FROM OPERATIONS
     (606,376 )     (41,249 )     (2,004,878 )     (41,325 )
                                 
OTHER INCOME (EXPENSE)
                                
                                 
Interest expense
     (43,105 )     -       (72,136 )     -  
Gain on forgiveness of debt
     -       -       74,000       -  
                                 
Total Other Income (Expense)
     (43,105 )     -       1,864       -  
                                 
NET LOSS
   $ (649,481 )   $ (41,249 )   $ (2,003,014 )   $ (41,325 )
                                 
Foreign currency translation
     (409 )     -       170,737       -  
                                 
TOTAL COMPREHENSIVE LOSS
     (649,890 )     (41,249 )     (1,832,277 )     (41,325 )
                                 
BASIC AND DILUTED LOSS PER SHARE OF
                                
COMMON STOCK
   $ (0.01 )   $ (0.00 )   $ (0.03 )   $ (0.00 )
                                 
BASIC AND DILUTED WEIGHTED AVERAGE
                                
  NUMBER OFSHARES OUTSTANDING
     101,161,368       25,000,000       68,126,239       25,000,000  

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

 
Page 4
 

NATIONAL GRAPHITE CORP.
 
Condensed Consolidated Statements of Cash Flows
  
(Unaudited)
  
             
   
For the Nine Months Ended
  
   
February 28,
  
   
2015
    
2014
  
OPERATING ACTIVITIES
            
Net loss
   $ (2,003,014 )   $ (41,325 )
Adjustments to reconcile loss
                
  to cash flows from operating activities
                
Gain on forgiveness of debt
     (74,000 )     -  
Amortization of debt issuance costs
     26,246       -  
Common stock issued for services
     -       -  
Changes in operating assets and liabilities
                
Deposits
     (22,696 )     -  
Accounts payable and accrued expenses
     48,680       -  
Net Cash Used in Operating Activities
     (2,024,784 )     (41,325 )
                 
INVESTING ACTIVITIES
     -       -  
                 
FINANCING ACTIVITIES
                
Proceeds from related party notes payable
     356,178       -  
Payments on related party notes payable
     (10,500 )     -  
Proceeds from short-term notes payable
     15,579       41,203  
Proceeds from convertible notes payable
     568,450       -  
Proceeds from long-term notes payable
     631,679       -  
Proceeds from common stock subscribed
     480,906       -  
Proceeds from common stock issued for cash
     104,000       -  
Capital contributed by shareholders
     -       1,000  
Net Cash Provided by Financing Activities
     2,146,292       42,203  
                 
Effects of exchange rates on cash
     (126,325 )     -  
                 
NET INCREASE (DECREASE) IN CASH
   $ (4,817 )   $ 878  
CASH AT BEGINNING OF PERIOD
     4,893       -  
                 
CASH AT END OF PERIOD
   $ 76     $ 878  
                 
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                
                 
Cash paid for interest:
   $ -     $ -  
Cash paid for taxes:
   $ -     $ -  
                 
NON-CASH FINANCING ACTIVITIES:
                
                 
Debt issuance costs on long-term notes payable
   $ 337,497     $ -  
Issuance of common stock in conversion of preferred stock
   $ 67,500     $ -  
Issuance of common stock for net assets in reverse recapitalization
   $ 96,354     $ -  

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

 
Page 5
 
NATIONAL GRAPHITE CORP. AND SUBIDIARY
Notes to the Condensed Consolidated Financial Statements
February 28, 2015 and May 31, 2014


NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at February 28, 2015, and for all periods presented herein, have been made.
 
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's May 31, 2014 audited financial statements. The results of operations for the periods ended February 28, 2015 and 2014 are not necessarily indicative of the operating results for the full years.

NOTE 2 – ORGANIZATION AND NATURE OF BUSINESS

Biotech Development Corp (“the Company”), is a biopharmaceutical risk/cost-sharing company operating in Germany, founded in May 2013 to collaborate clinical stage companies that develop new biological entities or new therapeutic platforms in the treatment of various rare diseases. The Company is pursuing the commercial development of a drug candidate elafin, a human identic protein, in the treatment of postoperative inflammatory complications.

National Graphite Corporation (“NGRC”) formerly known as Lucky Boy Silver Corporation, which was formerly known as Sierra Ventures, Inc. was incorporated under the laws of the State of Wyoming on October 19, 2006.
 
Reverse Recapitalization

On September 30, 2014 the Company entered into a share exchange agreement with NGRC. Pursuant to the exchange agreement, NGRC acquired all the issued and outstanding shares of the Company in exchange for 25,000,000 common shares of NGRC. The transaction resulted in the Company becoming a wholly-owned subsidiary of NGRC. The exchange agreement closed on October 24, 2014 and was accounted for as a reverse capitalization with NGRC as the legal acquirer for legal and the Company as the accounting acquirer. The historical financial statements presented herein for the period prior to the merger date are those of Biotech Development Corp.
 
NOTE 3 – GOING CONCERN

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of February 28, 2015, the Company has a working capital deficit of $1,658,111 and an accumulated deficit of $2,935,899. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to: identify future investment opportunities and obtain the necessary debt or equity financing and generate profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 

 
Page 6
 
NATIONAL GRAPHITE CORP. AND SUBIDIARY
Notes to the Condensed Consolidated Financial Statements
February 28, 2015 and May 31, 2014


NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Cash and Cash Equivalents
 
The Company considers all highly liquid investment instruments purchased with an initial maturity of three months or less to be cash equivalents.

Foreign Currency Translation
 
The functional currency of the Company is the United States dollar. However, often the Company transacts in the Euro. Consequently, monetary assets and liabilities are remeasured into United States dollars at the exchange rate on the balance sheet date and non-monetary items are remeasured at the rate of exchange in effect when the assets are acquired or obligations incurred. Revenues and expenses are remeasured at the average exchange rate prevailing during the year. Foreign currency transaction gains and losses are included in results of operations.

Basic and Diluted Loss per Common Share

The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the periods presented using the treasury stock method. The computation of fully diluted loss per share includes common stock equivalents outstanding at the balance sheet date. The Company had 490,232 of common stock equivalents related to convertible notes payable included in the fully diluted loss per share as of February 28, 2015, which have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development or exploration stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. Accordingly, the Company has adopted this standard as of February 28, 2015.

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or statements.


 
Page 7
 
NATIONAL GRAPHITE CORP. AND SUBIDIARY
Notes to the Condensed Consolidated Financial Statements
February 28, 2015 and May 31, 2014


NOTE 5 – NOTES PAYABLE, RELATED PARTIES

As of February 28, 2015 and May 31, 2014, the Company’s notes payable due to related parties consisted of the following:

   
February 28,
    
May 31,
  
   
2015
    
2014
  
             
Note payable bearing interest at 5.0% per annum, originated May 16, 2013, due on demand.
   $ 559,178     $ 203,000  
                 
Note payable bearing interest at 5.0% per annum, originated May 16, 2014, due on demand.
     39,500       50,000  
Total notes payable, related parties
   $ 598,678     $ 253,000  

With each of the notes payable above, 100 percent of the note proceeds were transmitted directly to a pharmaceutical development entity headquartered in Germany, which is also a related party to the Company. The proceeds were transmitted pursuant to an agreement dated May 16, 2014 whereby the Company agreed to assist with the financing of the continued development of a certain cancer treatment drug. Pursuant to the agreement the Company committed to provide funding of 425,000 EUR on the date of the agreement, and 100,000 EUR per month until a total of 3,500,000 EUR has been provided. In exchange for the funding, the pharmaceutical entity contracted to pay the Company two percent of the net sales of the product within the European Union.  Due to the fact that there is a high degree of uncertainty surrounding the probability and amounts of future sales and net cash flows, all such funding has been expensed as research and development expenses in the Company’s statement of operations.

NOTE 6 – NOTES PAYABLE

As of February 28, 2015 and May 31, 2014, the Company’s notes payable consisted of the following:

   
February 28,
    
May 31,
  
   
2015
    
2014
  
             
Note payable bearing no interest, originated May 27, 2014, due on demand.
   $ 520,598     $ 632,423  
                 
Note payable bearing interest at 5.0% per annum, originated February 24, 2014, due on demand.
     33,624       40,847  
                 
Four (4) notes payable bearing interest at 6.75% per annum, origination dates between September 2014 and February 2015, due on demand.
     14,010       -  
                 
Note payable bearing interest at 8.25% per annum, originated October 9, 2014, due on October 9, 2019, debt issuance costs recognized upon origination of $337,497.
     493,152       -  
                 
Two (2) notes payable bearing interest at 6.75% per annum, origination dates in December 2014, due in December 2019.
     375,468       -  
                 
Total notes payable
     1,436,852       673,269  
Less: short-term notes payable
     (568,232 )     (673,269 ) 
Long-term notes payable
   $ 868,620     $ -  



 
Page 8
 
NATIONAL GRAPHITE CORP. AND SUBIDIARY
Notes to the Condensed Consolidated Financial Statements
February 28, 2015 and May 31, 2014


NOTE 7 – CONVERTIBLE NOTES PAYABLE

As of February 28, 2015 and May 31, 2014, the Company’s convertible notes payable consisted of the following:

   
February 28,
    
May 31,
  
   
2015
    
2014
  
             
Forty-one (41) convertible notes payable bearing interest at 8.25% per annum, originated between June 2014 and January 2015, due on demand; convertible into common shares of the Company at 1.00 EUR per share.
   $ 495,994     $ 4,109  
                 
Total convertible notes payable
   $ 495,994     $ 4,109  

The intrinsic value of the beneficial conversion feature and the debt discount associated with all convertible debts were recorded based on the relative fair value of the equity in relation to the debt in accordance with ASC 470. The total initial beneficial conversion feature recorded for the convertible notes equaled $-0- at origination.

NOTE 8 – STOCKHOLDERS’ DEFICIT

The Company is authorized to issue 1,000,000 shares of $0.001 par value preferred stock with -0- and 675,000 preferred shares issued and outstanding at February 28, 2015 and May 31, 2014, respectively.  The Company is authorized to issue 500,000,000 shares of $0.001 par value common stock with 105,364,441 and 25,000,000 shares issued and outstanding at February 28, 2015 and May 31, 2014, respectively.

On May 6, 2013, the Company issued 10,000,000 of common stock to Company founders for cash proceeds of $10,000 which was recorded as stock subscriptions receivable at May 31, 2014 as the cash had not been received by the Company. Also, on May 6, 2013, the Company issued 15,000,000 of common stock to Company founders for $15,000 of services performed. The shares were valued at the price per share of common stock issued for cash which was also equivalent to the par value of the Company’s common stock, or $0.001 per share.

On August 23, 2014, the Company received $1,000 as capital contribution from a Company investor.

On September 20, 2014, preferred stockholders elected to convert 675,000 shares of preferred stock into 67,500,000 shares of common stock.

On September 30, 2014 the Company issued 25,000,000,000 shares of common stock for the acquisition of National Graphite Corporation in exchange for 100 percent of the issued and outstanding shares of NGRC.

In October 2014, the Company issued 325,000 shares of common stock for cash proceeds of $104,000 or $0.32 per share.
 
During the period ended February 28, 2015, the Company received cash proceeds of $480,906 in exchange for forty-one stock subscription agreements to issue 10,248,925 shares of the Company’s common stock.

 
Page 9
 
NATIONAL GRAPHITE CORP. AND SUBIDIARY
Notes to the Condensed Consolidated Financial Statements
February 28, 2015 and May 31, 2014


NOTE 9 – SUBSEQUENT EVENTS

Subsequent to February 28, 2015 the Company borrowed $1,119 in the form of short-term notes payable. The Company also received an additional $46,000 in cash in exchange for stock subscription agreements to issue 440,000 shares of the Company’s common stock.

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report, and there are no other material subsequent events to report.


 
Page 10
 

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 
This quarterly report contains forward-looking statements. These forward-looking statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions or words which, by their nature, refer to future events.
 
In some cases, you can also identify forward-looking statements by terminology such as “may”, “will”, “should”, “plans”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in Item 1A. Risk Factors on page 15 that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
GENERAL INFORMATION
 
As used in this quarterly report, the terms “we”, “us”, “our”, “National Graphite Corp or National Graphite mean National Graphite Corp., unless otherwise indicated.
 
Until October 2014 we were exclusively an exploration stage company and there is no assurance that commercially viable mineral deposits exist on the mineral property that we have under option.  Additional exploration is required to determine the economic and legal feasibility of the claim is determined.

We were incorporated in the State of Wyoming on October 19, 2006, as Sierra Ventures, Inc. and established a fiscal year end of May 31. On February 5, 2010 we filed an Amendment to Articles with the Wyoming Secretary of State and changed our name from “Sierra Ventures Inc.” to “Lucky Boy Silver Corp.” We changed our company name to National Graphite Corp. on March 9, 2012. We changed the name of our company to better reflect the direction and business of our company.  On March 22, 2011, the corporation converted from a Wyoming corporation to a Nevada corporation.

On October 24, 2014, in order to diversify our operations and growth avenues for the Company, we consummated the acquisition of Biotech Development Corp. (“BDC”), as a wholly-owned subsidiary. BDC is a biopharmaceutical risk/cost-sharing company operating in Germany, founded in May 2013 to collaborate clinical stage companies that develops new biological entities or new therapeutically platforms in the treatment for various diseases, rare diseases and diseases with unmet needs.  BDC is pursuing the commercial development of Proteo’s lead drug candidate elafin, a human identic protein, in the treatment of postoperative inflammatory complications.

With the abandonment of its mining operations and focus of business operations in the biopharmaceutical arena, the Company anticipates the change of the Company’s name in the near future.
 
The following analysis of the results of operations and financial condition of the corporation for the period ending February 28, 2015, should be read in conjunction with the corporation’s financial statements, including the notes thereto contained elsewhere in this Form 10-Q and in our annual report filed on Form 10-K.
 

 
Page 11
 

 
Overview

We are a biopharmaceutical risk/cost-sharing company operating in Germany collaborating with clinical stage companies that develops new biological entities or new therapeutically platforms in the treatment for various diseases, rare diseases and diseases with unmet needs.
 
Projects
 
ELAFIN

We are currently pursuing the commercial development in collaboration with Proteo of the drug elafin, a human identic protein, in the treatment of postoperative inflammatory complications. There is no assurance that commercially viable application this drug will develop.

Our Proposed Plan of Operation
 
While continuing the research and development of elafin, will continue working toward further collaboration with other clinical stage companies to expand our operations into new businesses.
 
Results of Operations
 
Our comparative periods for the period ended February 28, 2014 and May 31, 2014 are presented in the following discussion.
 

Three Months Ended February 28, 2015 and February 28, 2014

Revenues
 
We did not generate any revenues from operations for the three month periods ended February 28, 2015 or 2014.
 
Expenses
 
The table below shows our operating results for the three-month periods ended February 28, 2015 and 2014.
 
   
Three  months
  
Three  months
   
Ended
  
Ended
   
February 28, 2015
  
February 28, 2014
Research and development
  
$
395,160
      
41,204
  
General  and  administrative
    
211,216
      
45
  
Total  operating  expenses
  
$
606,376
      
41,249
  
  
Operating expenses have and will vary from quarter to quarter based on the level of corporate activity, exploration operations and capital-raising. Operating expenses in the most recently completed quarter increased relative to the comparable period of the prior year due primarily to the fact that we have commenced expenditures toward research and development and engaged in corporate restructuring. For the three months ended February 28, 2015 and 2015, Operating Expenses increased to $606,376 from $41,249 due primarily to the Company’s commencing business operations.

 
Page 12
 
 
Other expenses for the three months ended February 28, 2015 included Interest Expense of $43,105, compared to $-0- for the three month period ended February 28, 2014.

Nine Months Ended February 28, 2015 and February 28, 2014

Revenues
 
We did not generate any revenues from operations for the nine-month periods ended February 28, 2015 or 2014.
 
Expenses
 
The table below shows our operating results for the nine-month periods ended February 28, 2015 and 2014.
 
   
Nine Months
  
Nine Months
   
Ended
  
Ended
   
February 28, 2015
  
February 28, 2014
Research and development
  
$
1,041,533
      
41,204
  
General  and  administrative
    
963,345
      
121
  
Total  operating  expenses
  
$
2,004,878
      
41,325
  
  
Operating expenses have and will vary from quarter to quarter based on the level of corporate activity and capital-raising. Operating expenses for the nine-month period ended February 28, 2015 increased relative to the comparable period of the prior year due primarily to the fact that we have commenced expenditures toward research and development and engaged in corporate restructuring. For the nine months ended February 28, 2015 and 2014, Operating Expenses increased to $2,004,878 from $41,325 due primarily to the Company’s commencing business operations.
 
Other expenses for the nine months ended February 28, 2015 included Interest Expense of $72,136, compared to $-0- for the nine month period ended February 28, 2014.  Additionally, we recognized a gain on forgiveness of debt totaling $74,000 during the 2015 period.

We continue to carefully control our expenses and overall costs as we move our business development plan forward. We do not have any employees and engages personnel through outside consulting contracts or agreements or other such arrangements, including for legal, accounting and technical consultants.
  
Plan of Operation and Anticipated Cash Requirements
 
Our primary source of working capital to date has been from funds raised through loans and the sale of debt and equity securities. Based on our current plan of operations, we do not have sufficient funds for the next twelve months, and we will require additional funds to continue our product development operations. We have no established bank-financing arrangements; therefore, it is possible that we need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development and marketing of our products through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail one or more of our research and development programs.

 
Page 13
 

 
Presently, our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and this is likely to continue through fiscal 2014-2015. Management projects that we will require up to $1,410,000 in order to fund ongoing operating expenses and working capital requirements for the next 12 months, broken down as follows:
 
General  and  administrative  expenses
  
$
80,000
  
Future  property  acquisitions
    
180,000
  
Working  capital
    
450,000
  
Development  of  properties
    
700,000
  
   
$
1,410,000
  
  
Going Concern
 
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the nine months endd February 28, 2015, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional notes describing the circumstances that lead to this disclosure by our independent auditors. Our issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
 
There are no assurances that we will be able to obtain further funds required for continued operations. We are pursuing various financing alternatives to meet immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it could be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our obligations as they come due.
 
Liquidity and Capital Resources
 
As of February 28, 2015, we have yet to generate any revenues.  Since inception, we have used our common stock and loans or advances from our officers and directors to raise money for our product development and for corporate expenses.
 
Working Capital
 
As of February 28, 2015, we had a working capital balance of negative $1,658,111.
 
   
February 28,
  
May  31,
   
2015
  
2014
Current  Assets
  
$
91,634
      
4,893
  
Current  Liabilities
    
1,749,745
      
944,110
  
Working  Capital
  
$
1,658,111
 
    
(939,217
)
 
We have incurred recurring losses from inception. Our ability to meet our financial obligations and commitments is primarily dependent upon continued financial support of our shareholders, directors and the continued issuance of equity to new and existing shareholders. There are no agreements to supply working capital to the Company.
 

 
Page 14
 

Cash Flows
  
Nine Months
Nine Months
 
Ended
Ended
 
February 28, 2015
February 28 2014
     
Net cash used in operating activities
   $ (2,024,784 )   $ (41,325 )
Net cash provided by investing activities
     —       —  
Net cash provided by financing activities
     2,146,292       42,203  
Effects of exchange rates on cash
     (126,325 )  
—
  
Net decrease in cash
   $ (4,817 )   $ (878 )
 
Net cash used in operating activities
 
Net cash used in operating activities for the nine months ended February 28, 2014 and February 28, 2013 was $2,024,784 and $41,325, respectively. This negative cash flow from operations is due primarily to the Company’s net loss, coupled by the fact that the Company has not generated revenue to date.
 
Net cash used in investing activities
 
The Company had no cash flows from investing activities during the nine-month periods ended February 28, 2015 and 2014, respectively.
 
Net cash provided by financing activities
 
Net cash provided by financing activities during the nine-month periods ended February 28, 2015 and 2014 was $2,146,292 and $42,203, respectively.  This positive cash flow was generated from debt and equity financing.
 
Inflation / Currency Fluctuations
 
Inflation has not been a factor during the nine months ended February 28, 2015. Although inflation is moderately higher than it was during 2014 the actual rate of inflation is not material and is not considered a factor in our contemplated capital expenditure program.
 
In accordance with ASC 855 Company management reviewed all material events through the date of this report and there are no other material subsequent events to report.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 
Page 15
 

ITEM 4.                      CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of February 28, 2015, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.
 
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
   
Changes in Internal Control over Financial Reporting
 
 There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.  The Company has not taken any steps at this time to address these weaknesses but will formulate a plan before fiscal year ending May 31, 2015.
  
PART II -  OTHER INFORMATION

ITEM 1.                      LEGAL PROCEEDINGS

To the best of our knowledge, we are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
 
 
ITEM 1A.                    RISK FACTORS

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

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

On September 22, 2014 the Company issued 67,500,000 restricted shares of common stock to Kenneth B. Liebscher, a principal shareholder, a director and officer of the Company, upon the conversion of 675,000 shares of Preferred Stock held by Mr. Liebscher.  No underwriters were used. The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

On October 17, 2014, prior to the closing of the acquisition Biotech Development Corp., the Company issued 325,000 restricted shares of common stock to the three Biotech Development Corp. shareholders, at a price of $0.32 per shares for an aggregate sum of $104,000 in cash.  No underwriters were used.  The securities were issued pursuant to an exemption from registration provided under Section 4(2) and Regulations of the Securities Act of 1933.


 
Page 16
 

On October 24, 2014, upon the closing of the acquisition of Biotech Development Corp., and pursuant to the Share Exchange Agreement, the Company issued 25,000,000 restricted shares of common stock to the shareholders of Biotech Development Corp., in exchange for their shares of Biotech Development Corp. o underwriters were used.  The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

ITEM 5.                      OTHER INFORMATION

None.

ITEM 6.     EXHIBITS

(a)           Documents filed as part of this Report.
 
1.           Financial Statements.  The condensed unaudited consolidated Balance Sheet of National Graphite Corp. and subsidiaries as of February 28, 2015, 2014 and the audited balance sheet as of May 31, 2014, the condensed unaudited Statements of Operations for the three and nine month periods ended February 28, 2015 and 2014, and the condensed unaudited Statements of Cash Flows for the nine month periods ended February 28, 2015 and 2014, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.

3.           Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.

Exhibit
  
Number
Description of Exhibit
2.1
Share Exchange Agreement dated September 30, 2014 by and among National Graphite Corp., Biotech Development Corp., and the shareholders of Biotech Development Corp.(1)
3.1
Articles of Incorporation(1)
3.2
By-laws(2)
3.3
Articles of Conversion(3)
3.4
Certificate of Amendment to the Articles of Incorporation(4)
31.1
CEO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 (5)
31.2
CFO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 (5)
32.1
CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)
101
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 formatted in Extensible Business Reporting Language (“XBRL”): (i) the balance sheets (unaudited) ; (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes.
(1)
Incorporated by reference to the Form 8-K filed on October 28, 2014;
(2)
Incorporated by reference to the Form SB-2 filed on October 12, 2007.
(3)
Incorporated by reference to the Form 8-K filed on April 5, 2011;
(4)
Incorporated by reference to the Form 8-K filed on September 4, 2012;

 
Page 17
 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  NATIONAL GRAPHITE CORP.
   
   
Dated: August 31, 2015
 /s/ Ulrike Dickmann
 
By: Ulrike Dickmann
 
Its: Chief Executive Officer
   
   
   
   
Dated: August 31, 2015
/s/ Wolfgang Kochs
 
By: Wolfgang Kochs
 
Its: Chief Financial Officer


 
Page 18
 


Exhibit 31.01
 
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14
 
I, Ulrike Dickmann, certify that:
 
1.           I have reviewed this Quarterly Report on Form 10-Q of National Graphite Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
Dated: August 31, 2015
/s/ Ulrike Dickmann
 
By:  Ulrike Dickmann
 
Its:  Chief Executive Officer

 
 
 


Exhibit 31.02
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14
 
I, Wolfgang Kochs, certify that:
 
1.           I have reviewed this Quarterly Report on Form 10-Q of National Graphite Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: August 31, 2015
 /s/ Wolfgang Kochs
 
By:  Wolfgang Kochs
 
Its:  Chief Financial Officer

 
 
 




Exhibit 32.01

 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of National Graphite Corp. (the “Company”) on Form 10-Q for the period ending February 28, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wolfgang Kochs, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 
(1)        The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 
Dated: August 31, 2015
 /s/ Wolfgang Kochs
 
By:  Wolfgang Kochs
 
Its:  Chief Executive Officer
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 
 
 

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