U.S.
SECURITIES AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



(Mark
One)



|þ  ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|---------------------------------------------------------------------------------------



For
the Fiscal Year Ended December 31, 2014



|☐  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|-------------------------------------------------------------------------------------------



For
the transition period from ________________ to ________________



Commission
File Number 001-34048



|NEXT
    GRAPHITE, INC.                                   
|----------------------------------------------------------
|(Exact
    name of registrant as specified in its charter)



|Nevada                                |  | 90-0911609         
|------------------------------------- |  | -------------------
|(State or other jurisdiction          |  | (IRS Employer      
|of incorporation
    or organization) |  | Identification No.)



|318 North
    Carson Street, Suite 208      
|--------------------------------------------
|Carson City,
    NV 89701 USA               
|(Address of
    principal executive offices)



Issuer’s
telephone number, including area code: (949) 397-2522



Securities
registered pursuant to Section 12(b) of the Act: None.



Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes  ☐   No  þ



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐    No  þ



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  þ   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).þYes  ☐   No



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K  ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.(as defined in Rule 12b-2 of the Exchange Act). Check one:



|Large accelerated filer | ☐ | Non-accelerated filer     | ☐
|----------------------- | - | ------------------------- | -
|Accelerated Filer       | ☐ | Smaller reporting company | þ



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



As
of June 30, 2014, the last day of the Registrant’s most recently completed second fiscal quarter, the
aggregate market value of the registrant’s voting and none-voting common stock held by non-affiliates of the registrant
was approximately: $2,974,514 at $0.08 per share, based on the closing price on the OTCQB.





As of March 31, 2015, there were outstanding 50,411,443
shares of the registrant’s common stock, $.0001 par value.



Documents
incorporated by reference: None.






















Next
Graphite, Inc.



Form
10-K



Table
of Contents





|                     |                                                                                                                     | Page
|-------------------- | ------------------------------------------------------------------------------------------------------------------- | ----
|PART I               |                                                                                                                     |     
|                     |                                                                                                                     |     
|Item 1.              | Business                                                                                                            | 3   
|Item 1A              | Risk Factors                                                                                                        | 16  
|Item 2.              | Properties                                                                                                          | 21  
|Item 3.              | Legal Proceedings                                                                                                   | 21  
|Item 4.              | Mine Safety Disclosures                                                                                             | 21  
|                     |                                                                                                                     |     
|PART II              |                                                                                                                     |     
|                     |                                                                                                                     |     
|Item 5.              | Market for Registrant’s Common
    Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | 21  
|Item 6.              | Selected Financial Data                                                                                             | 24  
|Item 7.              | Management's Discussion and Analysis of Financial Condition and
    Results of Operations                           | 24  
|Item 8.              | Financial Statements and Supplementary Data                                                                         | 25  
|Item 9.              | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure                            | 25  
|Item 9A              | Controls and Procedures                                                                                             | 26  
|Item 9B.             | Other Information                                                                                                   | 27  
|                     |                                                                                                                     |     
|PART III             |                                                                                                                     |     
|                     |                                                                                                                     |     
|Item 10.             | Directors, Executive Officers and Corporate Governance                                                              | 28  
|Item 11.             | Executive Compensation                                                                                              | 30  
|Item 12.             | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                  | 32  
|Item 13.             | Certain Relationships and Related Transactions, and Director Independence                                           | 32  
|Item 14.             | Principal Accountant Fees and Services                                                                              | 33  
|                     |                                                                                                                     |     
|PART IV              |                                                                                                                     |     
|                     |                                                                                                                     |     
|Item 15.             | Exhibits                                                                                                            | 34  
|                     |                                                                                                                     |     
|Signatures           |                                                                                                                     | 35  
|                     |                                                                                                                     |     
|Financial Statements | 36                                                                                                                 



2







PART
I



ITEM
1.     BUSINESS



Corporate
History



Next
Graphite, Inc. (the “Company”) was incorporated under the name Zewar Jewellery, Inc. on September 26, 2012 in the
State of Nevada. The business plan of the Company was originally to operate as an on-line imitation jewelry retailer. Immediately
after the completion of the Share Exchange, the Company discontinued its on-line imitation jewelry business and changed its business
plan to exploration and development of the license area covered by the License. Effective December 16, 2013, the Company changed
its name to Next Graphite, Inc.



Share
Exchange Agreement



On
November 14, 2013, we consummated transactions (the “Share Exchange”) pursuant to a Share Exchange Agreement (the
“Share Exchange Agreement”) dated November 14, 2013 by and among the Company and the stockholders of African Graphite,
Inc., a private Nevada corporation (“AGI” and the “AGI Stockholders”), whereby AGI Stockholders transferred
100% of the outstanding shares of common stock of AGI held by them, in exchange for an aggregate of 8,980,046 newly issued shares
of the Company’s common stock, par value $.0001 per share (“Common Stock”).



Stock
Purchase Option Agreement



On
November 14, 2013, AGI entered into a Stock Purchase Option Agreement (the “Option Agreement”) with NMC Corp., a corporation
organized under the laws of the Province of Ontario, Canada (“NMC”), whereby NMC granted to AGI an option to purchase
90 ordinary shares, par value one Namibian dollar per share, of Gazania Investments Two Hundred and Forty Two (Proprietary) Limited,
a corporation organized under the laws of the Republic of Namibia ("Gazania"), representing 90% of the issued and outstanding
shares of Gazania, for $240,000. NMC had entered into an option agreement dated  March 29, 2013, as amended on November
4, 2013 (the “Centre Agreement”), with Centre for Geoscience Research CC (formerly known as “Industrial Minerals
and Rock Research Centre CC”), a company organized under the laws of the Republic of Namibia ("Centre"), whereby
Centre agreed to transfer to Gazania 100% undivided interest in the exclusive prospecting license No. 3895 known as AUKAM originally
issued to Centre by the government of the Republic of Namibia on April 4, 2011 and renewed on April 4, 2013 (the “License”).
The License grants the right to conduct prospecting operations, bulk sampling and pilot production in the license area called
AUKAM located in southern Namibia in the Karas Region within the Betaine district. The license area covers about 49,127 hectares.
AUKAM is the only mine in Namibia which has produced graphite is situated in the license area. The ore body lies on the eastern
slope of a prominent range of hills, which rises 120 to 150 meters above the level of the surrounding sand-covered valleys. The
country rock consists almost entirely of grayish, medium-to-coarse grained granite and gneissic rocks of the Namaqualand Metamorphic
Complex. The License applies to “base and rare metals” and “industrial minerals” and Gazania is the only
party licensed to conduct mining operations of this type in the area. The transfer of the License to Gazania was approved by the
Ministry of Mines and Energy of the Republic of Namibia on February 25, 2014.



Under
the Option Agreement, AGI was required to pay to NMC $90,000 as an advance payment to be credited towards the purchase price of
the Gazania shares. The Company made the advance payment on November 14, 2013. The balance of the purchase price in the amount
of $150,000 was paid by AGI upon exercise of the Option that was completed on March 14, 2014. As a result, Gazania became a direct
90% owned subsidiary of AGI and an indirect subsidiary of the Company.



On
November 14, 2013, the Company issued 12,600,003 shares of Common Stock to NMC in connection with the Option grant closing under
the Option Agreement. In connection with the issuance of 12,600,003 shares of Common Stock, NMC entered into a Stock Escrow Agreement
and a Lock-Up Agreement with the Company. Pursuant to the Stock Escrow Agreement, NMC delivered to the escrow agent the shares
of Common Stock issued to it to be held by the escrow agent pending the closing of the Option exercise to purchase shares of Gazania
by AGI under the Option Agreement in which case such 12,600,003 shares of Common Stock will be released by the escrow agent to
NMC. The shares were released from escrow following the closing of the option exercise on March 14, 2013.



Under
the Option Agreement, we undertook to provide at least $260,000 of working capital to or for the benefit of Gazania from the option
grant closing date to June 30, 2014. The $260,000 of working capital was provided prior to June 30, 2014.



Under
the Lockup Agreement executed on November 14, 2013, NMC agreed not to offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, sell short, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of any shares of Common Stock, or enter into any swap or other arrangement that transfers any
economic consequences of ownership of Common Stock until 12 months after the date therein.



3





Private
Placement of Common Stock



From
November 2013 to November 2014, the Company entered into and consummated transactions pursuant to a series of the Subscription
Agreements (the “Subscription Agreements”) with certain accredited investors whereby the Company issued and sold to
the investors for $1.00 per share an aggregate of 1,501,402 shares of the Company’s Common Stock for an aggregate purchase
price of $1,501,400 (the “Private Placement”).



The
Subscription Agreements contain representations and warranties by the Company and the investors which are customary for transactions
of this type such as, with respect to the Company: organization, good standing and qualification to do business; capitalization;
subsidiaries, authorization and enforceability of the transaction and transaction documents; valid issuance of stock, consents
being obtained or not required to consummate the transaction; litigation; compliance with securities laws; and no brokers used,
and with respect to the investors: authorization, accredited investor status and investment intent.



Stock
Split



Effective
December 16, 2013, a 7.8-for-1 forward stock split of the Company’s issued and outstanding Common Stock was effected (the
“Stock Split”). As a result of the Stock Split, 9,602,569 shares of common stock issued and outstanding immediately
before the Forward Split increased automatically, and without any further action from the Company’s stockholders, to 74,900,039
shares of common stock. The authorized number and par value of common stock were unchanged.



Consulting
Agreement



On
March 20, 2014, the Company entered into a consulting agreement with Wall Street Relations, Inc. (the “Consultant”).
Under the agreement, the Consultant will provide to the Company public relations, communications, advisory and consulting services.
The term of the agreement is 12 months. For the services to be rendered under the agreement, the Company paid to the Consultant
an aggregate amount of $500,000 in cash.



On
June 20, 2014, the Company terminated the agreement because of the Consultant’s failure to perform its obligations under
the agreement. The Company is currently pursuing its options to obtain reimbursement of the fee paid to the Consultant under the
agreement. As a result, the Company recorded a write off of prepaid assets of approximately $320,000 for the year ended December
31, 2014.



Private
Placement of Secured Convertible Note



On
October 2, 2014, the Company sold and issued to an accredited investor a secured convertible promissory note in the principal
amount of $100,000 (the “2014 Note”), which is due and payable on December 31, 2015 and accrues interest at the rate
of 5% per annum. In addition, all or any outstanding amount of the 2014 Note shall be convertible one year from the date of this
Note at the Holder’s discretion into the Company’s stock at a 25% discount to the market price of the Company’s
Common Stock at the time of conversion.



The
foregoing descriptions of the 2014 Note are qualified in their entirety
by reference to the provisions of the 2014 Note which is included as Exhibit 4.2 to this Report and  is incorporated by
reference herein.



Company’s
Corporate Structure



Below
is the Company’s current corporate structure:







4







Going
concern



The
Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of obligations in the normal course of business. However, it has $17,878 in cash, has losses
and an accumulated deficit, and a working capital deficiency. The Company does not currently have any revenue generating operations.
These conditions, among others, raise substantial doubt about the ability of the Company to continue as
a going concern.



In
view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to, meets its financial requirements, raise additional capital, and the success of its future
operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities
that may be necessary should the Company not continue as a going concern.



Management
believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive
cash flow. Management intends to seek new capital from owners and related parties to provide needed funds.



Aukam
Processing & Preliminary Economic Report







On February18, 2015, the Company’s lead geologist consultant
Mr. Ian Flint prepared and issued a report that addresses building requirements for an overall processing circuit on site that
would adequately accommodate the processing of Aukam graphite, initially targeted towards processing material from the on-site
mine dumps. In August of 2014 Next carried out a 500 tonne bulk sampling program on the Aukam property, targeting the largest of
three surface mine dumps. Through this sampling program it was discovered that the dumps contained a significant amount of graphitic
lump material, which is easily separated from the mix. It was further recorded that a lump to waste ratio of 1:3 was averaged throughout
the sample taken. From the 500 tonne sampling program 150 tonnes of lumps were separated out of the dumps by running the material
over a screen specifically constructed for this purpose. The majority of the graphitic lumps ranged in purity from 40-80% graphite
with an average grade of 42%, and a residual 350 tonnes of lesser grade material graded an average of 34% graphite.  In
December of 2014, the Company reported additional testing from Gecko Laboratories, Namibia, including industry–standard flotation
tests that reported the flotation characteristics of its lump graphite that influenced the Company’s plant design. 
The tests were conducted on 1,763 pounds of composite samples drawn from the 150 tonnes of pre-screened graphitic lump, residual
and waste material.  Flotation tests carried out on samples and then tested for purity and grade demonstrated a 212-micron
grind was the optimal size for flotation, and delivered a result of 97.1 % pure graphite after a single, rougher float.  
An average of 96.2 % graphite was recorded in the concentrates across all samples including waste material.





Below is
a brief summary of Mr. Ian Flint’s biographical information:



Mr.
Ian Flintholds a PhD in Mining and Mineral Processing Engineering from the University of British Columbia, and a Master
of Science degree in Metallurgical Engineering and Bachelor of Science degree in Geological Engineering, both from the University
of Toronto. He has 24 years of graphite experience, including geology, test work, pilot plants, circuit design, mine development,
purchasing, management, marketing and service as a public company corporate director. Mr. Flint is currently on a project for
Elcora Resources Corp. (TSXV: ERA), and he has previously worked on projects for companies such as the Graphene Corporation, Dalhousie,
Integrated Carbonics, Quinto, Bissett Creek, Mount Cameron Minerals, Worldwide Graphite (Superior), Farrell, Crystal Graphite,
Victoria Graphite, CalGraphite. He worked as a technical advisor to Innovacorp during June 2011 through August 2013 and he served
as Vice President at Champlain Tidal Energy Corp. Ltd. between 2009 and 2010. Mr. Flint has served on the Board or Advisor to
several mining and graphite companies including, The Graphene Corporation, Dalhousie, Integrated Carbonics, Quinto, Bissett Creek,
Mount Cameron Minerals, Worldwide Graphite (Superior), Farrell, Crystal Graphite, Victoria Graphite, CalGraphite.



New
Potential Business Relationships



The
Company is in discussions with off takers for the purchase, initially, of high grade unprocessed graphite from its existing 140,000
tonnes of tailing heaps. It is also in discussions with a firm relative to a joint venture arrangement that would begin in the
second quarter of 2015 and would include the funding and installation of a processing facility at the Company’s Aukam mine
site.



Our
Business



Next
Graphite, Inc. is an exploration/development stage company targeting the growing global graphite production industry with the
Company's 125,000-acre Africa-based Aukam Graphite Project. The Aukam Graphite Mine was established in 1940 in the current Republic
of Namibia, produced USD $30 million of graphite at today's prices. The Graphite property is estimated to still contain a significant
amount of high grade, vein type graphitic material. Global graphite demand is being driven by the development of new markets for
clean and efficient energy alternatives, smart grid infrastructure and military capabilities. Next Graphite has an immediately
available, surface-visible, estimated 140,000-tonne mine heaps along with competitive projected mining and processing costs. The
completion of GPNE's Aukam Graphite Mine re-launch and development activities are expected to result in a multi-million dollar
inward investment into Namibia commencing in 2015.



Global
graphite demand is being driven by the development of new markets for clean and efficient energy alternatives, smart grid infrastructure
and military capabilities.





5









Location
of the Project and Infrastructure



The
Aukam Graphite Mine is located in southern Namibia in the Karas region within the Betanie district 169 km from the port of Luderitz.
The nearest town of Aus is some 87 km away by road. The license area spurns about 49,127 hectares stratiform base metal that form
part of the Namaqualand meta-sedimentary sequence.



The
infrastructure in the area is good with access to the site possible throughout the year.  The Aukam Graphite deposit
is relatively close to a main tar road and well graded so the only construction required would be an approximately 2 km long access
road to the site.  There is a national power grid that passes right by the property.  Water is available in
large amounts from underground aquifers.  The nearest rail link is located next to the main highway (some 70 km from
the site).







Climate



The
Aukam Graphite Mine deposit is located in an unusual area of southern Namibia with both summer and winter rainfall.  In
the austral summer, day-time temperature peak in the mid 40° Celsius, while in winter temperatures can go as low as freezing.  Rainfall
in winter is generally light drizzle with occasional harder falls and sometimes flurries.  In summer, the rainfall is
associated with occasional thunderstorms and is of short duration, but can be of very high intensity.  All of the streams
within the area are ephemeral and can flow very strongly after summer rainfall.  Average annual rainfall is 50-150 mm.



Geology



The
Aukam Graphite Mine is the only mine in Namibia which has produced graphite. The ore body lies on the eastern slope of a prominent
range of hills which rises 120 to 150 meters above the level of the surrounding sand covered valleys. The country rock consists
almost entirely of grayish, medium- to coarse grained granite and gneissic rocks of the Namaqualand Metamorphic Complex.





6











The
graphite-bearing zone, which strikes east-west, is about 10 m wide and is traceable over a distance of some 350 m. The graphite,
which is of the fine-flaky to lumpy type, usually contains malachite specks, while sulphur occurs along cracks. The graphite veins
are flanked by a pale green, highly epidotized and kaolinized granite which is soft and highly decomposed. Parallel stringers
of ferruginous and micaceous talcose material are associated with the veins.



7







Graphite
deposit in the Aukam Graphite Mine











The
best quality graphite is located in the central lode and was initially worked by opencast mining along the slope, as the softness
of the rocks in this area greatly facilitated mining operations. The excavation, which now measures 45 by 35 m, was later supplemented
by two adits sited further downhill along the same lode, and a third was developed above the opencast pit. The lowermost tunnel
is about 120 m long. Large-scale sloping from these adits yielded several thousand tons of graphite. The deposit was mined from
1940 to 1956 when the workings were destroyed by fire. Production was resumed in 1964 and ceased in 1974.





8







Graphite
occurs as veins and lenses in the East-West striking vertical zone, 10m wide and 350m long. At the bottom of the hill it disappears
underneath the sand cover, whereas near the summit it peters out. The zone comprises three parallel lodes. Veins, lenses and pockets
of ore, several meters wide, dip 70o to 90o to the south.



Graphite
and its Industrial Uses



Graphite
is considered to be the purest form of carbon. Graphite is an excellent conductor of heat and electricity and has a high melting
temperature of 3,500 degrees Celsius. It is extremely resistant to acid, chemically inert and highly refractory. The utility of
graphite is dependent largely upon its type.



There are
three principal types of natural graphite, each occurring in different types of ore deposits:



| | ● | Crystalline flake graphite,
    or flake graphite, occurs as isolated, flat, plate-like particles with hexagonal edges, if unbroken, and when broken, the
    edges can be irregular or angular.                                                     
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                      
| | ● | Amorphous graphite occurs
    as fine particles and is the result of thermal metamorphism of coal, the last stage of coalification, and is sometimes called
    meta-anthracite. Very fine flake graphite is sometimes called amorphous in the trade.
| |   |                                                                                                                                                                                                                                                      
| | ● | Lump graphite, or vein
    graphite, occurs in fissure veins or fractures and appears as massive platy intergrowths of fibrous or acicular crystalline
    aggregates, and is probably hydrothermal in origin.                                       



All
grades of graphite, especially high grade amorphous and crystalline graphite that remains suspended in oil are used as lubricants.
Graphite has an extraordinarily low co-efficient of friction under most working conditions. This property is invaluable in lubricants.
It diminishes friction and tends to keep the moving surface cool. Dry graphite as well as graphite mixed with grease and oil is
utilized as a lubricant for heavy and light bearings. Graphite grease is used as a heavy-duty lubricant where high temperatures
may tend to remove the grease.



The
flake type graphite is found to possess extremely low resistivity to electrical conductance. The electrical resistivity decreases
with the increase of flaky particles. The bulk density decreases progressively as the particles become flakier. Because of this
property in flake graphite, it is used in the manufacture of carbon electrodes, plates and brushes required in the electrical
industry and dry cell batteries. Flake graphite has been replaced to some extent by synthetic, amorphous, crystalline graphite
and acetylene black in the manufacture of plates and brushes. Flake graphite containing 80 to 85% carbon is used for crucible
manufacture; graphite containing a carbon content of 93% and above is preferred for the manufacture of lubricants, and graphite
containing a carbon content of 40 to 70% is utilized for foundry facings. Natural graphite, refined or otherwise pure, having
carbon content not less than 95% is used in the manufacture of carbon rods for dry battery cells.



The Industry



The
recent surge in interest and value of graphite is built on long-standing and solid fundamentals as a well-established
industrial mineral. Natural graphite has been mostly consumed in steel making; for refractories and foundry facings; as a lubricant
and as a containment lining in nuclear applications. Other uses have included automobile brake linings and transmission components,
but with the extraordinary increase in the use of lithium-Ion batteries, graphite has experienced a huge growth surge and the
auto industry is sure to be at the forefront of this growth.



Prices
of large-flake, high carbon graphite has increased from $600 per metric ton during the 1990s to highs of approximately $2,500
per metric ton recently. Industry participants believe that positive trends in graphite prices could continue in the coming years
as China is expected to continue to tighten regulations regarding exports of graphite.



The
statements made in this section, “The Industry,” reflect management opinions and beliefs based on the information
obtained from a variety of sector and industry sources.  These include but are not limited to: Angel Publishing, Industrial
Minerals Magazine, RR Market Research, and the U.S. Geological Survey of Mineral Commodity Summaries.



9











A
report by Industrial Minerals, a leading source of information on critical minerals, stated that the Chinese government is focused
on consolidating the domestic graphite industry and is going ahead with plans to reduce the number of graphite mines in Hunan
province from 230 to around 20, with increased government supervision aimed at reducing environmental impact due to harmful mining
practices. This is expected to lead to a loss of around 100,000 metric tons of graphite per year, or approximately 10 percent
of the global supply.



Recent
prices for flake graphite have seen $1,500 - $3,000 per tons depending on flake size and grade. Graphite prices have seen
increases for large flake, high purity graphite (+80 mesh, 94-97%C) and have more than doubled in recent years. China, which produces
about 80 percent of the world's graphite, is reducing its 200 amorphous graphite mines to 20 and creating a state-run monopoly
causing disruptions in supply. Industrial Minerals recently reported exports from China in January and February 2012 have been
reduced by 55.3% and 60.1% from 2011 level exports from Hunan Province. It is not expected that current graphite mines in other
countries could replace Chinese amorphous supply.



10

















World
demand to rise 6% annually through 2018



Worldwide
demand for natural and synthetic graphite (including carbon fiber) is forecast to expand six percent per annum to about 3.9 million
metric tons in 2018.  This is an improvement over the 2008-2013 pace.  Three key trends are expected to fuel
this growth.  First, advances in manufactured goods are expected to spur graphite consumption.  Second, steelmaking
and other types of metallurgy activity, important markets for graphite, are expected to accelerate between 2013 and 2018. Third,
the global graphite market will benefit greatly from the rise of new, technologically advanced applications, including graphene,
pebble-bed nuclear reactors, fuel cells, solar power, and aerospace.  [Source: RR Market Research World Graphite (Natural,
Synthetic & Carbon Fiber to 2018)]



Natural
flake graphite to outpace amorphous types



In
the natural graphite segment flake graphite is anticipated to capture market share from amorphous graphite as high tech applications
become more important and the availability of flake graphite increases.  Through 2018, worldwide demand for flake graphite
is expected to grow more than twice as fast as for amorphous products.  When China reduced natural graphite output between
2011 and 2013 because of environment and industry fragmentation concerns, a large number of exploration projects were launched
around the world.  Approximately 30 companies are now working on developing mines in countries such as Australia, Canada,
Russia, South Korea, Sweden, and the US.  Finally, interest in natural graphite has increased dramatically with the
rise of lithium ion batteries, which are used in electronics and electric motor vehicles.



The
synthetic graphite market is also likely to see healthy gains during the 2013-2018 period.  Worldwide demand for carbon
fiber is expected to grow at a double-digit annual pace through 2018, as its use in aerospace, automotive, wind turbine, and other
applications increases sharply.  Additionally, the cost of carbon fiber is expected to gradually decline between 2013
and 2018 because of technological innovation.  The growing use of electric arc furnaces to produce steel in most parts
of the world is expected to boost sales of graphite electrodes.  As synthetic graphite becomes more widely available
in industrializing countries, product demand will grow.  However, increasing production capacity will moderate prices.   [Source:
RR Market Research World Graphite (Natural, Synthetic & Carbon Fiber to 2018, online research)]





China
to remain key market



Roughly
45 percent of all additional graphite demand generated between 2013 and 2018 is expected to be attributable to China, also the
world’s leading consumer of these products.  Growth will be bolstered by gains in manufactured goods shipments,
increases in metallurgy activity, and additional investment in technologically advanced industries. Other industrializing countries
in the Asia/Pacific region are also expected to perform well between 2013 and 2018, as their manufacturing sectors expand and
grow in sophistication.  Additionally, the availability of graphite products in Asia/ Pacific countries is anticipated
to increase.



11







Graphite
consumption in North America is forecast to expand by nearly six percent per annum between 2013 and 2018.  This is a
significant improvement over the 2008-2013 pace.  The US is expected to register the region’s fastest growth,
as industrial production increases, metallurgy activity rebounds, and lithium ion battery output surges.  Led by Brazil,
Central and South America is projected to see sales of graphite increase at the second fastest annual rate worldwide through 2018.  [Source:
RR Market Research World Graphite (Natural, Synthetic & Carbon Fiber to 2018, online research)]



Graphite’s
new era of demand



Natural
graphite appears to be entering a new era of demand.  Faced by a perfect storm of factors the world’s graphite
supply is in uncertain times.  Graphite’s diversity has secured a strong suite of traditional end use markets
over the last 100 years as refractories, metallurgy, lubricants, carbon products such as car brake pads and pencils, and many
other products, have carved out a substantial business for many producers around the world. However, it is the emergence of the
Li-ion battery era that has the potential to turn the industry on its head.  Portable electronic devices: mobile
phones, iPads, and power tools, and large scale energy storage, all favor Li-ion technology.  It is anticipated that
electric vehicles hold the potential demand clout that could revolutionize the graphite space.  The potential for graphite
does not stop there.  The wild card is the new super-material graphene. Derived from a single layer of graphite, graphene
is over 100 times stronger than steel and more conductive than copper while being incredibly light.  The applications
of graphene seem to be endless, but it is yet to be commercialized.  Very soon, the industry may not have enough natural
graphite to go around. [Source: The Natural Graphite Report, 2012.]



China



The
world is currently at the mercy of Chinese supply, which accounted for 79% of the world’s natural graphite in 2011.  China’s
graphite production power was on display twenty years ago when huge volumes of new supply came into the world market rendering
smaller mines in Canada, Mexico, Europe, and Australia uneconomic.  Now China has focused on serving its own domestic
needs and the manufacture of higher value goods.  China’s desire to build a value-chain means it no longer wants
to be the source of raw materials, but the source of processed and finished products.



This situation
holds the potential to be a graphite game-changer.  A generation of under investment in mines around the world is now
being felt.  However, exploration is underway, particularly in Canada and Brazil, and new mines are under development.  Some
of the questions facing the industry are the following:



| | ● | How
    long will this new supply take to come to fruition?
| | - | -----------------------------------------------------------
| | ● | Will the
    quality and volumes be sufficient?            
| | ● | Is there
    room for more players?                        
| | ● | Are there
    already too many producers?                  



Prices
up 140%



A
supply/demand situation has been simmering for the last five years.  Since 2010 the price of high quality flake grades
of natural graphite have increased by 140% as a result of Chinese policy and struggling production elsewhere.  The price
pattern is recurring: that of a stabilization followed by an increase.  One thing seems certain –that graphite
is not losing its value.  The talk in, and outside of, the industry is on what the future will hold for natural
graphite.  The rate of exploration in the second half of 2011 has levels not seen in a generation and Canada is leading
the way on new projects.  The unknowns that are electric vehicles and large scale energy storage together with China
at a rapid stage of economic development, leaves the future for the key raw material uncertain.



Our
Strategy



The
Company has prepared a plan to re-launch mining production and on-site processing at an estimated cost, from inception, of $2,750,000.
The completed, re-opened mine will initially be targeting an estimated 5,000 tons of annual production.



In
2014, we conducted the following pre-production activities: the transfer of the mining license to Next Graphite Inc.; initial
testing of the Aukam Graphite Mine samples and the compilation of its initial geological report; process testing of surface graphite
samples from on-site tailings; preparation of an Environmental Impact Assessment report; application for a Mining License for
extraction; preliminary drilling and advanced product testing; preliminary economic analysis based on our findings and a scoping
study that details the engineering for production, mining design, flowchart and operations; construction planning for a small-scale
processing facility; and continuing public company governance, overhead & professional services.



In 2015, the Company plans to build an on-site
processing plant and begin processing its existing 140,000 tons of graphite tailings. The Company is targeting to initially reach
graphite production of up to 2,000 tons per year commencing in the second half of 2015. The approximately 140,000 tonnes of mine
heaps currently sitting at the surface is a legacy of the former mining operations on site. The pile still contains a large
concentration of graphitic material.  Through a recent bulk testing program conducted in June-August 2014, the Company
was able to recover 137 metric tonnes of graphite lumps from 455 metric tonnes of material passed through a separation screen.  The
average lump-to-waste ratio in the piles with an average of ±70 recovery was 1:3.  If these results continue
the Company can expect that approximately 30,000 tonnes of graphitic lumps will still be present in the heaps.  The
former average grade per lump was about 42% carbon.  This indicates that within the piles alone there could be as much
as 15,000 tonnes of graphite.  80 samples were submitted to a laboratory in Namibia for testing to determine the average
grade of the recovered lumps.   The results as reported in December 2014 were positive. Historically 300,000 tonnes
of material was mined from the Aukam site, from which 25,000 tonnes of graphite was recovered.



12







Historically 300,000 tonnes of material was mined from the Aukam
site, from which 25,000 tonnes of graphite was recovered.





The
Company intends to capitalize upon the increasing worldwide demand for high-grade graphite in a cost-effective and potentially
profitable fashion, overseen by a highly experienced management team:



| | Ø§§ | The Global Graphite market,
    currently estimated at $12 billion, is expected to grow at a Compound Aggregate Growth Rate (“CAGR”) of 5.5% during
    2012-2016. One key factor is the increasing use of graphite in batteries, e.g., the Li-Ion market is estimated at ~$250B by
    2020 [Source: ReportStack, “Global Graphite Market 2012-2016”].                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                 
| | Ø§§ | Next Graphite has secured the mining
    rights to a mine with proven resources that has already been historically operated (has previously produced USD $30 million
    of graphite at today’s prices, and is estimated by the Company’s geological consultants to contain over 4 million
    tons of natural, high-grade, large-flake, hydrothermal-sourced graphite reserves)
| |     |                                                                                                                                                                                                                                                                                                                                                                                 
| | Ø§§ | The Company plans to be
    operating in the Republic of Namibia, a country that is mining-friendly, has infrastructure in place, and has low labor costs.                                                                                                                                                                                                                      



Market,
Customers and Distribution Methods



Although
there can be no assurance, large and well capitalized markets are readily available for all metals and precious metals throughout
the world. A very sophisticated futures market for the pricing and delivery of future production also exists. The price for metals
is affected by a number of global factors, including economic strength and resultant demand for metals for production, fluctuating
supplies, mining activities and production by others in the industry, and new and or reduced uses for subject metals.



The
mining industry is highly speculative and of a very high risk nature. As such, mining activities involve a high degree of risk,
which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Few mining projects actually
become operating mines. The mining industry is subject to a number of factors, including intense industry competition, high susceptibility
to economic conditions (such as the price of metal, foreign currency exchange rates, and capital and operating costs), and political
conditions (which could affect such things as import and export regulations, foreign ownership restrictions). Furthermore, the
mining activities are subject to all hazards incidental to mineral exploration, development and production, as well as risk of
damage from earthquakes, any of which could result in work stoppages, damage to or loss of property and equipment and possible
environmental damage. Hazards such as unusual or unexpected geological formations and other conditions are also involved in mineral
exploration and development.



Our methods
of distributing our mined graphite will in part be dictated by what our initial drilling activities indicate relative to quality,
quantity, concentration and cost of extraction.



The options
we are considering include:



| | ● | marketing
                                         department that sells the Company’s graphite to end users.  This will
                                         probably not be pursued unless we are mining at least 5,000 - 10,000 tonnes of graphite
                                         a year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | market
                                         the graphite through a partnership with another graphite mine.                                                                                                                                                                                            
| | ● | market
                                         the material, via offtakes, to graphite distributors, traders or other companies that
                                         may market graphite from more than one mining company.                                                                     





13







The
Company’s costs of operation will also be largely influenced by the factors noted above such as quality, quantity, concentration,
and cost of extraction. Based on our initial planned small-scale operation, the cost to build our processing plant will be approximately
$1,000,000. We anticipate our on-going costs of operation will be relatively low given our low Namibian labor costs and low extraction
costs based on preliminary testing.



Intellectual
Property



The Company
does not have any Intellectual Property at this time.



Competition



The
mineral exploration industry is highly competitive. We are a new exploration stage company and have a weak competitive position
in the industry. We compete with junior and senior mineral exploration companies, independent producers and institutional and
individual investors who are actively seeking to acquire mineral exploration properties throughout the world together with the
equipment, labor and materials required to operate on those properties. Competition for the acquisition of mineral exploration
interests is intense with many mineral exploration leases or claims available in a competitive bidding process in which we may
lack the technological information or expertise available to other bidders.



Many
of the mineral exploration companies with which we compete for financing and for the acquisition of mineral exploration properties
have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend
greater amounts on acquiring mineral exploration interests of merit or on exploring or developing their mineral exploration properties.
This advantage could enable our competitors to acquire mineral exploration properties of greater quality and interest to prospective
investors who may choose to finance their additional exploration and development. Such competition could adversely impact our
ability to attain the financing necessary for us to acquire further mineral exploration interests or explore and develop our current
or future mineral exploration properties.



We
also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared
to invest in such companies. The presence of competing junior mineral exploration companies may impact our ability to raise additional
capital in order to fund our acquisition or exploration programs if investors perceive that investments in our competitors are
more attractive based on the merit of their mineral exploration properties or the price of the investment opportunity. In addition,
we compete with both junior and senior mineral exploration companies for available resources, including, but not limited to, professional
geologists, land specialists, engineers, camp staff, helicopters, float planes, mineral exploration supplies and drill rigs.



General
competitive conditions may be substantially affected by various forms of energy legislation and/or regulation introduced from
time to time by the governments of the United States and other countries, as well as factors beyond our control, including international
political conditions, overall levels of supply and demand for mineral exploration. In the face of competition, we may not be successful
in acquiring, exploring or developing profitable mineral properties or interests, and we cannot give any assurance that suitable
oil and gas properties or interests will be available for our acquisition, exploration or development. Despite this, we hope to
compete successfully in the mineral exploration industry by:



| | ● | keeping
our costs low;                                                                                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | relying
on the strength of our management’s contacts; and                                                                                             
| | ● | using our size and experience to our advantage by adapting quickly
    to changing market conditions or responding swiftly to potential opportunities.



Government
Regulation



In Namibia,
all mineral rights are vested in the state. The Minerals (Prospecting and Mining) Act of 1992 regulates the mining industry in
the country. The Ministry of Mines and Energy is responsible for mining. Licenses and permits are authorized by the Minister on
recommendation of the Mining Commissioner. Namibia's mining industry is also regulated by the Minerals Development Fund of Namibia
Act of 1996 and the Diamond Act of 1999. Several types of mining and prospecting licenses exist as follows:



| | ● | Non-Exclusive Prospecting
    Licenses, valid for 12 months, permit prospecting non-exclusively in any open group not restricted by other mineral rights.                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | Reconnaissance Licenses
    allow regional remote sensing techniques, and are valid for 6 months (renewable under special circumstances) and can be made
    exclusive in some instances.                                                                                    
| | ● | Exclusive Prospecting Licenses
    can cover areas not exceeding 1000 square kilometers and are valid for 3 years, with two renewals of 2 years each and discretionary
    renewals thereafter. Two or more EPLs can be issued for more than one mineral in the same area.   
| | ● | Mineral Deposit Retention
    Licenses (MDRLs) allow successful prospectors to retain rights to mineral deposits which are uneconomical to exploit immediately.
    MDRLs are valid for up to 5 years and can be renewed subject to limited work and expenditure obligations.
| | ● | Mining Licenses can be
    awarded to Namibian citizens and companies registered in Namibia. They are valid for an initial 25 years, renewable up to
    15 years at a time.                                                                                                 
| | ● | There is no requirement
    that the Government should hold equity participation in mining ventures.                                                                                                                                                                         



We
will be required to comply with the foregoing government regulations. An Environmental Impact Analysis was prepared and accepted
by the Namibia Ministry of Environment and Tourism on September 22, 2014. We have submitted an extension to our current Exploratory
License and are confident of it being renewed.



14







Additional
approvals and authorizations may be required from other government agencies, depending upon the nature and scope of the proposed
exploration program. The amount of these costs is not known as we do not know the size, quality of any resource or reserve at
this time. It is impossible to assess the impact of any capital expenditures on earnings or our competitive position.



Environmental
Regulations



Our
exploration activities are also subject to laws and regulations of Namibia governing protection of the environment. These laws
are continually changing and, as a general matter, are becoming more restrictive. Our policy is to conduct business in a way that
safeguards public health and the environment and in material compliance with applicable environmental laws and regulations. Changes
to current laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased
operating costs. Although we are unable to predict what additional legislation and the associated costs of such legislation, if
any, might be proposed or enacted, additional regulatory requirements could render certain exploration activities uneconomic.



Employees



As
of December 31, 2014, the Company and its subsidiaries had no employees. The Company utilizes the services of consultants and
advisors. These include its principal executive officer, chief financial officer, geological personnel, accountants, and attorneys.
Some of these positions, especially those of a technical nature, may be converted to employment if and when the Company's business
requires and resources permit.



Emerging
Growth Company



The
Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS
Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but not limited to, not being required to comply with
the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections
14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation
and any golden parachute payments not previously approved.



The
Company has elected to use the extended transition period for complying with new or revised accounting standards under Section
102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As a result of this election,
our financial statements may not be comparable to companies that comply with public company effective dates.



We
will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year during which our
revenues exceed $1 billion, (2) the date on which we issue more than $1 billion in non-convertible debt in a three year period,
(3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities
pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market
value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently
completed second fiscal quarter.



To
the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available
to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being
required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive
compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three
years.





15







ITEM
1A.     RISK FACTORS



An
investment in the Company is subject to risks and uncertainties. The occurrence of any one or more of these risks or uncertainties
could have a material adverse effect on the value of any investment in the Company and the business, prospects, financial position,
financial condition or operating results of the Company. Prospective investors should carefully consider the information presented
in this report, including the following risk factors, which are not an exhaustive list of all risk factors associated with an
investment in the Company or the Company’s shares or in connection with the operations of the Company:



The
Company has a limited history of operations and Aukam Graphite Project is the Company’s sole asset. There can be no assurance
that any of the Company’s planned exploration and development activities on the Aukam Graphite Project will ever lead to
the re-launch of graphite production from it.



The
Company has a limited history of operations and is in the early stage of development. The Company is engaged in the business of
exploring, resuming production and developing a single asset, the Aukam Graphite Project, in the hope of ultimately, at some future
point, placing the Aukam Graphite Project back into production. The Aukam Graphite Project will be for the foreseeable future
the Company’s sole asset. Although management believes the Aukam Graphite Project has sufficient merit to justify focusing
all the Company’s limited resources upon it, the Company will in consequence be exposed to some heightened degree of risk
due to the lack of property diversification. The Aukam Graphite Project is assumed to still host graphitic material that has been
historically mined. However, there are no guarantees that the re-launched production of these potentially indicated and inferred
resources will ever be demonstrated, in whole or in part, to be profitable to mine. Development of the Aukam Graphite Project
will only follow upon obtaining satisfactory results from the recommended multi-phase testing, exploration and development program
and any subsequent work and studies that may be required. There can be no assurance that any of the Company’s planned exploration
and development activities on the Aukam Graphite Project will ever lead to the re-launch of graphite production from it.



There
is no guarantee that the mineral deposit contained in the Aukam Graphite Project will be commercially viable.



The
exploration and development of mineral projects is highly speculative in nature and involves a high degree of financial and other
risks over a significant period of time, which even a combination of careful evaluation, experience and knowledge may not reduce
or eliminate. The Aukam Graphite Project will constitute the Company’s sole asset. However, there are no guarantees that
there will ever be a profitable mining operation on the Aukam Graphite Project. The proposed multi-phase exploration and development
program on the Aukam Graphite Project is subject to a significant degree of risk. Whether a mineral deposit will be commercially
viable depends on a number of factors, including the particular attributes of the deposit (i.e. size, grade, access, flake size
distribution, contaminants, and proximity to infrastructure), financing costs, the cyclical nature of commodity prices and government
regulations (including those relating to prices, taxes, currency controls, royalties (both product and monetary), land tenure,
land use, importing and exporting of mineral products, and environmental protection). The effect of these factors or a combination
thereof cannot be accurately predicted but could have an adverse impact on the Company.



The
Company has no history of mineral production.



Even
though the Aukam Graphite Project has produced graphite historically, the Company has never had an interest in a mineral-producing
property. There is no assurance that commercial quantities of minerals will be discovered at any future properties, nor is there
any assurance that any future exploration programs of the Company on the Aukam Graphite Project or any future properties will
yield any positive results. Even where commercial properties of minerals are discovered, there can be no assurance that any property
of the Company will ever be brought to a stage where mineral reserves can be profitably produced thereon. Factors that may limit
the ability of the Company to produce mineral resources from its property include, but are not limited to, the price of mineral
resources are explored, availability of additional capital and financing and the nature of any mineral deposits.



The
Company’s operations will be subject to all of the hazards and risks normally encountered in mineral exploration and development.
The Company does not currently carry insurance against these risks and there is no assurance that such insurance will be available
in the future, or if available, at economically feasible premiums or acceptable terms.



Mining
operations generally involve a high degree of risk. The Company’s operations will be subject to all of the hazards and risks
normally encountered in mineral exploration and development. Such risks include unusual and unexpected geological formations,
seismic activity, rock bursts, cave-ins, water inflows, fires and other conditions involved in the drilling and removal of material,
environmental hazards, industrial accidents, periodic interruptions due to adverse weather conditions, labor disputes, political
unrest and theft. The occurrence of any of the foregoing could result in damage to, or destruction of, mineral properties or interests,
production facilities, personal injury, damage to life or property, environmental damage, delays or interruption of operations,
increases in costs, monetary losses, legal liability and adverse government action. The Company does not currently carry insurance
against these risks and there is no assurance that such insurance will be available in the future, or if available, at economically
feasible premiums or acceptable terms. The potential costs associated with losses or liabilities not covered by insurance coverage
may have a material adverse effect upon the Company’s financial condition.





16







The
Company has a limited operating history and financial resources.



The
Company has a limited operating history, has no operating revenues and is unlikely to generate any revenues from operations in
the immediate future. Its existing cash resources are not sufficient to cover its projected funding requirements for the ensuing
year. If its phased exploration and development program is successful, additional funds will be required to bring the Aukam Graphite
Project back into production. The Company has limited financial resources and there is no assurance that sufficient additional
funding will be available to enable it to fulfill its obligations or for further exploration and development on acceptable terms
or at all. Failure to obtain additional funding on a timely basis could result in delay or indefinite postponement of further
exploration and development and could cause the Company to reduce or terminate its operations.



If
we cease to continue as a going concern, due to lack of funding or otherwise, you may lose your entire investment in the Company.



Our
current plans indicate that we will need substantial additional capital to implement our plan of operations before we have any
anticipated revenues. When we require additional funds, general market conditions or the then-current market price of our common
stock may not support capital raising transactions such as additional public or private offerings of our common stock. If we require
additional funds and we are unable to obtain them on a timely basis or on terms favorable to us, we may be required to scale back
our development of new products, sell or license some or all of our technology or assets, or curtail or cease operations.



The
Company is subject to Namibian government regulation of its mining operations. Although the Company believes that the Aukam Graphite
Project is in substantial compliance with all material laws and regulations that currently apply to its activities, there can
be no assurance, however, that the Company will obtain on reasonable terms or at all the permits and approvals, and the renewals
thereof, which it may require for the conduct of its future operations or that compliance with applicable laws, regulations, permits
and approvals will not have an adverse effect on plans to explore and develop the Aukam Graphite Project.



The
future operations of the Company, including exploration and development activities and the commencement and continuation of commercial
production, require licenses, permits or other approvals from various federal, provincial and local governmental authorities and
such operations are or will be governed by laws and regulations relating to prospecting, development, mining, production, exports,
taxes, labor standards, occupational health and safety, waste disposal, toxic substances, land use, water use, environmental protection,
land claims of indigenous people and other matters. The Company believes that the Aukam Graphite Project is in substantial compliance
with all material laws and regulations that currently apply to its activities. There can be no assurance, however, that the Company
will obtain on reasonable terms or at all the permits and approvals, and the renewals thereof, which it may require for the conduct
of its future operations or that compliance with applicable laws, regulations, permits and approvals will not have an adverse
effect on plans to explore and develop the Aukam Graphite Project. Possible future environmental and mineral tax legislation,
regulations and actions could cause additional expense, capital expenditures, restrictions and delay on the Company’s planned
exploration and operations, the extent of which cannot be predicted.



Failure
to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations
may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations.



The
initial property report was based on production data generated from the Namibian Ministry of Mines and Energy and from prior exploration
work. There is no guarantee in reliability of such data.



In
preparing the initial property report, The Aukam Property Geological Report of February 16, 2014, the authors of that report from
Element 12 Consulting relied upon certain data generated on production from the government-mining ministry, and by exploration
work carried out by geologists employed by others. There is no guarantee that data generated from government records or by prior
exploration work is 100% reliable and discrepancies in such data not discovered by the Company may exist. Such errors and/or discrepancies,
if they exist, could have impact on the accuracy of the subject report.



17







If
we lose the services of key management personnel and are unable to attract and retain highly skilled employees, we may not be
able to execute our business strategy effectively.



The
success of the Company will be largely dependent upon the performance of its senior management and directors. Due to the relative
small size of the Company, the loss of these persons or the inability of the Company to attract and retain additional highly skilled
employees may adversely affect its business and future operations. The Company has not purchased any “key-man” insurance
nor has it entered into any non-competition or non-disclosure agreements with any of its directors, officers or key employees
and has no current plans to do so.



While
our executive officers and directors are highly experienced in business, they do not come from the mining industry and rely on
Company managers and consultants for specific mining expertise. The Company has hired and may continue to rely upon consultants
and others for geological and technical expertise. The Company’s current personnel may not include persons with sufficient
technical expertise to carry out the future development of the Company’s properties. There is no assurance that suitably
qualified personnel can be retained or will be hired for such development.



The
Company faces increased competition for equipment and experienced personnel from competitors with greater financial and technical
resources.



The
mineral exploration and mining business is competitive in all of its phases. The mining industry is facing a shortage of equipment
and skilled personnel and there is intense competition for experienced geologists, field personnel, contractors and management,
including from competitors with greater financial resources. There is no assurance that the Company will be able to compete successfully
with others in acquiring such equipment or personnel.



There
is no guarantee that the Company will be successful in its competition for productive mineral properties and financing with competitors
possessing greater financial and technological resources.



The
mineral exploration and mining business is competitive in all phases of exploration, development and production. The Company competes
with a number of other entities in the search for and acquisition of productive mineral properties. As a result of this competition,
the majority of which is with companies with greater financial resources than the Company, the Company may be unable to acquire
attractive properties in the future on terms it considers acceptable. The Company also competes for financing with other resources
companies, many of whom have greater financial resources and/or more advanced properties. There can be no assurance that additional
capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable
to the Company.



There
is no assurance that the Company will be able to obtain a leasehold interest to the land lot covering the Aukam Graphite Project
on financially sound terms.



The
land lot comprising the Aukam Graphite Project is owned by an unrelated third party, and the Company will need to obtain a leasehold
interest to such land lot before it can commence mining operations. Under the laws of Namibia, the grant of a mining license guarantees
access to the land where a mineral deposit is located. The financial terms of such access, however, need to be negotiated directly
with the land owner. While the Company believes that it will be able to negotiate financially sound terms of such access when
mining is commenced, there can be no assurance or guarantee that such terms will be acceptable to the Company.



There
can be no assurance that the Company will be able to secure the renewal of the prospecting license or grant of a mining license
on terms satisfactory to it, or that governments having jurisdiction over the Aukam Graphite Project will not revoke or significantly
alter such license or other tenures or that such license and tenures will not be challenged or impugned.



The
Company possesses the license to the Aukam Graphite Project allowing for prospecting operations, bulk sampling and pilot production
(subject to ministry approval) in the license area, which expires on April 3, 2015. We submitted our application for an extension
to our current Exploratory License on March 13, 2015 and are confident of it being renewed. The exploration license will be followed
by a mining license, which cost is dependent on a number of variables that the Namibian Ministry of Mines will determine. We do
not expect that the mining license will exceed $20,000 in annual cost. While the Namibian government has an interest in the license
area being developed and the Company believes that it will be able to obtain necessary extensions on the prospecting license and
grant of a mining license required to recommence mining operations, there can be no assurance that the Company will be able to
secure the renewal of the prospecting license or grant of a mining license on terms satisfactory to it, or that governments having
jurisdiction over the Aukam Graphite Project will not revoke or significantly alter such license or other tenures or that such
license and tenures will not be challenged or impugned.



18







If
environmental hazards are identified on the Aukam Graphite Project, it may have the potential to negatively impact on the Company’s
exploration and development plans for the Aukam Graphite Project.



All
phases of the Company’s operations will be subject to environmental regulation in the jurisdictions in which it operates.
These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation and provide
for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain
mining industry activities and operations. They also set forth limitations on the generation, transportation, storage and disposal
of hazardous waste. A breach of such regulation may result in the imposition of fines and penalties. In addition, certain types
of mining operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving
in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors
and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the viability or profitability
of operations of the Company. The Aukam Graphite Project has in the past been subject to an environmental study. Additional environmental
studies will, however, be required as the Company’s anticipated exploration and development programs unfold. It is always
possible that, as work proceeds, environmental hazards may be identified on the Aukam Graphite Project which are at present unknown
to the Company and which may have the potential to negatively impact on the Company’s exploration and development plans
for the Aukam Graphite Project.



The
price of the Company’s securities, its financial results and its exploration, development and mining activities may be significantly
adversely affected by declines in the price of graphite.



The
price of the Company’s securities, its financial results and its exploration, development and mining activities may be significantly
adversely affected by declines in the price of graphite. Industrial mineral prices fluctuate widely and are affected by numerous
factors beyond the Company’s control such as the sale or purchase of industrial minerals by various dealers, interest rates,
exchange rates, inflation or deflation, currency exchange fluctuation, global and regional supply and demand, production and consumption
patterns, speculative activities, increased production due to improved mining and production methods, government regulations relating
to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, environmental protection, the degree
to which a dominant producer uses its market strength to bring supply into equilibrium with demand, and international political
and economic trends, conditions and events. The prices of industrial minerals have fluctuated widely in recent years, and future
price declines could cause continued exploration and development of the Aukam Graphite Project to be impracticable. Further, reserve
calculations and life-of-mine plans using significantly lower industrial mineral prices could result in material write-downs of
the Company’s investment in the Aukam Graphite Project and increased amortization, reclamation and closure charges. In addition
to adversely affecting reserve estimates and the Company’s financial condition, declining commodity prices can impact operations
by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management
decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined
to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until
the reassessment can be completed.



As
our business grows, we will need to hire highly skilled personnel and, if we are unable to retain or motivate hire additional
qualified personnel, we may not be able to grow effectively.



Although
no assurance can be given, the Company contemplates that growth will occur as the Company implements its business strategies.  The
Company expects the expansion of its business to place a significant strain on its limited managerial, operational, and financial
resources. The Company will be required to expand its operational and financial systems significantly and to expand, train, and
manage its work force in order to manage the expansion of its operations. The Company’s failure to fully integrate new employees
into its operations could have a material adverse effect on its business, prospects, financial condition, and results of operations.
The Company’s ability to attract and retain highly skilled personnel in connection with its growth is critical to its operations
and expansion. The Company faces competition for these types of personnel from other mining companies and more established organizations,
many of which have significantly larger operations and greater financial, marketing, human, and other resources than does the
Company. The Company may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms,
or at all. If the Company is not successful in attracting and retaining these personnel, its business, prospects, financial condition,
and results of operations will be materially adversely affected.



19







The
market price of the common stock may fluctuate significantly.



There was no quotation for the Company
common stock until March 6, 2014. An active public market for the Company's common stock may not be sustained. The market price
of the common stock may fluctuate significantly in response to factors, some of which are beyond the Company's control, such as
competitors' results of operations, changes in earnings estimates or recommendations by securities analysts, developments in our
industry, and general market conditions and other factors, including factors unrelated to our operating performance.



Issuance
of additional shares of common stock or securities convertible into common stock may substantially dilute the ownership interests
of our existing stockholders.



We
may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests
of our common stockholders. We are currently authorized to issue one hundred million shares of common stock and ten million shares
of preferred stock with such designations, preferences and rights as determined by our board of directors. Issuance of additional
shares of common stock may substantially dilute the ownership interests of our existing stockholders. We may also issue additional
shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with the
hiring of personnel, future acquisitions, future public or private placements of our securities for capital raising purposes,
or for other business purposes. Any such issuance would further dilute the interests of our existing stockholders.



The
outcomes of any legal action may have a material adverse effect on the financial results of the Company.



From
time to time, the Company may be involved in lawsuits. The outcomes of any such legal actions may have a material adverse effect
on the financial results of the Company on an individual or aggregate basis.



The
Company does not anticipate paying any dividends on its common stock.



The
Company has no earnings or dividend record and does not anticipate paying any dividends on its common shares in the foreseeable
future.



Our
common stock is considered a “penny stock” and, as a result, it may affect the ability of investors to sell their
shares.



The
SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market or exercise
price of less than $5.00 per share, subject to specific exemptions. The market price of the Company’s common stock may be
below $5.00 per share and therefore may be designated as a "penny stock" according to SEC rules. This designation requires
any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement
from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict
the ability of brokers or dealers to sell such shares and may affect the ability of investors to sell their shares. In addition,
since the Company’s common stock is currently quoted on the OTCQB, investors may find it difficult to obtain accurate quotations
of the stock and may find few buyers to purchase the stock or a lack of market makers to support the stock price.



Failure
to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could prevent
the Company from producing reliable financial reports or identifying fraud. In addition, current and potential stockholders could
lose confidence in the Company's financial reporting, which could have an adverse effect on the Company's stock price.



Effective
internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud, and a lack
of effective controls could preclude the Company from accomplishing these critical functions. We are required to document and
test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), which requires annual management assessments of the effectiveness of the Company's internal
controls over financial reporting.



If
we fail to maintain the adequacy of our internal accounting controls, as such standards are modified, supplemented or amended
from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls
over financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment
could cause investors to lose confidence in our reported financial information, which could have an adverse effect on our stock
price.



Under
the JOBS Act we have elected to use an extended period for complying with new or revised accounting standards.



We
have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1),
which allows us to delay adoption of new or revised accounting standards that have different effective dates for public and private
until those standards apply to private companies. As a result of this election, our financial statements may not be comparable
to companies that comply with public company effective dates.





20









ITEM
2.     PROPERTIES



The
Company’s direct 90% owned subsidiary Gazania owns a 100% undivided interest in the exclusive prospecting license No. 3895
known as AUKAM originally issued to Centre by the government of the Republic of Namibia on April 4, 2011 and renewed on April
4, 2013 (the “License”). The License grants the right to conduct prospecting operations, bulk sampling and pilot production
in the license area called AUKAM located in southern Namibia in the Karas Region within the Betaine district. The license area
covers about 49,127 hectares.



The
property is named after the Aukam Farm where it is located. A land use and royalty agreement was reached with the landowner on
July 15, 2014, inclusive of land lease, boring and trenching and water usage compensation, and gross royalties once mining commences.
Under the laws of Namibia, the grant of a mining license guarantees access to the land where a mineral deposit is located.



ITEM
3.     LEGAL PROCEEDINGS



From time to time, we may become involved
in various lawsuits and legal proceedings which arise in the ordinary course of business.  However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
 Except for the following, we are currently not aware of any such legal proceedings or claims that we believe will have a
material adverse effect on our business, financial condition or operating results.



On August 25, 2014, the Company filed
a complaint in the Supreme Court of the State of New York in Nassau County against Wall Street Relations, Inc. (“WSR”).
On March 20, 2014, the Company entered into a consulting agreement (the “Consulting Agreement”) with WSR, which is
incorporated by reference herein to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 20, 2014. Under
the Consulting Agreement, WSR agreed to provide to the Company public relations, communications, advisory and consulting services
for fees of $500,000 (the “Fees”).  For the services to be rendered under the Consulting Agreement, the Company
paid to WSR $500,000 in cash. On June 20, 2014, the Company terminated the Consulting Agreement because the Company believed that
WSR failed to perform its obligations under the Consulting Agreement.  The Company therefore terminated the Consulting Agreement
and demanded WSR’s repayment of the Fees but to no avail. The Company’s claim against WSR seeks, among other things,
monetary damages of $500,000 and interests, costs and attorney’s fees. The Company intends to vigorously prosecute its claims
against WSR.



ITEM 4.     MINE
SAFETY DISCLOSURES.



Not applicable.



PART
II



ITEM
5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES



Market
Information



Our
Common Stock, $.0001 par value, is quoted on the OTC Market Group’s OTCQB Marketplace under the symbol “GPNE.”
There were no reported quotations for our common stock during the fiscal year 2013 and through March 5, 2014. Trading
in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that
may have little to do with a company’s operations or business prospects. OTCQB securities are not listed or traded on the
floor of an organized national or regional stock exchange. Instead, OTCQB securities transactions are conducted through a telephone
and computer network connecting dealers in stocks.



For
the periods indicated, the following table sets forth the high and low bid prices per share of Common Stock. The following quotations
reflect the high and low bids for our shares of common stock based on inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions. There were no reported quotations for our common stock during the fiscal
year 2013.



|Fiscal Year 2014 |  | High |      |  | Low |  
|---------------- |  | ---- | ---- |  | --- | -
|First Quarter*   |  | $    | 0.50 |  |     | $
|Second Quarter   |  | $    | 0.53 |  |     | $
|Third Quarter    |  | $    | 0.20 |  |     | $
|Fourth Quarter   |  | $    | 0.25 |  |     | $



*
The Company’s Common Stock did not trade until March 6, 2014.



As
of March 31, 2015, the last sale price reported on the OTCQB for the Company’s Common Stock was $0.02 per share.



As
of March 31, 2015, we had approximately 62 shareholders of record. The holders of common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights
and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable
to the common stock.





Transfer Agent and Registrar



Our transfer agent is Globex Transfer,
LLC at the address of 780 Deltona Blvd., Suite 202, Deltona, FL 32725.





21







Description
of Common Stock



Our
authorized capital stock consists of 100,000,000 shares of Common Stock, par value $.0001 per share, and 25,000,000 shares of
preferred stock, par value $.0001 per share. The following description of our Common Stock is intended as a summary only and is
qualified in its entirety by reference to our Articles of Incorporation, as amended, and By-laws. Subject to a special voting
rights or restrictions attached to a class of shares, each shareholder shall be entitled to one vote for each share of stock in
his or her own name on the books of the corporation, whether represented in person or by proxy.



No
business, other than the election of the chairman or the adjournment of the meeting, will be transacted at an annual or special
meeting unless a quorum of shareholders, entitled to attend and vote, is present at the commencement of the meeting, but the quorum
need not be present throughout the meeting. The holders of at least one third of the outstanding voting shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any business. Unless otherwise provided by law, any action
required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders,
may be taken without a meeting, without prior notice and without a vote if written consents are signed by shareholders representing
a majority of the shares entitled to vote at such a meeting, except however, if a different proportion of voting power is required
by law, the Articles of Incorporation or these Bylaws, than that proportion of written consents is required. Such written consents
must be filed with the minutes of the proceedings of the shareholders of the Corporation.



According
to the Articles of Incorporation and the By-laws of the Company, the holders of Common Stock have neither preemptive rights nor
cumulative voting rights. Dividends may be declared and paid out of any funds available therefor, as often, in such amounts, and
at such time or times as the Board of Directors may determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or series. Shares of one class or series may not be issued
as a share dividend to shareholders of another class or series unless such issuance is in accordance with the Articles of Incorporation
and: a majority of the current shareholders of the class or series to be issued approve the issue; or there are no outstanding
shares of the class or series of shares that are authorized to be issued as a dividend.



Dividends



Since
our inception, we have not declared nor paid any cash dividends on our capital stock and we do not anticipate paying any cash
dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance our operations. Our Board
of Directors will determine future declarations and payments of dividends, if any, in light of the then-current conditions it
deems relevant and in accordance with applicable corporate law.



Securities
Authorized for Issuance under Equity Compensation Plans



We
have no existing equity compensation plan.



Unregistered
Sales of Equity Securities



On
February 10, 2015, the Company consummated a private placement of a secured convertible note of $24,000, which accrues interest
at the annual rate of 5% and will be due on July 31, 2015.



On
October 2, 2014, the Company consummated a private placement of a secured convertible note of $100,000, which accrues interest
at the annual rate of 5% and will be due on December 31, 2015.



On
August 28, 2014, the Company consummated a private placement of an aggregate of 170,000 shares of its Common Stock, for gross
proceeds of $170,000 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.



On
June 19, 2014, the Company consummated a private placement of an aggregate of 60,000 shares of Common Stock for gross proceeds
of $60,000 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.



On
April 29, 2014, the Company consummated a private placement of an aggregate of 50,000 shares of Common Stock, for gross proceeds
of $50,000 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.



On
March 25, 2014, the Company consummated a private placement of an aggregate of 150,000 shares of Common Stock, for gross proceeds
of $150,000 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.



On
March 14 and March 20, 2014, the Company consummated a private placement of an aggregate of 550,000 shares of Common Stock, for
gross proceeds of $550,000 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.



On
February 3, 2014, the Company consummated a private placement of an aggregate of 271,400 shares of Common Stock, for gross proceeds
of $271,400 at a per share price of $1.00 pursuant to a subscription agreement with an accredited investor.





22







The foregoing
issuances of the Company’s securities described herein were effectuated pursuant to the exemption from the registration
requirements of the 1933 Act provided by Section 4(2) of the Act and Rule 506(b) of Regulation D promulgated thereunder.



Purchases
of Equity Securities by the Registrant and Affiliated Purchasers



We
have not repurchased any shares of our common stock during the fiscal year ended December 31, 2014.



Penny
Stock Regulations



The
Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security
that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within
the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited investors (generally those with assets in excess
of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).



For
transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such
securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction,
other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also make
a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may
affect the ability of investors to sell their Common Stock in the secondary market.



In
addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory
Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these
rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least
some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit the investors’ ability to buy and sell our stock.



23







ITEM
6.    SELECTED FINANCIAL DATA



Disclosure
in response to this item is not required of a smaller reporting company.



ITEM
7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



SPECIAL
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS



CERTAIN
STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD-LOOKING STATEMENTS",
WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN
ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS",
"ANTICIPATES", "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY
INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR
PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT
SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE
THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE
SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING
DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND
IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION
SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.



Plan
of Operations



The
Company plans to re-launch mining production and on site processing at the Aukam Graphite Mine at an overall estimated cost of
$2,750,000. Approximately $1,100,000 was used for 2013-2014 start-up costs such as mining rights acquisition, licensing, engineering,
geological and project consultants fees, accounting and legal fees. An additional $1,000,000 has been budgeted for the 2015 costs
of a small-scale, on-site processing plant and another $650,000 for initial operating costs until the Company’s revenue
make it self-sufficient.



In
2014, we conducted the following pre-production activities: the transfer of the mining license to Next Graphite Inc.; initial
testing of the Aukam Graphite Mine samples and the compilation of its initial geological report; process testing of surface graphite
samples from on-site tailings; preparation of an Environmental Impact Assessment report; application for a Mining License for
extraction; preliminary drilling and advanced product testing; preliminary economic analysis based on our findings and a scoping
study that details the engineering for production, mining design, flowchart and operations; construction planning for a small-scale
processing facility; and continuing public company governance, overhead & professional services.





The Company will need to raise at least
$1,650,000 in funding for planned 2015 activities. Funds will also be required to pursue the exploration of additional subterranean
graphite on the property with the goal to produce 2,000 tonnes of graphite yearly.



The
completed, re-opened mine will be targeting an estimated 2,000 tons of annual production, with initial production targeted for
the third quarter of 2015. As previously stated, approximately $1,000,000 has been targeted for securing basic processing equipment
and other costs associated with the construction of a small-scale, on-site processing plant. We believe the Company should be
profitable within 18 months of initial production.



The
management team continues to review and assess the benefits and costs to of financing structures and methods to fund its growth.  While
the Company believes it will begin to realize some revenue and working capital in 2015 through initial sales of graphite, it plans
to obtain most of its required capital through private placements of its common stock to accredited investors.



Results
of Operations



We
did not have any revenues since inception.  We incurred operating expenses of $1,387,435 for the year ended December 31,
2014 and $2,569,223 from August 29, 2013 (inception) to December 31, 2013.   The operating expenses for the year ended
December 31, 2014 primarily consisted of professional and legal fees of approximately $1,085,000 and $228,000 of stock based compensation
expense.  The operating expenses from August 29, 2013 (inception) to December 31, 2013 primarily consisted of professional
and legal fees of approximately $183,000 and $2,370,000 of stock based compensation expense.   We also incurred $240,000
impairment loss on goodwill and intangible assets and $19,000 of interest expense, primarily related to amortization of debt discount
from issuance of convertible note, for the year ended December 31, 2014 which are included in other expense in the statements
of operations.



Liquidity
and Capital Resources



As of December
31, 2014 and 2013, we had $17,878 and $2,450, respectively, in cash.



The
Company does not currently have sufficient resources to cover ongoing expenses and expansion. From November 2013 to March 2014,
we consummated a private placement of our securities that resulted in net proceeds to us of $1,098,900. We used $240,000 out of
the net proceeds to make a payment to NMC under the Option Agreement in connection with the option grant closing and the option
exercise closing. Under the Option Agreement, we undertook to provide at least $260,000 of working capital to or for the benefit
of Gazania from the option grant closing date to June 30, 2014. We plan on raising additional funds from investors to implement
our business model. In the event we are unsuccessful, this will have a negative impact on our operations.



24







If the Company
cannot find sources of additional financing to fund its working capital needs, the Company will be unable to obtain sufficient
capital resources to operate our business. We cannot assure you that we will be able to access any financing in sufficient amounts
or at all when needed. Our inability to obtain sufficient working capital funding will have an immediate material adverse effect
upon our financial condition and our business.



Critical
Accounting Policies



Development
stage entity



The Company
is considered a development stage entity, as defined in FASB ASC 915, because since inception it has not commenced operations
that have resulted in significant revenue and the Company’s efforts have been devoted primarily to activities related to
raising capital.



Going
concern



The
Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of obligations in the normal course of business. However, it has $17,878 in cash,
has losses and an accumulated deficit, and a working capital deficiency. The Company does not currently have
any revenue generating operations. These conditions, among others, raise
substantial doubt about the ability of the Company to continue as a going concern.



In view
of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent
upon the Company's ability to, meets its financial requirements, raise additional capital, and the success of its future operations.
The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be
necessary should the Company not continue as a going concern.



Management
believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive
cash flow. Management intends to seek new capital from owners and related parties to provide needed funds.



Off-Balance
Sheet Arrangements



We
do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons,
also known as "special purpose entities" (SPEs).



ITEM
8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



The
Company's consolidated audited financial statements for the fiscal years ended December 31, 2014 and 2013, together with the report
of the independent certified public accounting firm thereon and the notes thereto, are presented beginning at page F-1.



ITEM
9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.





25









ITEM
9A.  CONTROLS AND PROCEDURES



Disclosure
Controls and Procedures



The
Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean controls and other
procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files
or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including
its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure
that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required
to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions
regarding disclosure.



As
of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation
of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. The Company did not disclose in its SEC filings in a timely manner the transactions with respect to the
sale and issuance of a secured convertible note of $100,000 by the Company on October 2, 2014. Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the
end of the period covered by this report.



Management’s
Annual Report on Internal Control over Financial Reporting



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and
(iii) compliance with applicable laws and regulations.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies and procedures may deteriorate.



Management
assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report.
In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control - Integrated Framework. Based on our assessment, we determined that, as of the end of the period covered
by this report, our internal control over financial reporting was not effective based on those criteria.



During
our assessment of the effectiveness of internal control over financial reporting as of the end of the period covered by this report,
management identified the following material weaknesses:



| | 1. | Lack
    of Internal Audit Function – We lack qualified resources to perform the internal audit functions properly as well as
    oversight of recording and reporting of information. In addition, the scope and effectiveness of the internal audit function
    are yet to be developed.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                            
| | 2. | Review
    of Financial Information and Financial Reporting – We do not have adequate levels of review of financial information
    necessary to ascertain the accounting for complex transactions as well as review of financial information presented.                                   
| |    |                                                                                                                                                                                                                                                                                            
| | 3. | Lack
    of Segregation of Duties – We do not have segregation of duties between recording, authorizing and testing.                                                                                                                                                                       



26







Remediation
Initiative



We
are developing a plan to ensure that all information will be recorded, processed, summarized and reported accurately, and as of
the date of this report, we have taken the following steps to address the above-referenced material weakness in our internal control
over financial reporting:



| | 1. | We
    will continue to educate our management personnel to increase its ability to comply with the disclosure requirements and financial
    reporting controls; and                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                        
| | 2. | We
    will increase management oversight of accounting and reporting functions in the future; and                                                                                     
| |    |                                                                                                                                                                                        
| | 3. | As
    soon as we can raise sufficient capital or our operations generate sufficient cash flow, we will hire additional personnel
    to handle our accounting and reporting functions.



While
the first two steps of our remediation process are ongoing, we do not expect to remediate the weaknesses in our internal controls
over financial reporting until the time when we start to commercialize our products (and, therefore, may have sufficient cash
flow for hiring sufficient personnel to handle our accounting and reporting functions).



A
material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual
or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet
important enough to merit attention by those responsible for oversight of the company's financial reporting.



This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm because
as a smaller reporting company we are not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002.



Changes
in Internal Controls over Financial Reporting



No
change in our system of internal control over financial reporting occurred during the fourth quarter of the fiscal year ended
December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.



ITEM
9B.   OTHER INFORMATION



As
previously reported in the Current Report on Form 8-K filed by the Company with the SEC on March 20, 2014, on March 14, 2014,
the Company exercised its option under the Option Agreement with NMC and completed its acquisition of 90% of the outstanding shares
of Gazania which currently holds the License to the Aukam Graphite Mine.



As
a result of the option exercise and acquisition of Gazania, the Company ceased to be a shell company as such term is defined in
Rule 12b-2 under the Exchange Act.





27







PART
III



ITEM
10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



The
following table sets forth certain information as of March 31, 2015 concerning our directors and executive officers:





|Name                 |  | Age |  |  | Position                                                                
|-------------------- |  | --- |  |  | ------------------------------------------------------------------------
|                     |  |     |  |  |                                                                         
|Michael Doron        |  | 53  |  |  | Chairman, Director and Secretary                                        
|                     |  |     |  |  |                                                                         
|Charles C. Bream III |  | 70  |  |  | Director, Chief Executive Officer, Chief Financial Officer and Treasurer





Michael
Doron, age 53, is an accomplished corporate leader with executive level experience in the financing of small to mid-cap private
and public companies. Currently based in Stockholm, Sweden, he is also Managing Partner at DDR & Associates, a business development
firm specializing in pre-IPO companies. Previously Mr. Doron was Co-Founder and a Partner in Evolution Capital, a private firm
working in conjunction with DDR, and specializing in providing capital to publicly held companies using various debt instruments.
He serves on the Board of Directors of MusclePharm Corp (NASDAQ: MSLP), and GASE Energy, Inc. (OTCQB: GASE). We believe that Mr.
Doron’s qualifications and his extensive experience with emerging public companies provide a unique perspective for our
board.



Charles
C. Bream III, age 70, is a seasoned executive, turnaround expert, and investor with over 30 years of experience leading
companies in the telecommunications, computer, office products, and packaged goods sectors. He has managed public and private
companies as president/CEO, has served as a senior executive at Fortune 500 corporations, and has worked in environments
ranging in revenue from $1 million to over $15 billion. Mr. Bream was appointed President and CEO of Next Graphite, Inc. in
November 2013. He is also a Managing Partner of an M&A and merchant banking firm which he co-founded. Prior to this he
served as Senior Managing Director at a national specialty financial advisory services firm, and as Senior Managing Director
at a turnaround and restructuring firm. Mr. Bream holds a B.S. in Electrical Engineering from the United States Naval Academy
and earned an MBA from the Wharton School of Business, University of Pennsylvania. We believe that Mr. Bream’s
qualifications and his extensive business experience position him well as our director and President/CEO..



Our
directors hold their positions on the board until our next annual meeting of the shareholders, and until their successors have
been qualified after being elected or appointed. Officers serve at the discretion of the board of directors.



There
are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among
our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights
to continue to elect the current board of directors.



Our
directors and executive officers have not, during the past ten years:



| | ● | had
    any bankruptcy petition filed by or against any business of which was a general partner or executive officer, either at the
    time of the bankruptcy or within two years prior to that time,                                                                                                                                 
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | been
    convicted in a criminal proceeding and is not subject to a pending criminal proceeding,                                                                                                                                                                                                                                       
| | ● | been
    subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities,
    futures, commodities or banking activities; or
| | ● | been
    found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission or the Commodity Futures
    Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
    suspended or vacate                                         



28









Board
Committees



We
currently do not have standing audit, nominating or compensation committees. Currently, our entire board of directors is responsible
for the functions that would otherwise be handled by these committees. We intend, however, to establish an audit committee, a
nominating committee and a compensation committee of the board of directors as soon as practicable. We envision that the audit
committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting
policies and our system of internal controls. The nominating committee would be primarily responsible for nominating directors
and setting policies and procedures for the nomination of directors. The nominating committee would also be responsible for overseeing
the creation and implementation of our corporate governance policies and procedures. The compensation committee will be primarily
responsible for reviewing and approving our salary and benefit policies (including stock options), including compensation of executive
officers.



Audit
Committee Financial Expert



The
Board of Directors does not currently have Audit Committee financial expert, as defined under Item 407(d)(5)(i) of Regulation
S-K.



Code
of Ethics



We
do not have a code of ethics but intend to adopt one in the near future.



Board
Leadership Structure



Charles
C. Bream III is our Chief Executive Officer. Michael Doron is the Chairman of our Board of Directors. We believe a board
leadership structure involving one person serving as chairman and another as chief executive officer is best for our company
and our stockholders. Further, we believe this separation improves the Board’s oversight of management, provides
greater accountability of management to stockholders, and allows the chief executive officer to focus on managing our
business operations, while allowing the chairman to focus on more effectively leading the Board and overseeing our general
strategic direction and extraordinary transactions.



Potential
Conflict of Interest



Since
we do not have an audit or compensation committee comprised of independent Directors, the functions that would have been performed
by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our Directors
have the authority to determine issues concerning management compensation, in essence their own, and audit issues that may affect
management decisions. We are not aware of any other conflicts of interest with any of our executives or Directors.



Board’s
Role in Risk Oversight



The
Board assesses on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive,
and operational risks. The Board dedicates time at each of its meetings to review and consider the relevant risks faced by the
Company at that time. In addition, since the Company does not have an Audit Committee, the Board is also responsible for the assessment
and oversight of the Company’s financial risk exposures.





29







ITEM
11.     EXECUTIVE COMPENSATION



The following
is a summary of the compensation we paid to our executive officers, for the two fiscal years ended December 31, 2014 and 2013.



Summary
Compensation Table



|Name and Position                    |  | Year |      |  | Salary ($) |  |        | Stock Awards ($) |  |  | Total ($) | 
|------------------------------------ |  | ---- | ---- |  | ---------- |  | ------ | ---------------- |  |  | --------- | 
|Charles C. Bream III(1)              |  |      | 2014 |  |            |  | 51,500 |                  |  |  | -         | 
|CEO, CFO and Director of the Company |  |      | 2013 |  |            |  | 6,000  |                  |  |  | 300,004   | 
|                                     |  |      |      |  |            |  |        |                  |  |  |           | 
|Mohsin Mulla(2)                      |  |      | 2014 |  |            |  | -      |                  |  |  | -         | 
|CEO, CFO and Director                |  |      | 2013 |  |            |  | -      |                  |  |  | -         | 










|(1) | Mr.
    Bream was appointed as the Chief Executive Officer, Chief Financial Officer and Director of the Company on November 14, 2013.
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                      
|(2) | Mr.
    Mulla resigned as our Chief Executive Officer, Chief Financial Officer and Sole Director of the Company on November 14, 2013.



Compensation
Discussion and Analysis



Overview



We
intend to provide our named executive officers (as defined in Item 402 of Regulation S-K) with a competitive base salary that
is in line with their roles and responsibilities when compared to peer companies of comparable size in similar locations.



Consultant
Agreements











On September 2, 2013, AGI and 360
Partners, LLC (the “Consultant”) entered into an independent consultant agreement for the service of Mr. Charles
C. Bream III, the principal of the Consultant as AGI’s Chief Executive Officer, Chief Financial Officer, Director and
Treasurer for a term of six months. On November 14, 2013 he was appointed to the same positions at the Company. The agreement
is automatically renewable for additional six months unless either party notifies the other at least 30 days prior to the end
of the term of an intention to terminate. Under the original agreement, the Consultant is compensated with a monthly cash
compensation of US$3,000, payable in arrears. The Consultant also received 38,462 shares of AGI’s common stock that
were exchanged for approximately 300,004 shares of the Company’s common stock on November 14, 2103, which are not
subject to any vesting conditions or subject to forfeiture. In the fiscal year of 2014, Mr. Bream’s monthly cash
compensation was increased to $6,500 effective May 1, 2014, per board resolution. The Consultant received an aggregate of
$51,000 in cash as compensation pursuant to the aforementioned agreement and resolution. In addition, the Board of Directors
approved to the grant of a total of 1,200,000 restricted shares of common stock, which will be vested in three equal
installments based on achievement of certain performance goals. As of the date of this Report, none of the granted shares
have been issued to Mr. Bream or the Consultant.



On September 27, 2013 AGI and
Michael Doron entered into an independent consultant agreement as AGI’s Chairman and Director for a term of six months.
On November 14, 2013 he was appointed to the same positions at the Company. The agreement is automatically renewable for
additional six months unless either party notifies the other at least 30 days prior to the end of the term of an intention to
terminate. Under the agreement, Mr. Doron is compensated with a monthly cash compensation of US$1,000, payable in arrears.
Mr. Doron also received 12,821 shares of AGI’s common stock that were exchanged for approximately 100,012 shares of the
Company’s common stock on November 14, 2103, which are not subject to any vesting conditions or subject to
forfeiture. Mr. Doron’s monthly cash compensation was increased to $1,500 effective May 1, 2014, per board
resolution. In the fiscal year of 2014, Mr. Doron received an aggregate of approximately $15,000 in cash as compensation
pursuant to the aforementioned agreement. In addition, the Board of Directors approved to the grant of a total of 150,000
restricted shares of common stock, which will be vested in two equal installments based on achievement of certain performance
goals. As of the date of this Report, none of the granted shares have been issued to Mr. Doron.





Outstanding
Equity Awards at Fiscal Year End



None.





30







Additional
Narrative Disclosure



We
have no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement,
including, but not limited to, tax qualified defined benefit plans, supplemental executive retirement plans, tax qualified defined
contribution plans and non-qualified defined contribution plans.



Director
Compensation



The
following table reflects the compensation of the directors (other than the named executive officers) including director fees and
consulting fees for the Company’s fiscal years ended December 31, 2014 and 2013:



|Name of Director |  | Year |      |  | Fees Earned or Paid in Cash ($) |   |        | Stock Awards ($)(1) |  |  | Total ($) | 
|---------------- |  | ---- | ---- |  | ------------------------------- | - | ------ | ------------------- |  |  | --------- | 
|Michael Doron(2) |  |      | 2014 |  |                                 | $ | 10,223 |                     |  |  | -         | 
|                 |  |      | 2013 |  |                                 | $ | 2,000  |                     |  |  | 100,012   | 










|(1) | The
amounts in these columns represent the compensation cost of stock awards granted during the fiscal year ended December 31, 2014
and 2013, except that these amounts do not include any estimate of forfeitures. The amount recognized for these awards was calculated
based on the value of the stock awards at the time of vesting.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr.
        Doron was appointed as our Chairman and Director of the Company on November 14, 2013.                                                                                                                                                                                                                                       



31









ITEM
12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The
following table sets forth information regarding beneficial ownership of our common stock as of the date of this report by (i)
any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer
and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000, and (iv) all such
executive officers and directors as a group. Unless otherwise specified, the address of each of the officers and directors set
forth below is in care of the Company, 318 N. Carson Street, Suite 208, Carson City, NV 89701. Except as indicated in the footnotes
to this table and subject to applicable community property laws, the persons named in the table to our knowledge have sole voting
and investment power with respect to all shares of securities shown as beneficially owned by them.



|Name                                                          |  | Office                           |  | Shares Beneficially Owned(1) |         |  | Percent of Class(2) | 
|------------------------------------------------------------- |  | -------------------------------- |  | ---------------------------- | ------- |  | ------------------- | 
|                                                              |  |                                  |  |                              |         |  |                     | 
|Officers and Directors                                        |  |                                  |  |                              |         |  |                     | 
|Michael Doron                                                 |  | Chairman, Director and Secretary |  |                              | 100,012 |  |                     | 
|                                                              |  |                                  |  |                              |         |  |                     | 
|Charles C. Bream III(3)                                       |  | Director, CEO, CFO and Treasurer |  |                              | 300,004 |  |                     | 
|                                                              |  |                                  |  |                              |         |  |                     | 
|All officers and directors as a group (2 persons named above) |  |                                  |  |                              | 400,016 |  |                     | 
|                                                              |  |                                  |  |                              |         |  |                     | 
|5% Securities Holders                                         |  |                                  |  |                              |         |  |                     | 
|                                                              |  |                                  |  |                              |         |  |                     | 
|None.                                                         |  |                                  |  |                              |         |  |                     | 












|*   | Less
    than 1%.                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                 
|(1) | Beneficial
    ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect
    to securities.
|    |                                                                                                                                                                 
|(2) | Based
    on 50,411,443 shares of the Company’s common stock outstanding.                                                                                       
|    |                                                                                                                                                                 
|(3) | Includes
    shares held by 360 Partners, LLC, an entity in which Charles C. Bream III is a Managing Partner.                                                   



Change
in Control



As
of the date of this report, there were no arrangements which may result in a change in control of the Company.



Securities
Authorized for Issuance under Equity Compensation Plan



None.



ITEM
13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE



Transactions
with related persons



32







On
March 26, 2014 the Company cancelled the 3,300,000 pre-split shares of the Company’s stock acquired under the Stock Purchase
Agreement with Mr. Mohsin Mulla, resulting in the current 49,431,443 shares of the Company’s common stock outstanding.



On
September 2, 2013, AGI and 360 Partners, LLC (the “Consultant”) entered into an independent consultant agreement
for the service of Mr. Charles C. Bream III, the principal of the Consultant as AGI’s Chief Executive Officer, Chief
Financial Officer, Director and Treasurer for a term of six months. On November 14, 2013, Mr. Bream was appointed to the same
positions at the Company. The agreement is automatically renewable for additional six months unless either party notifies the
other at least 30 days prior to the end of the term of an intention to terminate. Under the agreement, the Consultant is
compensated with a monthly cash compensation of US$3,000, payable in arrears. The Consultant also received 38,462 shares of
AGI’s common stock that were exchanged for approximately 300,004 shares of the Company’s common stock on November
14, 2103, which are not subject to any vesting conditions or subject to forfeiture.



On
September 27, 2013 AGI and Michael Doron entered into an independent consultant agreement as AGI’s Chairman and Director
for a term of six months. On November 14, 2013 he was appointed to the same positions at the Company. The agreement is automatically
renewable for additional six months unless either party notifies the other at least 30 days prior to the end of the term of an
intention to terminate. Under the agreement, Mr. Doron is compensated with a monthly cash compensation of US$1,000, payable in
arrears. Mr. Doron also received 12,821 shares of AGI’s common stock that were exchanged for approximately 100,012 shares
of the Company’s common stock on November 14, 2103, which are not subject to any vesting conditions or subject to forfeiture.



Other
than the above transactions or as otherwise set forth in this report or in any reports filed by the Company with the SEC, there
have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item
404 of Regulation S-K. The Company is currently not a subsidiary of any company.



The
Company’s Board conducts an appropriate review of and oversees all related party transactions on a continuing basis and
reviews potential conflict of interest situations where appropriate. The Board has not adopted formal standards to apply when
it reviews, approves or ratifies any related party transaction. However, the Board believes that the related party transactions
are fair and reasonable to the Company and on terms comparable to those reasonably expected to be agreed to with independent third
parties for the same goods and/or services at the time they are authorized by the Board.



Director
Independence



We
are not subject to listing requirements of any national securities exchange and, as a result, we are not at this time required
to have our board comprised of a majority of “independent Directors.” We do not believe that any of our directors
currently meets the definition of “independent” as promulgated by the rules and regulations of NASDAQ.



ITEM
14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES



The
following lists fees billed by the auditors for the Company, for the years ended December 31, 2014 and 2013:





|Financial Statements for the Year Ended December 31 |  | Audit Services |        |  | Audit Related Fees |  |   | Tax Fees |  |  | Other Fees | 
|--------------------------------------------------- |  | -------------- | ------ |  | ------------------ |  | - | -------- |  |  | ---------- | 
|2014(1)                                             |  | $              | 18,720 |  |                    |  | - |          |  |  | -          | 
|2013(1)                                             |  | $              | 8,160  |  |                    |  | - |          |  |  | -          | 
|2013(2)                                             |  | $              | 7,065  |  |                    |  | - |          |  |  | -          | 



|(1) | These
    services were provided by Anton & Chia, LLP who were engaged on December 5, 2013.              
|--- | ---------------------------------------------------------------------------------------------------------
|    |                                                                                                          
|(2) | These
    services were provided by LBB & Associates Ltd., LLP who were engaged through December 5, 2013.



|● | Audit
    Fees. Represents fees for professional services provided for the audit of the Company’s annual financial statements
    and review of its quarterly financial statements, and for audit services provided in connection with other statutory or regulatory
    filings.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                  
|● | Audit-Related
    Fees.Represents fees for assurance and other services related to the audit of Company’s financial statements.                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                  
|● | Tax
    Fees. Represents fees for professional services provided primarily for tax compliance and advice.                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                  
|● | All
    Other Fees. Represents fees for products and services not otherwise included in the categories above.                                                                                                                                                                    



In the event
that we should require substantial non-audit services, the audit committee would pre-approve such services and fees.



33







PART
IV



ITEM
15.  EXHIBITS



(a)Financial
Statements and Schedules



The following
financial statements and schedules listed below are included in this Form 10-K.



|Audited Financial Statements                    |  |  | F-1
|----------------------------------------------- |  |  | ---
|Balance Sheet                                   |  |  | F-2
|Statement of  Operations and Comprehensive Loss |  |  | F-3
|Statement of Stockholders' Equity               |  |  | F-4
|Statement of Cash Flows                         |  |  | F-5
|Notes to Financial Statements                   |  |  | F-6



(b) Exhibits



|Number |      |  | Description
|------ | ---- |  | -----------
|       |      |  |            
|       | 2.1  |  |            
|       |      |  |            
|       | 3.1  |  |            
|       |      |  |            
|       | 3.2  |  |            
|       |      |  |            
|       | 3.3  |  |            
|       |      |  |            
|       | 4.1  |  |            
|       |      |  |            
|       | 4.2  |  |            
|       |      |  |            
|       | 4.3  |  |            
|       |      |  |            
|       | 10.1 |  |            
|       |      |  |            
|       | 10.2 |  |            
|       |      |  |            
|       | 10.3 |  |            
|       |      |  |            
|       | 10.4 |  |            
|       |      |  |            
|       | 10.5 |  |            
|       |      |  |            
|       | 10.6 |  |            
|       |      |  |            
|       | 21.1 |  |            
|       |      |  |            
|       | 31.1 |  |            
|       |      |  |            
|       | 32.1 |  |            
|       |      |  |            
|       | 101  |  |            



Footnotes:



|(1) | Incorporated
    by reference to our Current Report on Form 8-K filed with the SEC on November 20, 2013.       
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|(2) | Incorporated
    by reference to our Registration Statement on Form S-1 filed with the SEC on December 5, 2012.
|    |                                                                                                                
|(3) | Incorporated
    by reference to our Current Report on Form 8-K filed with the SEC on December 18, 2013.       
|    |                                                                                                                
|(4) | Incorporated
    by reference to our Annual Report on Form 10-K filed with the SEC on April 15, 2014.          



* Filed
herewith



**Users
of this data are advised pursuant to Rule 406T of Regulation S-X that this interactive data file is deemed not filed or part of
a registration statement or prospectus for the purpose of section 11 or 12 of the Securities Act of 1933, as amended, is deemed
not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability
under these sections



34







SIGNATURES



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.



|                         | Next
    Graphite, Inc.
|------------------------ | -----------------------
|                         |                        
|Date: March
    31, 2015 | By:                    
|                         |                        
|                         |                        



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the dates indicated.



|Name
    and Title                                                                                                                                                                                                                 |  | Date              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------
|                                                                                                                                                                                                                                   |  |                   
|/s/
    Charles C. Bream III                                                                                                                                                                                                       |  | March
    31, 2015
|Charles
    C. Bream III                                                                                                                                                                                                           |  |                   
|Chief
                                         Executive Officer, Chief Financial Officer and Director
        (Principal
        Executive Officer, Principal Financial Officer and
        Principal
        Accounting Officer) |  |                   
|                                                                                                                                                                                                                                   |  |                   
|/s/
    Michael Doron                                                                                                                                                                                                              |  | March
    31, 2015
|Michael
    Doron, Chairman and Director                                                                                                                                                                                           |  |                   





35









Next Graphite, Inc.



Index to Financial Statements



|                                                                                                                                                                         | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                                                                                                                                         |     
|Report of Independent Registered Public Accounting Firm                                                                                                                  | F-1 
|                                                                                                                                                                         |     
|Consolidated Balance Sheet as of December 31, 2014 and December 31, 2013                                                                                                 | F-2 
|                                                                                                                                                                         |     
|Consolidated Statement of Operations for the year ending December 31, 2014 and the period from August 29, 2013
    (Inception) to December 31, 2013                      | F-3 
|                                                                                                                                                                         |     
|Consolidated Statement of Changes in Stockholders’ Equity for the year ending December 31, 2014 and the period
    from August 29, 2013 (Inception) to December 31, 2013 | F-4 
|                                                                                                                                                                         |     
|Consolidated Statement of Cash Flows for the year ending December 31, 2014 and the period from August 29, 2013
    (Inception) to December 31, 2013                      | F-5 
|                                                                                                                                                                         |     
|Notes to Consolidated Financial Statements                                                                                                                               | F-6 





36













REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors
and

Stockholders of Next Graphite,
Inc.



We have
audited the accompanying consolidated balance sheets of Next Graphite, Inc. (the “Company”) as of December 31, 2014
and 2013, and the related consolidated statement of operations, changes in stockholders’ deficit, and cash flows for
the year ended December 31, 2014 and for the period from August 29, 2013 (inception) to December 31, 2013. Next Graphite, Inc.’s
management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.



We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our
opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Next Graphite, Inc. as of December 31, 2014, and from August 29, 2013 (inception) through December 31, 2013, and the results
of its consolidated operations and its cash flows for the year ended December 31, 2014 and for the period from August 29, 2013
(inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial statements
referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company’s present financial situation raises substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to this matter are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.



|/s/ Anton & Chia, LLP
|---------------------
|                     
|Newport Beach        
|                     
|March 31, 2015       







F-1









NEXT GRAPHITE, INC.

CONSOLIDATED BALANCE SHEETS





|                                                                                                                                                                               |  | December 31, |            |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ---------- | - | ------------ | -
|                                                                                                                                                                               |  | 2014         |            |   | 2013         |  
|ASSETS                                                                                                                                                                         |  |              |            |   |              |  
|Current assets:                                                                                                                                                                |  |              |            |   |              |  
|Cash                                                                                                                                                                           |  | $            | 17,878     |   |              | $
|Total current assets:                                                                                                                                                          |  |              | 17,878     |   |              |  
|Deposit                                                                                                                                                                        |  |              | -          |   |              |  
|                                                                                                                                                                               |  |              |            |   |              |  
|Total assets                                                                                                                                                                   |  | $            | 17,878     |   |              | $
|                                                                                                                                                                               |  |              |            |   |              |  
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                                 |  |              |            |   |              |  
|Current liabilities:                                                                                                                                                           |  |              |            |   |              |  
|Accounts payable                                                                                                                                                               |  | $            | 62,579     |   |              | $
|Accrued interest                                                                                                                                                               |  |              | 1,251      |   |              |  
|Convertible note payable, net of debt discount of $52,751                                                                                                                      |  |              | 47,249     |   |              |  
|Fair value of derivative liability - beneficial conversion feature                                                                                                             |  |              | 70,334     |   |              |  
|Total current liabilities                                                                                                                                                      |  |              | 181,413    |   |              |  
|                                                                                                                                                                               |  |              |            |   |              |  
|Total liabilities                                                                                                                                                              |  |              | 181,413    |   |              |  
|                                                                                                                                                                               |  |              |            |   |              |  
|Stockholders’ equity (deficit):                                                                                                                                                |  |              |            |   |              |  
|Preferred stock authorized 25,000,000 shares, $.0001 par value, no shares issued and outstanding at December 31, 2014 and December 31, 2013                                    |  |              | -          |   |              |  
|Common stock authorized 100,000,000 shares, $.0001 par value, 50,411,443 and 74,900,043 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively |  |              | 5,041      |   |              |  
|Additional paid-in capital                                                                                                                                                     |  |              | 4,046,916  |   |              |  
|Advance subscriptions                                                                                                                                                          |  |              | -          |   |              |  
|Accumulated deficit                                                                                                                                                            |  |              | (4,215,492 | ) |              |  
|Total stockholders' equity (deficit)                                                                                                                                           |  |              | (163,535   | ) |              |  
|                                                                                                                                                                               |  |              |            |   |              |  
|Total liabilities and stockholders' equity (deficit)                                                                                                                           |  | $            | 17,878     |   |              | $



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





F-2







NEXT GRAPHITE, INC.

CONOLIDATED STATEMENTS OF OPERATIONS





|                                                     |  | Year Ended   |            |   | August 29, 2013 (inception) to |  
|---------------------------------------------------- |  | ------------ | ---------- | - | ------------------------------ | -
|                                                     |  | December 31, |            |   | December 31,                   |  
|                                                     |  | 2014         |            |   | 2013                           |  
|                                                     |  |              |            |   |                                |  
|NET SALES                                            |  | $            | -          |   |                                | $
|                                                     |  |              |            |   |                                |  
|OPERATING EXPENSES:                                  |  |              |            |   |                                |  
|Organizational                                       |  |              | -          |   |                                |  
|Professional fees                                    |  |              | 1,085,146  |   |                                |  
|Stock based compensation                             |  |              | 227,740    |   |                                |  
|Selling, general, and administrative                 |  |              | 74,549     |   |                                |  
|Total Operating Expenses                             |  |              | 1,387,435  |   |                                |  
|                                                     |  |              |            |   |                                |  
|Loss from operations                                 |  |              | (1,387,435 | ) |                                |  
|                                                     |  |              |            |   |                                |  
|OTHER EXPENSES:                                      |  |              |            |   |                                |  
|Impairment loss on goodwill and intangible asset     |  |              | (240,000   | ) |                                |  
|Interest expense                                     |  |              | (18,834    | ) |                                |  
|Total Other Expenses                                 |  |              | (258,834   | ) |                                |  
|                                                     |  |              |            |   |                                |  
|NET LOSS APPLICABLE TO COMMON SHARES                 |  | $            | (1,646,269 | ) |                                | $
|                                                     |  |              |            |   |                                |  
|NET LOSS PER BASIC AND DILUTED SHARES                |  | $            | (0.03      | ) |                                | $
|                                                     |  |              |            |   |                                |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |  |              | 50,016,068 |   |                                |  



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





F-3









NEXT GRAPHITE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
DEFICIT





|                                                            |  |                  |             |   |         |   |        |            |  |   | Advance       |   |  |         |         |   | Total         |  
|----------------------------------------------------------- |  | ---------------- | ----------- | - | ------- | - | ------ | ---------- |  | - | ------------- | - |  | ------- | ------- | - | ------------- | -
|                                                            |  |                  |             |   |         |   |        | Additional |  |   | Subscriptions |   |  |         |         |   | Stockholders' |  
|                                                            |  | Common
    Stock |             |   | Paid-in |   |        | from       |  |   | Accumulated   |   |  | Equity  |        
|                                                            |  | Shares           |             |   | Amount  |   |        | Capital    |  |   | Investor      |   |  | Deficit |         |   | (Deficit)     |  
|                                                            |  |                  |             |   |         |   |        |            |  |   |               |   |  |         |         |   |               |  
|Balance at August 29, 2013 (Inception)                      |  |                  | -           |   |         | $ | -      |            |  | $ | -             |   |  | $       | -       |   |               | $
|                                                            |  |                  |             |   |         |   |        |            |  |   |               |   |  |         |         |   |               |  
|Common shares issued to founders                            |  |                  | 8,980,047   |   |         |   | 898    |            |  |   | (898          | ) |  |         | -       |   |               |  
|Common Stock assumed in merger                              |  |                  | 50,700,000  |   |         |   | 5,070  |            |  |   | (53,504       | ) |  |         | -       |   |               |  
|Shares issued in option agreement                           |  |                  | 12,600,003  |   |         |   | 1,260  |            |  |   | -             |   |  |         | -       |   |               |  
|Common stock issued for cash                                |  |                  | 249,998     |   |         |   | 25     |            |  |   | 249,975       |   |  |         | -       |   |               |  
|Issuance of common stock                                    |  |                  | 2,369,991   |   |         |   | 237    |            |  |   | 2,369,754     |   |  |         | -       |   |               |  
|Advance subscriptions from investor                         |  |                  | -           |   |         |   | -      |            |  |   | -             |   |  |         | 40,400  |   |               |  
|Net loss - August 29, 2013 (inception) to December
31, 2013 |  |                  | -           |   |         |   | -      |            |  |   | -             |   |  |         | -       |   |               |  
|                                                            |  |                  |             |   |         |   |        |            |  |   |               |   |  |         |         |   |               |  
|Balance at December 31, 2013                                |  |                  | 74,900,039  |   |         |   | 7,490  |            |  |   | 2,565,327     |   |  |         | 40,400  |   |               |  
|                                                            |  |                  |             |   |         |   |        |            |  |   |               |   |  |         |         |   |               |  
|Common stock issued for cash                                |  |                  | 1,251,404   |   |         |   | 125    |            |  |   | 1,251,275     |   |  |         | -       |   |               |  
|Advance subscriptions from investor                         |  |                  | -           |   |         |   | -      |            |  |   | -             |   |  |         | (40,400 | ) |               |  
|Cancelation of common stock                                 |  |                  | (25,740,000 | ) |         |   | (2,574 | )          |  |   | 2,574         |   |  |         | -       |   |               |  
|Stock compensation expense                                  |  |                  | -           |   |         |   | -      |            |  |   | 227,740       |   |  |         | -       |   |               |  
|Net loss - 2014                                             |  |                  | -           |   |         |   | -      |            |  |   | -             |   |  |         | -       |   |               |  
|                                                            |  |                  |             |   |         |   |        |            |  |   |               |   |  |         |         |   |               |  
|Balance at December
    31, 2014                            |  |                  | 50,411,443  |   |         | $ | 5,041  |            |  | $ | 4,046,916     |   |  | $       | -       |   |               | $



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





F-4







NEXT GRAPHITE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS





|                                                                            |  |                   |            |   | August 29, 2013   |  
|--------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|                                                                            |  |                   |            |   | (inception) to    |  
|                                                                            |  | December 31, 2014 |            |   | December 31, 2013 |  
|                                                                            |  |                   |            |   |                   |  
|Operating Activities:                                                       |  |                   |            |   |                   |  
|Net loss                                                                    |  | $                 | (1,646,269 | ) |                   | $
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                   |            |   |                   |  
|Common shares issued for services                                           |  |                   | -          |   |                   |  
|Stock compensation                                                          |  |                   | 227,740    |   |                   |  
|Impairment of goodwill and intangible assets                                |  |                   | 240,000    |   |                   |  
|Interest expense - amortization of convertible note discount                |  |                   | 18,834     |   |                   |  
|Changes in assets and liabilities:                                          |  |                   |            |   |                   |  
|Accounts payable and accrued liabilities                                    |  |                   | 14,123     |   |                   |  
|Net cash used in operating activities                                       |  |                   | (1,145,572 | ) |                   |  
|                                                                            |  |                   |            |   |                   |  
|Investing Activities:                                                       |  |                   |            |   |                   |  
|Common stock issued for purchase of acquiree                                |  |                   | -          |   |                   |  
|Purchase of interest in Gazania                                             |  |                   | (150,000   | ) |                   |  
|Net cash used in investing activities                                       |  |                   | (150,000   | ) |                   |  
|                                                                            |  |                   |            |   |                   |  
|Financing Activities:                                                       |  |                   |            |   |                   |  
|Advanced subscriptions                                                      |  |                   | (40,400    | ) |                   |  
|Proceeds from issuance of common stock                                      |  |                   | 1,251,400  |   |                   |  
|Proceed from issuance of convertible note                                   |  |                   | 100,000    |   |                   |  
|Common stock issued in recapitalization                                     |  |                   | -          |   |                   |  
|Net cash provided by financing activities                                   |  |                   | 1,311,000  |   |                   |  
|                                                                            |  |                   |            |   |                   |  
|Net increase in cash                                                        |  |                   | 15,428     |   |                   |  
|                                                                            |  |                   |            |   |                   |  
|Cash, beginning of Year                                                     |  |                   | 2,450      |   |                   |  
|                                                                            |  |                   |            |   |                   |  
|Cash, end of Year                                                           |  | $                 | 17,878     |   |                   | $
|                                                                            |  |                   |            |   |                   |  
|Supplemental disclosures of cash flow information Cash paid for:            |  |                   |            |   |                   |  
|Interest                                                                    |  | $                 | -          |   |                   | $
|Income taxes                                                                |  | $                 | -          |   |                   | $
|                                                                            |  |                   |            |   |                   |  
|Non-cash Financing Activities:                                              |  |                   |            |   |                   |  
|Common shares issued for services                                           |  | $                 | -          |   |                   | $
|Common shares issued in recapitalization                                    |  | $                 | -          |   |                   | $
|Common shares issued for purchase of acquiree                               |  | $                 | -          |   |                   | $
|Common shares issued purchase of interest in Gazania                        |  | $                 | -          |   |                   | $
|Common shares cancelled                                                     |  | $                 | 2,574      |   |                   | $



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





F-5









NEXT GRAPHITE, INC.

Notes
to the Consolidated Financial Statements

December
31, 2014 and 2013



NOTE
1 – ORGANIZATION



Next
Graphite, Inc. (the “Company”) was incorporated in Nevada on August 29, 2013 under the name Zewar Jewellery, Inc.
and is a development-stage entity. The Company's current business plan is to engage in the mining business developing graphite
properties located in Namibia. The Company is based in Carson City, Nevada.



On
November 14, 2013, the Company consummated transactions pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”)
dated November 14, 2013 by and among the Company and the stockholders of African Graphite, Inc., a private Nevada corporation
(“AGI” and the “AGI Stockholders”) whereby AGI Stockholders transferred 100% of the outstanding shares
of common stock of AGI held by them, in exchange for an aggregate of 8,980,047 newly issued shares of the Company’s common
stock, par value $.0001 per share (“Common Stock”).



On
November 14, 2013, AGI entered into a Stock Purchase Option Agreement (the “Option Agreement”) with NMC Corp., a corporation
organized under the laws of the Province of Ontario, Canada (“NMC”), whereby NMC granted to AGI an option to purchase
90 ordinary shares, par value one Namibian dollar per share, of Gazania Investments Two Hundred and Forty Two (Proprietary) Limited,
a corporation organized under the laws of the Republic of Namibia ("Gazania"), representing 90% of the issued and outstanding
shares of Gazania, for $240,000. NMC had entered into an option agreement dated  March 29, 2013, as amended on November
4, 2013 (the “Centre Agreement”), with Centre for Geoscience Research CC (formerly known as “Industrial Minerals
and Rock Research Centre CC”), a company organized under the laws of the Republic of Namibia ("Centre"), whereby
Centre agreed to transfer to Gazania 100% undivided interest in the exclusive prospecting license No. 3895 known as AUKAM originally
issued to Centre by the government of the Republic of Namibia on April 4, 2011 and renewed on April 4, 2013 (the “License”).
The License grants the right to conduct prospecting operations, bulk sampling and pilot production in the license area called
AUKAM located in southern Namibia in the Karas Region within the Betaine district. The license area covers about 49,127 hectares.
The only mine in Namibia which has produced graphite is situated in the license area. The transfer of the License to Gazania was
approved by the Ministry of Mines and Energy of the Republic of Namibia on February 25, 2014.



Under
the Option Agreement, AGI was required to pay to NMC $90,000 as an advance payment to be credited towards the purchase price of
the Gazania shares. The Company made the advance payment on November 14, 2013. The balance of the purchase price in the amount
of $150,000 was paid by AGI upon exercise of the option that was completed on March 14, 2014. As a result, Gazania became a direct
90% owned subsidiary of AGI and an indirect subsidiary of the Company.



NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Going
Concern



The
accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.



From its inception, the Company
has suffered from continuous losses with an accumulated deficit of $4,215,492 during the development stage as of December 31,
2014 and experienced negative cash flows from operations. The continuation of the Company as a going concern through December
31, 2014 is dependent upon the continued financial support from its stockholders. Management believes the Company is currently
pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing
sufficient funds to sustain the operations.





These
and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities
that may result in the Company not being able to continue as a going concern.



Principles of Consolidation



The
consolidated financial statements include the accounts of Next Graphite, Inc. (the “Parent”), a wholly owned subsidiary,
African Graphite, Inc., and Gazania Investments Two Hundred and Forty Two (Proprietary) Limited (“Gazania Investments”),
a Namibian company. African Graphite, Inc. owns 90% of Gazania Investments and 10% is owned by Centre for Geosciences Research
Close Corporation, a Namibian company. In the preparation of consolidated financial statements of the Company, intercompany transactions
and balances are eliminated and net earnings are reduced by the portion of the net earnings of subsidiaries applicable to non-controlling
interests.



As
consolidated financial statements are based on the assumption that they represent the financial position and operating results
of a single economic entity, the retained earnings or deficit of a subsidiary at the date of acquisition by the parent are excluded
from consolidated retained earnings. When a subsidiary is consolidated, the consolidated financial statements include the subsidiary’s
revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated, and the non-controlling interest
is reported in the consolidated statement of financial position within equity, separately from the Parent’s equity.



Non-controlling
Interest in a Consolidated Subsidiary



From
March 14, 2014 (date of acquisition of Gazania Investments) to December 31, 2014, there was no net income attributable to non-controlling
interest.





F-6







Development
Stage Company



The
Company is considered to be in the development stage as defined in ASC 915-10-05, “Development Stage Entity.”The
Company is devoting substantially all of its efforts to the execution of its business plan. The Company adopted ASU No. 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 effective October 1, 2014.



Use
of Estimates



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



Start-up
Costs



In
accordance with ASC 720-15-20, “Start-up Activities,” the Company expenses all costs incurred in connection
with the start-up and organization of the Company.



Debt
Discount



On
October 2, 2014, the Company issued convertible note which had beneficial conversion feature. The Company recorded the beneficial
conversion feature as a derivative liability and debt discount and is amortized over the life of the convertible note. The debt
discount is recorded against the related convertible note outstanding. The amortization is recorded as interest expense. The amortization
expense was $18,834 and was recorded as interest expense for the year ended December 31, 2014.



Common
Stock Issued For Other Than Cash



Services
purchased and other transactions settled in the Company's common stock are recorded at the estimated fair value of the stock issued
if that value is more readily determinable than the fair value of the consideration received.



Income
Taxes



Provisions
for income taxes are based on taxes payable or refundable and deferred taxes. Deferred taxes are provided on differences between
the tax bases of assets and liabilities and their reported amounts in the financial statements and tax operating loss carry forwards.
Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable
to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws
or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Assets and liabilities
are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions
are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated
interest and penalties related to uncertain tax positions are included as a component of general and administrative expense.



Basic
and Diluted Loss per Common Share



Basic
loss per common share amounts are computed by dividing net loss by the weighted-average number of shares of common stock outstanding
during each period. Diluted loss per share amounts are computed assuming the issuance of common stock for potentially dilutive
common stock equivalents.



Goodwill
and Intangible Assets



Goodwill
and other intangible assets are accounted for in accordance with ASC 350, “Goodwill and Other Intangible Assets.” 
Goodwill is tested for impairment at least annually and any related impairment losses are recognized in earnings when identified.
Based on the impairment analysis, the Company recorded an impairment of $240,000 for the year ended December 31, 2014.



Long-lived
Assets



In
accordance with ASC 360, “Property, Plant, and Equipment,” the Company reviews for impairment of long-lived assets
and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable.  The
Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes
in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods;
loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the
asset; or significant negative industry or economic trends.  An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset are less than its carrying amount.



The
Company is not aware of any events or changes in circumstances during the year ended December 31, 2014 that would indicate that
the long-lived assets are impaired other than goodwill and intangible assets which were impaired in the amount of $240,000 for
the year ended December 31, 2014.





F-7







Fair
Value of Financial Instruments



The
carrying amounts reported in the balance sheets for accounts payable, and related party payables approximate fair value because
of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for convertible notes payable
approximate fair value based on the value of the common stock into which the notes are convertible. The carrying amounts reported
for notes payable approximate fair value because the underlying instruments are at interest rates that approximate current market
rates.



Recent
Accounting Pronouncements



In
August 2014, the Financial Accounting Standards Board ("FASB") issued a new standard on
disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard provides guidance on
determining when and how reporting entities must disclose going concern uncertainties in their financial statements. The new
standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern
within one year of the date of issuance of the entity's financial statements. Additionally, an entity must provide
certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern. The new standard
will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016.
Early adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's
financial statements.



In
June 2014, the FASB issued a new standard on accounting for share-based payments. The new standard
clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based
payment award as performance conditions that affect vesting. As such, the performance target should not be reflected in
estimating the grant date fair value of the award. The new standard also clarifies that compensation cost should be
recognized in the period in which it becomes probable that the performance target will be achieved and should represent the
compensation cost attributable to the period for which the requisite service has already been rendered. The new standard will
be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Early
adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's financial
statements.



In
May 2014, the FASB issued a new standard on recognizing revenue in contracts with customers. The
new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with
customers and supersedes most current revenue recognition guidance. The new standard creates a five-step process to recognize
revenue that requires entities to exercise judgment when considering contract terms and relevant facts and circumstances. The
new standard also requires expanded disclosures surrounding revenue recognition. The new standard will be effective for
fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The Company is in the
process of evaluating the impact of adoption on the Company's financial statements.



Other
recently issued accounting standards are not expected to have a material effect on the Company's financial statements.



NOTE
3 – FAIR VALUE MEASUREMENTS



ASC
820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities
required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it
would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes
a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest
level of input that is significant to the fair value measurement. SC 820 establishes three levels of inputs that may be used to
measure fair value:



| | ● | Level
                                         1 – Valuations based on unadjusted quoted prices in active markets for identical
                                         assets or liabilities that the Company holds. An active market for the asset or liability
                                         is a market in which transactions for the asset or liability occur with sufficient frequency
                                         and volume to provide pricing information on an ongoing basis.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Level
                                         2 – Valuation based on quoted prices in markets that are not active for which all
                                         significant inputs are observable, either directly or indirectly.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Level
                                         3 – Valuations based on inputs that are unobservable and significant to the overall
                                         fair value measurement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Financial
instruments include cash, accounts payable and accrued expenses and other current liabilities. The carrying amounts of cash, accounts
payable and accrued expenses and other current liabilities approximate their fair value due to the short term maturities of these
instruments.



The
Company has Level 3 financial instrument, an embedded derivative liability (beneficial conversion feature) that is recorded at
fair value on periodic basis. The embedded derivative is evaluated under the hierarchy of ASC 480-10, ASC Paragraph 815-25-1 and
ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of such Level 3 financial instrument is estimated
using the Black-Scholes option pricing model. The foregoing Level 3 financial instrument has certain provisions which qualifies
to be classified as a liability under ASC 815.



As
of December 31, 2014, the following table represents the Company’s fair value hierarchy for items that are required to be
measured at fair value on a recurring basis:



|Description                             |  | Level 1 |   |  | Level 2 |   |   | Level 3 | 
|--------------------------------------- |  | ------- | - |  | ------- | - | - | ------- | 
|                                        |  |         |   |  |         |   |   |         | 
|Beneficial conversion feature liability |  | $       | - |  |         | $ | - |         | 



NOTE
4 – ACCOUNTS PAYABLE



As
of December 31, 2014, the Company’s accounts payable was primarily made up of professional fees.







F-8









NOTE
5 – CONVERTIBLE NOTE PAYABLE



On
October 2, 2014, the Company issued a convertible note payable with an interest rate of 5.0% per annum in the amount of $100,000.
The outstanding balance and any accrued interest is due on December 31, 2015. Under the agreement, the note can be convertible
at the holder’s discretion into common shares of the Company’s stock at a 25% discount to the price at the date of
exercise.



The
Company adopted the provisions of FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”) (previously
EITF 07-5, “Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own Stock”),
as the convertible note agreement contained certain provision that the convertible note failed to pass the “fixed for fixed”
criteria of ASC815, the conversion feature of the convertible debt should have to be bifurcated and recorded separately until
the conversion date.



Based
on ASC 815, the Company determined that the convertible debt contained embedded derivatives and full-ratchet provision which the
Company valued the embedded derivative using the Black-Scholes method. The following table represents fair value of embedded derivative
movement from the date of issuance to December 31, 2014



|Description                             |  | Fair Value at Date of Issuance |        |  | Changes in Fair Value 2014 |   |   | Fair Value at December 31,
2014 | 
|--------------------------------------- |  | ------------------------------ | ------ |  | -------------------------- | - | - | ------------------------------- | 
|                                        |  |                                |        |  |                            |   |   |                                 | 
|Beneficial conversion feature liability |  | $                              | 70,334 |  |                            | $ | - |                                 | 



As
a result of initial recording of derivative liability of $70,334 with proceeds of $100,000 the Company recorded debt discount
of $70,334 at the date of issuance of convertible note payable.



The
Company accretes debt discount of $70,334 over the life of the convertible note which is 12 months. The Company recorded accretion
of $17,583 for the year ended December 31, 2014 which is recorded as interest expense.



Interest
incurred for the year ended December 31, 2014 was $1,251 (excluding debt discount accretion of $17,583 which is also recorded
as interest expense).



NOTE
6 – PROVISION FOR INCOME TAXES



The
Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net
income regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASB 740-10-65-1
to give effect to the temporary differences which may arise from differences in the bases of fixed assets, depreciation methods
and allowances based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets
arising as a result of net operating loss carry-forwards have been offset completely by a valuation allowance due to the uncertainty
of their utilization in future periods.



The
Company recognizes interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense.
During the period from August 28, 2013 (inception) to December 31, 2014 the Company recognized no income tax related interest
and penalties. The Company had no accruals for income tax related interest and penalties at December 31, 2014.



NOTE
7 – STOCKHOLDERS’ DEFICIT



As
of December 31, 2014, the Company had (i) 100,000,000 Common shares authorized with a par value of $.0001 per share, of which
50,411,443 shares were issued and outstanding, and (ii) 25,000,000 shares of preferred stock, par value $.0001 per share, authorized,
none of which was issued and outstanding. 8,980,047 shares of Common Stock have been issued to founders, of which, 400,016 shares
were issued to the President and director as part of their consulting agreements.



On
November 14, 2013, the Company had the following transactions:



| | ● | The
                                         Company entered into and consummated transactions pursuant to a Subscription Agreement
                                         (the “Subscription Agreement”) with certain accredited investors whereby
                                         the Company issued and sold to the investors for $1.00 per share an aggregate of 249,998
                                         shares of the Company’s Common Stock for an aggregate purchase price of $250,000.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | As
                                         share-based compensation to employees and non-employees, the Company issued 2,369,991
                                         shares of common stock valued at $2,369,991, based on the market price of the stock on
                                         the date of issuance.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Company consummated transactions pursuant to a Share Exchange Agreement dated November
                                         14, 2013 (the “Share Exchange Agreement”) by and among the Company and the
                                         stockholders of African Graphite, Inc., a Nevada Corporation (“AGI”), whereby
                                         the stockholders of AGI transferred 100% of the outstanding shares of common stock of
                                         AGI held by them, in exchange for an aggregate of 8,980,047 newly issued shares of the
                                         Company’s common stock.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Company consummated transactions pursuant to a Share Exchange Agreement (the “Share
                                         Exchange Agreement”) with Zewar Jewellery, Inc. dated November 14, 2013 by and
                                         among the Company and the stockholders of the Company whereby the Company’s Stockholders
                                         transferred 100% of the outstanding shares of common stock of the Company held by them,
                                         in exchange for an aggregate of 8,980,047 newly issued shares of the Zewar Jewellery’s
                                         common stock with a par value $.0001 per share (“Common Stock”).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Company issued 12,600,003 shares of Common Stock to NMC in connection with the option
                                         grant closing under the Option Agreement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-9







All
shares presented in these financial statements and accompanying footnotes have been retroactively adjusted to reflect the increased
number of shares resulting from the seven point eight-to-one forward stock split effective on December 16, 2013.



The
Company had the following common stock issuance transactions from January 1, 2014 to December 31, 2014 pursuant to a Subscription
Agreement with accredited investors:



|Quarter |  | Date                              |  | # of Shares Sold |         |  | Per Share Price |   |      | Gross Proceeds | 
|------- |  | --------------------------------- |  | ---------------- | ------- |  | --------------- | - | ---- | -------------- | 
|Q1 2014 |  | February 3, 2014                  |  |                  | 271,400 |  |                 | $ | 1.00 |                | 
|Q1 2014 |  | March 14, 2014 and March 20, 2014 |  |                  | 550,000 |  |                 | $ | 1.00 |                | 
|Q1 2014 |  | March 25, 2014                    |  |                  | 150,000 |  |                 | $ | 1.00 |                | 
|Q2 2014 |  | April 29, 2014                    |  |                  | 50,000  |  |                 | $ | 1.00 |                | 
|Q2 2014 |  | June 19, 2014                     |  |                  | 60,000  |  |                 | $ | 1.00 |                | 
|Q3 2014 |  | August 28, 2014                   |  |                  | 170,000 |  |                 | $ | 1.00 |                | 



On
March 21, 2014, the Company cancelled 25,740,000 shares of common stock. The cancellation of the shares decreased the amount of
common stock by $2,574 and increased additional paid in capital by the same amount. The shares were held by African Graphite and
were cancelled for internal company restructuring.



On
March 14, 2014, AGI exercised its option under the Option Agreement and the Company paid to NMC the balance of the purchase price
in the amount of $150,000 outstanding under the Option Agreement.



NOTE
8 – COMMITMENTS AND CONTINGENCIES



On
March 20, 2014, the Company entered into a consulting agreement with Wall Street Relations, Inc. (the “Consultant”).
Under the agreement, the Consultant agreed to provide to the Company public relations, communications, advisory and consulting
services. The term of the agreement is 12 months. For the services to be rendered under the agreement, the Company paid to the
Consultant $500,000 in cash. On June 20, 2014, the Company terminated the agreement because of the Consultant’s failure
to perform its obligations under the agreement. The Company is currently pursuing its options to obtain reimbursement of the fee
paid to the Consultant under the agreement. As a result, the Company recorded a write off of the prepayment of approximately $320,000
for the three months ended September 30, 2014.



The
Company is subject to various legal proceedings from time to time as part of its business. As of December 31, 2014, the Company
was not currently party to any legal proceedings or threatened legal proceedings, the adverse outcome of which, individually or
in the aggregate, it believes would have a material adverse effect on its business, consolidated financial condition and consolidated
results of operations.



NOTE
9 – SUBSEQUENT EVENTS



ASC
855, “Subsequent Events. ASC 855 establishes general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are available to be issued. During these periods, the Company
did not have any material recognizable subsequent events required to be disclosed other than those disclosed in this note to the
financial statements as of and for the year ended December 31, 2014 other than the following:



| | ● | Secured
                                         Convertible Note – On February 10, 2015, the Company sold and issued a secured
                                         convertible note in the principal amount of $24,000 (the “2015 Note”) with
                                         a maturity date of July 31, 2015. The interest rate of the 2015 Note is 5% per annum
                                         and all or any outstanding amount of the 2015 Note shall be convertible one year from
                                         the date of this 2015 Note at the Holder’s discretion into the Company’s
                                         stock at a 25% discount to the market price of the Company’s Common Stock at the
                                         time of conversion. The foregoing descriptions of the 2015 Note are qualified in their
                                         entirety by reference to the provisions of the 2015 Note which is included as Exhibit
                                         4.3 to this Report and are incorporated by reference herein.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-10