NOTE 13 –RESTATEMENT of PREVIOUSLY ISSUED FINANCIAL STATEMENTS

 

Subsequent to filing its Quarterly Report on Form 10-Q for the period ended March 31, 2017 (the “Form 10-Q”) with the Securities and Exchange Commission (the “SEC”) on May 22, 2017, Next Graphite, Inc. (the “Company”) determined that a account classification error occurred in its gain recognition of the sale of subsidiary for the period ended March 31, 2017.

 

In accounting for the Company’s gain on the sale of 52% interest of subsidiary Gazania Investments Two Hundred and Forty Two (Proprietary) Limited for the period ended March 31, 2017, the Company reclass the deposit from investment into additional paid in capital which the joint venture partner fulfilled and achieved the certain milestone for the period ended March 31, 2017. Upon correcting for the previously used additional paid in capital, the Company should recognize the gain on the sales of subsidiary as income and has been $177,493 higher than previously reported.

 

The Company has restated its previously issued financial statements as of and for the three months ended March 31, 2017, to correct the classification error related to gain on the sale of subsidiary.

 

The impact of the restatements is reflected below for the periods indicated:

 

Condensed Consolidated Balance Sheets

 

		As of March 31, 2017
		As previously
		Reported				Adjustment				Restated
ASSETS
Current assets:
Cash		$	9,485			$	-			$	9,485
Total current assets:			9,485				-				9,485
Total assets		$	9,485			$	-			$	9,485
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		$	419,859			$	-			$	419,859
Accrued interest payable			34,763				-				34,763
Note payable, net of debt discount $1,517 and $1,517, respectively			145,483				-				145,483
Note payable – related parties			16,000				-				16,000
Convertible note payable			121,000				-				121,000
Fair value of derivative liability - beneficial conversion feature			46,476				-				46,476
Deposit			-				-				-
Total current liabilities			783,581				-				783,581
Total liabilities			783,581				-				783,581
Stockholders’ deficit:
Preferred stock authorized 25,000,000 shares, $.0001 par value, no shares issued and outstanding at March 31, 2017 and December 31, 2016.			-				-				-
Common stock authorized 100,000,000 shares, $.0001 par value, 51,411,443 shares issued and outstanding at March 31, 2017 and December 31, 2016.			5,141				-				5,141
Additional paid-in capital			4,401,221				(177,493	)			4,223,728
Accumulated deficit			(5,180,458	)			177,493				(5,002,965	)
Total stockholders’ deficit			(774,096	)			-				(774,096	)
Total liabilities and stockholders’ deficit		$	9,485			$	-			$	9,485

  

Condensed Consolidated Statements of Operations

 

		For the Three Months Ended March 31, 2017
		As Previously
		Report				Adjustment				Restated
NET SALES		$	-			$	-			$	-
OPERATING EXPENSES:
Professional fees			96,222				-				96,222
Selling, general, and administrative			10,191				-				10,191
Total Operating Expenses			106,413				-				106,413
Loss from operations			(106,413	)			-				(106,413	)
OTHER INCOME (EXPENSE):
Other Income			1,775				-				1,775
Gain on the sale of subsidiary			-				177,493				177,493
Interest expense			(6,195	)			-				(6,195	)
Changes in fair value of derivative			(7,720	)			-				(7,720	)
Total Other Income (Expenses), net			(12,140	)			177,493				165,353
NET INCOME/LOSS		$	(118,553	)		$	177,493			$	58,940
NET INCOME/LOSS PER BASIC SHARES		$	0.00			$	-			$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC			51,411,443								51,411,443
NET INCOME/(LOSS) PER DILUTED SHARES		$	0.00			$	-			$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING –DILUTED		$	51,411,443			$	15,648,651			$	67,060,094

  

Condensed Consolidated Statements of Cash Flows

 

		For the Three Months Ended March 31, 2017
		As Previously
		Report				Adjustment				Restated
Operating Activities:
Net income/(loss)		$	(118,553	)		$	177,493			$	58,940
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Change in deposit balance			44,522				(222,015	)			(177,493	)
Stock based compensation			48,558				-				48,558
Interest expense – note payable			3,439				-				3,439
Interest expense – amortization of convertible note discount			2,554				-				2,554
Changes in fair value of convertible note			7,720				-				7,720
Accounts payable			11,946				-				11,946
Deposit			-				44,522				44,522
Net cash provided by operating activities			186				-				186
Financing Activities:
Proceeds from issuance of note payable			-				-				-
Net cash provided by financing activities			-				-				-
Net increase (decrease) in cash			186				-				186
Cash, Beginning of period			9,299				-				9,299
Cash, End of period		$	9,485			$	-			$	9,485

 

The adjustment column for the condensed consolidated financial statements includes the following changes as of March 31, 2017 and for the three months ended March 31, 2017.

 

●

The balance sheet reflects no changes to total shareholders’ deficit. This is the result of a decrease of $177,493 to the additional paid-in capital at the end of the period and a $ 177,493 increase to the accumulated deficit.

 

●

The statement of operations reflects an increase of net income by $177,493. This is made up of an increase in other income of $177,493 from the gain on the sales of subsidiary.

 

●

The statement of cash flow reflects no change to net cash provided by operating activities. This is the result of an increase of $177,493 from the gain on the sales of subsidiary, $222,015 decrease to change in deposit balance and $44,522 increase to deposit balance for the three months ended March 31, 2017.