UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File Number: 000-52044

USA GRAPHITE INC.

(Name of Small Business Issuer in its charter)


Nevada	26-2940624
(state or other jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. No.)

848 N. Rainbow Blvd. #3550

Las Vegas, Nevada 89107

(Address of principal executive offices)

(603) 525-3380

Issuer’s telephone number

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

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

As of October 18, 2013, there were 129,400,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.

USA GRAPHITE INC.

Table of Contents


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3. Quantitative and Qualitative Disclosures About Market Risk .	6
Item 4 Controls and Procedures	6

PART II – OTHER INFORMATION
Item 1. Legal Proceedings.	8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	8
Item 3. Defaults Upon Senior Securities.	8
Item 4. Submission of Matters to a Vote of Security Holders.	8
Item 5. Other Information.	8
Item 6. Exhibits	9
SIGNATURES	9

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of USA Graphite Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "USGT" refers to USA Graphite Inc.

PART I - FINANCIAL INFORMATION

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Item 1. Financial Statements

The unaudited interim financial statements of USA GRAPHITE INC. (the “Company”, “Magnum Oil”, “we”, “our”, “us”) follow. All currency references in this report are in U.S. dollars unless otherwise noted.

The accompanying Financial Statements of USA GRAPHITE INC. should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended February 28, 2013. Significant accounting policies disclosed therein have not changed except as noted below.

USA GRAPHITE INC.

(Formerly MAGNUM OIL, INC.)

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2013

Audited

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO FINANCIAL STATEMENTS

USA GRAPHITE INC.
(Formerly MAGNUM OIL, INC.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
Unaudited

		August 31, 2013		February 28, 2013
				Audited

ASSETS

CURRENT ASSETS
Prepaid expenses	$	11,418	$	-
TOTAL CURRENT ASSETS		11,418		-

FIXED ASSETS		3,780,000		3,780,000

TOTAL ASSETS	$	3,791,418	$	3,780,000
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	46,492	$	24,141
Note payable		43,642		42,692
Loans from related party		168,571		129,841
TOTAL CURRENT LIABILITIES	$	258,705	$	196,674

STOCKHOLDERS' DEFICIT
Capital stock
Authorized
10,000,000 preferred shares, par value $0.001 par value
800,000,000 shares of common stock, $0.001 par value
129,400,000 shares of common stock (169,400,000 on Feb 29, 2012)	$	129,400	$	129,400
Additional Paid in Capital		18,715,600		18,715,600
Deficit accumulated during the development stage		(15,312,287)		(15,261,674)
TOTAL STOCKHOLDERS' DEFICIT	$	3,532,713	$	3,583,326
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	3,791,418	$	3,780,000

The accompanying notes are an integral part of these financial statements

F-1

USA GRAPHITE INC.
(Formerly MAGNUM OIL, INC.)
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited

										Inception date
		Three months		Three months		Six months		Six months		(December 13, 2005)
		ended		ended		ended		ended		to
		August 31, 2013		August 30, 2012		August 31, 2013		August 31, 2012		August 31, 2013
EXPENSES

Office and general	$	19,377	$	2,707	$	27,601	$	4,592	$	15,107,170
Professional Fees		10,217		6,915		22,062		22,890		130,949
Total Expenses	$	25,595	$	9,622	$	49,663	$	27,482	$	15,238,119

Operating Loss		(29,595)		(9,622)		(49,663)		(27,482)		(15,238,119)

Other losses
Interest expense		(475)		(475)		(950)		(950)		(5,958)
Foreign Currency transaction loss		-		-		-				(120)
Net loss		(475)		(475)		(950)		(950)		(6,077)
Net Loss from continued operations		(30,070)		(10,097)		(50,613)		(28,432)		(15,244,196)

Discontinued Business		-		-		-		-		(151,510)
Forgiveness of Debt		-		-		-		-		83,420
Total other Expenditure		-		-		-		-		(68,090)


NET LOSS	$	(30,070)	$	(10,097)	$	(50,613)	$	(28,432)	$	(15,312,287)

BASIC AND DILUTED LOSS PER COMMON SHARE
BASIC AND DILUTED LOSS PER COMMON SHARE	$	-	$	-	$	-	$	-

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

	$	129,400,000	$	169,400,000		129,400,000		169,400,000

The accompanying notes are an integral part of these financial statements

F-2

USA GRAPHITE INC.
(Formerly MAGNUM OIL, INC.)
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
From inception (December 13, 2005) to August 31, 2013
Unaudited
							Deficit
	Common Stock						accumulated		Accumulated
					Additional		during the		Other
	Number of				Paid-in		development		Comprehensive
	shares		Amount		Capital		stage		Income(loss)		Total


Common stock issued for cash at $0.000065
per share on December 14, 2005	77,000,000	$	77,000	$	(72,000)	$	-	$	-	$	5,000

Net loss, February 28, 2006							(983)				(983)

Foreign currency translation adjustments									34		34
Balance, February 28, 2006	77,000,000	$	77,000	$	(72,000)	$	(983)	$	34	$	4,051
Stock issued for cash during the quarter
August 31, 2006 @$0.00065 per share	92,400,000		92,400		(32,400)						60,000

Net loss, February 28, 2007							-				-

Foreign currency translation adjustments									2,683		2,683
Balance, February 28, 2007	169,400,000	$	169,400	$	(104,400)	$	(983)	$	2,717	$	66,734

Net loss, February 28, 2008							(52,058)				(52,058)

Foreign currency translation adjustments									350		350
Balance, February 28, 2008	169,400,000	$	169,400	$	(104,400)	$	(53,041)	$	3,067	$	15,026

Net loss, February 28, 2009							(75,309)				(75,309)

Foreign currency translation adjustments									5,988		5,988
Balance, February 28, 2009	169,400,000	$	169,400	$	(104,400)	$	(128,350)	$	9,055	$	(54,295)

Net loss, February 28, 2010							(45,238)				(45,238)

Foreign currency translation adjustments									(6,360)		(6,360)
Balance, February 28, 2010	169,400,000	$	169,400	$	(104,400)	$	(173,588)	$	2,695	$	(105,893)

Net loss, February 28, 2011							23,538				23,538

Foreign currency translation adjustments									(2,695)		(2,695)
Balance, February 28, 2011	169,400,000	$	169,400	$	(104,400)	$	(150,050)	$	-	$	(85,050)

Net loss, February 29, 2012							(54,722)				(54,722)

Balance, February 29, 2012	169,400,000	$	169,400	$	(104,400)	$	(204,772)	$	-	$	(139,772)

Common stock retired December, 2012	(77,000,000)		(77,000)		77,000						-
Common stock issued December, 2012	37,000,000		37,000		18,743,000						18,780,000

Net loss, February 28, 2013							(15,056,902)				(15,056,902)

Balance, February 28, 2013	129,400,000	$	129,400	$	18,715,600	$	(15,261,674)	$	-	$	3,583,326

Net Loss, August 31, 2013							(50,613)				(50,613)

Balance, August 31 2013	129,400,000	$	129,400	$	18,715,600	$	(15,312,287)	$	-	$	3,532,713

The accompanying notes are an integral part of these financial statements

F-3

USA GRAPHITE INC.
(Formerly MAGNUM OIL, INC.)
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
			Six months		Six months		December 13, 2005
			ended		ended		(date of inception) to
			August 31, 2013		August 31, 2012		August 31, 2013

OPERATING ACTIVITIES
	Net loss	$	(50,613)	$	(28,432)	$	(15,312,287)
	Adjustment to reconcile net loss to net cash
	used in operating activities
	Forgiveness of debt						(83,420)
	Depreciation		-		-		2,825
	Stock issuance for compensation						15,000,000
	Loss on Disposition of Assets		-		-		4,607
	Increase in Prepaid Expenses		(11,418)		3,912		(11,418)
	Foreign Transaction loss		-		-		696
	Increase (decrease) in accrued expenses		22,351		7,525		129,914

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(39,680)	$	(16,995)	$	(269,083)

INVESTING ACTIVITIES
	Purchase of fixed assets		-		-		(11,468)
	Disposition of fixed assets		-		-		3,337
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES		$	-	$	-	$	(8,131)
FINANCING ACTIVITIES
	Proceeds from sale of common stock		-		-		2,200
	Additional paid-in capital		-		-		62,800
	Note Payable		950		950		43,642
	Loan from related parties		38,730		13,113		168,572
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET CASH PROVIDED BY FINANCING ACTIVITIES		$	39,680	$	14,063	$	277,214

NET INCREASE (DECREASE) IN CASH		$	-	$	(2,932)	$	-

CASH, BEGINNING OF PERIOD		$	-	$	2,935	$	-

CASH, END OF PERIOD		$	-	$	3	$	-

Supplemental cash flow information and noncash financing activities:
Cash paid for:
	Interest	$	-	$	-	$	-

	Income taxes	$	-	$	-	$	-

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

F-4

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

USA GRAPHITE, INC. (Formerly MAGNUM OIL, INC.) (the “Company”) was incorporated under the laws of the State of Nevada on December 13, 2005. The Company is in the development stage. Its activities to date have included capital formation, organization and development of its business plan. The Company has commenced operations. On April 12, 2012 the company changed its name to USA Graphite, Inc.

The Company operated through its lone subsidiary: PTM Publications Sdn Bhd, a Malaysian Corporation.

The Company decided to cease the operation of subsidiary in January 2011.

USA GRAPHITE, INC. (the parent company) is now a holding company.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a February year-end.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Use of Estimates and Assumptions

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

Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Mineral Property Costs

The Company has been in the exploration stage since its acquisition of mining option on November 19, 2012 and has not yet realized any revenues from its planned operations. All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.

If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Recent Accounting Pronouncements

The company has evaluated all the recent accounting pronouncements and believes that none of them will have a material effect on the company’s financial statement.

F-5

NOTE 3 – GOING CONCERN

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has a working capital deficit of $247,287, an accumulated deficit of $15,312,287 and net loss from operations since inception of $15,312,287. The Company does not have a source of revenue sufficient to cover its operation costs giving substantial doubt for it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merge with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern. The Company is funding its initial operations by way of issuing Founder’s shares.

The officers and directors have committed to advancing certain operating costs of the Company, including Legal, Audit, Transfer Agency and Edgarizing costs.

NOTE 4 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities approximate their carrying value due to the short-term maturity of the instruments.

NOTE 5 - MINING OPTION AGREEMENT

On November 19, 2012, the Company entered into a Property Option Agreement with Nevada Minerals Holdings, Inc. Pursuant to the terms and conditions of the Option Agreement, NV Minerals shall grant the Company with the right and option to acquire 100% of the mining interests in that certain Property known as the Blue Wing Mountains Graphite Project which is comprised of a total 1,985 acres and is located in Pershing County of the State of Nevada. In order to exercise the Option, the Company shall be required to: (i) pay an initial cash payment of $50,000 to NV Minerals; (ii) issue an aggregate 5,000,000 restricted shares of the Company’s common stock to NV Minerals; (iii) pay an additional aggregate payment of $450,000 over a three (3) year period; and (iv) pay a Royalty to NV Minerals equal to 2% of the net smelter returns, per the terms and conditions of the Option Agreement. The Company will also provide funds for the conduct of a program of work to be undertaken by NV Minerals for the benefit of the Property of not less than $1,000,000 over four years. The Option Agreement also provides that the Company shall have a one-time right to purchase 50% of the Royalty in the Property for $500,000. Pursuant to the Option Agreement, NV Minerals has agreed to enter into an 18 month voluntary lock up agreement for all of the shares it will receive upon execution of the Option Agreement. The Company issued 5,000,000 shares on December 10, 2012 at $0.50 per shares. According the Option Agreement, the Company needs to pay $50,000 within four months after the commencement of the Option. But the Company has not paid it.

On December 7, 2012, the Company entered into an Option Agreement with Nevada Minerals Holdings, Inc. Pursuant to the terms and conditions of the Agreement, NV Minerals shall grant the Company with the right and option to acquire 100% of the mining interests in that certain Property known as the Gordon Creek Graphite Property which is comprised of a total of 206 acres and is located in Elko County of the State of Nevada. In exchange, the Company is required to: (i) pay an initial cash payment of $25,000 to NV Minerals ninety days after the commencement of the Option Period; (ii) issue an aggregate 2,000,000 restricted shares of the Company’s common stock to NV Minerals at $0.64 per share; (iii) pay an additional aggregate payment of $175,000 over a three (3) year period; and (iv) pay a Royalty to NV Minerals equal to 2% of the net smelter returns, per the terms and conditions of the Option Agreement. The Company will also provide funds for the conduct of a program of work to be undertaken by NV Minerals for the benefit of the Property of not less than $500,000 over four years. The Option Agreement also provides that the Company shall have a one-time right to purchase 50% of the Royalty in the Property for $500,000. Pursuant to the Option Agreement, NV Minerals has agreed to enter into an 18 month voluntary lock up agreement for all of the shares it will receive upon execution of the Option Agreement. The Company issued 2,000,000 shares on December 10, 2012 at $0.64 per shares. According the Option Agreement, the Company needs to pay $25,000 ninety days after the commencement of the Option Period. But the Company has not paid it.

On January 14, 2013, the Company entered into a Letter of Intent (the “LOI”) with Nevada Minerals Holdings, Inc. (“NV Minerals”). Pursuant to the terms and conditions of the LOI, NV Minerals shall grant the Company with the right and option (the “Option”) to acquire one hundred percent (100%) of the mining interests in that certain Property known as the Ruby Mountains Graphite Property (the “Property”) which is comprised of a total of approximately Seven Hundred and Eighty Five acres (785 acres) and is located in Elko County of the State of Nevada. In exchange, the Company is required to: (i) pay an initial cash payment of twenty five thousand dollars ($25,000) to NV Minerals; (ii) issue an aggregate of four million six hundred and fifteen thousand (4,615,000) restricted shares of the Company’s common stock to NV Minerals; (iii) pay an additional aggregate payment of one hundred seventy five thousand dollars ($175,000) over a three (3) year period; and (iv) pay a production royalty (the “Royalty”) to NV Minerals equal to two percent (2%) of the net smelter returns, per the terms and conditions of the LOI. As of the Balance Sheet date the shares had not been issued.

F-6

NOTE 6 - WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional shares of common.

NOTE 7 - NOTE PAYABLE

As of August 31, 2013, there is a Note Payable of $43,642 ($42,692 as of February 28, 2013) at 5% interest, which was repayable on June 7, 2011. As of May 31, 2013, it had not been paid and is overdue. The Company continued to accrue interest payable at 5% interest.

NOTE 8 - DIRECTOR'S FEES

Fees of $500 per month have been recorded for the remuneration of the previous director, and $2,000 per month for the current director since November 1, 2012

NOTE 9 - RELATED PARTY TRANSACTIONS

As of August 31, 2013, there is a total of $109,543 that has been forwarded by previous officers of the Company and $59,028 by a current officer of the Company; no specific repayment terms have been established.

On December 10, 2012, the Company entered into an Employment Agreement with Wayne Yamamoto. Pursuant to the Agreement, Mr. Smith agreed to serve as Chief Executive Officer of the Company. In exchange, the Company has agreed to: (i) pay Mr. Yamamoto $2,000 per month; and (ii) issue 30,000,000 shares of the Company’s common stock to Mr. Yamamoto. This Agreement is at-will and can be terminated at any time by either the Company or Mr. Yamamoto. On December 5, 2012 the company issued the 30,000,000 common shares for compensation at $0.50 per share.

Wayne Yamamoto, the Company’s sole director and officer, is sole director and officer of Nevada Minerals Holdings, Inc. He has 100% ownership of Nevada Minerals Holdings, Inc. Company entered Mining Option Agreements with Nevada Minerals Holdings, Inc. on November 19, and December 7, 2012. Also, on January 14, 2013, the Company entered into a Letter of Intent (the “LOI”) with Nevada Minerals Holdings, Inc. (See Note 5. Mining Option Agreement).

NOTE 10 - INCOME TAXES

We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. Accounting for Uncertainty in Income Taxes when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period.

The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of are as follows:

August 31, 2013

Net operating loss carryforwards $15,312,287

Gross deferred tax assets $ 5,359,300

Valuation allowance $ (5,359,300)

Net deferred tax assets $ 0

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.

F-7

NOTE 11 - NET OPERATING LOSSES

As of August 31, 2013, the Company has a net operating loss carryforwards of approximately $15,312,287. Net operating loss carryforward expires twenty years from the date the loss was incurred.

NOTE 12 - STOCK TRANSACTIONS

Transactions, other than employees’ stock issuance, are in accordance with ASC 505. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees’ stock issuance are in accordance with ASC 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.

On December 14, 2005, the company issued a total of 22,000,000 shares of $0.000455 par value common stock as founder's shares to Jasmin Bin Omar Jayaseelan, Jefferi Bin Omar Jayaseelan and Cheryl Lim Phaik Suan, all of whom are officers and directors of the company. Mr. Jasmin Jayaseelan and Mr. Jefferi Jayaseelan received 8,800,000 shares each, and Ms. Lim received 4,400,000 shares. The shares were issued in exchange for cash in the aggregate amount of $5,000.

In August 2006, the company completed an offering of shares of common stock in accordance with an SB-2 registration statement declared effective by the Securities and Exchange Commission on May 4, 2006. The company sold 26,400,000 shares of common stock, par value $0.001, at a price of $0.0227 per share to approximately 32 investors. The aggregate offering price for the offering closed in August 2006 was $60,000, all of which was collected from the offering.

On May 23, 2010 the company received approval from FINRA for a forward split of common share of 22:1.

On April 17, 2012 the company received approval from FINRA for a forward slit of 3.5:1. All share amounts have been retroactively adjusted for all periods presented.

On August 28, 2012 the company amended the authorized common shares from 175,000,000 to 800,000,000 common shares of $0.001 per share. On the same day the company authorized 10,000,000 preferred shares, par value $0.001 per share. None were previously authorized.

On December 7, 2012, 30,000,000 shares were issued to the president at $0.50 per share, Mr. Wayne Yamamoto in exchange for services, and 7,000,000 shares to Nevada Mineral Holdings, of which 5,000,000 were at a value of $0.50 per share and 2,000,000 were at a value of $0.64 per share.

On December 14, 2012 77,000,000 restricted shares held by the previous president, Patrick DeBlois, were retired and returned to Treasury.

As of August 31, 2013, the Company had 129,400,000 shares of common stock issued and outstanding.

NOTE 13 - STOCKHOLDERS’ EQUITY

The stockholders’ equity section of the Company contains the following classes of capital stock as at August 31, 2013:

Common stock, $0.001 par value: 800,000,000 shares authorized; 129,400,000 shares issued and outstanding.

Preferred stock, $0.001 par value: 10,000,000 shares authorized and no shares are issued and outstanding.

NOTE 14 - SUBSEQUENT EVENTS

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through the date of issuance of the consolidated financial statements. During this period, the Company did not have any material recognizable subsequent events.

F-8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Results of Operations

Our financial statements and information for the three months ended August 31, 2013 have been prepared by our Management on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We generated no revenues during the three months ended August 31, 2013 and have incurred total net losses of $15,312,287 from inception to August 31, 2013.

Net Loss and Operating Expenses

Three months Ended August 31, 2013 compared to the Three months Ended August 31, 2012

We incurred net losses of $30,070 for the three-month period ended August 31, 2013, as compared to net losses of $10,097 for the three-month period ended August 31, 2012. The increase was mainly attributed to increased office and general expenses of $19,377 compared to $2,707 for the three-month period ended August 31, 2012. Our other expenses for the three-month period ended August 31, 2013 consisted of professional fees of $10,217, compared to $6,915 for the three-month period ended August 31, 2012.

Six months Ended August 31, 2013 compared to the Six months Ended August 31, 2012

We incurred net losses of $50,613 for the six-month period ended August 31, 2013, as compared to a net loss of $28,432, for the six-month period ended August 31, 2012. The increase was mainly attributed to increased office and general expenses of $27,601 as compared to $4,592 for the six months ended August 31, 2012. Our other expenses for the six-month period ended August 31, 2013 consisted of professional fees in the amount of $22,062 as compared to $22,890 for the same period ended 2012.

Liquidity and Capital Resources

At August 31, 2013, we had total assets of $3,791,418 which consisted of prepaid expenses and fixed assets. The Company had current liabilities of $258,705. As of the date of filing this Report, the Company has no cash reserves.

Our accounts payable at August 31, 2013 were $46,492. In addition, we have loans from related party due in the amount of $168,571. This loan balance is non-interest bearing, unsecured and has no fixed terms of repayment. We also have notes payable in the amount of $43,642. There are currently no options, warrants, rights or other securities conversion rights issued and/or outstanding.

We do not currently have any substantial source of revenues and expect to rely on additional financing. We are pursuing plans to seek further capital through the sale of additional stock by way of private placement, but there is no assurance that we will be successful in raising further funds.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that there is substantial doubt about our ability to continue as a going concern without further financing.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected wither by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Contractual Obligations

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

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Item 3. Quantitative And Qualitative Disclosures Of Market Risk

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

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), to allow for timely decisions regarding required disclosure.

As of the end of the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president and chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended August 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors.

Our Annual Report on Form 10-K for the fiscal year ended February 29, 2013 includes a detailed discussion of our risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits


Exhibit Number	Description	Filed
3.1 (a)	Articles of Incorporation filed with the Nevada Secretary of State on December 13, 2005.	Incorporated by reference as Exhibits to the Form SB-2 filed on April 27, 2006.
3.1 (b)	Amendment to Articles of Incorporation filed with the Nevada Secretary of State on June 17, 2010.	Incorporated by reference as Exhibit to the Form 8-K filed on July 16, 2010.
3.1 (c)	Amendment to Articles of Incorporation filed with the Nevada Secretary of State on April 11, 2012.	Incorporated by reference as Exhibit to the Form 8-K filed on April 18, 2012.
3.1 (d)	Amendment to Articles of Incorporation filed with the Nevada Secretary of State on August 28, 2012.	Incorporated by reference as Exhibit to the Form 8-K filed on August 29, 2012.
3.2	Bylaws.	Incorporated by reference as Exhibits to the Form SB-2 filed on April 27, 2006.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
101.INS*	XBRL Instance Document.	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document.	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	USA GRAPHITE INC.


Date: October 21, 2013	/s/ Wayne Yamamoto
	Wayne Yamamoto
	President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director

USA Graphite Inc. 10-Q