SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

For the Quarter Ended December 31, 2019

 

OR

 

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

FOR THE TRANSITION PERIOD FROM _______________________ TO _______________________

 

Commission File # 000 - 53371

 

GRYPHON RESOURCES, INC.

 (Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

98-0465540

 (IRS Employer Identification Number)

 

3512 Desert Mesa Road

Roanoke, TX 76262

(Address of principal executive offices)    (Zip Code)

 

(315) 254-8553

 (Registrant’s telephone no., including area code)

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated file, or a smaller reporting company.

 

  Large accelerated filer o Accelerated filer o
  Non-accelerated filer o Smaller reporting company x
      Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yeso Nox

 

The issuer had 267,675,000 shares of common stock issued and outstanding as of the quarter ended December 31, 2019 and the filing date of February 11, 2020.

  

 

 

 
 

 

GRYPHON RESOURCES, INC.

December 31, 2019

 

FORM 10-Q

 

TABLE OF CONTENTS

 

Item # Description

Page

Numbers

     
  PART I 1
     
ITEM 1 UNAUDITED FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS 1-8
     
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
     
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13
     
ITEM 4 CONTROLS AND PROCEDURES 13
     
  PART II 14
     
ITEM 1 LEGAL PROCEEDINGS 14
     
ITEM 1A RISK FACTORS 14
     
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 14
     
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 15
     
ITEM 4 MINE SAFETY DISCLOSURES 15
     
ITEM 5 OTHER INFORMATION 15
     
ITEM 6 EXHIBITS 16
     
  SIGNATURES 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS (unaudited)

 

Gryphon Resources , Inc.
BALANCE SHEETS
(Unaudited)
         
      December 31,        September 30,  
      2019       2019  
ASSETS                
  Current Assets:                
  Cash   $ —       $ —    
  Total Current Assets     —         —    
                 
TOTAL ASSETS   $ —       $ —    
                 
                 
                 
LIABILITIES & STOCKHOLDER'S DEFICIT                
  Current Liabilities:                
  Accounts Payable   $ 1,000     $ 5,250  
  Accounts Payable - Related Party     2,000       1,500  
  Interest Payable - Related Party     910       549  
  Notes Payable - Related Party     25,045       17,798  
                 
  Total Current Liabilities     28,955       25,097  
                 
  Total Liabilities     28,955       25,097  
                 
  Stockholder's Deficit                
  Common Stock, par value $0.001,                
      400,000,000 shares Authorized,  267,675,000 shares Issued and                
      Outstanding at December 31, 2019 and at September 30, 2019     267,675       267,675  
  Additional Paid-In Capital     459,270       459,270  
  Accumulated Deficit     (755,900 )     (752,042 )
                 
  Total Stockholder's Deficit     (28,955 )     (25,097 )
                 
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT   $ —       $ —    
                 
The accompanying notes are an integral part of these unaudited financial statements

  

1

 

 
 

 

Gryphon Resources, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
         
    For the Three Months Ended
    December 31,
    2019   2018
         
Revenues:   $ —       $ —    
                 
Expenses:                
   Professional fees     2,355       883  
   General and administrative expense     1,142       —    
 Total Operating Expenses     3,497       883  
                 
 Operating Loss     (3,497 )     (883 )
                 
Other  Expense                
Interest expense     361       5,206  
                 
 Net Loss   $ (3,858 )   $ (6,089 )
                 
 Basic & Diluted Loss per Common Share   $ (0.00 )   $ (0.00 )
                 
 Weighted Average Common Shares                
 Outstanding     276,675,000       117,675,000  
                 
 The accompanying notes are an integral part of these unaudited financial statements

  2

 

 

 
 

Gryphon Rescources, Inc.
STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
                     
     

Common Stock

 Shares 

       Par Value        Additional Paid-In Capital       Accumulated Deficit         Total Stockholders' Deficiency  
                                         
Balance as of September 30, 2019     267,675,000     $ 267,675     $ 459,270     $ (752,042 )   $ (25,097 )
                                         
Net Loss     —         —         —         (3,858 )     (3,858 )
                                         
Balance as of December 31, 2019     267,675,000     $ 267,675     $ 459,270     $ (755,900 )   $ (28,955 )
                                         
                                         
                                         
                                         
Balance as of September 30, 2018     117,675,000     $ 117,675     $ 573,109     $ (715,878 )   $ (25,094 )
                                         
Beneficial Conversion Feature     —         —         5,000       —         5,000  
                                         
Net Loss     —         —         —         (6,089 )     (6,089 )
                                         
Balance as of December 31, 2018     117,675,000     $ 117,675     $ 578,109     $ (721,967 )   $ (26,183 )
                                         
                                         
The accompanying notes are an integral part of these unaudited financial statements

 

3

 

 
 

Gryphon Rescources, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
         
    For the Three Months Ended
    December 31,
    2019   2018
CASH FLOWS FROM OPERATING                
ACTIVITIES:                
Net Loss   $ (3,858 )   $ (6,089 )
 Adjustments to reconcile net loss to net cash                
 used in operating activities:                
Benefical Conversion Feature     —         5,000  
Changes In:                
Accounts Payable     500       500  
Accounts Payable - Related Party     (4,250 )     (4,617 )
Interest Payable - Related Party     361       206  
Net Cash Used in Operating Activities     (7,247 )     (5,000 )
                 
CASH FLOWS FROM FINANCING                
  Proceeds from Note Payable - Related Party     7,247       5,000  
Net Cash Provided by Financing Activities     7,247       5,000  
                 
Net (Decrease) Increase in Cash     —         —    
Cash at Beginning of Period     —         —    
                 
Cash at End of Period   $ —       $ —    
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid during the year for:                
Interest   $ —       $ —    
Franchise Taxes   $ —       $ —    
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                
None                
                 
The accompanying notes are an integral part of these unaudited financial statements

 4

 

 

 
 

GRYPHON RESOURCES, INC. 

NOTES TO FINANCIAL STATEMENTS

December 31, 2019

(Unaudited)

 

Note 1. Organization and Description of Business

  

The Company is not currently engaged in any business operations. It is, however, in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities.

 

Note 2. Going Concern Uncertainties

 

The Company has not generated any revenues, has an accumulated deficit of $755,900 as of December 31, 2019, and does not have positive cash flows from operating activities. The Company expects to incur additional losses as it continues to identify and develop new commercial opportunities. The Company will be subject to the risks, uncertainties, and difficulties frequently encountered by early-stage companies. The Company may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause the Company’s business, results of operations, and financial condition to suffer. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance date of these financial statements.

 

The Company’s ability to continue as a going concern is an issue due to its net losses and negative cash flows from operations, and its need for additional financing to fund future operations. Management plans to identify commercial opportunities and to obtain necessary funding from outside sources. There can be no assurance that such funds, if available, can be obtained on terms reasonable to the Company. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. Based on the Company’s current level of expenditures, management believes that cash on hand is adequate to fund operations for at least the next twelve months.

 

Note 3.  Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited interim financial statements as of December 31, 2019, and for the three months ended December 31, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s annual report on Form 10-K for the year ended September 30, 2019. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of December 31, 2019 and the results of operations for the three months ended December 31, 2019 and 2018 and cash flows for the three months ended December 31, 2019 and 2018. The results of operations for the three months ended December 31, 2019 are not necessarily indicative of the results to be expected for the full year.

 

Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known

 

Cash and Cash Equivalents

 

Cash and cash equivalents includes highly liquid investments with original maturities of three months or less. On occasion, the Company has amounts deposited with financial institutions in excess of federally insured limits. 

Fair Value of Financial Instruments

 

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

 

5

 

 
 

 

GRYPHON RESOURCES, INC. 

NOTES TO FINANCIAL STATEMENTS

December 31, 2019

(Unaudited)

 

Income Taxes

 

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.  

 

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2019 and 2018, the Company has not recorded any unrecognized tax benefits. See Note 6. Income Taxes.

 

Segment Reporting

 

The Company’s business currently operates in one segment.

 

Net Loss per Share

 

The computation of basic net loss per common share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net loss per common share is based on the weighted average number of shares used in the basic net loss per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. See Note 4. Net Loss Per Share.

 

Recently Issued Accounting Pronouncements

 

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

 

 Note 4. Net Loss Per Share

 

During the three months ended December 31, 2019 and December 31, 2018, the Company recorded a net loss. The Company does not have any potentially dilutive securities outstanding. Therefore, basic and diluted net loss per share is the same for those periods.

Note 5. Related Party

 

In September 2018 – December 31, 2019, the Company incurred a related party payable in the amount of $6,000 to an entity related to the legal custodian of the Company for professional fees. As of December 31, 2019, $4,000 of this balance was converted into a promissory note payable, bearing interest at an annual rate of 10% and $2,000 remains outstanding.

 

In September 30, 2018 the Company issued $5,955 in convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,955, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2018. As of September 30, 2019, this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.

  

 

6

 

 

 
 

 GRYPHON RESOURCES, INC. 

NOTES TO FINANCIAL STATEMENTS

 

December 31, 2019

(Unaudited)

 

In December 2018, the Company issued $5,000 in convertible notes payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.

 

In January 2019, 150,000,000 million shares were issued in exchange for the cancellations of debt, $21,161 in convertible notes payable and accrued interest to an entity related to the legal custodian of the Company.

 

In March 2019, the Company issued a $4,000 promissory note payable and a $2,794 promissory note payable to entities related to the legal custodian of the Company. These notes bear interest at an annual rate of 10% and are payable on demand. 

 

In January 2019, the Company issued a $10,000 in a convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $10,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 is outstanding in principal and accrued interest.

 

In June 2019, the Company issued a $5,000 promissory note payable and a $354 promissory note payable to entities related to the legal custodian of the Company. These notes bear interest at an annual rate of 10% and are payable on demand.

 

In July 2019, the Company issued a $2,150 promissory note payable related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and are payable on demand.

 

In September 2019, the Company issued a $3,500 promissory note payable related to the legal custodian of the Company. This note is non- interest bearing and are payable on demand.

 

In December 2019, the Company issued a $7,247 promissory note payable related to the legal custodian of the Company. This note is non- interest bearing and are payable on demand.

 

As of the three months ended December 31, 2019, the Company has $25,045 in promissory notes payable to a legal custodian of the company and related accrued interest on these notes of $910.

 

Note 6. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at December 31, 2019 and September 30, 2019 are as follows:

    December 31, 2019   September 30, 2019
Deferred tax assets:                
Net operating loss carryforwards   $ 158,477     $ 157,667  
                 
Total deferred tax assets     158,477       157,667  
                 
Less: valuation allowance     (158,477 )     (157,667 )
                 
Net deferred tax asset   $ —       $ —    

  

7

 

 

 
 

GRYPHON RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS

 

December 31, 2019

(Unaudited)

 

The net increase in the valuation allowance for deferred tax assets was $810 for the three months ended December 31, 2019. The Company evaluates its valuation allowance on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.

 

For federal income tax purposes, the Company has net U.S. operating loss carry forwards at December 31, 2019 available to offset future federal taxable income, if any, of $755,900.  Accordingly, there is no current tax expense for the three months ended December 31, 2019 and 2018.

 

The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.

 

The effects of state income taxes were insignificant for the three months ended December 31, 2019 and 2018.

 

The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 21% for the three months ended December 31, 2019 and 2018, respectively:

 

    Three months Ended
    December 31,
    2019   2018
         
Income tax benefit at statutory rate   $ 810     $ 1,279  
Change in valuation allowance     (810 )     (1,279 )
    $ —       $ —    

 

The fiscal years 2012 through 2019 remain open to examination by federal authorities and other jurisdictions in which the Company operates.

 

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. This law substantially amended the Internal Revenue Code, including reducing the U.S. corporate tax rates. Upon enactment, the Company’s deferred tax asset and related valuation allowance decreased by $110,223 to $150,334. As the deferred tax asset is fully allowed for, this change in rates had no impact on the Company’s financial position or results of operations.

 

Note 7. Subsequent Events

 

None.

 

8

 

 

 
 

ITEM 2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  

 

Certain information included herein contains forward-looking statements that involve risks and uncertainties within the meaning of Sections 27A of the Securities Act, as amended; Section 21E of the Securities Exchange Act of 1934. These sections provide that the safe harbor for forward looking statements does not apply to statements made in initial public offerings. The words, such as "may," "would," "could," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this Form 10 - Q and include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, our directors or our officers, with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans; (iii) continued development of business opportunities; (iv) market and other trends affecting our future financial condition; (v) our growth and operating strategy. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) we have incurred significant losses since our inception; (ii) any material inability to successfully develop our business plans; (iii) any adverse effect or limitations caused by government regulations; (iv) any adverse effect on our ability to obtain acceptable financing; (v) competitive factors; and (vi) other risks including those identified in our other filings with the Securities and Exchange Commission.

 

Overview

 

Organizational History.

 

Gryphon Resources, Inc. (“Gryphon”, “We”, or the “Company”) was incorporated in the State of Nevada on January 16, 2006 under the name Gryphon Oil & Gas, Inc. On March 22, 2007, our name was changed to Gryphon Resources, Inc. to more accurately reflect the nature of our operations. At the time of the filing of our initial registration statement on Form SB-2 with the Securities & Exchange Commission (the “SEC” or “Commission”) on or about April 25, 2007 our primary business focus was acquiring and exploring properties for the existence of commercially viable deposits of gold in Canada. On April 28, 2008 we incorporated a Turkish company named APM Madencilik Sanayi Ve Ticaret Limited Sirketi. (“APM”) as a 99% owned subsidiary. Thereafter, In July, 2010, we re-focused our operations and began mineral exploration in Arizona, USA and on September 27, 2010, sold our entire shareholdings in APM to an unrelated third party and ceased all operations in Turkey.  Thereafter focused on mineral exploration and continued exploring for gold, silver and copper-porphyry; and lithium on two different properties in the State of Arizona, USA. Following the filing of our Information Statement on May 15, 2009 with the Commission on DEF Schedule 14C, on May 26, 2009 we amended or Articles of Incorporation to increase our common stock from 100 million shares to 400 million shares, $0.001 par value, authorized for issuance. On May 3, 2012 prior management filed a termination of our registration statement on Form 15-12G pursuant to Rule 12g-4(a)1 and our termination went effective 90 days later on August 1, 2012 then on May 4, 2012 the Company was dissolved at the Nevada Secretary of State’s office and on August 28, 2018, its corporate charter was reinstated.   On February 21, 2018, one of the Company’s shareholders made a motion and application to be appointed as custodian of the Company based on prior management abandoning its responsibilities to continue making filings at the Nevada Secretary of State’s office and for failing to hold a shareholders’ meeting in over 6 years otherwise keep current in its obligations to the Company.  Upon motion and application to the District Court, Clark County Nevada, the Court granted the shareholder’s request and the shareholder was appointed as custodian for the Company (“Custodian”). As Custodian of the Company, the shareholder was ordered to file an amendment to the Company’s articles of incorporation which was filed in conformity with N.R.S. 78.347(4) and the shareholder was ordered to have the Company’s charter reinstated in Nevada, to notice and hold a shareholder meeting; to provide a report to the Court of the actions taken at the shareholder meeting; to identify and name a new registered agent in the State of Nevada; to reinstate the Company in the State of Nevada and the Custodian is complying with the Court Order and will be filing a motion for termination of the Custodian which will be followed by an Order from the Court terminating the Custodian and acknowledging that the Custodian has complied with all of the requirements listed by the Court in its Order for Appointment. The Custodian was given the power and authority to take any action it deemed reasonable and for the benefit of the Company and its shareholders. A Copy of the Order Appointing the Custodian was furnished with the Registration Statement as Exhibit 99.1 filed on July 5, 2019.   The Company has since been seeking a merger target and has been evaluating various opportunities.

 

The Company’s year end is September 30, 2019.

 

Our Business

 

The Company is currently attempting to locate and negotiate with an eligible target company or companies and to acquire an interest in it/them by way of a share exchange or reverse merger. In addition to acquiring an interest in it/them, the Company may assist any such target company or companies with raising capital, as necessary, and offer such target(s) with managerial assistance as may be needed to help the combined enterprise to succeed.

Employees

As of the date of this Form 10Q, December 31, 2019, we have no employees.  

9

 

 
 

RESULTS OF OPERATIONS

 

Three Months Ended December 31, 2019 and December 31, 2018

 

The professional fees were $2,355 and $833, in the three months ended December 31, 2019 and December 31, respectively. This was due to an increase in business operations in 2019 to keep the Company’s reporting obligations current. General & Administrative expenses were $1,142 and $0 for the three months ended December 31, 2019 and December 31, 2018, respectively.

 

Interest expense of $5,206 for the three months ended December 31, 2018, was primarily related to a $5,000 beneficial conversion feature for a convertible note payable that the Company issued and accrued interest on the note. In October 2018 we received funding from issuing $5,000, in convertible notes payable to a legal custodian of the company. The note had an annual rate of 10% and was convertible to common shares of the Company at $0.0001 per share. As of the current date, this note has been converted.

 

Interest expense of $361 for three months ended December 31, 2019 was related to accrued interest on promissory notes. In the three months ended December 31, 2019 we received funding from issuing $7,247, in notes payable to a legal custodian of the company. The notes bear interest at an annual rate of 10% and are payable upon demand. As of December 31, 2019, $25,045 of the principal balance and $910 in accrued interest remained outstanding on multiple notes payable to a legal custodian of the company.

 

For the year ended September 30, 2019, $549 of the principal balance and accrued interest remained outstanding on the notes payable. In connection with the above notes, the Company recognized a beneficial conversion feature of $15,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019.

 

Net cash used in operating activities was $7,247 for the three months ended December 31, 2019, compared to net cash used in operating activities of $5,000 for the previous three months ended December 31, 2018. Based on our current level of expenditures, additional funding is required to cover our operations for at least the next twelve months. The company is in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities

 

Liquidity and Capital Resources

 

Three Months Ended December 31, 2019 and December 31, 2018

 

As of the three months ended December 31, 2019, we had an accumulated deficit of $755,900 and cash and cash equivalents of $0

 

As of the previous year ended September 30, 2019, we had an accumulated deficit of $752,042 and cash and cash equivalents of $0.

 

In September 2018 – December 31, 2019, the Company incurred a related party payable in the amount of $6,000 to an entity related to the legal custodian of the Company for professional fees. As of December 31, 2019, $4,000 of this balance was converted into a promissory note payable, bearing interest at an annual rate of 10% and $2,000 remains outstanding.

 

In September 30, 2018 the Company issued $5,955 in convertible note payable to an entity related to the legal custodian of the Company. This notes bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,955, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2018. As of September 30, 2019, this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.

 

In December 2018, the Company issued $5,000 in convertible notes payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable

 

In January 2019, the Company issued a $10,000 in a convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $10,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 is outstanding in principal and accrued interest. 

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 In January 2019, 150,000,000 million shares were issued in exchange for the cancellations of debt, $21,161 in convertible notes payable and accrued interest to an entity related to the legal custodian of the Company.

 

In March 2019, the Company issued a $4,000 promissory note payable and a $2,794 promissory note payable to entities related to the legal custodian of the Company. These notes bear interest at an annual rate of 10% and are payable on demand.

In June 2019, the Company issued a $5,000 promissory note payable and a $354 promissory note payable to entities related to the legal custodian of the Company. These notes bear interest at an annual rate of 10% and are payable on demand.

In July 2019, the Company issued a $2,150 promissory note payable to entities related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is payable on demand.

 

In September 2019, the Company issued a $3,500 promissory note payable related to the legal custodian of the Company. This note is non- interest bearing and are payable on demand.

 

In December 2019, the Company issued a $7,247 promissory note payable related to the legal custodian of the Company. This note is non- interest bearing and are payable on demand.

 

As of the three months ended December 31, 2019, the Company has $25,045 in promissory notes payable to a legal custodian of the company and related accrued interest on these notes of $910.

 

Other Contractual Obligations

 

As of the three months ended December 31, 2019, we do not have any contractual obligations other than the $25,045 in promissory notes payable to a legal custodian of the company and related accrued interest on these notes of $910.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Recently Issued Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to the Company, we have not identified any standards that we believe merit further discussion. We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our financial position, results of operations, or cash flows. 

 

Going Concern

 

We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern .

 

Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding being available.

 

The Company, as of the date of this filing had approximately $0 in cash and has not earned any revenues from operations to date. In the previous two fiscal years ended September 30, 2019 and September 30, 2018 our expenses were $20,409 and $25,094 respectively, consisting primarily of professional fees, administrative expenses and filing fees. In the three months ended December 31, 2019, our expenses were $3,858, consisting primarily of professional fees, administrative expenses and filing fees. The ongoing expenses of the Company will be related to seeking out a suitable acquisition as well as mandatory filing requirements including our reporting requirements under the Securities Exchange Act of 1934 upon effectiveness of this registration statement.

 

 

 

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The Company continues to rely on borrowings and financings either arranged by the Company’s President or through entities controlled by the President.  In the next 12 months we expect to incur expenses equal to approximately $20,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the Company’s Exchange Act filing requirements. The costs related to the acquisition of a business combination target company vary widely and are dependent on a variety of factors including, but not limited to, the amount of time it takes to complete a business combination, the location of the target company, the size and complexity of the business of the target company, whether stockholders of the Company prior to the transaction will retain equity in the Company, the scope of the due diligence investigation required, the involvement of the Company’s auditors in the transaction, possible changes in the Company’s capital structure in connection with the transaction, and whether funds may be raised contemporaneously with the transaction. Therefore, we believe such costs are unascertainable until the Company identifies a business combination target. These conditions raise substantial doubt about our ability to continue as a going concern. The Company is currently devoting its efforts to locating merger candidates. The Company’s ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve profitable operations.

 

The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. Our management believes that the public company status that results from a combination with the Company will provide such company greater access to the capital markets, increase its visibility in the investment community, and offer the opportunity to utilize its stock to make acquisitions. There is no assurance that we will in fact have access to additional capital or financing as a public company. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

  

Our officers and directors have not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

 

Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

 

The Company anticipates that the selection of a business combination will be complex and extremely risky. While the Company is in a competitive market with a small number of business opportunities, through information obtained from industry professionals including attorneys, investment bankers, and other consultants with experience in the reverse merger industry, our management believes that there are opportunities for a business combination with firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

We do not currently intend to retain any entity to act as a “finder” to identify and analyze the merits of potential target businesses.

 

We have not established a specific timeline nor have we created a specific plan to identify an acquisition target and consummate a business combination. We expect that our management and the Company, through its various contacts and affiliations with other entities will locate a business combination target. We expect that funds in the amount of approximately $20,000 will be required in order for the Company to satisfy its Exchange Act reporting requirements during the next 12 months, in addition to any other funds that will be required in order to complete a business combination. Such funds can only be estimated upon identifying a business combination target. Our management and stockholders have indicated an intent to advance funds on behalf of the Company as needed in order to accomplish its business plan and comply with its Exchange Act reporting requirements, however, there are no agreements in effect between the Company and our management or stockholders specifically requiring they provide any funds to the Company. Therefore, there are no assurances that the Company will be able to obtain the required financing as needed in order to consummate a business combination transaction.

 

 

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Anthony Lombardo, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation Anthony Lombardo, our Chief Executive Officer and Chief Financial Officer concluded that as of the three months ended December 31, 2019 and the date of this filing February 11, 2020, our disclosure controls and procedures were not effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

The material weakness identified relates to the lack of proper segregation of duties. The Company believes that the lack of proper segregation of duties is due to the Company’s limited resources.

Changes in Internal Controls Over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of our last fiscal quarter as covered by this report on December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Inherent Limitations on Effectiveness of Controls 

 

The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error or all fraud and is not effective. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

 

 

 

 

 

 

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On February 21, 2018, one of the Company’s shareholders made a motion and application to be appointed as custodian of the Company based on prior management abandoning its responsibilities to continue making filings at the Nevada Secretary of State’s office and for failing to hold a shareholders’ meeting in over 6 years and otherwise failing to keep current in its obligations to the Company.  Upon motion and application to the District Court, Clark County Nevada, the Court granted the shareholder’s request and the shareholder was appointed as custodian for the Company (“Custodian”). As Custodian of the Company, the shareholder was ordered to file an amendment to the Company’s articles of incorporation which was filed in conformity with N.R.S. 78.347(4) and the shareholder was ordered to have the Company’s charter reinstated in Nevada, to notice and hold a shareholder meeting; to provide a report to the Court of the actions taken at the shareholder meeting; to identify and name a new registered agent in the State of Nevada; to reinstate the Company in the State of Nevada; and the Custodian. In addition to the aforementioned items set forth in the Order Appointing the Custodian, the Custodian was given the power and authority to take any action it deemed reasonable and for the benefit of the Company and its shareholders.  The Custodian is now in the process of meeting all of the requirements set forth in the Court Order and filing a motion to terminate its services.  Upon granting the motion, the Court will issue an Order acknowledging that the Custodian has performed all of the duties that had been required of it and the management of the Company will revert exclusively to the officers and directors appointed by the Custodian. A Copy of the Order Appointing the Custodian was furnished with the Registration Statement filed on July 5, 2019

 

There were no other legal proceedings threatened or otherwise. 

 

ITEM 1A. RISK FACTORS

 

An investment in our shares is speculative and involves a high degree of risk. Therefore, you should not invest in our shares unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as those set forth in our annual report on Form 10-K for the year ended September 30, 2019 and the other information contained herein before deciding to invest in our shares. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described above. The fact that some of the risk factors may be the same or similar to our past filings, means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our SEC filings are part of doing business in our industry and will likely be present in all periods reported. The fact that certain risks are endemic to our industry does not lessen the significance of the risk. We urge you to carefully consider the following discussion of risks as well as other information regarding our common stock. This report and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections.

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 2. UNREGISTERED SALES OF EQUI TY SECURITIES AND USE OF PROCEEDS

 

During the Company’s previous 2018 fiscal year ending September 30th, the Company had no sales of unregistered securities. In January 2019, the Company issued 150,000,000 shares in connection with the conversion of 3 convertible notes payable entered into with the Tourmeline Ventures, Inc., a company owned by the CEO and principal shareholder of the custodian for advances made by Tourmeline Ventures, Inc. bringing the Company in compliance with its filing obligations, consistent with the Court Order appointing the Custodian. The convertible notes payable bore simple interest at a rate of 10% per annum. As of the date that the notes were converted they represented $20,955 in principal such that together with interest of $206 the total purchase price for the aforementioned shares was $21,161; so the total consideration paid for the 150 million shares on conversion was $21,161 or $0.00141 per share. The shares were issued under the exemptions from registration based on Section 4(2) of the Securities Act of 1933, as amended as to the sale of the convertible notes as not being in a public offering and then on conversion, based on Section 3(a)9 of the Securities Act of 1933, as amended. In addition Tourmeline Ventures, Inc. advanced additional funds required by the Custodian for additional expenses of the Company as part of the expenses of the custodianship. These funds were advanced under four promissory notes that bear simple interest at 10% per annum and total $12,418.31. They were issued under Section 4(2) of the Securities Act of 1933, as amended, like the aforementioned 3 convertible promissory notes as they were not made in a public offering. 

 

Note that due to the price differential between the conversion price on certain notes and the most recent market prices, the Company’s auditor required it to take one time non-cash charges deemed “beneficial conversions” despite the fact that no conversions had taken place.  This is simply an accounting convention designed to capture the expense to a Company for issuing shares below deemed market value, notwithstanding the fact that there was an extremely limited market for the Company’s common stock when the convertible notes were entered into and the fact that the shares were not actually issued at the time. 

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 Description of Securities

 

The authorized capital stock of Gryphon Resources, Inc. consists of 400,000,000 shares of Common Stock, $0.001 par value per share (the “Common Stock”), As of January --, 2020 there were 267,675,000 shares of Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding.

 

The following description of certain matters relating to Gryphon Resources, Inc. securities is a summary and is qualified in its entirety by the provisions of Gryphon Resources, Inc. Articles of Incorporation, the Amendments to the Articles of Incorporation and Bylaws.

Common Stock

 

The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of our stockholders. The holders of the common stock have the sole right to vote, except as otherwise provided by law, by our articles of incorporation, or in a statement by our board of directors in a Preferred Stock Designation.

 

In addition, such holders are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of legally available funds.

 

The holders of the common stock do not have cumulative voting rights or preemptive rights to acquire or subscribe for additional, unissued or treasury shares in accordance with the laws of the State of Nevada. Accordingly, the holders of more than 50 percent of the issued and outstanding shares of the common stock voting for the election of directors can elect all of the directors if they choose to do so, and in such event, the holders of the remaining shares of the common stock voting for the election of the directors will be unable to elect any person or persons to the board of directors. All outstanding shares of the common stock are fully paid and nonassessable.

 

The laws of the State of Nevada provide that the affirmative vote of a majority of the holders of the outstanding shares of our common stock and is required to authorize any amendment to our articles of incorporation, any merger or consolidation of Gryphon Resources, Inc. with any corporation, or any liquidation or disposition of any substantial assets of Gryphon Resources, Inc.

 

Preferred Stock

 

The Company has no authorized shares of Preferred Stock..

 

Options

 

The Company has not issued any options to purchase shares of its common stock, although it may establish a qualified option plan at some point in the future.

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFTEY DISCLOSURES

 

N/A

 

ITEM 5. OTHER INFORMAION

 

None.

 

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ITEM 6. EXHIBITS

 

Exhibit 31.1 Certification of the Principal Executive Officer Pursuant to Rule 13A-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Exhibit 32.1 Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   

 

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, there unto duly authorized.

 

  GRYPHON RESOURCES, INC.  
       
  By: /s/ Anthony Lombardo  
    Anthony Lombardo  
    President and Chief Executive Officer, Chief  
    Financial Officer, Principal Accounting Officer,  
    Secretary and Treasurer, Director and Board Chair  
       
   

Dated: February 11, 2020

 

 

 

 

Pursuant to the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

/s/ Anthony Lombardo

Anthony Lombardo

President and Chief Executive Officer, Chief Financial Officer,

Principal Accounting Officer, Secretary and Treasurer,

Director

Dated: February 11, 2020

 

 

 

 

 

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