Our financial statements, together with the report of auditors,
are as follows:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and
Board of Directors of Gryphon Resources, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets
of Gryphon Resources, Inc. (the “Company”) as of September 30, 2019 and 2018, the related statements of operations,
stockholder’s deficit, and cash flows for each of the years in the two-year period ended September 30, 2019, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of September 30, 2018 and 2018, and the results of its operations
and its cash flows for each of the years in the two-year period ended September 30, 2019, in conformity with accounting principles
generally accepted in the United States of America.
Basis of Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
Substantial Doubt About
the Company’s Ability to Continue as a Going Concern
As discussed in Note 2 to the financial statements,
the Company’s lack of revenues, accumulated deficit and inability to generate positive cash flows raise substantial doubt
about its ability to continue as a going concern for one year from the issuance of these financial statements. Management’s
plans are also described in Note 2. The financial statements do not include adjustments that might result from the outcome of this
uncertainty.
/s/ Boyle CPA, LLC
We have served as the Company’s auditor since 2018
Bayville, NJ
November 12, 2019
13
NOTES TO FINANCIAL STATEMENTS
September 30, 2019
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 $752,042 as of September 30, 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 financial statements have
been prepared in accordance with U.S. GAAP.
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.
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.
18
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2019
Note 3. Summary of Significant Accounting
Policies (Continued)
Income Taxes (continued)
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 September
30, 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 years ended September 30, 2019 and
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 –
September 2019, the Company incurred a related party payable in the amount of $5,500 to an entity related to the legal custodian
of the Company for professional fees. As of September 30, 2019, $4,000 of this balance was converted into a promissory note payable,
bearing interest at an annual rate of 10% and $1,500 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
19
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2019
Note 5. Related Party (continued)
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 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
and a $354 promissory note payable to entities related to the legal custodian of the Company. This note bears interest at an annual
rate of 10% and are payable on demand.
As of the year ended September 30, 2019, the Company has $17,798
in promissory notes payable to a legal custodian of the company and related accrued interest on these notes of $549.
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 June 30, 2019 and September
30, 2018 are as follows:
|
|
September 30, 2019
|
|
September 30, 2018
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
157,667
|
|
|
$
|
250,557
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
157,667
|
|
|
|
250,557
|
|
|
|
|
|
|
|
|
|
|
Less: valuation allowance
|
|
|
(157,667
|
)
|
|
|
(250,557
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The net decrease in the valuation allowance
for deferred tax assets was $92,890 for the year ended September 30, 2019, due to the decrease in tax rate under the Tax Cuts and
Jobs Act of 2017. 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 September 30, 2019 available to offset future federal taxable income, if any, of
$752,043, which will fully expire by the fiscal year ended September 30, 2038. Accordingly, there is no current tax expense
for the year ended September 30, 2019 and 2018.
19
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2019
Note 6. Income Taxes (continued)
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 year ended September 30, 2019 and 2018.
The following is a reconciliation between expected
income tax benefit and actual, using the applicable statutory income tax rate of 21% and 34% for the year ended September 30, 2019
and 2018, respectively:
|
|
Year Ended
|
|
|
September 30,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
Income tax benefit at statutory rate
|
|
$
|
7,594
|
|
|
$
|
10,867
|
|
Change in valuation allowance
|
|
|
(7,594
|
)
|
|
|
(10,867
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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.
20