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.
10
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.
11
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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