Ameritrust Corp - Annual Report: 2010 (Form 10-K)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended September 30, 2010
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)
1313 East Maple Street, Suite 201-462
Bellingham, Washington 98225
(Address of principal executive offices) (Zip Code)
(360) 685-4238
(Registrant’s telephone no., including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: Yes x No o
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:
| Large accelerated filer | o | Accelerated filer | o | |
| Non-accelerated filer | o | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes o No x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:
Based on the closing price on January 11, 2011 of $0.09, the aggregate market value of the 48,025,000 common shares held by non-affiliates was $4,322,250.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 96,775,000 Common shares were outstanding as of January 12, 2011.
Documents incorporated by reference: None
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
General
Gryphon Resources, Inc. was incorporated in the State of Nevada on January 16, 2006. On April 28, 2008 we incorporated a Turkish company named APM Madencilik Limited. (“APM”) as a 99% owned subsidiary. The remaining balance of 1% of APM shares were held by our former CEO. In July, 2010, we re-focused our operations and began mineral exploration in Arizona, USA. On September 27, 2010, we sold our entire shareholding in APM to an unrelated third party and ceased all operations in Turkey and the former activity of APM is treated as a discontinued operation in the financial statements included in this Report. (Hereinafter Gryphon Resources, Inc. may herein be referred to: “Gryphon Resources”, “Gryphon”, “We”, “Us”, the “Registrant”, or the “Company”).
We are a mineral exploration company and are exploring for lithium, gold and copper-porphyry in Arizona, USA.
Background
Gryphon Resources, Inc. was incorporated in Nevada on January 16, 2006 as Gryphon Oil & Gas Inc. and on August 10, 2006 filed Articles of Amendment with the Nevada Secretary of State to change its name to Gryphon Resources, Inc.
The Company’s common stock is traded in the NASD Over-The-Counter Bulletin Board and on the Pink Sheets under the symbol “GRYO”.
Our fiscal year end is September 30th.
The following risk factors should be considered in connection with an evaluation of the business of our business:
THE COMPANY'S LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO JUDGE ITS PROSPECTS.
The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. You should consider any purchase of the Company's shares in light of the risks, expenses and problems frequently encountered by all companies in the early stages of its corporate development.
LIQUIDITY AND CAPITAL RESOURCES ARE UNCERTAIN.
For the year ended September 30, 2010, the Company had a Net Loss of $(57,322) including a non-cash gain of $97,920. The Company may need to raise additional capital by way of an offering of equity securities, an offering of debt securities, or by obtaining financing through a bank or other entity. The Company has not established a limit as to the amount of debt it may incur nor has it adopted a ratio of its equity to debt allowance. If the Company needs to obtain additional financing, there is no assurance that financing will be available from any source, that it will be available on terms acceptable to us, or that any future offering of securities will be successful. If additional funds are raised through the issuance of equity securities, there may be a significant dilution in the value of the Company’s outstanding common stock. The Company could suffer adverse consequences if it is unable to obtain additional capital which would cast substantial doubt on its ability to continue its operations and growth.
THE VALUE AND TRANSFERABILITY OF THE COMPANY'S SHARES MAY BE ADVERSELY IMPACTED BY THE LIMITED TRADING MARKET FOR ITS SHARES AND THE PENNY STOCK RULES.
There is only a limited trading market for the Company's shares. The Company's common stock is traded in the Over-The-Counter Bulletin Board (‘OTC-BB’)and the Pink Sheets markets and "bid" and "asked" quotations regularly appear on the OTC-BB and Pink Sheets under the symbol "GRYO". There can be no assurance that the Company's common stock will trade at prices at or above its present level and an inactive or illiquid trading market may have an adverse impact on the market price. In addition, holders of the Company's common stock may experience substantial difficulty in selling their securities as a result of the "penny stock rules" which restrict the ability of brokers to sell certain securities of companies whose assets or revenues fall below the thresholds established by those rules.
FUTURE SALES OF SHARES MAY ADVERSELY IMPACT THE VALUE OF THE COMPANY'S STOCK.
If required, the Company may seek to raise additional capital through the sale of common stock. Future sales of shares by the Company or its stockholders could cause the market price of its common stock to decline.
MINERAL EXPLORATION AND DEVELOPMENT ACTIVITIES ARE SPECULATIVE IN NATURE.
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection, the combination of which factors may result in the Company not receiving an adequate return of investment capital.
Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities and grades to justify commercial operations or that funds required for development can be obtained on a timely basis. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors relating to reserves, such as the need for orderly development of mineralized zones or the processing of new or different grades, may also have an adverse effect on mining operations and on the results of operations. Material changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of any project.
THE COMPANY WILL BE SUBJECT TO OPERATING HAZARDS AND RISKS WHICH MAY ADVERSELY AFFECT THE COMPANY'S FINANCIAL CONDITION.
Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The Company's operations will be subject to all the hazards and risks normally incidental to exploration, development and production of metals, such as unusual or unexpected formations, cave-ins or pollution, all of which could result in work stoppages, damage to property and possible environmental damage. The Company does not have general liability insurance covering its operations and does not presently intend to obtain liability insurance as to such hazards and liabilities. Payment of any liabilities as a result could have a materially adverse effect upon the Company's financial condition.
THE COMPANY'S ACTIVITIES WILL BE SUBJECT TO ENVIRONMENTAL AND OTHER INDUSTRY REGULATIONS WHICH COULD HAVE AN ADVERSE EFFECT ON THE FINANCIAL CONDITION OF THE COMPANY.
The Company's activities are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailing disposal areas, which would result in environmental pollution. A breach of such legislation may result in imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations could have an adverse effect on the financial condition of the Company.
The operations of the Company include exploration and development activities and commencement of production on its properties, require permits from various federal, state, provincial and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.
Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.
COMPETITION MAY HAVE AN IMPACT ON THE COMPANY'S ABILITY TO ACQUIRE ATTRACTIVE METALS PROPERTIES, WHICH MAY HAVE AN ADVERSE IMPACT ON THE COMPANY'S OPERATIONS.
Significant and increasing competition exists for the limited number of metals acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than the Company, the Company may be unable to acquire attractive metals properties on terms it considers acceptable. Accordingly, there can be no assurance that any exploration program intended by the Company on properties it intends to acquire will yield any reserves or result in any commercial mining operation.
DOWNWARD FLUCTUATIONS IN METAL PRICES MAY SEVERELY REDUCE THE VALUE OF THE COMPANY.
The Company has no control over the fluctuations in the prices of the metals for which it is exploring. A significant decline in such prices would severely reduce the value of the Company.
THE COMPANY CURRENTLY RELIES ON CERTAIN KEY INDIVIDUALS AND THE LOSS OF ONE OF THESE CERTAIN KEY INDIVIDUALS COULD HAVE AN ADVERSE EFFECT ON THE COMPANY.
The Company's success depends to a certain degree upon certain key members of the management. These individuals are a significant factor in the Company's growth and success. The loss of the service of members of the management and advisory board could have a material adverse effect on the Company. In particular, the success of the Company is highly dependent upon the efforts of the President & CEO, CFO, PAO, Chair & Director of the Company, Alan Muller, the loss of whose services would have a material adverse effect on the success and development of the Company.
THE COMPANY DOES NOT MAINTAIN KEY MAN INSURANCE TO COMPENSATE THE COMPANY FOR THE LOSS OF CERTAIN KEY INDIVIDUALS.
The Company does not anticipate having key man insurance in place in respect of its senior officers or personnel, although the Board has discussed and investigated the prospect of obtaining key man insurance for Alan Muller.
WE ARE AN EXPLORATION STAGE COMPANY, AND THERE IS NO ASSURANCE THAT A COMMERCIALLY VIABLE DEPOSIT OR "RESERVE" EXISTS ON ANY PROPERTIES FOR WHICH THE COMPANY HAS, OR MIGHT OBTAIN, AN INTEREST.
The Company is an exploration stage company and cannot give assurance that a commercially viable deposit, or “reserve,” exists on any properties for which the Company currently has (through an option) or may have (through potential future joint venture agreements or acquisitions) an interest. Therefore, determination of the existence of a reserve depends on appropriate and sufficient exploration work and the evaluation of legal, economic, and environmental factors. If the Company fails to find a commercially viable deposit on any of its properties, its financial condition and results of operations will be materially adversely affected.
WE REQUIRE SUBSTANTIAL FUNDS MERELY TO DETERMINE WHETHER COMMERCIAL METAL DEPOSITS EXIST ON OUR PROPERTIES.
Any potential development and production of the Company’s exploration properties depends upon the results of exploration programs and/or feasibility studies and the recommendations of duly qualified engineers and geologists. Such programs require substantial additional funds. Any decision to further expand the Company’s operations on these exploration properties is anticipated to involve consideration and evaluation of several significant factors including, but not limited to:
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Costs of bringing each property into production, including exploration work, preparation of production feasibility studies, and construction of production facilities;
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Availability and costs of financing;
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●
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Ongoing costs of production;
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●
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Market prices for the metals to be produced;
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●
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Environmental compliance regulations and restraints; and
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●
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Political climate and/or governmental regulation and control.
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GENERAL MINING RISKS
Factors beyond our control may affect the marketability of any substances discovered from any resource properties the Company may acquire. Metal prices have fluctuated widely in recent years. Government regulations relating to price, royalties, and allowable production and importing and exporting of metals can adversely affect the Company. There can be no certainty that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and operations on any projects it may acquire and environmental concerns about mining in general continue to be a significant challenge for all mining companies.
None.
At September 30, 2010, the Company’s material property investments comprised an option to purchase certain mineral exploration rights to a property in south-eastern Arizona, USA, named the L.G. Property which the Company purchased on July 19, 2010 from two individuals (collectively the “Vendors”). The Vendors each owned a 50% interest in the mineral exploration rights to the L.G. Property and held the sole right, title and interest to the L.G. Property exploration rights (subject to the rights and title of the State of Arizona), free and clear of all liens and encumbrances. Through the option agreement (the “L.G. Agreement”), the Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in Vendors’ rights to the Property, and the Company acquired an option to purchase Vendors’ rights to the Property from Vendors, upon the terms and conditions set forth in the L.G. Agreement (incorporated herein by reference as Exhibit 10.1).
To exercise the option included in the L.G. Agreement (the “Option”), the Company must: (i) pay the aggregate sum of $240,000 to Vendors; (ii) incur an aggregate of at least $550,000 of Expenditures on the Property; and (iii) issue an aggregate of 1,000,000 restricted shares of common stock in Gryphon (or any public company created by Gryphon for the purpose of development of the Property).
To implement exercise of the Option, and maintain the Option in effect, Gryphon agreed to:
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(a)
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Pay Vendors the following cash sums on or before the dates described below:
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(i)
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$15,000 upon execution of this Agreement (such payment which has been made);
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(ii)
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$15,000 on or before August 10, 2010 (such payment which has been made);
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(iii)
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$50,000 on or before March 1, 2011;
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(iv)
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$60,000 on or before March 1, 2012; and
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(v)
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$100,000 on or before March 1, 2013.
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(b)
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Incur the following Expenditures on or with respect to the Property, by the following dates:
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(i)
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$50,000 within 12 months following the Execution Date;
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(ii)
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an additional $100,000 on or before 24 months following the Execution Date;
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(iii)
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$200,000 on or before 36 months following the Execution Date; and
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(iv)
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$200,000 on or before 48 months following the Execution Date.
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(c)
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Cause Gryphon to issue shares to the Vendors in the following amounts:
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(i)
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250,000 restricted common shares upon execution of the L.G. Agreement (such payment which has been made and was valued at $12,500);
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(ii)
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250,000 restricted common shares on or before February 1, 2011;
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(iii)
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250,000 restricted common shares on or before February 1, 2012; and
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(iv)
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250,000 restricted common shares on or before February 1, 2013.
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Once the Company has paid the Option Price in full, the Company will have exercised the Option and have acquired an undivided 100% right, title and interest in and to the L.G. Property, the Company will then be obligated to pay the following additional consideration:
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(a)
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1,000,000 restricted shares of Gryphon common stock;
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(b)
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a minimum annual royalty of $150,000 on or before December 31, 2014 and a minimum annual royalty of $150,000 every 12 months for each year that Gryphon holds the Property;
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(c)
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a 5% (five percent) Gross Production Royalty on lithium minerals actually produced and sold from the L.G. Property; and
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(d)
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a 3-1/2% (three and one-half percent) Net Returns Royalty on all other minerals actually produced and sold from the L.G. Property.
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As required by generally accepted accounting principles, at year end date of September 30, 2010 the Company undertook a review of the Company’s exploration projects and determined an impairment charge of $42,500 should be recorded.
Office Premises
Gryphon’s office is located at suite 1313 East Maple Street, Suite 201-462, Bellingham, Washington 98225. The rental agreement for these premises may be cancelled with one month’s notice.The Company’s CEO also provides office facilities in New Zealand free of charge to the Company.
There are no material, active, or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our officer and director, or any registered or beneficial shareholders are an adverse party or has a material interest adverse to us.
None.
Market Information
Our common stock is currently quoted on the NASD OTC Bulletin Board and Pink Sheets over the counter markets. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. Our shares are also quoted on the Pink Sheets market. The symbol for our common stock in both markets is: “GRYO.”
The following table sets forth the range of high and low bid quotations for our common stock as reported by the OTCBB and/or Pink Sheets for each of the periods indicated. The market for our shares is limited, volatile and sporadic. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
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Quarter Ended:
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High Trade
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Low Trade
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Closing Trade(1)
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December 31, 2008
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$
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1.40
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$
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0.50
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$
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1.40
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March 31, 2009
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1.80
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1.40
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1.73
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|||
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June 30, 2009
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1.80
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1.15
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1.73
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|||
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September 30, 2009
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1.75
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0.36
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0.51
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December 31, 2009
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$
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2.00
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$
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0.36
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$
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0.51
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March 31, 2010
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0.51
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0.05
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0.05
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|||
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June 30, 2010
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0.05
|
0.05
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0.05
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|||
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September 30, 2010
|
0.26
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0.01
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0.26
|
| Notes: | |
| (1) | Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. |
Shareholders
On January 12, 2011, there were 6 shareholders of record of our common stock.
Dividends
We intend to retain future earnings to support our growth. Any payment of cash dividends in the future will be dependent upon: the amount of funds legally available therefore; our earnings; financial condition; capital requirements; and other factors which our Board of Directors deems relevant.
Section 15(g) of the Securities Exchange Act of 1934
The Company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended, which imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by this Section 15(g), the broker/dealer must make a special suitability determination for the purchase and must have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, Section 15(g) may affect the ability of broker/dealers to sell the Company’s securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and the secondary market; terms important to an understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customer’s rights and remedies in causes of fraud in penny stock transactions; and, the NASD’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Recent Sales of Unregistered Securities
On July 19, 2010, the Company issued 250,000 shares of its common stock to Vendors of the L.G. Property. This transaction was valued at a board approved value of $0.05 per share for total deemed proceeds of $12,500. These shares are deemed "restricted" securities under the Securities Act and may not be sold or transferred other than pursuant to an effective registration statement under the Securities Act or any exemption from the registration requirements of the Securities Act.
Subsequent to the year ended September 30, 2010, the Company issued 6,400,000 restricted common shares which included the September 30, 2010 balance of $273,740 of Common Shares Subscribed But Not Issued shown on the September 30, 2010 balance sheet included in this Report. The total value of this private placement was $320,000 and represented the sale of 6,400,000 restricted common shares at a price of $0.05 per share. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended, and the Company did not engage in any general solicitation or advertising regarding this offering.
Subsequent to the year ended September 30, 2010, the Company received private placement subscriptions for an offering of its common shares which raised aggregate proceeds of US$100,000 based on the sale of 1,000,000 restricted common shares priced at US$0.10 per share. When issued, these shares will be issued pursuant to Regulation S of the Securities Act of 1933, as amended, and the Company did not engage in any general solicitation or advertising regarding this offering.
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FISCAL
2010
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FISCAL
2009
|
FISCAL
2008
|
FISCAL
2007
|
FISCAL
2006
|
|
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$
|
$
|
$
|
$
|
$
|
|
|
Operating Revenue:
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|||||
|
Quarter One - Three Months to December 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Net Income/(Loss):
|
|||||
|
Quarter One - Three Months to December 31st
|
(4,445)
|
(15,991)
|
(7,981)
|
(12,772)
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
(17,885)
|
(45,375)
|
(23,758)
|
(5,176)
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
(28,752)
|
(27,074)
|
(25,334)
|
(11,500)
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
(57,322)
|
(126,550)
|
(75,571)
|
(47,972)
|
(1,243)
|
|
Earnings/(Loss) per share:
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|||||
|
Quarter One - Three Months to December 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
Nil
|
Nil
|
Nil
|
(0.01)
|
Nil
|
|
Cash:
|
|||||
|
Quarter One - Three Months to December 31st
|
18,479
|
23,893
|
4,703
|
21,317
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
35,457
|
11,918
|
11,126
|
17,860
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
103,344
|
6,173
|
9,978
|
6,435
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
10,252
|
1,572
|
33,895
|
11,208
|
22,502
|
|
Total assets:
|
|||||
|
Quarter One - Three Months to December 31st
|
20,192
|
28,797
|
24,244
|
49,914
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
28,291
|
15,090
|
13,567
|
37,385
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
119,017
|
15,079
|
12,751
|
25,582
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
30,023
|
3,354
|
37,039
|
30,706
|
51,099
|
|
Total stockholders’ equity (deficit):
|
|||||
|
Quarter One - Three Months to December 31st
|
(203,527)
|
(88,507)
|
(4,746)
|
49,061
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
(221,412)
|
(133,882)
|
(28,504)
|
32,309
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
(95,270)
|
(160,957)
|
(53,838)
|
20,809
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
29,852
|
(199,066)
|
(72,516)
|
3,235
|
50,257
|
|
Cash dividends per share:
|
|||||
|
Quarter One - Three Months to December 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Two - Three Months to March 31st
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Quarter Three- Three Months to June 30th
|
Nil
|
Nil
|
Nil
|
Nil
|
n/a
|
|
Full Year – Twelve Months to September 30th
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
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-K 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.
Operational Developments during Fiscal 2010
On April 20, 2010, a change of control of the Company occurred wherein, Mr. Serdar Kirmizioglu resigned his positions as Director, Chair of the Board of Directors, President and CEO, Chief Financial Officer, and Principal Accounting Officer of the Company and sold all his shareholding in the Company to Mr. Alan Muller. Effective April 20, 2010, Mr. Muller was appointed to the positions of Director, Chair of the Board of Directors, President and CEO, Chief Financial Officer, and Principal Accounting Officer of the Company. A brief biography of Mr. Muller is as follows:
Appointment of Alan Muller, Pr. Eng, B.Sc. Eng, PMP, as President & CEO
Alan Clive Muller was born and raised in South Africa where he was closely associated with the gold mining industry through his father who was the general manager of several major gold mines. This allowed him to gain an insight into the workings of the mining industry and afforded him the opportunity to gain work experience in the mines during several vacation employment stints.
In 1975, Mr. Muller gained an honours degree in Civil Engineering from the University of Natal, Durban, South Africa and became a registered professional Civil and Structural engineer. Mr. Muller also earned a four year Post Graduate Computer Science Diploma in Datametrics from the University of South Africa and a Post Graduate Diploma in Project Management. In 1994, Alan Muller emigrated to New Zealand where he continued to extend his expertise in project management. Over the last 30 years he has managed major construction projects in many fields encompassing health care, commercial developments and infrastructure, these projects have been spread across Southern Africa, the Indian Ocean Islands and for the last 16 years in New Zealand.
Based on his professional experience in managing large complex construction projects, the Company expects Mr. Muller's considerable organizational, operational and financial skills will be of significant of value in the development of Gryphon’s mineral exploration and development projects. (For further details regarding Mr. Muller’s experience, please see Item 10 Directors, Executive Officers, and Corporate Governance)
Appointment of Stephen Sutorius as Secretary & Treasurer
On May 25, 2010, Mr. David Walker resigned his positions as Vice President Administration, and Secretary and Treasurer of the Company. Mr. Walker resigned for personal reasons and there was no disagreement with the Company relating to its operations, policies or practices.
On May 25, 2010, Mr. Stephen Sutorius was appointed to the positions of Director, and Secretary and Treasurer of the Company. Stephen Philip Sutorius was born in New Zealand and currently resides in Australia. He holds a Diploma of Investments from the Open Polytechnic of New Zealand in addition to a Diploma in Financial Services (Australian Securities and Investment Commission RG146). His career has emphasized relationship management with major treasury clients and the Company expects to benefit from his knowledge and skills for its fund-raising activities.(For further details regarding Mr. Sutorius’ experience, please see Item 10 Directors, Executive Officers, and Corporate Governance)
Acquisition of L.G. Property to form basis of lithium exploration initiative:
On July 19, 2010, the Company entered into an option to purchase certain mineral exploration rights to a property in south-eastern Arizona, USA, named the L.G. Property from two individuals (collectively the “Vendors”). The Vendors each owned a 50% interest in the mineral exploration rights to the L.G. Property and held the sole right, title and interest to the L.G. Property exploration rights (subject to the rights and title of the State of Arizona), free and clear of all liens and encumbrances. Through the option agreement (the “L.G. Agreement”), the Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in Vendors’ rights to the Property, and the Company acquired an option to purchase Vendors’ rights to the Property from Vendors, upon the terms and conditions set forth in the L.G. Agreement (please see Financial Statements Note 5 and Item 2 - Properties, for the full terms of this acquisition).
Sale of Turkish Subsidiary:
On September 27, 2010, we sold our entire shareholding in our former Turkish subsidiary APM Madencilik Ltd. to an unrelated third party and ceased all operations in Turkey.
Operational Developments subsequent to September 30, 2010 year end
$320,000 Private Placement:
On November 29, 2010, the Company completed a private placement totalling $320,000. This financing was based on the sale of 6,400,000 restricted common shares priced at US$0.05 per share and included a debt to shares conversion which eliminated $118,846 of loans from the Company’s balance sheet.
Appointment of Geological Project Manager:
On November 30, 2010 the Company appointed Mr. Nick Barr B.S. Geo., as its Arizona exploration project manager. Nick Barr has over 30 years experience as a geologist, working primarily in exploration for precious and base metals, oxide copper, massive sulfides, uranium, chromite, industrial minerals and gold placers in Arizona, Nevada, California, Idaho, Utah and Oregon. Mr. Barr’s background includes four years of geotechnical investigation work related to structure foundations, slope stability, and rock mechanics. He has also owned and operated a Simco 4000 track-mount drill and has managed crews in an exploration service company. Mr. Barr’s experience includes target generation, claim staking, permitting,
surface and UG mapping, soil, mobile metallic ion and biogeochemical sampling, supervision of rotary, RC and core drilling, reclamation and report preparation. He has co-authored SEC Industry Guide 7 compliant reports and has been active in brokering and evaluating mineral properties in western US, and managing crews for claim staking, grid sampling and all phases of mineral exploration. Mr. Barr earned his B.S., Geology in 1978 at Southern Oregon State University, Ashland, Oregon.
Some of Mr. Barr’s prior engagements include:
|
|
●
|
Sage Gold Inc, Gold Hill Mine, Maricopa Co, AZ:
Lead project geologist for detailed study and supervision of 6100 ft core drilling program on high-grade, gold fissure vein system.
|
|
|
●
|
Rodinia Minerals/Ashworth Exploration:
|
Managing field geologist for regional uranium exploration program in Arizona and Utah. In this role Mr. Barr pioneered successful use of trace radon detection method, leading to drill confirmed mineralization. In March, 2009, he participated in claim staking and initial mapping of volcanic source rocks for Clayton Valley, Nevada, lithium brine deposits.
|
|
●
|
Cobre Valley Mineral Recovery United Mines Inc:
|
Authored comprehensive regional study of southern Arizona silver-gold district. In this engagement Mr. Barr served as lead geologist for all exploration to present date and remains on advisory committee for anticipated, near-term start-up of milling operations and a large scale exploration program. Additional project work included detailed mapping of gold properties in Oro Blanco District, Santa Cruz Co., Arizona.
|
|
●
|
Cambior Exploration USA, Reno, Nevada:
|
As team geologist, Mr. Barr helped design and execute grassroots gold exploration programs in Idaho, Nevada, Arizona and eastern Oregon. Personal generative work lead to identification and drilling intrusive-hosted gold in Malheur Co, Oregon, and exotic oxide-copper in Pinal Co., Arizona.
Start of lithium exploration:
Commencing with Mr. Barr’s appointment, the Company began exploration on the L.G. Property in south-eastern Arizona. In a press release, Mr. Barr commented:
“Initial project due diligence and research has confirmed current land holdings are well positioned to explore for potentially economic concentrations of brine-hosted lithium. Project planning thus far has benefited from a large data base of well log data, academic research and government funded studies detailing gravity, structure, geology and sedimentation history of the immediate area. Work to date, does verify that the core of the project area is situated very near or within the deepest portion of a Pliocene-age lake basin. This is supported by a series of water wells in close proximity and on either side of the property, all showing highly elevated lithium. Additionally, Boron, a recognized pathfinder element for lithium, is also anomalous in well water test data. More importantly, log data from a well within about 2 miles documents approximately 82 feet of nearly pure sodium chloride/calcium sulfate evaporite, which is one the thickest intercepts recognized within the basin.”
Barr continued: “The source area for the lithium enriched brines is currently thought to be from nearby, aerially extensive exposures of tertiary volcanic rocks. Several studies of basin stratigraphy do indicate that the previously closed lake basin would have been directly down drainage of this volcanic terrain. Felsic volcanic rocks
adjacent to the Clayton Valley, Nevada brine deposits, are documented in assay data as being anomalous in lithium. Also potentially significant, are a series of geologically young, graben subsidence faults, noted in the literature and falling right within the project area. Recent conceptual work in evaporite basins does suggest basin sediment faulting may facilitate remobilization of brines, and subsequent concentration at favorable structural traps. This conceptual model approach is presented in exploration models used in study of Nevada evaporite basin brines.”
Barr further commented: “At the present stage of project planning, a simple exploration model approach has been adopted which is based on the concept that the thickest accumulation of evaporite brines will host the highest concentration of lithium. Unique properties of concentrated brine include low density and high conductivity/low resistivity. Based on these parameters, a consensus among geophysical consultants supports that electromagnetics should be effective in delineating evaporite horizons. Several studies do highlight the successful use of Controlled Source Audiomagnegtotellurics (‘CSAMT’) for recognition of brine horizons. We also believe gravity surveys will also be valuable in basin studies, as it defines the sediment/bedrock contact and serves to locate the low point of closed basin drainage. It is at this loci, that the greatest brine accumulations should be found. Gravity can also useful to delineate contact and structures in the underlying basement rocks.”
President and CEO Alan Muller followed up: “Gryphon’s current project approach will be to utilize a large, regional gravity data base available from the United States Geological Survey (‘USGS’). Work is in progress to enhance this data base by adding additional gravity survey points in key areas. Bids are presently being solicited for this anticipated work.” Muller concluded, “Based on our work to date, we have established some viable sampling targets and have confidence we’ve formed a realistic working plan. We hope to report further news in the near future.”
Execution of Cruce Property Letter of Intent adds gold and copper-porphyry project:
On December 1, 2010, Gryphon entered a Letter of Intent for an option to purchase mineral exploration rights located in Pinal County, south-central Arizona, USA with potential for gold and copper-porphyry reserves. In a press release, President and CEO Alan Muller reported:
“Yesterday we completed an extended negotiation to acquire exploration rights to the 560 acre ‘Cruce Property’ which is located approximately 40 miles north of Tucson, Arizona. This property fits into our overall exploration plan and should dovetail well with the development work we’re getting in place for our lithium properties nearby. Additionally, Nick Barr, our newly appointed project manager has done drilling and exploration work at this site as recently as 2008.”
To exercise the purchase option in the Cruce Property Letter of Intent Gryphon must, in staged increments, over three years: (i) pay the vendors an aggregate sum of US$265,000; (ii) incur an aggregate of at least US$335,000 of expenditures on the Cruce Property; and (iii) issue the vendors an aggregate of 2,600,000 restricted common shares of Gryphon. Additionally, the vendors will receive an NSR payment of 3%, subject to a minimum royalty payment of US$250,000 per year upon commencement of mineral production.
Mr. Muller continued, “We believe previous exploration supports our belief that the Cruce Property has gold potential and note that the potential for both gold and copper-porphyry is also indicated by the existence of the San Manuel-Kalamazoo copper deposit approximately 13 miles east; Asarco’s huge Ray Complex some 28 miles north and its Silver Bell Mine about 37 miles west; and the extensive Pima District which begins less than 50 miles south.”
Asarco describes its Ray Complex as consisting of two sites: The Ray Operations which is a 250,000 ton/day open pit mine with a 30,000 ton/day concentrator, a 103 million pound/year solvent extraction-electrowinning operation, and associated maintenance, warehouse and administrative facilities; and Asarco’s Hayden Operations
which consists of a 27,400 ton/day concentrator and a 720,000 ton/year copper smelter consisting of an oxygen flash furnace, converters, anode casting, oxygen plant, acid plant, and associated maintenance, warehouse and administrative facilities. Asarco’s Silver Bell Mine operates four open-pits (North Silver Bell, El Tiro, West Oxide and East Oxide). Copper in these pits is extracted from ore utilizing either of two hydrometallurgical processes: dump leaching or rubblization. Each month 1,800,000 tons of ore and waste are mined, and 700,000 tons of ore is rubblized. The four open-pits and other plant facilities are situated on 19,000 acres. Mining affected areas of the facility total 3,900 acres. The current cathode production rate is 67 tons per day (source: www.asarco.com).
Comparatively, the San Manuel Copper Mine was a surface and underground mine based on an ore body discovered in 1879 and expanded on in 1942. The exploration drilling went on from 1943 to 1948 and was based on faulting of the original ore body which created two main segments, separated by an area of minor sulfides. The mineralization was a porphyry copper deposit and the mine was operated by Magma before being bought out by BHP Billiton, which ultimately closed it. Over 700,000,000 tons of ore were extracted.
Mr. Muller also commented, “With respect to our lithium project, investors may wish to know that the lithium battery market is already worth over US$4 billion annually. Although this figure is mostly derived from its widespread use in portable electronic devices, it’s hybrid green cars powered by batteries that are really driving the lithium battery demand.” Muller continued, “Approximately two dozen models of eco-automobiles are expected to be on the market by 2012. As these cars require 20-60 pounds of lithium oxide, it’s this market that is creating a heightened demand for this new-age metal.”
In the long-term, demand for lithium powered vehicles is expected to increase as much as fivefold within the next 5-7 years, according to many industry analysts. And some estimates suggest that as many as 250 million electric cars will be driven by the year 2020 — the majority of which will be manufactured and driven in the emerging industrial countries of China, India and Brazil. Currently most of the world’s lithium supplies come from a half-dozen countries, most notably three Latin American nations — Bolivia, Chile and Argentina. The U.S. contributes as little as 3% of the world’s supply. Industry experts have flagged this as a problem, because there are various technical and geopolitical hurdles in the major producing countries to ensuring the availability of a steady long- term supply of lithium for the US battery manufacturing and automotive industries.
The lack of a long-term supply of lithium has become a major concern for all major auto manufacturers, not just in the US but in all of the world’s major markets. In North America, the major manufacturers have been very vocal about securing long term lithium supplies, especially as the domestic auto industry does not want to replace a dependency on foreign oil with one on foreign lithium. “The industry needs to know where the lithium is going to come from. Are these countries friendly to the Western World?”, says Charles Wu, a spokesperson for Ford Research. Even President Obama has expressed serious concerns about future lithium supplies. In a speech last summer he declared: “Switching Middle Eastern oil for foreign batteries is not an option.”
“Gryphon Resources is focused on finding a domestic lithium supply solution to fuel the demand from current and future automakers”, commented Muller. “This goal forms a significant pillar in our business strategy.”
$150,000 Private Placement:
On December 23, 2010, the Company also concluded a private placement offering of its common shares which raised aggregate proceeds of US$150,000 based on the sale of 1,500,000 restricted common shares priced at US$0.10 per share.
RESULTS OF OPERATIONS
The following discussion and analysis covers material changes in the financial condition of Gryphon during the years ended September 30, 2010 and September 30, 2009 and the Exploration Stage Period of January 16, 2006 to September 30, 2010 (the “Exploration Stage”).
Revenues
Gryphon did not earn revenues during the periods included in the financial statements in this report.
Expenses
Our operating expenses are classified into five categories:
- Exploration Expenses
- Professional and Consultant Fees
- Administrative Expenses
- Investor Relations
- Mineral Properties Impairment
Exploration Expenses
Exploration expenses for the year ended September 30, 2010 totaled $32,422 compared to $9,109 for the year ended September 30, 2009. Expenses for the Exploration Stage totaled $41,531. During fiscal 2010, these expenses were primarily comprised of costs for mineral rights applications to the Arizona State Land Department and property rental fee deposits. We predict the level of these expenses will increase substantially during upcoming fiscal 2011.
Professional and Consultant Fees
Professional & consultant Fees are comprised of fees paid to our two officers and directors, and for work performed by geological, accounting, audit and legal professionals. During the year ended September 30, 2010 these fees totaled $41,944 compared with $19,196 for the year ended September 30, 2009. For the Exploration Stage, these costs totaled $134,348. We anticipate Professional & Consultant Fees to increase substantially during the upcoming fiscal year as we continue with our exploration initiatives in Arizona.
Administrative Expenses
Administrative expenses were $11,559 for the year ended September 30, 2010 compared with $11,371 during the year ended September 30, 2009. For the Exploration Stage, administrative expenses totaled $32,978. These expenses are composed of travel, Edgar agent filing fees, stock transfer agent fees and general office expenses. We anticipate Administrative Expenses will increase moderately in the upcoming year.
Investor Relations
Investor relations expenses comprise costs for press releases, maintenance of the Company’s website and other investor information initiatives. During the year ended September 30, 2010, these expenses totaled $4,610 versus $4,653 for the year ended September 30, 2009. For the Exploration Stage, Investor Relations expenses totaled $9,263. We anticipate Investor Relations expenses will increase moderately in the upcoming year.
Mineral Properties Impairment
As required by generally accepted accounting principles, at year end date of September 30, 2010 the Company undertook a review of the Company’s exploration projects and determined an impairment charge of $42,500 should be recorded. Mineral properties impairment charges were $nil for the year ended September 30, 2009 and totaled $61,498 for the Exploration Stage.
Discontinued Operations
On September 27, 2010, we sold our entire shareholding in our former Turkish subsidiary APM to an unrelated third party and ceased all operations in Turkey. The sale of APM resulted in a non-cash gain of $97,920 due to the elimination from the previously consolidated enterprise of the Company of debt APM owed to a third party.
Net (Loss)
We incurred a net loss of $(57,322) for the twelve months ended September 30, 2010 including a non-cash gain on sale of subsidiary of $97,920. This compared with a net loss of $(126,550) for the same period ended September 30, 2009. For the Exploration Stage, the Net Loss totaled $(307,888).
Liquidity and Capital Resources
Since the date of our incorporation, we have raised $206,394 though private placements of our common shares and $105,588 through shareholder loans and $91,038 through loans from other parties. As of September 30, 2010 we had cash on hand of $10,252 and a prepaid expenses balance of $19,771. We estimate we will need to attempt to raise additional funds during the coming twelve months and project we will be able to raise these funds through private placements of our common shares and/or shareholder loans from our CEO.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Contractual Obligations
Other than as noted in Item 2, the Company has no material contractual obligations outstanding.
Material Events and Uncertainties
Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable early stage companies in rapidly evolving markets.
There can be no assurance that we will successfully address such risks, expenses and difficulties.
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles. We have expensed all development costs related to our establishment.
Employees
As of September 30, 2010, we had no employees and used contracted services to perform geological work, legal services and our bookkeeping. Going forward, the Company will use consultants with specific skills to assist with various aspects of its project evaluation, due diligence, acquisition initiatives, corporate governance and property management and will hire additional staff as needed.
Critical Accounting Policies
Gryphon’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in NOTE 2 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, Gryphon views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on Gryphon’s financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.
We have not entered into derivative contracts either to hedge existing risk or for speculative purposes.
Our financial statements, together with the report of auditors, are as follows:
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
To Board of Directors and
Stockholders of Gryphon Resources, Inc. (an Exploration Stage Company)
We have audited the accompanying consolidated balance sheets of Gryphon Resources, Inc. (the Company) (an Exploration Stage Company) as of September 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended September 30, 2010, and for the period October 1, 2007 to September 30, 2010. We did not audit the consolidated statements of operations, stockholders’ equity, and cash flows for the period from January 16, 2006 (inception) to September 30, 2007. Those financial statements were audited by other auditors whose report dated December 16, 2007, expressed an unqualified opinion. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material aspects, the consolidated financial position of Gryphon Resources, Inc. (an Exploration Stage Company) as of September 30, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2010, and for the period October 1, 2007 to September 30, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have the necessary working capital for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates CPAs, Inc.
Madsen & Associates CPAs, Inc.
Salt Lake City, Utah
January 10, 2011
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
|
September 30,
2010
|
September 30,
2009
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash (Note 2)
|
$ | 10,252 | $ | 1,572 | ||||
|
Prepaid expenses
|
19,771 | 1,782 | ||||||
|
Total current assets
|
30,023 | 3,354 | ||||||
|
Total assets
|
$ | 30,023 | $ | 3,354 | ||||
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts payable
|
171 | 7,550 | ||||||
|
Loans payable (Note 7)
|
- | 81,654 | ||||||
|
Shareholder loans (Note 7)
|
- | 113,216 | ||||||
|
Total current liabilities
|
$ | 171 | $ | 202,420 | ||||
|
Total liabilities
|
$ | 171 | $ | 202,420 | ||||
|
COMMITTMENTS AND CONTINGENCIES
(Notes 2, 3, 5, 9 and 10)
|
- | - | ||||||
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
|
Common shares, 400,000,000 shares par value $0.001 authorized, 96,775,000 and 96,525,000 issued and outstanding at September 30, 2010 and September 30, 2009 (Note 9)
|
5,200 | 4,950 | ||||||
|
Paid-in Capital
|
58,800 | 46,550 | ||||||
|
Common shares subscribed but not issued (Note 9)
|
273,740 | - | ||||||
|
Accumulated deficit in the exploration stage
|
(307,888 | ) | (249,796 | ) | ||||
|
Total Gryphon Resources, Inc. equity
|
29,852 | (198,296 | ) | |||||
|
Non-Controlling Interest (Notes 2 and 6)
|
- | (770 | ) | |||||
|
Total stockholders’ equity (deficit)
|
29,852 | (199,066 | ) | |||||
|
Total liabilities and stockholders’ equity (deficit)
|
$ | 30,023 | $ | 3,354 | ||||
The accompanying notes to financial statements are an integral part of these consolidated financial statements
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
|
Year ended
September 30, 2010
|
Year ended
September 30, 2009
|
Exploration Stage
January 16, 2006
through
September 30, 2010
|
||||||||||
|
EXPENSES:
|
||||||||||||
|
Exploration expenses
|
32,422 | 9,109 | 41,531 | |||||||||
|
Professional and consultant fees
|
41,944 | 19,196 | 134,348 | |||||||||
|
Administrative expenses
|
11,559 | 11,371 | 32,978 | |||||||||
|
Investor relations
|
4,610 | 4,653 | 9,263 | |||||||||
|
Mineral properties impairments (Notes 2, 4 and 5)
|
42,500 | - | 61,498 | |||||||||
|
Total expenses
|
$ | 133,035 | $ | 44,329 | $ | 279,618 | ||||||
|
Net loss from operations
|
$ | (133,035 | ) | $ | (44,329 | ) | $ | (279,618 | ) | |||
|
Other (Expense) Income:
|
||||||||||||
|
Interest expense
|
(5,630 | ) | (5,175 | ) | (13,258 | ) | ||||||
|
Net loss from continuing operations
|
(138,665 | ) | (49,504 | ) | (292,876 | ) | ||||||
| Discontinued Operations: | ||||||||||||
|
Net loss from discontinued operations (Note 6)
|
$ | (16,577 | ) | $ | (77,046 | ) | $ | (112,932 | ) | |||
|
Gain on Sale of Subsidiary (Note 6)
|
$ | 97,920 | $ | - | $ | 97,920 | ||||||
|
Net (Loss)
|
$ | (57,322 | ) | $ | (126,550 | ) | $ | (307,888 | ) | |||
|
Less: Net Loss attributable to Non-Controlling Interest related to discontinued operations (Notes 2 and 6)
|
166 | 770 | 936 | |||||||||
|
Equals: Net Loss attributable to Gryphon Resources, Inc. (Notes 2 and 6)
|
(57,156 | ) | (125,780 | ) | (306,952 | ) | ||||||
|
Loss per common share (Notes 2 and 6), basic and diluted from discontinued operations
|
$ | 0.00 | $ | 0.00 | ||||||||
|
Loss per common share (Note 2), basic and diluted from continuing operations
|
$ | 0.00 | $ | 0.00 | ||||||||
|
Weighted average shares outstanding , basic and diluted (Notes 2 and 9)
|
96,575,684 | 96,525,000 | ||||||||||
The accompanying notes to financial statements are an integral part of these consolidated financial statements
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
|
Common
Shares
|
Common
Stock
|
Paid-in
Capital
|
Shares
subscribed
but not issued
|
Deficit
Attributable to
Non-Controlling Interest
|
Deficit
Accumulated During the Exploration
Stage
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
|
Common shares issued for cash at $0.001 January 27, 2006
|
48,750,000 | $ | 2,500 | $ | — | $ | — | $ | — | $ | — | $ | 2,500 | |||||||||||||||
|
Common shares issued for cash at $0.02 during the period ended September 30, 2006
|
47,775,000 | $ | 2,450 | $ | 46,550 | $ | — | $ | — | $ | — | $ | 49,000 | |||||||||||||||
|
Net loss for the period from January 16, 2006 (inception) to September 30, 2006
|
— | $ | — | $ | — | $ | — | $ | — | $ | (1,243 | ) | $ | (1,243 | ) | |||||||||||||
|
Balance, September 30, 2006
|
96,525,000 | $ | 4,950 | $ | 46,550 | $ | — | $ | — | $ | (1,243 | ) | $ | 50,257 | ||||||||||||||
|
Net loss for year ended September 30, 2007
|
— | $ | — | $ | — | $ | — | $ | — | $ | (47,022 | ) | $ | (47,022 | ) | |||||||||||||
|
Balance, September 30, 2007
|
96,525,000 | $ | 4,950 | $ | 46,550 | $ | — | $ | — | $ | (48,265 | ) | $ | 3,235 | ||||||||||||||
|
Net loss for year ended September 30, 2009
|
— | $ | — | $ | — | $ | — | $ | — | $ | (75,751 | ) | $ | (75,751 | ) | |||||||||||||
|
Balance, September 30, 2009
|
96,525,000 | $ | 4,950 | $ | 46,550 | $ | — | $ | — | $ | (124,016 | ) | $ | (72,516 | ) | |||||||||||||
|
Net loss for year ended September 30, 2009
|
— | $ | — | $ | — | $ | — | $ | (770 | ) | $ | (125,780 | ) | $ | (126,550 | ) | ||||||||||||
|
Balance, September 30, 2009
|
96,525,000 | $ | 4,950 | $ | 46,550 | $ | — | $ | (770 | ) | $ | (249,796 | ) | $ | (199,066 | ) | ||||||||||||
|
Mineral property acquisition payment July 19, 2010
|
250,000 | $ | 250 | $ | 12,250 | $ | — | $ | — | $ | — | $ | 12,500 | |||||||||||||||
|
Shares subscribed but not issued at September 30, 2010
|
— | $ | — | $ | — | $ | 273,740 | $ | — | $ | — | $ | 273,740 | |||||||||||||||
|
Elimintatin of Non-Controlling Interest due to sale of subsidiary
|
— | $ | — | $ | — | $ | — | $ | 770 | $ | — | $ | 770 | |||||||||||||||
|
Net loss for year ended September 30, 2010
|
— | $ | — | $ | — | $ | — | $ | — | $ | (57,322 | ) | $ | (57,322 | ) | |||||||||||||
|
Balance, September 30, 2010
|
96,775,000 | $ | 5,200 | $ | 58,800 | $ | 273,740 | $ | — | $ | (307,888 | ) | $ | 29,852 | ||||||||||||||
The accompanying notes to financial statements are an integral part of these consolidated financial statements
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
|
Year ended
September 30, 2010
|
Year ended
September 30, 2009
|
Exploration Stage
January 16, 2006
through
September 30, 2010
|
||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net Income (Loss) for period
|
$ | (57,322 | ) | $ | (126,550 | ) | $ | (307,888 | ) | |||
|
Reconciling adjustments:
|
||||||||||||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
|
Non-cash gain on sale of subsidiary
|
(97,920 | ) | - | (97,920 | ) | |||||||
|
Accrued interest on shareholder loans
|
5,630 | 5,175 | 13,258 | |||||||||
|
Accrued interest on loans related to discontinued operation
|
4,854 | 2,010 | 6,882 | |||||||||
|
Mineral property impairments
|
42,500 | - | 61,498 | |||||||||
|
Net change in operating assets and liabilities:
|
||||||||||||
|
Prepaid expenses
|
(17,989 | ) | 1,362 | (19,771 | ) | |||||||
|
Accounts payable
|
(7,379 | ) | 4,404 | 171 | ||||||||
|
Net cash provided (used) by operating activities
|
(127,626 | ) | (113,599 | ) | (343,770 | ) | ||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Purchase of mineral properties
|
(30,000 | ) | - | (48,998 | ) | |||||||
|
Net cash provided by investing activities
|
(30,000 | ) | - | (48,998 | ) | |||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Common shares issued for cash
|
- | - | 51,500 | |||||||||
|
Cash from common shares subscribed but not issued
|
154,894 | - | 154,894 | |||||||||
|
Cash proceeds from loans related to discontinued operation
|
11,412 | 75,036 | 91,038 | |||||||||
|
Cash proceeds from Shareholder loans
|
- | 6,240 | 105,588 | |||||||||
|
Net cash provided by financing activities
|
166,306 | 81,276 | 403,020 | |||||||||
|
Net increase (decrease) in cash
|
8,680 | (32,323 | ) | 10,252 | ||||||||
|
Cash, beginning of period
|
1,572 | 33,895 | - | |||||||||
|
Cash, end of period
|
$ | 10,252 | $ | 1,572 | $ | 10,252 | ||||||
The accompanying notes to financial statements are an integral part of these consolidated financial statements
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
|
Year ended
September 30, 2010
|
Year ended
September 30, 2009
|
Exploration Stage January 16, 2006 through
September 30, 2010
|
||||||||||
|
Shares issued for mineral property acquisition
|
$ | 12,500 | $ | — | $ | 12,500 | ||||||
|
Conversion of debt into common stock subscribed but not issued
|
$ | 118,846 | $ | — | $ | 118,846 | ||||||
The accompanying notes to financial statements are an integral part of these consolidated financial statements
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
NOTE 1 – Nature of Business and Operations
Gryphon Resources, Inc. was incorporated in the State of Nevada on January 16, 2006. On April 28, 2008 we incorporated a Turkish company named APM Madencilik Limited. (“APM”) as a 99% owned subsidiary. The remaining balance of 1% of APM shares were held by our former CEO. In July, 2010, we re-focused our operations and began mineral exploration in Arizona, USA. On September 27, 2010, we sold our entire shareholding in APM to an unrelated third party and ceased all operations in Turkey and the former activity of APM is treated as a discontinued operation in these financial statements. (Hereinafter Gryphon Resources, Inc. may herein be referred to: “Gryphon Resources”, “Gryphon”, “We”, “Us”, the “Registrant”, or the “Company”).
Our fiscal year end is September 30th.
Exploration Stage Activities
The Company has been in the exploration stage since January 16, 2006 and has not yet realized any revenues from its operations.
NOTE 2 – Summary of Significant Accounting Policies
This summary of significant accounting policies is presented to assist in understanding Gryphon’s financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements, which are stated in U.S. Dollars.
The financial statements reflect the following significant accounting policies:
Exploration Stage Company
The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.
Exploration Costs and Mineral Property Right Acquisitions
The Company is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the proven and probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Consolidation of Financial Statements
These financial statements include the accounts of the Company and its former subsidiary APM Madencilik Limited on a consolidated basis. On September 27, 2010, the Company sold its entire shareholding in APM to an unrelated third party. All inter-company accounts have been eliminated.
Non-Controlling Interest
As required by GAAP, the Consolidated Balance Sheet and Consolidated Statements of Operations of the financial statements for the year ended September 30, 2009 include the allocation to ‘Non-Controlling Interest’ of a proportionate share of the Company’s net losses relating to the 1% ownership interest in APM Madencilik Limited which was not owned by the Company.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Earnings or (Loss) per Share
Basic loss per share is calculated by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period. The denominator in this calculation is adjusted to reflect any stock splits or stock dividends.
Diluted loss per share is calculated using the treasury method which requires the calculation of diluted loss per share by assuming that any outstanding stock options with an average market price that exceeds the average exercise prices of the options for the year, are exercised and the assumed proceeds are used to repurchase shares of the Company at the average market price of the common shares for the year. An incremental per share effect is then calculated for each option. The denominator of the diluted loss per share formula is the number common shares outstanding at balance sheet date plus the incremental shares assumed to be issued from treasury for option exercises, less the number of shares assumed to be repurchased, weighted by the period they are assumed to be outstanding. This dilution calculation did not affect current fiscal year results because the Company does not have an Option Plan and has not issued any stock options.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Stock Based Compensation
The Company applies the fair value method of accounting for all stock and stock option awards. Under this method the Company measures compensation expense for stock option grants based on the fair value of the option on the date of grant and amortizes this cost over the vesting period. In cases where vesting is immediate, the full cost of the grant is recorded on grant date. This costing calculation did not affect current fiscal year results because the Company has not made any stock awards.
Estimated Fair Value of Financial Instruments
The carrying value of the Company’s financial instruments reflected in the financial statements approximates fair value due to the short-term maturity of the instruments. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted rates in effect in the years during which the differences are expected to reverse and upon the possible realization of net operating loss carry-forwards. Additionally, the Company has not recognized any amount for a tax position taken or expected to be taken on its tax return, or for any interest or penalties.
Valuation of Long-Lived Assets
The Company will periodically analyze its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operation cash flows on a basis consistent with accounting principles generally accepted in the United States of America.
Foreign Currency
The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency. Transactions denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statements of Operations:
|
|
(i)
|
Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;
|
|
|
(ii)
|
Non-Monetary items including equity are recorded at the historical rate of exchange; and
|
|
|
(iii)
|
Revenues and expenses are recorded at the period average in which the transaction occurred
|
GRYPHON RESOURCES, INC. .
(An Exploration Stage Company)
Notes to Financial Statements
Cash and Cash Equivalents
The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less.
Risks and Uncertainties
The Company is subject to substantial business risks and uncertainties inherent in starting a new business. There is no assurance the Company will be able to generate sufficient revenues or obtain sufficient funds necessary for launching a new business venture.
Revenue Recognition
Revenue from the sale of precious and/or base metals and co-products will be recognized when the following conditions are met: persuasive evidence of an arrangement exists; delivery has occurred in accordance with the terms of the arrangement; the price is fixed or determinable and collectability is reasonably assured. Revenue for precious metal bullion will be recognized at the time of delivery and transfer of title to counter-parties.
Capital Assets
Capital assets will be recorded at cost. Depreciation will be recorded based on estimated useful lives of assets at time of acquisition. At present the Company has no depreciable assets.
Recent Accounting Pronouncements
Various accounting pronouncements have been issued during 2009 and 2008, none of which are expected to have a material effect on the financial statements of the Company.
Other
The Company paid no dividends during the periods presented.
The Company consists of one reportable business segment. The Company has no revenue to report from any customers.
As at year end September 30, 2010 the Company's assets with carrying value are located in the United States.
Advertising is expensed as it is incurred.
Certain comparative figures in these statements have been reclassified to conform to current year classifications.
We did not have any off-balance sheet arrangements as at September 30, 2010 or September 30, 2009.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
NOTE 3 – Basis of Presentation and Going Concern
Generally accepted accounting principles in the United States of America contemplate the continuation of the Company as a going concern. However, the Company had a net loss of $(57,322) which includes a gain on sale of subsidiary of $97,920. Additionally it has accumulated an operating losses since its inception and has had limited business operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company is dependent on many factors, many of which have a high degree of uncertainty.
During the year ended September 30, 2010, we addressed the going concern issue by raising cash of $154,894 through private placements of our common shares and $11,412 in loans from other parties. Subsequent to the year ended September 30, 2010, we have also raised an additional $150,000 via common share private placements. The Company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to successfully fulfill its business plan. Management plans to attempt to raise additional funds to finance the operating and capital requirements of the Company through a combination of equity and debt financings. While the Company is making its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. The accompanying financial statements do not include any adjustments that might result from the resolution of these matters.
NOTE 4 - Impairment of Mineral Properties
At September 30, 2010, the Company undertook a review of the Company’s exploration projects and determined an impairment charge of $42,500 should be recorded against the mineral exploration rights detailed in Note 5.
NOTE 5 – Acquisition of Mineral Property
On July 19, 2010, the Company entered into an option to purchase certain mineral exploration rights to a property in south-eastern Arizona, USA, named the L.G. Property from two individuals (collectively the “Vendors”). The Vendors each owned a 50% interest in the mineral exploration rights to the L.G. Property and held the sole right, title and interest to the L.G. Property exploration rights (subject to the rights and title of the State of Arizona), free and clear of all liens and encumbrances. Through the option agreement (the “L.G. Agreement”), the Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in Vendors’ rights to the Property, and the Company acquired an option to purchase Vendors’ rights to the Property from Vendors, upon the terms and conditions set forth in the L.G. Agreement (incorporated herein by reference as Exhibit 10.1).
To exercise the option included in the L.G. Agreement (the “Option”), the Company must: (i) pay the aggregate sum of $240,000 to Vendors; (ii) incur an aggregate of at least $550,000 of Expenditures on the Property; and (iii) issue an aggregate of 1,000,000 restricted shares of common stock in Gryphon (or any public company created by Gryphon for the purpose of development of the Property).
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
To implement exercise of the Option, and maintain the Option in effect, Gryphon agreed to:
|
(a)
|
Pay Vendors the following cash sums on or before the dates described below:
|
||
|
(i)
|
$15,000 upon execution of this Agreement (such payment which has been made);
|
||
|
(ii)
|
$15,000 on or before August 10, 2010 (such payment which has been made);
|
||
|
(iii)
|
$50,000 on or before March 1, 2011;
|
||
|
(iv)
|
$60,000 on or before March 1, 2012; and
|
||
|
(v)
|
$100,000 on or before March 1, 2013.
|
||
|
(b)
|
Incur the following Expenditures on or with respect to the Property, by the following dates:
|
||
|
(i)
|
$50,000 within 12 months following the Execution Date;
|
||
|
(ii)
|
an additional $100,000 on or before 24 months following the Execution Date;
|
||
|
(iii)
|
$200,000 on or before 36 months following the Execution Date; and
|
||
|
(iv)
|
$200,000 on or before 48 months following the Execution Date.
|
||
|
(c)
|
Cause Gryphon to issue shares to the Vendors in the following amounts:
|
||
|
(i)
|
250,000 restricted common shares upon execution of the L.G. Agreement (such payment which has been made and was valued at $12,500);
|
||
|
(ii)
|
250,000 restricted common shares on or before February 1, 2011;
|
||
|
(iii)
|
250,000 restricted common shares on or before February 1, 2012; and
|
||
|
(iv)
|
250,000 restricted common shares on or before February 1, 2013.
|
||
Once the Company has paid the Option Price in full, the Company will have exercised the Option and have acquired an undivided 100% right, title and interest in and to the L.G. Property, the Company will then be obligated to pay the following additional consideration:
|
(a)
|
1,000,000 restricted shares of Gryphon common stock;
|
|
|
(b)
|
a minimum annual royalty of $150,000 on or before December 31, 2014 and a minimum annual royalty of $150,000 every 12 months for each year that Gryphon holds the Property;
|
|
|
(c)
|
a 5% (five percent) Gross Production Royalty on lithium minerals actually produced and sold from the L.G. Property; and
|
|
|
(d)
|
a 3-1/2% (three and one-half percent) Net Returns Royalty on all other minerals actually produced and sold from the L.G. Property.
|
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
NOTE 6 – Discontinued Operation
On April 28, 2008 we incorporated a Turkish company named APM Madencilik Limited. (“APM”) as a 99% owned subsidiary. The remaining balance of 1% of APM shares were held by our former CEO. In July, 2010, we re-focused our operations and began mineral exploration in Arizona, USA and on September 27, 2010, we sold our entire interest in APM to an unrelated third party and ceased all operations in Turkey. The losses and cash flows of APM have been presented as a discontinued operation in these financial statements. Prior year’s Statements of Operations, Equity and Cash Flows have been adjusted to reflect the effect of this discontinued operation.
The Components of the APM discontinued operation are:
|
|
Year ended
September 30, 2010
|
Year ended
September 30, 2009
|
Exploration Stage
January 16, 2006
through
September 30, 2010
|
|||||||||
|
EXPENSES:
|
||||||||||||
|
Exploration expenses
|
- | 15,117 | 17,573 | |||||||||
|
Salaries & wages
|
9,814 | 42,336 | 57,224 | |||||||||
|
Professional and consultant fees
|
- | 757 | 1,996 | |||||||||
|
Administrative expenses
|
1,909 | 16,826 | 29,257 | |||||||||
|
Total expenses
|
$ | 11,723 | $ | 75,036 | $ | 106,050 | ||||||
|
Net loss from operations
|
$ | (11,723 | ) | $ | (75,036 | ) | $ | (106,050 | ) | |||
|
Interest expense
|
(4,854 | ) | (2,010 | ) | (6,882 | ) | ||||||
|
Total
|
(16,577 | ) | (77,046 | ) | (112,932 | ) | ||||||
The sale of APM also resulted in a non-cash gain of $97,920 due to the assumption of debt by the third party. This has been recorded in these statements as a gain on sale of subsidiary in discontinued operations.
NOTE 7 – Shareholder Loan and Loans Payable
During the year ended September 30, 2010, shareholder loans totaling $118,846, including accrued interest, were transferred to a third party, and then converted to common share subscription.
On September 27, 2010, a loan payable of $97,920, including accrued interest, which was owed by the Company’s former subsidiary to a private company in Turkey, was removed from the consolidated books of the Company when the subsidiary was sold to another third party and that other third party assumed responsibility for payment of the loan.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
NOTE 8 – Related Party Transactions
During the year ending September 30, 2010 related party transactions included payment of $15,000 in consulting fees to our CEO and payment of $5,000 in director fees to our independent director.
NOTE 9 – Common shares and Common Shares Subscribed but Unissued
Common Shares
On January 27, 2006, the Company issued 2,500,000 shares of its common stock to its founding President for cash. This transaction was valued at a board approved value of $0.001 per share for total proceeds of $2,500.
During the fiscal year ending September 30, 2006, the Company issued 2,450,000 shares of its common stock in a private offering at $0.02 per share for total proceeds of $49,000.
On June 23, 2008, the Company declared an 18.5 for 1 stock dividend. The Record date and Payment date for this stock dividend were July 3, 2008 and July 7, 2008 respectively. The Company instructed its Transfer Agent to round up to one for any fractional interest which resulted in the calculation of the dividend. This dividend had the effect of increasing the issued and outstanding share capital of the Company from 4,950,000 shares to 96,525,000 shares. All references to stock issued and stock outstanding have been retroactively adjusted as if the stock dividend had taken place at the earliest date shown.
As recorded in a Form DEF 14C filed May 15, 2009, the Company amended its Articles of Incorporation to increase the authorized number of shares of common stock from 100,000,000 shares to 400,000,000 shares, par value of $0.001 per share.
On July 19, 2010, the Company issued 250,000 shares of its common stock to Vendors of the L.G. Property. This transaction was valued at a board approved value of $0.05 per share for total deemed proceeds of $12,500. These shares are deemed "restricted" securities under the Securities Act and may not be sold or transferred other than pursuant to an effective registration statement under the Securities Act or any exemption from the registration requirements of the Securities Act.
Common Shares Subscribed but Unissued
At the balance sheet date of September 30, 2010, the Company had a balance of $273,740 related to private placement shares which had been subscribed but were not yet issued. The subscribers of these shares are non-US persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) and the Shares will be issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended. The shares will be deemed "restricted" securities under the Securities Act and may not be sold or transferred other than pursuant to an effective registration statement under the Securities Act or any exemption from the registration requirements of the Securities Act.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
NOTE 10 – Operating Leases
Office premises in the US are leased on a monthly basis. Gryphon’s office is located at suite 1313 East Maple Street, Suite 201-462, Bellingham, Washington 98225 and incurs monthly rent of $100. This rental agreement may be cancelled with one month’s notice. The Company’s CEO also provides office facilities in New Zealand free of charge to the Company.
NOTE 11 – Income Taxes
The Company is subject to federal income taxes in the United States. The Company had no income taxes payable during the reported periods due to net operating losses.
Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company's deferred tax assets consist entirely of the benefit from net operating loss carry-forwards. The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operating loss carry-forwards. Net operating loss carry-forwards may be further limited by a change in company ownership and other provisions of the tax laws.
Income taxes at the statutory rate are reconciled to the Company’s actual income taxes as follows:
|
Income tax benefit at statutory rate resulting from net operating Loss carryforward
|
(35 | %) | ||
|
Deferred income tax valuation allowance
|
35 | % | ||
|
Actual tax rate
|
0 | % |
The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows (“NOL” denotes Net Operating Loss):
|
Year Ending
|
Estimated
NOL
Carry-forward
|
NOL
Expires
|
Estimated
Tax
Benefit
from NOL
|
Valuation
Allowance
|
Net Tax
Benefit
|
|||||||||||||||
|
2006
|
$ | (1,243 | ) | 2026 | $ | 435 | $ | (435 | ) | $ | — | |||||||||
|
2007
|
$ | (47,972 | ) | 2027 | $ | 16,790 | $ | (16,790 | ) | $ | — | |||||||||
|
2008
|
$ | (75,571 | ) | 2028 | $ | 26,450 | $ | (26,450 | ) | $ | — | |||||||||
|
2009
|
$ | (125,780 | ) | 2029 | $ | 44,023 | $ | (44,023 | ) | $ | — | |||||||||
|
2010
|
$ | (57,322 | ) | 2029 | $ | 20,063 | $ | (20,063 | ) | $ | — | |||||||||
| $ | (307,888 | ) | $ | 107,761 | $ | (107,761 | ) | $ | — | |||||||||||
The total valuation allowance for the year ended September 30, 2010 is $(107,761) which increased by $(20,063) for the year ended September 30, 2010.
GRYPHON RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
NOTE 12 – Subsequent Events
The Company has evaluated subsequent events from the balance sheet date through January 10, 2010, which is the date these consolidated financial statements were issued.
As reported in a Current Report on Form 8K filed December 3, 2010, subsequent to the year ended September 30, 2010, the Company entered into a Letter of Intent (the “LOI”) which will allow it to acquire an option to purchase certain mineral exploration rights from two individuals (the “Vendors”) to a property in south-central Arizona, USA, named the Cruce Property. The Vendors each owned a 50% interest in the mineral exploration rights to the Cruce Property and held the sole right, title and interest to the Cruce Property exploration rights (subject to the rights and title of the State of Arizona), free and clear of all liens and encumbrances. Under the LOI, upon entry into an a material definitive option agreement, the Vendors will grant an exclusive option (the “Option”), to Gryphon to purchase a 100% undivided right, title and interest in Vendors’ rights to the Cruce Property. To exercise the Option, The Company must, in staged increments, over three years: (i) pay the vendors an aggregate sum of US$265,000; (ii) incur an aggregate of at least US$335,000 of expenditures on the Cruce Property; and (iii) issue the vendors an aggregate of 2,600,000 restricted common shares of Gryphon. Additionally, the vendors will receive an Net Smelter Royalty payment of 3%, subject to a minimum royalty payment of US$250,000 per year upon commencement of mineral production. To current date the Company has made payments to the Vendors toward this agreement totaling $33,500.
Subsequent to the year ended September 30, 2010, the Company issued 6,400,000 restricted common shares which included the September 30, 2010 balance of $273,740 of Common Shares Subscribed But Not Issued shown on the September 30, 2010 balance sheet included in this Report. The total value of this private placement was $320,000 and represented the sale of 6,400,000 restricted common shares at a price of $0.05 per share. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended, and the Company did not engage in any general solicitation or advertising regarding this offering.
Subsequent to the year ended September 30, 2010, the Company also concluded a private placement offering of its common shares which raised aggregate proceeds of US$150,000 based on the sale of 1,500,000 restricted common shares priced at US$0.10 per share. These shares will be issued pursuant to Regulation S of the Securities Act of 1933, as amended, and the Company did not engage in any general solicitation or advertising regarding this offering.
There were no disagreements with our accountants regarding accounting and financial disclosure matters.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are ineffective in reaching that level of assurance.
As of the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
Management's Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
As of September 30, 2010, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO management concluded that the Company's internal control over financial reporting was not effective as of September 30, 2010, as a result of the identification of the material weaknesses described below.
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Specifically, management identified the following control deficiencies: (1) The Company has not properly segregated duties as one or two individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system. The Company does not believe that this control deficiency has resulted in deficient financial reporting because the Chief Financial Officer is aware of his responsibilities under the SEC's reporting requirements and personally certifies the financial reports; (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
During the last quarter of the Company’s fiscal year ended September 30, 2010, the Certifying Officers reviewed our internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f)) under the Exchange Act as of the Evaluation Date and concluded that no changes occurred in such control or in other factors during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Deficiencies identified include the inadequate segregations of duties, lack of controls over procedures used to enter transactions into the general ledger, and lack of appropriate review of the reconciliations and supporting workpapers used in the financial close and reporting process. Due to the potential pervasive effect on the financial statement account balances and disclosures and the importance of the annual and interim financial closing and reporting process, in the aggregate, management concluded that there was more than a remote likelihood that a material misstatement in our annual or interim financial statements could occur and would not be prevented or detected.
Remediation Plan
Addition of staff
We have identified that additional staff will be required to properly segment the accounting duties of the Company. However, we do not currently have resources to fulfill this part of our plan and will be addressing this matter once sufficient resources are available.
None.
Our directors and officers, as of September 30, 2010, were as set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. Vacancies in the Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors. The term of the directors listed below is each one year.
|
Name
|
Age
|
Positions and Offices Held
|
|
Alan Muller
|
59
|
President & Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Director and Board Chair
|
|
Stephen Sutorius
|
27
|
Secretary & Treasurer, Director
|
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.
Alan Clive Muller, Pr. Eng, B.Sc. Eng, PMP
Alan Muller was born and raised in South Africa where he was closely associated with the gold mining industry through his father who was the general manager of several major gold mines. This allowed him to gain an insight into the workings of the mining industry and afforded him the opportunity to gain work experience in the mines during several vacation employment stints.
In 1975, Mr. Muller gained an honours degree in Civil Engineering from the University of Natal, Durban, South Africa and became a registered professional Civil and Structural engineer. Mr. Muller also earned a four year Post Graduate Computer Science Diploma in Datametrics from the University of South Africa and a Post Graduate Diploma in Project Management. In 1994, Alan Muller emigrated to New Zealand where he continued to extend his expertise in project management. Over the last 30 years he has managed major construction projects in many fields encompassing health care, commercial developments and infrastructure, these projects have been spread across Southern Africa, the Indian Ocean Islands and for the last 16 years in New Zealand.
Mr. Muller’s employment history includes: September 1999 to Present, Self employed providing project management services to the construction industry; July 1997 to October 1999, Senior Project Manager, Opus International Consultants Limited, Hamilton, New Zealand; May 1996 to July 1997, Self employed providing project management services to the construction industry in the Hamilton, New Zealand region; 1994 to May 1996, Construction Operations Manager, Waikato / Bay of Plenty with Mainzeal Property & Construction; 1990 to 1994, Senior Project Manager, Liebenberg & Stander, Consulting Engineers and Project Managers; 1988 to 1989, Senior Contracts Manager, Ovcon (Natal) Building - Building & Civil Engineering Contractors; 1987 to 1988, Senior Contracts Manager, John Sisk and Sons Building & Civil Engineering Contractors; 1981 to 1986, Site Agent/Contracts Manager, S.M. Goldstein Natal (Civils) Building & Civil Engineering Contractors; 1977 to 1980, Civil Engineer, South African Railways & Harbours New works construction division; 1975 to 1976, Graduate Engineer, De Leuw Cather and Associates - Consulting Engineers.
During his career Alan Muller has managed a long list of major civil engineering and construction projects. Recent examples of his project work is as follows (note: in this list NZ dollars have been converted to US dollars at a rate of 1.00 US$ = 1.31857 NZ$):
Alan Muller Project Management Services:
AUCKLAND ELECTRIFICATION PROJECT - 2010 to Present, Senior Project Manager
Client: KiwiRail;
Project value: US$455,000
Scope: This project involves acting as the Civil Coordinator across all disciplines of this major infrastructure project.
NEWMARKET STATION AND RAILWAY JUNCTION - 2007 to 2010, Senior Project Manager
Client: Ontrack
Project value: US$56,880,000
Scope: This complex project incorporated all stages of the design and construction of the new Newmarket railway station in New Zealand and the remodelling of the railway junction including the replacement of the Remuera Road and St Marks Road bridges.
NEW ZEALAND INLAND REVENUE GREATER OFFICE AND RECEPTION FITOUT - 2006 to 2007, Senior Project Manager
Client: New Zealand Inland Revenue
Project Value: US$3,800,000
Scope: Design and fitout of office space and public reception areas for the IRD office in Takapuna and Manukau, New Zealand.
AIR NEW ZEALAND CARGO TERMINAL UPGRADE - 2006 to 2007, Senior Project Manager
Client: Air New Zealand
Project Value: US$7,960,000
Scope: Extension and refurbishment of Air New Zealand Cargo’s facilities including new cargo handling equipment and an extensive CCTV security system
INLAND REVENUE GREATER AUCKLAND PROPERTY PROJECT - 2006 to 2011, Senior Project Manager
Client: New Zealand Inland Revenue
Project Value: US$25,790,000
Scope: Identification, procurement, construction liaison and fitout of two new office buildings totalling 25,000 square meters, to house all New Zealand Inland Revenue functions in the greater Auckland, New Zealand area.
Stephen Philip Sutorius
Mr. Stephen Sutorius was born in New Zealand and currently resides in Australia. He holds a Diploma of Investments from the Open Polytechnic of New Zealand in addition to a Diploma in Financial Services (Australian Securities and Investment Commission RG146). His career has emphasized relationship management with major treasury clients. Mr. Sutorius’ employment history includes: Site Acquisitions and Business Development consulting for property and investment companies in New Zealand and Australia, 2010 to Present; Senior Negotiator, CB Richard Ellis, Wellington, New Zealand, 2005 to 2010; Debt Securities Specialist - 2002 to 2005, Settlements Officer - 2002, and Account Reconciliation Officer - 2001 to 2002, National Bank of New Zealand, Wellington, New Zealand.
Family Relationships
There are no family relationships between or among any of our officers or directors.
Involvement in Certain Legal Proceedings
To our knowledge, during the past five years, no present or former director or executive officer of the Company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities:
(i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of illegal business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in subsequently reversed, suspended or vacate; (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Audit Committee Financial Expert
In 2006 the Board delegated responsibilities of the Audit Committee to the full Board. Due to the fact that the Company is in its exploration stage, it has not yet been able to recruit and compensate a financial expert for the Audit Committee.
Compliance With Section 16(a) of the Exchange Act - Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act as amended requires the Company's officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities (the "10% Stockholders"), to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Officers, directors and 10% Stockholders of the Company are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms so filed.
Based solely upon a review of filings made and other information available to it, the Company believes that each of the Company's present Section 16 reporting persons filed all forms required of them by Section 16(a) during the year ended September 30, 2010.
Based solely upon a review of the Forms 3, 4, and 5 furnished to us for the fiscal year ended September 30, 2010, we have determined that our directors, officers, and greater than 10% beneficial owners complied with all applicable Section 16 filing requirements.
Code of Ethics and Conduct
The Board approved a code of ethics and conduct which was filed as an exhibit to our registration statement on Form SB-2 filed February 26, 2006 and is incorporated herein by this reference.
Director Compensation
During the year ended September 30, 2010, there were no cash payments, nor stock or option grants made to any directors.
The following tables set forth information regarding the salaries and other compensation paid to our executive officers in our most recent fiscal year ended September 30, 2010 and since inception:
|
SUMMARY COMPENSATION TABLE
|
||||||||
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other Annual Compensation
($)
|
Restricted Stock Awards or SARs ($) (1)
|
Securities Underlying Options or
SARs (#)
|
LTIP
Payouts
($) (2)
|
All Other Compensation
($)
|
|
Alan Muller
President & CEO, CFO, PAO
|
Fiscal
2010
|
15,000
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Stephen Sutorius
Secretary & Treasurer
|
Fiscal
2010
|
5,000
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Serdar Kirmizioglu
President & CEO, CFO, PAO
|
Fiscal
2010
|
9,814
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Serdar Kirmizioglu
President & CEO, CFO, PAO
|
Fiscal
2009
|
27,577
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Serdar Kirmizioglu
President & CEO, CFO, PAO
|
Fiscal
2008
|
1,940
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Lou Jurinak
President & CEO, CFO, PAO
|
Fiscal
2008
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Lou Jurinak
President & CEO, CFO, PAO
|
Fiscal
2007
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Lou Jurinak
President & CEO, CFO, PAO
|
Fiscal
2006
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
| (1) | SARs are “Stock Appreciation Rights” | |
| (2) | LTIP’s are “Long-Term Incentive Plans” |
|
Option/SAR Grants in Last Fiscal Year
|
|||||
|
Name
|
Number of Securities Underlying
Options or SAR’s
(#)
|
Percentage of
Total Options or SARs Granted to Employee in
Fiscal Year
|
Exercise Price ($/share)
|
Expiration
Date
|
Grant Date
Value
($)
|
|
(no grants made)
|
Nil
|
-
|
-
|
-
|
-
|
|
Aggregated Option/SAR Exercises and Fiscal Year-End Options/SAR Table
|
||||||
|
Name
|
Shares Acquired on Exercise
(#)
|
Value Realized
($)
|
Number of Securities
Underlying Unexercise
Options/SARs at FY-end
(#)
|
Value of Unexercised
In-the-Money Options/SARs
at FY-End
($)
|
||
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||
|
(no grants made)
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
The Company has not adopted an Options Plan.
No retirement, pension, profit sharing, or insurance programs or other similar programs have been adopted by us for the benefit of our employees.
The Company has not yet established a Compensation Committee of the Board and plans to do so in the near future.
The Company does not have an employment agreement with its President & CEO and there is no policy in place which creates a relationship between corporate performance and executive or director compensation.
Under the rules of the Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
The following table sets forth each person known by us to be the beneficial owner of five percent or more of the Company’s Common Stock and all such persons as a group. Each person has sole voting and investment power with respect to the shares shown.
|
Security Ownership of Certain Beneficial Owners
|
|||
|
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Owner
|
Percent of Class (1)
|
|
Common Stock
|
Alan Muller
1313 East Maple Street,
Bellingham, Washington 98225
|
48,750,000
|
50.4%
|
|
Common Stock
|
All Included Persons as a Group
|
48,750,000
|
50.4%
|
| (1) | The denominator for this calculation is based on the 96,775,000 issued and outstanding shares of the Company. |
The following table sets the beneficial ownership of the Company’s Common Stock by all directors and officers individually and all directors and officers of the Company as a group. Each person has sole voting and investment power with respect to the shares shown.
|
Security Ownership of Certain Beneficial Owners
|
|||
|
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Owner
|
Percent of Class
|
|
Common Stock
|
Alan Muller
President & CEO, CFO, PAO,
Director and Board Chair
1313 East Maple Street,
Bellingham, Washington 98225
|
48,750,000
|
50.4%
|
|
Common Stock
|
Stephen Sutorius
Vice President – Administration,
Secretary & Treasurer
1313 East Maple Street,
Bellingham, Washington 98225
|
Nil
|
Nil%
|
|
Common Stock
|
All Directors & Officers
as a Group
|
48,750,000
|
50.4%
|
Transactions with Management and Others
During the year ending September 30, 2010 there were no related party transactions which exceeded $60,000 in value.
Certain Business Relationships
None to report.
In its capacity as the Audit Committee, the Board of Directors pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the independent auditors. The Board of Directors annually approves the scope and fee estimates for the year-end audit to be performed by the Corporation’s independent auditors for the fiscal year. With respect to other permitted services, the Board of Directors pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual project and annual maximums. To date, the Company has not engaged its auditors to perform any non-audit related services.
Audit Fees
The aggregate fees billed for the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory engagements for those fiscal years was:
2010 – $7,500 – Madsen & Associates CPAs Inc.
2009 – $7,235 – Madsen & Associates CPAs Inc.
Audit - Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported in the preceding paragraph:
2010 – $Nil – Madsen & Associates CPAs Inc.
2009 – $Nil – Madsen & Associates CPAs Inc.
Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
2010 – $Nil – Madsen & Associates CPAs Inc.
2009 – $Nil – Madsen & Associates CPAs Inc.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
2010 – $Nil – Madsen & Associates CPAs Inc.
2009 – $Nil – Madsen & Associates CPAs Inc.
|
No.
|
Exhibit Description
|
|
3.1
|
Articles of Incorporation(1)
|
|
3.2
|
Certificate of Amendment of Articles of Incorporation(1)
|
|
3.2
|
Bylaws(1)
|
|
10.1
|
L.G. Property Purchase Agreement(2)
|
|
14.1
|
Code of Ethics(1)
|
(1) Filed as an exhibit to a registration statement on Form SB-2 filed February 26, 2006 and incorporated herein by reference
(2) Filed as an exhibit to a Form 8-K filed July 22, 2010 and incorporated herein by reference.
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.
/s/ Alan Muller
Alan Muller
President and Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, Director and Board Chair
/s/Stephen Sutorius
Stephen Sutorius
Secretary and Treasurer,
Dated: January 12, 2011
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/ Alan Muller
Alan Muller
President and Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, Director and Board Chair
/s/Stephen Sutorius
Stephen Sutorius
Secretary and Treasurer,
Dated: January 12, 2011
46