Ameritrust Corp - Quarter Report: 2011 December (Form 10-Q)

gryphon10q123111.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

FORM 10-Q

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

EXCHANGE ACT OF 1934

For the Quarter Ended December 31, 2011

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)

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

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

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

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

The issuer had 117,425,000 shares of common stock issued and outstanding as of February 8, 2012.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Table of Contents

			Page
PART I. Financial Information

	Item 1. Financial Statements.

		Balance Sheets at December 31, 2011 (unaudited) and September 30, 2011 (audited)	1

		Unaudited Statements of Operations for the three month periods ended December 31, 2011 and December 31, 2010 and the Exploration Stage Period of January 16, 2006 through December 31, 2011	2

		Unaudited Statements of Cash Flows for the three month periods ended December 31, 2011 and December 31, 2010 and the Exploration Stage Period of January 16, 2006 through December 31, 2011	3

		Unaudited Supplemental Disclosure of Non-cash Investing and Financing Activities for the three month periods ended December 31, 2011 and December 31, 2010 and the Exploration Stage Period of January 16, 2006 through December 31, 2011	4

		Notes to Unaudited Financial Statements	5

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		22

	Item 4. Controls and Procedures		22

PART II. Other Information			24

	Item 1. Legal Proceedings		24

	Item 1a. Risk Factors		24

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		28

	Item 3. Defaults Upon Senior Securities		28

	Item 4. [Removed and Reserved]		28

	Item 5. Other Information		28

	Item 6. Exhibits		29

Signatures			29

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (unaudited)

GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Balance Sheets

	December 31, 2011			September 30, 2011
ASSETS

CURRENT ASSETS
Cash	$	8,560		$	7,073
Prepaid expenses		3,438			10,187
Total current assets		11,998			17,260

Total assets	$	11,998		$	17,260


LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable		1,327			1,269
Shareholder advances (Note 6)		6,500			6,500
Total current liabilities	$	7,827		$	7,769

Total liabilities	$	7,827		$	7,769

COMMITMENTS AND CONTINGENCIES (Notes 2, 3 and 5)		—			—

STOCKHOLDERS’ EQUITY
Common shares, 400,000,000 shares par value $0.001 authorized, 117,425,000 and 105,025,000 issued and outstanding at December 31, 2011 and September 30, 2011 (Note 7)		117,425			105,025
Paid-in Capital		571,575			459,975
Common shares subscribed but not issued (Note 7)		—			106,000
Accumulated deficit in the exploration stage		(684,829	)		(661,509	)
Total stockholders’ equity		4,171			9,491

Total liabilities and stockholders’ equity	$	11,998		$	17,260

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

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Statements of Operations

	Three Months ended December 31, 2011			Three Months ended December 31, 2010			January 16, 2006 (date of inception) through December 31, 2011

EXPENSES:
Exploration expenses		1,000			28,113			153,749
Professional and consultant fees		17,564			20,550			233,233
Administrative expenses		3,561			6,818			57,056
Investor relations		195			13,715			29,023
Mineral properties impairments (Notes 2, 4 and 5)		1,000			40,000			183,498
Total expenses	$	23,320		$	109,196		$	656,559

Net loss from operations	$	(23,320	)	$	(109,196	)	$	(656,559	)
Other (Expense) Income:
Interest expense		—			—			(13,258	)
Net loss from continuing operations		(23,320	)		(109,196	)		(669,817	)

Discontinued Operations:
Net loss from discontinued operations (Note 8)	$	—		$	—		$	(112,932	)
Gain on Sale of Subsidiary (Note 8)	$	—		$	—		$	97,920
Net (Loss)	$	(23,320	)	$	(109,196	)	$	(684,829	)
Less: Net Loss attributable to Non-Controlling Interest related to discontinued operations (Notes 2 and 8)		n/a			n/a			936
Equals: Net Loss attributable to Gryphon Resources, Inc. (Notes 2 and 8)		(23,320	)		(109,196	)		(683,893	)

Loss per common share (Note 2), basic and diluted	$	Nil		$	Nil

Weighted average shares outstanding , basic and diluted (Notes 2 and 7)		107,457,608			101,854,347

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

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Statements of Cash Flows

	Three Months ended December 31, 2011			Three Months ended December 31, 2010			January 16, 2006 (date of inception) through December 31, 2011
Cash flows from operating activities:
Net Income (Loss) for period	$	(23,320	)	$	(109,196	)	$	(684,829	)
Reconciling adjustments:
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash gain on sale of subsidiary		—			—			(97,920	)
Accrued interest on shareholder loans		—			—			13,258
Accrued interest related to discontinued operation		—			—			6,882
Mineral property impairments		1,000			40,000			183,498
Net change in operating assets and liabilities:
Prepaid expenses		6,749			15,463			(3,438	)
Accounts payable		58			7			1,327
Net cash provided (used) by operating activities		(15,513	)		(53,726	)		(581,222	)

Cash flows from investing activities:
Purchase of mineral properties		—			(40,000	)		(138,998	)
Net cash provided by investing activities		—			(40,000	)		(138,998	)

Cash flows from financing activities:
Common shares issued for cash		17,000			46,260			525,654
Proceeds from common shares subscribed but not issued		—			150,000			—
Proceeds from loans related to discontinued operation		—			—			91,038
Proceeds from shareholder advances		—			6,500			112,088
Net cash provided by financing activities		17,000			202,760			728,780

Net increase (decrease) in cash		1,487			109,034			8,560

Cash, beginning of period		7,073			10,252			—

Cash, end of period	$	8,560		$	119,286		$	8,560

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

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Supplemental Disclosure of Non-cash Investing and Financing Activities

	Three Months ended December 31, 2011		Three Months ended December 31, 2010		January 16, 2006 (inception) through December 31, 2011

Shares issued for mineral property acquisition	$	1,000	$	—	$	44,500
Conversion of debt into common stock subscribed but not issued	$	—	$	—	$	118,846

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

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

NOTE 1 – Nature of Business and Operations

Gryphon Resources, Inc. is a mineral exploration enterprise which was incorporated in the State of Nevada on January 16, 2006. On April 28, 2008 we incorporated a subsidiary and conducted an exploration project through this subsidiary in Turkey until September 27, 2010, at which time it was sold to an unrelated third party. Activities of this former subsidiary are treated in these financial statements as a discontinued operation. Currently our activities include exploring for lithium; and gold and silver in Arizona, USA. Our fiscal year end is September 30th. (Hereinafter Gryphon Resources, Inc. may herein be referred to: “Gryphon Resources”, “Gryphon”, “We”, “Us”, the “Registrant”, or the “Company”).

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). 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. 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.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

Non-Controlling Interest

As required by GAAP, the Statement of Operations for the Exploration Stage Period from January 16, 2006 to December 31, 2011 include the allocation to ‘Non-Controlling Interest’ of a proportionate share of the Company’s discontinued operations net losses and related accounts which pertained to the 1% ownership interest in its former subsidiary which was not owned by the Company. This is an historic carryforward due to the extinguishment of any Non-Controlling Interest at the time of the sale of our subsidiary.

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; nor equity security equivalents such as warrants.

Stock-based Compensation

The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options; nor has it made any awards of stock, or stock equivalents.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

Estimated Fair Value of Financial Instruments

ASC 820, "Fair Value Measurements", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

Level 1:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2:

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3:

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts payable, and shareholder advances. Pursuant to ASC 820, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

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

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 other 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 2012 and 2011, none of which are expected to have a material effect on the financial statements of the Company.

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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 $(23,320) for the three month period ended December 31, 2011 and has accumulated net losses of $(684,829) since inception. Additionally the Company has had limited business operations, which raises substantial doubt about its 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 three month period ended December 31, 2011, we addressed the going concern issue by raising cash of $17,000 through a private placement of our common shares (the share issuance for this private placement also included $106,000 which had been carried on our balance sheet for the year ended September 30, 2011 as Common Shares Subscribed But Not Issued, for a total cash share issuance of $123,000). 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

During the three month period ended December 31, 2011 as fulfillment of one of the payment installments for the Cruce Property, the Company made a share issuance of 100,000 shares which was valued at $0.01 per share for total deemed proceeds of $1,000. At quarter end December 31, 2011, the Company determined this portion of its mineral property acquisition costs should be impaired and recorded an impairment loss of $1,000.

NOTE 5 – Mineral Properties

L.G. Property

As executed on July 19, 2010 and amended on February 27, 2011, 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 “L.G. 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, as amended (the “L.G. Agreement”), the L.G. Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in the L.G. Vendors’ rights to the L.G. Property, and the Company acquired an option to purchase L.G. Vendors’ rights to the L.G. Property from the L.G. Vendors, upon the terms and conditions set forth in the L.G. Agreement, as amended.

To exercise the option included in the L.G. Agreement (the “L.G. Option”), the Company must: (i) pay the aggregate sum of $240,000 to the L.G. Vendors; (ii) incur an aggregate of at least $550,000 of exploration expenditures on the L.G. Property; and (iii) issue to the L.G. Vendors 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 L.G. Property), based on the following schedules:

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

NOTE 5 – Mineral Properties (continued)

(a)	Cash sums on or before the dates described below:
	(i)	$15,000 upon execution of the L.G. 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 (such payment which has been made);
	(iv)	$60,000 on or before March 1, 2012; and
	(v)	$100,000 on or before March 1, 2013.

(b)	Share issuances on or before the dates described below:
	(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 (such payment which has been made and was valued at $25,000);
	(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.

(c)	The parties also agreed that the Company will incur the following amounts on exploration expenditures on the L.G. Property:
	(i)	$50,000 within 12 months following the L.G. Execution Date;
	(ii)	an additional $100,000 on or before 24 months following the L.G. Execution Date;
	(iii)	$200,000 on or before 36 months following the L.G. Execution Date; and
	(iv)	$200,000 on or before 48 months following the L.G. Execution Date.

Once the Company has paid the L.G. Option price in full, the Company will have exercised the L.G. 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 to the L.G. Vendors:

	(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 L.G. 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.

If the Company fails to deliver or spend the consideration comprising the L.G. Option price within the time periods set forth herein, the L.G. Agreement will terminate 30 days after the L.G. Vendors give the Company written notice of such failure (during which time the Company may deliver or spend the consideration overdue, and therefore maintain the L.G. Agreement in good standing). As of the date of these financial statements, the Company had made all cash and shares payments currently due under the terms of L.G. Agreement, but had not expended the entire required amount of its first year work commitment. The L.G. Vendors have not indicated they plan to give the Company any written notice which would cause a termination of the L.G. Agreement.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

NOTE 5 – Mineral Properties (continued)

Cruce Property:

As executed on January 21, 2011 and amended on January 25, 2011, the Company entered into an option to purchase certain mineral exploration rights to a property in Arizona, USA, named the Cruce Property from two individuals (collectively the “Cruce Vendors”). The Cruce 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. Through the option agreement (the “Cruce Agreement”), the Cruce Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in the Cruce Vendors’ rights to the Cruce Property, and the Company acquired an option to purchase the Cruce Vendors’ rights to the Cruce Property from the Cruce Vendors, upon the terms and conditions set forth in the Cruce Agreement, as amended.

To exercise the option included in the Cruce Agreement (the “Cruce Option”), the Company must: (i) pay the aggregate sum of $265,000 to the Cruce Vendors; (ii) incur an aggregate of at least $335,000 of exploration expenditures on the Cruce Property; and (iii) issue to the Cruce Vendors an aggregate of 2,600,000 restricted shares of common stock in Gryphon (or any public company created by Gryphon for the purpose of development of the Cruce Property), based on the following schedules:

(a)	Cash sums on or before the dates described below:
	(i)	$40,000 upon execution of the Letter of Intent regarding the Cruce Agreement (such payment which has been made);
	(ii)	$50,000 on or before November 30, 2011 (such payment which has not been made);
	(iii)	$75,000 on or before November 30, 2012;
	(iv)	$100,000 on or before November 30, 2013; and

(b)	Share issuances on or before the dates described below:
	(i)	100,000 shares upon execution of the Cruce Agreement (such issuance which has been made and was valued at $6,000);
	(ii)	100,000 shares on or before November 30, 2011 (such issuance which has been made and was valued at $1,000);
	(iii)	200,000 shares on or before November 30, 2012; and
	(iv)	200,000 shares on or before November 30, 2013.

(c)	The parties also agreed that the Company will incur the following amounts on exploration expenditures on the Cruce Property:
	(i)	$60,000 within 12 months following the Cruce Execution Date;
	(ii)	an additional $75,000 on or before 24 months following the Cruce Execution Date;
	(iii)	$100,000 on or before 36 months following the Cruce Execution Date; and
	(iv)	$100,000 on or before 48 months following the Cruce Execution Date.

Once the Company has paid the Cruce Option price in full, the Company will have exercised the Cruce Option and have acquired an undivided 100% right, title and interest in and to the Cruce Property, the Company will then be obligated to pay the following additional consideration:

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

	(a)	2,000,000 restricted shares of Gryphon common stock;
	(b)	a minimum annual royalty of $250,000 on or before November 30, 2014 and a minimum annual royalty of $250,000 every 12 months for each year that Gryphon holds the Cruce Property;
	(c)	a 3% (three percent) Net Returns Royalty on all minerals actually produced and sold from the Cruce Property.

If the Company fails to deliver or spend the consideration comprising the Cruce Option price within the time periods set forth herein, the Cruce Agreement will terminate 30 days after the Cruce Vendors give the Company written notice of such failure (during which time the Company may deliver or spend the consideration overdue, and therefore maintain the Cruce Agreement in good standing). As of the date of these financial statements, the Company had made all shares payments currently due under the terms of Cruce Agreement and had expended the entire required amount of its first year work commitment. The Company met it first scheduled cash installment of $40,000 to the Cruce Vendors, but is currently late on its second scheduled cash installment of $50,000 which was due by November 30, 2011. The Cruce Vendors have not indicated they plan to give the Company any written notice which would cause a termination of the Cruce Agreement.

NOTE 6 – Related Party Transactions & Shareholder Advances

During the year ending December 31, 2011, related party transactions included payment of $28,354 in consulting fees and expense reimbursements to our CEO and an advance from our CEO of $6,500 to the Company. This advance is non-interest bearing and payable on demand.

There were no related party transactions for the three month period ended December 31, 2011.

NOTE 7 – Common shares and Common Shares Subscribed but Unissued

Common Shares

The Company’s common stock is traded on the Pink Sheets Over-The-Counter Market under the symbol: GRYO.

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 on January 16, 2006 (inception).

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.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

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.

On November 18, 2010, the Company completed a private placement offering of its common stock which raised aggregate proceeds of US$320,000 ($118,846 of this amount was used to settle debt as of September 30, 2011; $154,894 of this amount was received in cash prior to September 30, 2011; $46,260 of this amount was received in cash during the quarter ended December 31, 2010). This offering was comprised of 6,400,000 restricted common shares at $0.05 per share and 6,400,000 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and the Company did not engage in any general solicitation or advertising regarding this offering.

On January 25, 2011, the Company issued 100,000 shares of its common stock to Vendors of the Cruce Property. This transaction was valued at a board approved value of $0.06 per share for total deemed proceeds of $6,000. 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.

On March 11, 2011, the Company completed a private placement offering of its common stock which raised aggregate cash proceeds of US$150,000. This offering was comprised of 1,500,000 restricted common shares at $0.10 per share and 1,500,000 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and the Company did not engage in any general solicitation or advertising regarding this offering.

On March 31, 2011, the Company issued 250,000 shares of its common stock as the second shares component installment payment to Vendors of the L.G. Property. This transaction was valued at a board approved value of $0.10 per share for total deemed proceeds of $25,000. 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.

On November 30, 2011, the Company issued 100,000 shares of its common stock as the second shares component installment payment to Vendors of the Cruce Property. This transaction was valued at a board approved value of $0.01 per share for total deemed proceeds of $1,000. 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.

On December 14, 2011 the Company completed a private placement offering of its common stock which raised aggregate cash proceeds of US$123,000. This offering was comprised of 12,300,000 restricted common shares at $0.01 per share and 12,300,000 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and the Company did not engage in any general solicitation or advertising regarding this offering. The consideration paid for this private placement was comprised of $106,000 which was recorded in the Company's September 30, 2011 year-end Balance Sheet as Shares Subscribed But Not Issued, plus $17,000 cash received during the three month period ended December 31, 2011.

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GRYPHON RESOURCES, INC.

(An Exploration Stage Company)

Notes to Financial Statements

Common Shares Subscribed but Unissued

At year-end Balance Sheet date of September 30, 2011, the Company had a balance of $106,000 related to private placement shares which had been subscribed but were not yet issued. As referenced above, this balance of $106,000 was added to $17,000 cash received during the three month period ended December 31, 2011to complete a private placement of 12,300,000 restricted common shares sold for $0.01 per share, for total consideration of $123,000.

NOTE 8 – Discontinued Operation

On April 28, 2008 we incorporated a Turkish company (the “Former Subsidiary”) as a 99% owned subsidiary. The remaining balance of 1% of the Former Subsidiary's shares were held by our former CEO. On September 27, 2010, we sold our entire interest in the Former Subsidiary to an unrelated third party and ceased all operations in Turkey. The losses and cash flows of the Former Subsidiary 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 sale of the Former Subsidiary 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.

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

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

Overview

Gryphon Resources, Inc. (hereinafter Gryphon Resources, Inc. may herein be referred to: “Gryphon Resources”, “Gryphon”, “We”, “Us”, the “Registrant”, or the “Company”) was incorporated in the State of Nevada on January 16, 2006. We are a mineral exploration company and are exploring for gold, silver and copper-porphyry; and lithium on two different properties in Arizona, USA. Our fiscal year end is September 30th. The Company’s common stock is traded in the Pink Sheets Over-The-Counter market under the symbol “GRYO”.

MINERAL PROPERTIES

Summary

At December 31, 2011, the Company’s material property investments comprise: (i) an option to purchase certain mineral exploration rights to a property in south-central Arizona, USA, named the Cruce Property on which the Company is primarily exploring for gold, silver and copper-porphyry, all leases on which are currently in good standing; and (ii) an option to purchase certain mineral exploration rights to a property in south-eastern Arizona, USA, named the L.G. Property on which the Company is primarily exploring for lithium, of which the Company has let lapse approximately 90% of the leases thereunder.

At present, the Company has no mineral property balances which are classified as assets under generally accepted accounting principles.

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Cruce Map

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CRUCE PROPERTY

Cruce Property Area of Interest

The Cruce Property covers 560 acres and is located approximately 40 miles north of Tucson in south-central Arizona. The Cruce Agreement area of interest is composed of all lands within that area in the State of Arizona described as: Section 16, Township 8 South, Range 14 East, G&SR Mer., and three miles extended in each direction from the exterior boundaries of Section 16.

Cruce Property Agreement:

As executed on January 21, 2011 (the "Cruce Execution Date"') and amended on January 25, 2011, the Company entered into an option to purchase certain mineral exploration rights to a property in Arizona, USA, named the Cruce Property from two individuals (collectively the “Cruce Vendors”). The Cruce 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. Through the option agreement (the “Cruce Agreement”), the Cruce Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in the Cruce Vendors’ rights to the Cruce Property, and the Company acquired an option to purchase the Cruce Vendors’ rights to the Cruce Property from the Cruce Vendors, upon the terms and conditions set forth in the Cruce Agreement, as amended (incorporated herein by reference as Exhibits 10.3 and 10.4).

(a)	Cash sums on or before the dates described below:
	(i)	$40,000 upon execution of the Letter of Intent regarding the Cruce Agreement (such payment which has been made)
	(ii)	$50,000 on or before November 30, 2011 (such payment which has not been made);
	(iii)	$75,000 on or before November 30, 2012;
	(iv)	$100,000 on or before November 30, 2013; and

(b)	Share issuances on or before the dates described below:
	(i)	100,000 shares upon execution of the Cruce Agreement (such issuance which has been made and was valued at $6,000);
	(ii)	100,000 shares on or before November 30, 2011 (such issuance which has been made and was valued at $1,000);
	(iii)	200,000 shares on or before November 30, 2012; and
	(iv)	200,000 shares on or before November 30, 2013.

	(a)	2,000,000 restricted shares of Gryphon common stock;
	(b)	a minimum annual royalty of $250,000 on or before November 30, 2014 and a minimum annual royalty of $250,000 every 12 months for each year that Gryphon holds the Cruce Property;
	(c)	a 3% (three percent) Net Returns Royalty on all minerals actually produced and sold from the Cruce Property.

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The parties also agreed that the Company will incur the following amounts on exploration expenditures on the Cruce Property:

	(a)	$60,000 within 12 months following the Cruce Execution Date.
	(b)	an additional $75,000 on or before 24 months following the Cruce Execution Date;
	(c)	$100,000 on or before 36 months following the Cruce Execution Date; and
	(d)	$100,000 on or before 48 months following the Cruce Execution Date.

L.G. PROPERTY

L.G. Property Area of Interest

The L.G. Agreement area of interest is composed of all lands within that area in the State of Arizona described as: T5S, R23 and 24E; T6S, R23, 24 and 25E; T7S, R25 and 26E; R26 and 27E; T9S, R26 and 27E; R10S, R26 and 27E and Sections 15 through 22 and 27 through 35 in T5S, R25E; Sections 6, 7, and 8, 16 through 23, and 25 through 36 in T6S, R26E; Sections 1 through 6 and 10 through 12 in T7S, R23E; Sections 1 through 18 in T7S, R24E; Sections 3 through 9, 16 through 20, and 29 through 33 in T7S, R27E; Sections 1, 2, 11through 14, 24, 25, and 36 in T8S, R25E, G&SR Mer.

During the three month period ended December 31, 2011, the Company did not make United States Bureau of Land Management ('BLM') property maintenance payments covering 10 lease sections on approximately 4091 acres and therefore these leases have lapsed. The Company had also previously let lapse one other BLM lease. These areas cover approximately 90% of the claim areas included in the L.G. Agreement. The Company is currently reviewing whether it will re-stake these claims in the future.

L.G.. Property Agreement

As executed on July 19, 2010 (the "'L.G. Execution Date") and amended on February 27, 2011, 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 “L.G. 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, as amended (the “L.G. Agreement”), the L.G. Vendors granted an exclusive option to the Company to purchase a 100% undivided right, title and interest in the L.G. Vendors’ rights to the L.G. Property, and the Company acquired an option to purchase L.G. Vendors’ rights to the L.G. Property from the L.G. Vendors, upon the terms and conditions set forth in the L.G. Agreement, as amended (incorporated herein by reference as Exhibits 10.1 and 10.2).

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(a)	Cash sums on or before the dates described below:
	(i)	$15,000 upon execution of the L.G. 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 (such payment which has been made);
	(iv)	$60,000 on or before March 1, 2012; and
	(v)	$100,000 on or before March 1, 2013.

(b)	Share issuances on or before the dates described below:
	(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 (such payment which has been made and was valued at $25,000);
	(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.

	(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 L.G. 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.

The parties also agreed that the Company will incur the following amounts on exploration expenditures on the L.G. Property:

	(i)	$50,000 within 12 months following the L.G. Execution Date;
	(ii)	an additional $100,000 on or before 24 months following the L.G. Execution Date;
	(iii)	$200,000 on or before 36 months following the L.G. Execution Date; and
	(iv)	$200,000 on or before 48 months following the L.G. Execution Date.

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Operational Developments During the Quarter Ended December 31, 2011

Leases expiries:

During the three month period ended December 31, 2011, the Company did not make United States Bureau of Land Management ('BLM') property maintenance payments covering 10 lease sections on approximately 4091 acres of its L.G. Property and therefore these leases have lapsed. The Company had also previously let lapse one other BLM lease on the L.G. Property. These areas cover approximately 90% of the claim areas included in the L.G. Agreement. The Company is currently reviewing whether it will re-stake these claims in the future and is currently re-evaluating its overall exploration programs.

Private Placement initiative:

On December 14, 2011, the Company completed a private placement totalling $123,000. This financing was based on the sale of 12,300,000 restricted common shares priced at US$0.01 per share and included application of $106,000 of funds which had been recorded on our Balance Sheet for the year ended September 30, 2011 as Shares Subscribed But Not Issued.

RESULTS OF OPERATIONS

The following discussion and analysis covers material changes in the financial condition of Gryphon during the three month periods ended December 31, 2011 and December 31, 2010 and the Exploration Stage Period of January 16, 2006 to December 30, 2011 (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 Impairments

Exploration Expenses

Exploration expenses for the three month period ended December 31, 2011 totaled $1,000 compared to $28,113 for the three month period ended December 31, 2010. Expenses for the Exploration Stage totaled $153,749. During the current period, these expenses were comprised of geologist fees. The comparative decrease in these expenses is due to our decreased exploration activity due to cash flow considerations. We predict the level of these expenses will decrease or remain at current levels during the balance of fiscal 2012.

Professional and Consultant Fees

Professional & consultant Fees include fees paid to our President and for work performed by accounting, audit and legal professionals. During the three month period ended December 31, 2011 these costs totaled $17,564 and were comprised primarily of costs for our annual fiscal 2011 audit. This compared with $20,550 during the same period ended December 31, 2010. For the Exploration Stage these costs totaled $233,233. We anticipate Professional & Consultant Fees to decrease moderately or remain at current levels during the balance of the 2012 fiscal year. Period over period, these costs decreased due to the reduction of fees paid to our President.

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Administrative Expenses

Administrative expenses were $3,561 for the three month period ended December 31, 2011 compared with $6,818 for the three month period ended December 31, 2010. For the Exploration Stage, administrative expenses totaled $57,056. These expenses are composed of Edgar and XBRL agent filing fees, stock transfer agent fees and general office expenses. The current decrease in period over period expenses is attributable to the general reduction of our business activity. We anticipate Administrative Expenses will remain at current levels during the balance of fiscal 2012.

Investor Relations

Investor relations expenses include costs for press releases, maintenance of the Company’s website and other investor information initiatives. During the three month period ended December 31, 2011, these expenses totaled $195 and were comprised of press release system access fees. For the three month period ended December 31, 2010 the costs totaled $13,715. For the Exploration Stage, Investor Relations expenses totaled $29,023. The current period over period decrease is attributable to our reduced issuance of press releases. We anticipate Investor Relations expenses may increase or remain at current levels during the balance of fiscal 2012.

Mineral Properties Impairments

As required by generally accepted accounting principles, during the three month period ended December 31, 2011 the Company undertook a review of the Company’s exploration projects and determined it should record an impairment charge of $1,000 against the Cruce Property mineral exploration rights. This was based on the valuation of 100,000 shares issued at a price of $0.01 per share for total deemed consideration of $1,000. Comparative Mineral Properties Impairment costs were $40,000 for the three month period ended December 31, 2010 and $183,498 for the Exploration Stage. We anticipate Mineral Properties Impairment costs will increase during the balance of fiscal 2012.

Discontinued Operations

On September 27, 2010, the sale of our former subsidiary resulted in a non-cash gain of $97,920 due to the elimination from the previously consolidated enterprise of the Company of debt the former subsidiary owed to a third party. This non-cash gain is recorded in our Statement of Operations in the Exploration Stage Period along with the accumulated costs of $(112,932) related to the discontinued former subsidiary.

Net (Loss)

We incurred a net loss of $(23,320) for the three month period ended December 31, 2011 compared with a net loss of $(109,196) for the same period ended December 31, 2010. The comparative decrease in these expenses is due to our decreased exploration activity due to cash flow considerations. For the Exploration Stage, accumulated Net Losses totaled $(684,829). These losses translated to $nil per share and $nil per share respectively for the three month periods ended December 31, 2011 versus December 31, 2010.

Liquidity and Capital Resources

Since the date of our incorporation, we have raised cash of $525,654 through private placements of our common shares (including debt conversions); and net cash of $112,088 through advances from shareholders. As of December 31, 2011 we had cash on hand of $8,560 and a prepaid expenses balance of $3,438. We estimate we will need to attempt to raise additional funds during the coming twelve months and will attempt to raise these funds through private placements of our common shares.

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 mineral resource markets. There can be no assurance that we will successfully address such risks, expenses and difficulties and cannot assure you that we will become profitable in the future.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EXCHANGE RATE FLUCTUATION RISK

Our reporting currency is United States Dollars. Our transactions are primarily conducted in US$ but also include transactions in other currencies. Foreign currency rate fluctuations may have a material impact on the Company’s financial reporting. These fluctuations may have positive or negative impacts on the results of operations of the Company.

We have not entered into derivative contracts either to hedge existing risk or for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

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 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 periods specified in the SEC's rules and forms, and that such information is accumulated 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 not effective in reaching that level of assurance.

At 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.

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As of December 31, 2011, 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 December 31, 2011, 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 weaknesses: (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 weakness 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; and (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.

Changes in Internal Control over Financial Reporting

During the current three month period ended December 31, 2011 of the Company’s fiscal year ended September 30, 2012, no material changes were made to the Company’s internal control over financial reporting

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.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no litigation pending or threatened by or against us.

ITEM 1A. RISK FACTORS

The following risk factors should be considered in connection with an evaluation 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 three months ended December 31, 2011, the Company had a Net Loss of $(23,320) and has accumulated Net Losses of $(684,829) since inception, net of 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 Pink Sheets over-the-counter market (‘Pink Sheets’) and "bid" and "asked" quotations regularly appear on the Pink Sheets under the symbol "GRYO". Our original public listing was on the Over-The-Counter Bulletin Board ("OTC-BB"), but such listing ceased due to the failure of a primary market-maker to file an updated Form 15-2c11 to comply with FINRA guidelines related to minimum required trading activity. 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.

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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 ore bodies 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.

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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 PRECIOUS METALS PROPERTIES, WHICH MAY HAVE AN ADVERSE IMPACT ON THE COMPANY'S OPERATIONS.

Significant and increasing competition exists for the limited number of precious 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 precious 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.

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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, Secretary & Treasurer, Chair & Director of the Company, 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 our CEO.

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 PRECIOUS 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:

§	Costs of bringing each property into production, including exploration work, preparation of production feasibility studies, and construction of production facilities;

§	Availability and costs of financing;

§	Ongoing costs of production;

§	Market prices for the precious metals to be produced;

§	Environmental compliance regulations and restraints; and

§	Political climate and/or governmental regulation and control.

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, in particular gold and silver prices, have fluctuated widely in recent years. Government regulations relating to price, royalties, and allowable production and importing and exporting of precious 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.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has no senior securities outstanding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

(a) During the quarter there was no information which would have been required to be filed via a report on Form 8-K which was not filed as such.

(b) During the quarter there were no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

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ITEM 6. EXHIBITS

EXHIBIT INDEX

Number	Exhibit Description

3.1	Articles of Incorporation(1)
3.2	Certificate of Amendment of Articles of Incorporation(1)
3.3	Bylaws(1)
10.1	L.G. Property Purchase Agreement(2)
10.2	L.G. Agreement Amendment(4)
10.3	Cruce Property Purchase Agreement(3)
10.4	Cruce Agreement Addendum(4)
14.1	Code of Ethics(1)
31.1	Certificate of President (chief executive officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate of Chief Financial Officer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certificate of President (chief executive officer) and Treasurer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Filed as an exhibit to our registration statement on Form SB-2 filed February 26, 2006 and incorporated herein by this reference
(2)	Filed as an exhibit to a Form 8-K filed July 22, 2010 and incorporated herein by this reference
(3)	Filed as an exhibit to a Form 8-K filed January 25, 2011 and incorporated herein by this reference
(4)	Filed as an exhibit to a Form 10-Q filed May 13, 2011 and incorporated herein by this reference

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GRYPHON RESOURCES, INC.

/s/ Alan Muller

Alan Muller

President & CEO, CFO, PAO,

Secretary & Treasurer,

Director, and Board Chair

Dated: February 8, 2012