UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2014

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

For the transition period from _____________________ to ______________

Commission File Number: 333-181683

Gray Fox Petroleum Corp.

(Name of registrant as specified in its charter)

Nevada	99-0373721
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3333 Lee Parkway, Suite 600, Dallas, Texas 75219

(Address of Principal Executive Offices)

(214) 665-9564

(Issuer’s telephone number)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 No X

As of February 9, 2015, the issuer had 37,994,889 shares of common stock, $0.001 par value per share, issued and outstanding.

GRAY FOX PETROLEUM CORP.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	3
Item 1 – Financial Statements	3
Item 2.  Management’s Discussion and Analysis or Plan of Operation.	13
Item 3. Quantitative and Qualitative Disclosure about Market Risk	16
Item 4. Controls and Procedures.	16
PART II — OTHER INFORMATION	17
Item 1. Legal Proceedings.	17
Item 1A. Risk Factors	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Mine Safety Disclosures	17
Item 5. Other Information.	17
Item 6. Exhibits.	17
SIGNATURES	18

2

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

GRAY FOX PETROLEUM CORP.

BALANCE SHEETS

	December 31, 2014 (Unaudited)			March 31, 2014
ASSETS
Cash and equivalents	$	41,559		$	7,419
Prepaid expenses		10,000			–
Total current assets		51,559			7,419
Other property, plant and equipment, net		2,082			–
Total non-current assets		2,082			–
TOTAL ASSETS		53,641			7,419
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	128,306		$	109,004
Accrued expenses, related party		4,306			607
TOTAL CURRENT LIABILITIES		132,612			109,611
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, par value $0.001, authorized 75 million, 37,994,889 and 35,940,000 issued and outstanding at December 31, 2014 and March 31, 2014, respectively.		37,995			35,940
Additional paid-in capital		1,770,882			882,937
Common stock payable		481,138			364,386
Accumulated deficit		(2,368,986	)		(1,385,455	)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)		(78,971	)		(102,192	)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)	$	53,641		$	7,419

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

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GRAY FOX PETROLEUM CORP.

RESULTS OF OPERATIONS

(Unaudited)

	Nine Months Ended December 31,						Three Months Ended December 31,
	2014			2013			2014			2013
Revenue	$	–		$	–		$	–		$	–
Operating expenses:
Lease operating		719			1,465			–			989
General and administrative		74,131			59,523			11,509			19,588
Officer salaries		731,752			311,099			241,202			156,030
Professional fees		140,662			152,847			48,448			31,985
Depreciation, depletion and amortization		702			–			234			–
Asset impairments		35,565			–			–			–
Net operating loss		(983,531	)		(524,934	)		(301,393	)		(208,592	)
Other expense:
Interest expense, related party		–			(1,385	)		–			(547	)
NET LOSS	$	(983,531	)	$	(526,319	)	$	(301,393	)	$	(209,139	)
Net loss per share, basic and fully diluted	$	(0.03	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average number of shares outstanding		37,047,034			44,801,455			37,557,389			35,542,514

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

4

GRAY FOX PETROLEUM CORP.

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

	Common Stock, Par Value $0.001						Additional Paid In Capital			Common Stock Payable			Accumulated Deficit			Total Shareholders' Deficit
	Shares			Amount
Balances, 3/31/13		72,160,000			72,160			(44,646	)		–			(31,236	)		(3,722	)
Related-party forgiveness of debt		–			–			8,363			–			–			8,363
Cancellation of shares, related party		(37,600,000	)		(37,600	)		37,600			–			–			–
Common stock sold for cash		1,230,000			1,230			728,770			–			–			730,000
Common stock issued for property acquisitions		150,000			150			152,850			–			–			153,000
Officer stock based compensation		–			–			–			364,386			–			364,386
Net loss		–			–			–			–			(1,354,219	)		(1,354,219	)
Balances, 03/31/14		35,940,000			35,940			882,937			364,386			(1,385,455	)		(102,192	)
Common stock sold for cash		1,054,889			1,055			388,945									390,000
Stock issued to officer for stock-based compensation		1,000,000			1,000			499,000			(500,000	)					–
Officer stock-based compensation											616,752						616,752
Net loss														(983,531	)		(983,531	)
Balances, 12/31/14		37,994,889		$	37,995		$	1,770,882		$	481,138		$	(2,368,986	)	$	(78,971	)

The accompanying notes are an integral part of these financial statements

5

GRAY FOX PETROLEUM CORP.

STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(983,531	)	$	(526,319	)
Adjustments to reconcile net loss with cash used in operations:
Depreciation, depletion and amortization		702			–
Stock-based compensation		616,752			241,099
Operating assets and liabilities:
Prepaid expenses		(10,000	)		(7,635	)
Accounts payable and accrued liabilities		29,302			1,775
Accrued expenses, related party		3,699			1,658
Salaries payable		(10,000	)		–
Net cash used in operating activities		(353,076	)		(289,422	)
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed asset acquisitions		(2,784	)		(251,870	)
Net cash used in investing activities		(2,784	)		(251,870	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of common stock		390,000			550,000
Proceeds from notes payable, related party		–			34,435
Repayments on notes payable, related party		–			(14,506	)
Net cash provided by financing activities		390,000			569,929
Net increase/(decrease) in cash		34,140			28,637
Cash at beginning of period		7,419			447
Cash at end of period	$	41,559		$	29,084
SUPPLEMENTAL DISCLOSURES
Cash paid for interest	$	–		$	1,127
Cash paid for income taxes		–			–
ADDITIONAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
Forgiveness of debt, related party	$	–		$	8,363
Par value of cancelled shares, related party		–			154,500
Stock issued for common stock payable		–			37,600

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

6

GRAY FOX PETROLEUM

NOTES TO UNAUDITED FINANCIAL STATEMENTS

DECEMBER 31, 2014

Note 1 – Nature of Business and Significant Accounting Policies

Nature of Business

Gray Fox Petroleum Corp. (formerly Viatech Corp.) was incorporated in the State of Nevada on September 22, 2011. The Company was formed originally to provide interior design and architectural visualization, 3D rendering and architectural animation services. On May 31, 2013, the then majority stockholder, Viatcheslav Gelshteyn, entered into a stock purchase agreement with Lawrence Pemble pursuant to which Mr. Gelshteyn sold 7,000,000 shares of common stock, $0.001 par value per share (“Common Stock”), of the Company to Mr. Pemble and forgave $8,363 in stockholder loans he had made to the Company in consideration of $50,000 in cash from Mr. Pemble. This transaction is referred to as the “Change in Control.” As a result of the Change in Control, Mr. Gelshteyn no longer owns any shares of Common Stock. In addition, Mr. Gelshteyn resigned his positions as the sole director and officer of the Company and Mr. Pemble was appointed as the Company’s sole director and as its Chief Executive Officer, President, Treasurer and Secretary. On June 5, 2013, the board of directors approved the dismissal of Ronald R. Chadwick, P.C. as its independent auditor and appointed M&K CPAS, LLC as its new independent auditor.

On June 10, 2013, the Company entered into an Agreement for Redemption of Shares of Common Stock, pursuant to which the Company redeemed 4,700,000 shares of Common Stock held by Mr. Pemble. As a result of this redemption, on June 10, 2013, Mr. Pemble’s shareholdings decreased from 7,000,000 shares to 2,300,000 shares, which represented approximately 53% of the total shares issued and outstanding.

On June 18, 2013, the Company received approval from the Financial Industry Regulatory Authority (“FINRA”) to change its name from “Viatech Corp.” to “Gray Fox Petroleum Corp.” and to conduct an 8:1 forward stock split of the issued and outstanding shares of Common Stock whereby each outstanding share of Common Stock would be exchanged for eight new shares of Common Stock. On June 20, 2013, the Company effected the stock split, which increased the issued and outstanding shares of Common Stock from 4,320,000 shares to 34,560,000 shares. In connection with the Change in Control and the name change, on July 19, 2013, the Company’s ticker symbol on the OTCQB was changed from VTCH to GFOX.

As of February 9, 2015, the Company had 37,994,889 shares of Common Stock issued and outstanding.

The Company’s administrative offices are located at 3333 Lee Parkway, Suite 600, Dallas, Texas 75219. The Company has only one employee, Lawrence Pemble, who serves as its Chief Executive Officer.

The Company is currently exploring oil and gas production opportunities. On December 2, 2013, Gray Fox completed the acquisition of 22 separate oil and gas leases (the “Leases”) issued by the U.S. Bureau of Land Management for the State of Nevada (the “BLM”) from FFMJ, LLC, a Nevada limited liability company (“FFMJ”), for an aggregate purchase price of $250,000. The leased land, known as the “West Ranch Prospect,” comprises 32,723 acres in the Butte Valley Oil Play Region in North Central Nevada. We have a 100% working interest and an 82% net revenue interest in the Leases. If the property is viable and can be developed, we will receive 82% of the net revenues generated from the property. As the leaseholder, we are responsible for evaluating, exploring, paying for and maintaining the Leases.

Our plan of operations for the next 12 months is to continue geological mapping, gravity surveying and 2D seismic coverage on the West Ranch Prospect. To that end, we have developed an initial 8-phase exploration plan to identify drilling targets. This initial exploration plan is designed to identify new drilling locations targeting certain geological formations that the Company believes may be capable of producing oil or natural gas in commercial quantities. The Company has completed phases one and two and has partially completed phases three, four, five and six.

Basis of Presentation

The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in U.S. Dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

The Company has adopted a fiscal year end of March 31.

7

These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. These interim condensed financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended March 31, 2014 and notes thereto included in the Company’s Annual Report on Form 10-K, filed on June 27, 2014. The Company follows the same accounting policies in the preparation of interim reports.

Fair Value of Financial Instruments

Under ASC 820-10-05, the Financial Accounting Standards Board (“FASB”) established a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, prepaid expenses and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments.

Revenue Recognition

Revenue from the production of oil and natural gas is recognized when persuasive evidence of an arrangement exists (such as a contract with an oil buyer), the Company has delivered the oil, the fee is fixed and determinable, and collectability is reasonably assured.

Start-Up Costs

The Company accounts for start-up costs, including organization costs, whereby such costs are expensed as incurred.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such asset will not be recovered through future operations.

Uncertain Tax Positions

In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Various taxing authorities may periodically audit the Company’s income tax returns. These audits may include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter for which an allowance has been established is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Stock-Based Compensation

The Company adopted FASB guidance on stock based compensation upon inception at September 22, 2011. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, are to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

Basic and Diluted Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

8

Recent Accounting Pronouncements

In February 2013, FASB issued Accounting Standards Update (“ASU”) No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that ASU 2013-02 requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

• Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income (but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period); and

• Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. The adoption of ASU No. 2013-02 has not had a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. ASU 2013-01 addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on or after January 1, 2013. The adoption of ASU 2013-01 has not had a material impact on our financial position or results of operations.

Note 2 – Going Concern

As shown in the accompanying financial statements, the Company has no revenues, incurred net losses from operations resulting in an accumulated deficit of $2,368,986, and a working capital deficit of $81,053. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing oil and gas production opportunities on the Leases. To that end, the Company has developed an initial exploration plan to identify new drilling locations on the West Ranch Prospect. In addition, the Company is currently in search of additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

9

Note 3 – Related Party Transactions

Common Stock

On May 30, 2014, the Company issued 1,000,000 shares to Lawrence Pemble, our Chief Executive Officer pursuant to his employment agreement with the Company.

Employment Agreement

On May 29, 2014, the Company engaged Randall Newton to fulfill the role of its Chief Financial Officer. Mr. Newton, age 53, is the managing member of Newton Collaboration, LLC. Mr. Newton is a Certified Public Accountant in the State of Texas.

On December 9, 2014, Mr. Pemble’s monthly salary was paid 53 days early. We therefore recorded the payment as a prepaid expense to be expensed in the month of January 2015.

On February 5, 2015, Mr. Newton resigned as Chief Financial Officer in order to reduce the monthly operating expense by $5,000. He has indicated that he would, if asked, return once financing for the project takes place.

Note 4 – Oil and Gas Properties

On December 2, 2013, the Company completed the acquisition of 22 separate oil and gas leases issued by the BLM pursuant to a Lease Purchase Agreement with FFMJ. The leased land comprises 32,723 acres in the Butte Valley Oil Play Region in North Central Nevada and excludes well or lease bonds in place with the Nevada Division of Minerals and/or the BLM. The expiration dates of the Leases range from March 31, 2016 to July 31, 2017. The Company has a 100% working interest and an 82% net revenue interest in the Leases. The Company also agreed to assume all rental payments due on the Leases starting on July 5, 2013. The aggregate purchase price of the Leases was $250,000. The Company made the final payment of $75,000 into escrow on October 23, 2013 and requested approval from the BLM to the assignment of the Leases from FFMJ to the Company. On December 2, 2013, the Company received confirmation of the BLM’s approval of the assignment of the Leases. At that time, the money was released from escrow and the lease purchase was consummated. The Company’s entry into the Lease Purchase Agreement was previously reported in Item 1.01 of the Current Report on Form 8-K, filed on July 10, 2013.

Pursuant to the Lease Purchase Agreement, the Company was responsible for all filing and recording fees for BLM and relevant county recorder offices. The Lease Purchase Agreement also provides that the Company must drill a test well with a surface and bottom hole location on the Leases for the purpose of hydrocarbon exploration and production which must achieve a depth of 6,000 feet, or a depth as otherwise agreed to between the Company and FFMJ. If the Company does not begin drilling with a rig capable of total depth on or before a certain deadline date, the Leases will be reassigned to FFMJ. In our original agreement, that deadline date was July 5, 2015. On August 5, 2014, we amended the original agreement to extend that deadline date until November 5, 2015.

We have recorded the $250,000 cash paid to FFMJ to “Oil and Gas Properties”. In addition to the cash costs paid to acquire the Leases, we also included in the acquisition cost a payment in the amount of $1,870 to the Office of Natural Resources Revenue of the State of Nevada, which represents the state fee for transferring title to the property. Additionally, we capitalized into the purchase price of the Leases $154,500 associated with the issuance of 150,000 shares of Common Stock to a broker as a finder’s fee (See Note 7).

In addition to the above, since acquiring the West Ranch Prospect, we have paid or incurred $174,152 in geological and geophysical costs and $80,493 of lease rentals.

The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount, which is generally defined as its future discounted cash flows. At March 31 and December 31, 2014, we had not yet conducted an evaluation of the potential oil and gas reserves, if any, that may exist in the West Ranch Prospect, and therefore cannot estimate future cash flows. Management is therefore unable to determine whether the carrying value of the West Ranch Prospect exceeds its recoverable amount and have recorded an impairment expense against the full carrying value of the West Ranch Prospect. The amount of this impairment was $602,919 for the year ended March 31, 2014 and $35,565 for the nine months ended December 31, 2014.

Note 5 – Fair Value of Financial Instruments

The Company adopted FASB ASC 820-10 upon inception at September 22, 2011. Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

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The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of December 31, 2014 and March 31, 2014, respectively:

	Fair Value Measurements at December 31, 2014
	Level 1		Level 2		Level 3
Assets
Cash	$	41,559	$	–	$	–
Prepaid expenses		10,000		–		–
Total assets		51,559		–		–
Liabilities
Accrued expenses, related party		–		4,306		–
Total liabilities	$	–	$	4,306	$	–

	Fair Value Measurements at December 31, 2014
	Level 1		Level 2		Level 3
Assets
Cash	$	7,419	$	–	$	–
Total assets		7,419		–		–
Liabilities
Accrued expenses, related party		–		607		–
Total liabilities	$	–	$	607	$	–

The fair values of our related party debts are deemed to approximate book value, and are considered Level 2 inputs as defined by ASC Topic 820-10-35.

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the nine months ended December 31, 2014 or the year ended March 31, 2014.

Note 6 – Stockholders’ Equity

The Company has authorized 75,000,000 shares of common stock, $0.001 par value per share.

On June 18, 2013, the Company received approval from FINRA to conduct an 8:1 forward stock split of the issued and outstanding shares of Common Stock whereby each outstanding share of Common Stock was exchanged for eight new shares of Common Stock. On June 20, 2013, the Company effected the stock split, which increased the issued and outstanding shares of Common Stock from 4,320,000 shares to 34,560,000 shares. The stock split has been applied retrospectively as presented in these financial statements and all related disclosures.

11

Common Stock Issuances

On June 10, 2013, the Company entered into an Agreement for Redemption of Shares of Common Stock, pursuant to which the Company redeemed 37,600,000 shares of Common Stock held by Mr. Pemble, as adjusted for the 8:1 forward stock split completed on June 20, 2013. As a result of this redemption, Mr. Pemble’s adjusted shareholdings decreased from 56,000,000 shares to 18,400,000 shares, which at that time represented approximately 53% of the total shares of Common Stock then issued and outstanding.

During the year ended March 31, 2014, we issued 1,230,000 shares of Common Stock in exchange for $730,000 in cash.

On December 13, 2013, we issued 150,000 shares of Common Stock to a broker as a finder’s fee in exchange for services associated with our acquisition of the West Ranch Prospect. We valued the shares at their fair values on the grant date and increased the acquisition price and carrying value of the West Ranch Prospect by $154,500, subject to the property impairment as reported in Note 4.

During the nine months ended December 31, 2014, we sold 1,054,889 shares to two accredited investors for $390,000 in cash.

Common Stock Payable

On July 8, 2013, the Company entered into an Employment Agreement with Lawrence Pemble regarding his position as President and Chief Executive Officer of the Company. Pursuant to the Employment Agreement, Mr. Pemble will be entitled to receive 3,000,000 shares of Common Stock, which will be issued in increments of 1,000,000 shares on May 31 in 2014, 2015 and 2016. We valued these shares at their fair values on the grant date, and valued the total of the 3,000,000 shares at $1,500,000. We are amortizing the value of these shares at the greater of the amount vesting or straight line (which, in this case, is the same). For the year ended March 31, 2014 and the nine months ended December 31, 2014, we have charged general and administrative expenses with $364,386 and $427,283, respectively, associated with Mr. Pemble’s Employment Agreement. The amount accrued but not settled in common stock is included on the balance sheet as Common Stock Payable.

On May 29, 2014, the Company entered into an employment agreement with Randall Newton to fulfill the role of its Chief Financial Officer. Pursuant to the agreement, Mr. Newton was entitled to receive up to 1,050,000 shares of common stock. We valued these shares at their fair values on the grant date, and valued the total of the 1,050,000 shares at $974,400. We are amortizing the value of these shares at the greater of the amount vesting or straight line (which, in this case, is the same). For the nine months ended December 31, 2014, we charged general and administrative expenses with $189,469 associated with Mr. Newton’s Employment Agreement. The amount accrued but not settled in common stock is included on the balance sheet as Common Stock Payable.

On May 30, 2014, we issued the first of three issuances of 1,000,000 shares to Mr. Pemble pursuant to his employment agreement. In so doing, we decreased the stock payable to him by $500,000.

Note 7 – Income Taxes

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

For the nine months ended December 31, 2014 and the year ended March 31, 2014, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31 and March 31, 2014, the Company had approximately $703,229 and $409,787 of federal net operating losses, respectively. The net operating loss carry forwards, if not utilized, will begin to expire in 2032.

The components of the Company’s deferred tax asset are as follows:

		12/31/14		3/31/14
Net operating loss carry-forwards	$	741,000	$	409,787

		12/31/14		3/31/14
Deferred tax asset		259,350		143,425
Valuation allowance		(259,350)		(143,425)
Net deferred tax asset	$	-	$	-

Note 8 – Subsequent Events

On February 5, 2015, Mr. Newton resigned as Chief Financial Officer in order to reduce the amount of monthly operating expenses. He has indicated that he would, if asked, return once financing for the project takes place.

We have evaluated subsequent events through the date this report was issued.

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Item 2.  Management’s Discussion and Analysis or Plan of Operation.

This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

Overview and Outlook

The Company was incorporated in the State of Nevada on September 22, 2011. The Company was formed originally to provide interior design and architectural visualization, 3D rendering and architectural animation services. On May 31, 2013, the then majority stockholder, Viatcheslav Gelshteyn, entered into a stock purchase agreement with Lawrence Pemble pursuant to which Mr. Gelshteyn sold 7,000,000 shares of Common Stock to Mr. Pemble and forgave $8,363 in stockholder loans he had made to the Company in consideration of $50,000 in cash from Mr. Pemble.

Since the Company’s inception on September 22, 2011, it has not generated any revenues. The Company’s administrative offices are located at 3333 Lee Parkway, Suite 600, Dallas, Texas 75219. The Company has one employee, Lawrence Pemble, who serves as its Chief Executive Officer and sole director.

On December 2, 2013, Gray Fox completed the acquisition of 22 separate oil and gas leases issued by the BLM from FFMJ for an aggregate purchase price of $250,000. The leased land, known as the “West Ranch Prospect,” comprises 32,723 acres in the Butte Valley Oil Play Region in North Central Nevada. We have a 100% working interest and an 82% net revenue interest in the Leases. If the property is viable and can be developed, we will receive 82% of the net revenues generated from the property. As the leaseholder, we are responsible for evaluating, exploring, paying for and maintaining the Leases.

Our plan of operations for the next 12 months is to continue geological mapping, gravity surveying and 2D seismic coverage on the West Ranch Prospect. To that end, we have developed an initial 8-phase exploration plan to identify drilling targets. This initial exploration plan is designed to identify new drilling locations targeting certain geological formations that the Company believes may be capable of producing oil or natural gas in commercial quantities. The Company has completed phases one and two and has partially completed phases three, four, five and six.

As a result of the acquisition of the Leases, the Company is no longer a “shell company,” as defined in Rule 12b-2 of the Exchange Act. This change in “shell company” status was previously reported in Item 5.06 of the Current Report on Form 8-K, filed on December 6, 2013, as amended.

In order for us to finance our operations, we will require additional capital. It was our expectation that registration with the SEC and subsequent public listing of our Common Stock might facilitate our efforts in attracting additional capital. Thus far we have been unsuccessful in identifying credible sources of financing despite our efforts.

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Results of Operations

Nine Months Ended December 31, 2014 versus 2013

Revenues:

The Company was established on September 22, 2011 and has had no revenues or field operations during the nine months ended December 31, 2014 and 2013.

Lease Operating Expenses:

Since we have yet to begin operations in the field, we have only recorded ad valorem taxes of $719 in this category. We had no such taxes in 2013.

General and Administrative:

General and administrative expense was $74,131 for the nine months ended December 31, 2014 compared to $59,523 for the same period in 2013, an increase of $15,889. General and administrative expenses consisted of bank fees, statutory reporting expenses, travel expenses, costs associated with website and other promotional activities. We had higher levels of expenditure in this category principally due to travel costs.

Officer Salaries:

Officer salaries expense was $731,752 for the nine months ended December 31, 2014 compared to $311,099 for the same period in 2013. The principal difference between these two periods is stock-based compensation: the inclusion of more periods for amortization of Mr. Pemble’s stock-based compensation ($186,184) and the inclusion of Mr. Newton’s stock-based compensation ($189,469).

Professional Fees:

Professional fees expense was $140,662 for the nine months ended December 31, 2014 compared to $152,847 for the same period in 2013. Professional fees consisted of legal, accounting and auditing costs necessary to prepare our public filings. The decrease in professional fees results mostly from a reduction in legal costs in the current year.

Depreciation, Depletion and Amortization:

Depreciation, depletion and amortization was $702 for the nine months ended December 31, 2014 versus zero for the same period in 2013. In the current year we had a small amount of computer equipment to depreciate whereas there was no such equipment during 2013.

Asset Impairments:

We incurred $35,565 of geological costs during the nine months ended December 31, 2014. We initially capitalized these amounts and then impaired them as the future value of the geological costs is currently unknown. In the previous year, we had no such impairment.

Interest Expense:

Interest expense was zero for the nine months ended December 31, 2014 compared to $1,385 of related-party interest for the same period in 2013. The decrease is a result of the elimination of interest-bearing debt.

Three Months Ended December 31, 2014 versus 2013

Revenues:

The Company was established on September 22, 2011 and has had no revenues or field operations during the three months ended December 31, 2014 and 2013.

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Lease Operating Expenses:

We had zero ad valorem taxes during the three months ended December 31, 2014 versus $989 during the same period in 2013.

General and Administrative:

General and administrative expense was $11,509 for the three months ended December 31, 2014 compared to $19,588 for the same period in 2013, a decrease of $7,922. General and administrative expenses consisted of bank fees, statutory reporting expenses, travel expenses, costs associated with website and other promotional activities. We had lower levels of expenditure in this category principally due to certain statutory compliance costs.

Officer Salaries:

Officer salaries expense was $241,202 for the three months ended December 31, 2014 compared to $156,030 for the same period in 2013. The principal difference between these two periods is the increase in stock-based compensation during the current year resulting from inclusion of Mr. Newton.

Professional Fees:

Professional fees expense was $48,448 for the three months ended December 31, 2014 compared to $31,985 for the same period in 2013. Professional fees consisted of legal, accounting and auditing costs necessary to prepare our public filings. The increase in professional fees results mostly from an increase in legal costs.

Depreciation, Depletion and Amortization:

Depreciation, depletion and amortization was $234 for the three months ended December 31, 2014 versus zero for the same period in 2013. In the current year we had a small amount of computer equipment to depreciate whereas there was no such equipment during 2013.

Interest Expense:

Interest expense was zero for the three months ended December 31, 2014 compared to $547 of related-party interest for the same period in 2013. The decrease is a result of the elimination of interest-bearing debt.

Liquidity and Capital Resources

Our principal source of operating capital has been provided from private sales of our common stock and related-party debt financing. At December 31, 2014, we had negative working capital of $81,053 and negative cash flows from operations of $353,076 for the nine months ended December 31, 2014. As we continue to develop our business and attempt to expand operational activities, we expect to continue to experience net negative cash flows from operations in amounts not now determinable. We will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings to the extent necessary to provide working capital. We have and expect to continue to have substantial capital expenditure and working capital needs. We do not now have funds sufficient to fund our operations at their current level for the next twelve months. We need to raise additional cash to fund our operations and implement our business plan. We expect that the additional financing will (if available) take the form of a private placement of equity, although we may be constrained to obtain additional debt financing in lieu thereof. We are maintaining an ongoing effort to locate sources of additional funding, without which we will not be able to remain a viable entity. There are no assurances that we will be able to obtain adequate financing to fund our operations. If we are able to obtain the financing required to remain in business, eventually achieving operating profits will require substantially increasing revenues or drastically reducing expenses from their current levels or both. If we are able to obtain the required financing to remain in business, future operating results depend upon a number of factors that are outside of our control.

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance, however, that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our future operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.

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Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, in consideration of the fact that the Company has no employees besides the President and Chief Executive Officer and Chief Financial Officer, these officers concluded that the Company’s disclosure controls and procedures are not effective at December 31, 2014 or March 31, 2014. Through the use of external consultants, the Company believes that the financial statements and the other information presented herewith are not materially misstated.

Inherent Limitations of Internal Controls

Our Principal Executive Officer and Chief Financial Officer do not expect that the Company’s disclosure controls and procedures or the Company’s internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the nine months ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

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

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

(a)                 Unregistered Sales of Equity Securities.

During the nine months ended December 31, 2014, we issued 1,054,889 shares to two accredited investors for $390,000.

We believe that Regulation S was available because:

None of these issuances involved underwriters, underwriting discounts or commissions;

We placed Regulation S required restrictive legends on all certificates issued;

No offers or sales of stock under the Regulation S offering were made to persons in the United States; and

No direct selling efforts of the Regulation S offering were made in the United States.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

(a)                 Other Information.

As a result of the acquisition of the Leases as described in Part I, Item 1 (see Note 4 to the financial statements) of this Quarterly Report on Form 10-Q, the Company is no longer a “shell company,” as defined in Rule 12b-2 of the Exchange Act. This change in “shell company” status was previously reported in Item 5.06 of the Current Report on Form 8-K, filed on December 6, 2013, as amended.

(b)                 Changes to Procedures for Recommending Director Nominees.

None.

Item 6. Exhibits.

Exhibit No.	Document Description
31.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 101	Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements**
	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 Label Linkbase Document**
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GRAY FOX PETROLEUM CORP.

/s/ Lawrence Pemble	February 10, 2015
Lawrence Pemble Principal Executive Officer	Date

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