Trilliant Exploration (TTXP) 10-Q 2011 Q3 Quarterly report

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Mark One

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

For the period ended September 30, 2011

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

For the transition period from ______ to _______

Commission File No. 333-138332

TRILLIANT EXPLORATION CORPORATION

(Name of small business issuer in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	20-0936313 (I.R.S. Employer Identification No.)
545 Eighth Avenue, Suite 401, New York, New York 10019 (Address of principal executive offices)
(212) 560-5195 (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	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Class	Outstanding as of September 30, 2011
Common Stock, $0.001	620,771*

*643,771 shares issued, 620,771 outstanding (after considering 23,000 shares of treasury stock repurchased by the Company)

TRILLIANT EXPLORATION CORPORATION

Form 10-Q

	Page
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010 (unaudited)	3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine months Ended September 30, 2011 and 2010 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2011 and 2010 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Forward-Looking Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3. Quantitative and Qualitative Disclosures About Market Risk	14
Item 4. Controls and Procedures	14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	15
Item 1A. Risk Factors	15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3. Defaults Upon Senior Securities	15
Item 4. Removed and Reserved	15
Item 5. Other Information	15
Item 6. Exhibits	15
Signatures	16

2

PART I

ITEM 1. FINANCIAL STATEMENTS

TRILLIANT EXPLORATION CORPORATION

Condensed Consolidated Balance Sheets

	September 30			December 31,
	2011			2010
	(unaudited)			(unaudited)
ASSETS
Current Assets
Cash	$	50		$	11,450
Total Current Assets		-			11,450
Other Assets
Bond issue costs, net - related party (Note 4C)		6,644			45,605
TOTAL ASSETS	$	6,694		$	57,055
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	248,485		$	250,612
Convertible notes payable-related party, current (Note 4A)		565,000			665,000
Accrued interest, convertible notes payable-related party (Note 4A)		110,535			89,098
Bonds payable, convertible and secured-related party net of debt discount (Note 4C)		1,610,407			1,610,407
Accrued interest, convertible bonds payable-related party (Note 4C)		349,224			149,379
Short-term notes payable-related party (Note 4B)		32,495			32,495
Total Current Liabilities		2,916,146			2,796,991
Long-term Liabilities
Derivative liability		13,117,278			12,005,649
Total Long-term Liabilities		13,117,278			12,005,649
Total Liabilities		16,033,424			14,802,640
TEMPORARY EQUITY (Note 5)
Preferred stock, par value $.001, 200,000,000 shares authorized, 12,563,500 and 12,563,500 issued and outstanding		10,846,192			10,846,192
PERMANENT EQUITY
STOCKHOLDERS' DEFICIT (Note 5)
Common stock, par value $.001, 1,000,000,000 shares authorized, 643,771 and 310,439 issued and 620,771 and 287,438 outstanding, respectively.		643			310
Additional paid-in capital		1,667,908			972,426
Accumulated deficit during the pre-exploration stage		(12,344,011	)		(12,344,011	)
Deficit accumulated		(5,997,463	)		(4,020,502	)
Total Stockholder's equity (deficit) (before treasury stock)		(16,672,923	)		(15,391,777	)
Treasury Stock (23,000 shares @ $443 per share) (Note 5)		(10,200,000	)		(10,200,000	)
Total Stockholders' (Deficit)		(26,872,923	)		(25,591,777	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	6,694		$	57,055

See accompanying notes to unaudited condensed consolidated financial statements. 

3

TRILLIANT EXPLORATION CORPORATION

Condensed Consolidated Statements of Operations (unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Revenues	$	-		$	-		$	-		$	-
Operating Expenses
General and administrative expenses		1,350			45,991			9,273			165,757
Total Operating Expenses		1,350			45,991			9,273			165,757
Net Loss from Operations		(1,350	)		(45,991	)		(9,273	)		(165,757	)
Other (expenses) income
Loss on Settlement of Debt		-			-			(583,333	)		-
(Loss)/ gain in change in fair value of derivative liability		19,280			(1,218,285	)		(1,111,629	)		(2,218,084	)
Amortization of beneficial conversion feature		(-	)		(683,481	)		(-	)		(874,037	)
Interest expense		(91,480	)		(102,511	)		(272,725	)		(305,962	)
Total Other Income (Expense)		(72,200	)		(2,004,277	)		(1,967,687	)		(3,398,083	)
Net (loss) before Income taxes		(73,550	)		(2,050,268	)		(1,976,960	)		(3,563,840	)
Income taxes (benefit)		-			-			-			-
Net (Loss)	$	(73,550	)	$	(2,050,268	)	$	(1,976,960	)	$	(3,563,840	)
BASIC AND DILUTED LOSS PER SHARE
Net loss per share	$	(0.12	)	$	(7.05	)	$	(3.33	)	$	(12.26	)
Weighted Average Number of Common Shares
Outstanding ( Basic and Diluted)		593,912			290,772			593,912			290,772

See accompanying notes to unaudited condensed consolidated financial statements.

4

TRILLIANT EXPLORATION CORPORATION

Condensed Consolidated Statements of Cash Flows (unaudited)

	Nine Months ended
	September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,976,960	)	$	(3,563,840	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		-
Amortization of bond issue costs - related party		38,961			38,961
Amortization of beneficial conversion feature		-			874,037
Change in Fair value of derivative liability		1,111,629			2,218,084
Loss on Settlement of Debt		583,333			-
Changes in operating assets and liabilities:
Prepaid expenses					22,433
Deposits					5,646
Accounts payable		(2,127	)		149,284
Accrued interest, convertible bonds payable - related party		33,919			39,354
Accrued interest, convertible notes payable - related party		199,845			227,647
Net Cash (Used In) Operating Activities		(11,400	)		11,606
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash Used In Investing Activities		-			-

See accompanying notes to unaudited condensed consolidated financial statements.

5

TRILLIANT EXPLORATION CORPORATION

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)

	Nine months ended
	September 30,
	2011			2010
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Provided By Financing Activities		-			-
NET INCREASE (DECREASE) IN CASH		(11,400	)		11,606
CASH AT BEGINNING OF PERIOD		11,450			-
CASH AT END OF PERIOD		50			11,606
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Common Stock Issued for settlement of debt and accrued interest	$	112,482		$	-
Issuance of Preferred stock for settlement of debt and accrued interest	$	-		$	645,192

See accompanying notes to unaudited condensed consolidated financial statements.

6

Trilliant Exploration Corporation

Notes to Condensed Consolidated Financial Statements (unaudited)

Three Months and Nine months Ended September 30, 2011

NOTE 1 –SUMMARY OF ACCOUNTING POLICIES

Organization and Basis of Presentation

Trilliant Exploration Corporation, (the “Company”) was incorporated as Project Development Pacific, Inc. on December 29, 2003, under the laws of the State of Nevada. On November 26, 2007, the Company changed its name to Trilliant Exploration Corporation, with a purpose to acquire and develop mineral properties.

Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the accompanying unaudited condensed financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly our financial position, results of operations and cash flows. Interim results are not necessarily indicative of the results that may be expected for the entire year. These condensed consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has reported a net loss from operations of $ 1,976,960  for the nine month period ended September 30, 2011, accumulated deficit of $18,314,474 and total current liabilities in excess of current assets of $ 2,916,096 as of September 30, 2011.

The Company is currently seeking to acquire mining projects and as of  the date of this Quarterly Report, we are devoting substantially all of our efforts to the execution of our business operations and re-establish the Company as an exploratory stage enterprise. The Company will be dependent on funds raised to satisfy its ongoing capital requirements for at least the next 12 months. The Company will require additional financing in order to execute its operating plan and continue as a going concern. The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, the Company may be unable to implement its current plans for expansion or respond to competitive pressures, any of these circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates that may change in the near future include value of goodwill, impairment of long-lived assets acquired, and value of investments.

Net Income or (Loss) Per Share of Common Stock

Basic and diluted loss per common share is based upon the weighted average number of common shares outstanding during the period computed under the provisions of Accounting Standards Codification subtopic 260-10, Earnings per Share (“ASC 260-10”). All primary dilutive common shares have been excluded since the inclusion would be anti-dilutive.

7

Derivative financial instruments

Accounting Standards Codification subtopic 815-40, Derivatives and Hedging, Contracts in Entity’s own Equity (“ASC 815-40”) became effective for the Company on October 1, 2009. The Company’s convertible debt and Preferred Stock  has reset provisions to the exercise price if the Company issues equity or a right to receive equity, at a price less than the exercise prices.

Reclassification

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting standards, if adopted, will have   a material effect on our financial statements

NOTE 2 – STOCKHOLDERS’ DEFICIT

Reverse Stock Split

On January 26, 2011, the Company’s Board of Directors , pursuant to unanimous written consent resolutions , authorized and approved a reverse stock split of one for every three hundred (1:300) of our total issued and outstanding shares of common stock was effectuated on April 8, 2011.  All references in the accompanying consolidated financial statements and notes thereto have been retroactively restated to reflect the above change in the ordinary share structure.

Preferred Stock

The Company is authorized to issue 200,000,000 shares of Preferred stock, par value of $ 0.001 per share.

On June 30, 2009, the Company filed a Certificate of Designation with the Secretary of State of Nevada, whereby 10,200,000 shares of the 200,000,000 authorized shares of Preferred stock were designated as Series I Preferred Stock, $0.001 par value and having the powers, designations, preferences, limitations, restrictions and relative rights as set forth in the Certificate of Designation of Series I Preferred Stock.

Holders of the Series I Preferred shares  do not receive interest or dividends separately from common stock shareholders. Preferred Stock holder shall participate in dividends when and if declared in the same proportion as common stock shareholders. Preferred stock is convertible into common shares at the lowest volume weighted average price of the common shares in the five days preceding conversion.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, holders of the Series I Preferred Shares will be entitled to receive for each share of Preferred Shares, out of the assets of the Company or proceeds available for distribution to our shareholders, subject to any rights of our creditors, before any distribution of assets or proceeds is made to or set aside for the holders of our common stock and any other class or series of our stock ranking junior to the Series I Preferred Shares, payment of an amount equal to the sum of (i) the $1.00 liquidation preference amount per Series I Preferred Shares and (ii) the amount of any accrued and unpaid dividends on the  Series I Preferred Shares (including dividends accrued on any unpaid dividends). To the extent the assets or proceeds available for distribution to shareholders are not sufficient to fully pay the liquidation payments owing to the holders of the Series I  Preferred Shares and the holders of any other class or series of our stock ranking equally with the  Series I Preferred Shares, the holders of the  Series I Preferred Shares and such other stock will share ratably in the distribution.

For purposes of the liquidation rights of the Series I Preferred Shares, neither a merger or consolidation of the Company with another entity, including a merger or consolidation in which the holders of Series I Preferred Shares receive cash, securities or other property for their shares, nor a sale, lease or exchange of all or substantially all of the Company’s assets will constitute a liquidation, dissolution or winding up of the affairs of the Company.

8

Issuance of 10,200,000 shares of Series I Preferred Shares

On December 31, 2009, the Company issued to Trafalgar Capital Specialized Investment Fund FIS (“Trafalgar”) (a significant stockholder of the Company), 10,200,000 shares of Series I Preferred Stock, in exchange for 23,000 shares of the Company’s own common stock previously held by Trafalgar. The 19,667 common stock were acquired in the year 2009 and 3,333 common stock in the year 2010 at $443 per share and the preferred stock was issued at $1.00 per share. The transaction was recorded using the Cost Method, resulting in treasury stock of $10,200,000 and an increase to Preferred Stock value of $10,200,000.

In accordance with Accounting Standards Codification subtopic 470-20, Debt, Debt with Conversions and Other Options (“ASC 470-20”), the Company recognized an imbedded beneficial conversion feature present in the convertible Series I Preferred Stock. The Company allocated a portion of the value of share cancelled to Preferred stock. The fair value of the imbedded beneficial conversion feature was determined using the Black-Scholes Option Pricing Model which approximates the fair value measured using the Black-Scholes Model with the following assumptions: Dividend yield: $-0-; Volatility: 214.38% and risk free rate: 0.85%.

The FASB finalized ACS 815, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” Under ASC 815, instruments which do not have fixed settlement provisions are deemed to be derivative instruments.  In accordance with ASC 470-20, the Company has classified the Series I  Preferred Stock outside of permanent equity. The Company has determined that it needs to account for these imbedded beneficial conversion features, issued to holder in 2009 for its Convertible Preferred Stock, as derivative liabilities, and apply the provisions of ASC 815. The instruments have a ratchet provision (that adjusts the exercise price according to market rate i.e., at 85% of the market rate).  As a result, the ratchet provision has been accounted for as derivative liabilities, in accordance with ASC 815.  ASC 815, “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815”) requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the consolidated statement of  operations

The fair value of the embedded conversion features were measured using the Black-Scholes option pricing model as of the date of issuance and as of September 30, 2011 and December 31, 2010:

							Date of
	2011			2010			Issuance
Imbedded Beneficial Conversion Feature:
Risk-free rate		0.21	%		0.62	%		0.85	%
Annual rate of dividends		0			0			0
Volatility		479.47	%		188.56	%		214.23	%
Weighted Average life (years)		2.75			3.50			5.0
Fair Value	$	10,199,287		$	9,414,818		$	10,034,407

The risk-free interest rate was based on rates established by the Federal Reserve.  The Company based expected volatility on the historical volatility for its common stock. The expected life of the embedded beneficial conversion features was based on their full term.  The expected dividend yield was based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the future.

The net value of the reset provision at the date of issuance was recorded as a derivative liability in the amount of $10,034,407 and  debited to beneficial conversion feature which was deducted from the face value of the preferred stock, since the preferred stock is a classified as temporary equity and  was immediately amortized in 2009.

As of the date of the financial statements, the Company believes an event under the contract that would create an obligation to settle in cash or other current assets is remote and has classified the obligation as a long term liability.

For the nine months ended September 30, 2011 and 2010, the Company adjusted the recorded fair value of the reset derivative liability to market resulting in non-cash, non-operating loss of $784,469 and $609,208, respectively in connection with the issuance of these Series I Preferred shares..

Issuance of 2,363,500 shares of Series I Preferred Shares

On August 23, 2010, the Company issued an additional 2,363,500 shares of its Series I Preferred stock to  a third party in connection  a payment by the third party  of  $193,599 in accrued interest and $451,593 in principal payable (an aggregate payment of $645,192)  to agent of  a  holder of certain of  the Company’s convertible bonds. The Company and the  holder of the convertible bonds are currently in dispute as to the  application of  the $645,192 payment made to its agent.

9

While the Company’s Certificate of Designation limited the issuance of the Series I Preferred shares to 10,200,000, the Company intends to amend the Certificate to correct this ministerial omission and   increase the number of designated Series I  Preferred  shares to 12,563,000 , and accordingly has accounted for the issuance  consistent with the issuance of the previous 10,200,000 Series I Preferred shares

The fair value of the embedded conversion features were measured using the Black-Scholes option pricing model as of the date of issuance and as of September 30, 2011 and December 31, 2010:

							Date of
	2011			2010			Issuance
Imbedded Beneficial Conversion Feature:
Risk-free rate		0.21	%		0.62	%		0.68	%
Annual rate of dividends		0			0			0
Volatility		479.47%			188.56	%		180.22	%
Weighted Average life (years)		3.90			4.65			5.0
Fair Value	$	2,363,495		$	2,265,368		$	2,261,584

 The risk-free interest rate was based on rates established by the Federal Reserve.  The Company based expected volatility on the historical volatility for its common stock.  The expected life of the embedded beneficial conversion features was based on their full term.  The expected dividend yield was based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the future.

The net value of the reset provision at the date of issuance was recorded as a derivative liability in the amount of $645,192 (maximum limit to value of preferred stock) and debited to beneficial conversion feature which was deducted from the face value of the preferred stock, since the preferred stock is a classified as temporary equity. This was immediately amortized in August 2010.

As of the date of the financial statements, the Company believes an event under the contract that would create an obligation to settle in cash or other current assets is remote and has classified the obligation as a long term liability.

For the nine months ended September 30, 2011 and 2010, the Company adjusted the recorded fair value of the reset derivative liability to market resulting in non-cash, non-operating loss of $98,126 and $1,566,965, respectively in connection with the issuance of these Series I Preferred shares.

In December 2009, the Company disposed of its principal asset, the Mulunkay Gold Corp subsidiary. The Company has not received notice from the holders of the Series I Preferred Stock exercising their rights under the terms of the Preferred Stock Designation to be paid the liquidation preference of $1.00 per share, plus accrued and unpaid dividends.

As of September 30, 2011 and December 31, 2010, the Company had 12,563,500 preferred shares issued and outstanding.

Common Stock

The Company is authorized to issue 1,000,000,000 shares of common stock, par value $.001 per share

On August 23, 2010, the company cancelled 3,333 shares of common stock as part of issuance of 10,200,000 Preferred stock, as described  above.

On January 22, 2011, a previously issued  $100,000 Convertible Note was assigned to a Company  shareholder  at the $0.001 of conversion price. The Company recorded $582,973 as loss on change in term of note. On the same date the Company issued 333,333  of Common stock in exchange  for  settlement of the Note of $100,000 in principal  and accrued interest of $12,482.

NOTE 3 - SUBSEQUENT EVENTS

The Company has evaluated events from September 30, 2011, through the date whereupon the consolidated financial statements were issued and has determined that there are no additional items to disclose.

10

FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identified by our use of certain terminology, including “will,” “believes,” “may,” “expects,” “should,” “seeks,” “anticipates,” or “intends,” or by discussions of strategy or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, among others, our history of operating losses and uncertainty of future profitability; our lack of working capital and uncertainty regarding our ability to continue as a going concern; uncertainty of access to additional capital; risks inherent in mineral exploration; environmental liability claims and insurance; dependence on consultants and third parties as well as those factors discussed in the sections entitled “Risk Factors,” “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated, or projected. Forward-looking statements in this document are not a prediction of future events or circumstances, and those future events or circumstances may not occur. Given these uncertainties, users of the information included herein, including investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. We do not assume responsibility for the accuracy and completeness of these statements.

FORWARD LOOKING STATEMENTS

The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. The Company is an exploration stage company and its properties have no known body of ore. U.S. investors are cautioned not to assume that the Company has any mineralization that is economically or legally mineable.

All references in this Quarterly Report on Form 10-Q to the terms “we,” “our,” “us,” “TTXP,” and the “Company” refer to Trilliant Exploration Corporation.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Trilliant Exploration Corporation was incorporated under the laws of the State of Nevada on December 29, 2003 under the name Project Development Pacific Inc. On November 26, 2007, we changed our name to Trilliant Exploration Corporation with a business purpose to acquire and develop mineral properties.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting standards, if adopted, will have   a material effect on our financial statements

CURRENT BUSINESS OPERATIONS

We are engaged in the evaluation, acquisition, exploration and advancement of mining projects. Although we were considered to have exited the pre-exploration stage with the Muluncay acquisition, the disposal of Muluncay necessitates that we re-enter the pre-exploration stage effective December 31, 2009. As of the date of this Quarterly Report, we are devoting substantially all of our efforts to the execution of our business operations. To date, funding to acquire and explore suitable gold properties and for operational purposes was acquired through private financings. The Company may need additional cash advances from stockholders or loans from other parties to pay for operating expenses until the Company consummates an acquisition . Although it is currently anticipated that the Company can satisfy its cash requirements with additional cash advances or loans from other parties, if needed, for at least the next twelve months, the Company can provide no assurance that it can continue to satisfy its cash requirements for such period.

11

RESULTS OF OPERATION

Nine Month Period Ended September 30, 2011 Compared to Nine Month Period Ended September 30, 2010.

Our net loss for the nine month period ended September 30, 2011 was $1,976,960 compared to a net loss of $3,563,840 during the nine month period ended September 30, 2010, a 45% decrease of $1,586,880. During the nine month periods ended September 30, 2011 and 2010, we did not generate any revenue from continuing operations.

During the nine month period ended September 30, 2011, we incurred operating expenses of $9,273 compared to $165,757 incurred during the nine month period ended September 30, 2010, a decrease of $156,484. These expenses incurred during the nine month period ended September 30, 2011 consisted of: (i) professional fees of $5,000 (2010: $135,116); (ii) salaries and wages of $-0- (2010: $3,000); (iii) advertising and promotion of $-0- (2010: $12,600); (iv) insurance of $-0- (2010: $9,833); and (v) other general and administrative expenses of $4,273 (2010: $5,208).  Operating expenses decreased due to the decreased scope and scale of our business operations. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.

Nine Month Period Ended September 30, 2011 Compared to Nine Month Period Ended September 30, 2010 (Cont’d).

Other income (expense) was incurred during the nine month period ended September 30, 2011 of ($1,967,687) (2010: ($3,398,083). Other income (expense) during the nine month period ended September 30, 2011 consisted of: (i) interest expense (including amortization of beneficial conversion feature) of ($272,725) compared to ($1,179,999) during the nine month period ended September 30, 2010; and (ii) change in fair value of derivative liability of $1,111,629 (2010: ($2,218,084)). The company in January 2011 incurred a loss of $583,333 on conversion of a Charms note.  We determined to discontinue operations with our Muluncay subsidiary, a mining operation in Ecuador effective December 31, 2009.

Therefore, this resulted in a net loss applicable to common shares during the nine month period ended September 30, 2011 of $1,976,960 compared to a net loss applicable to common shares during the nine month period ended September 30, 2010 of $3,563,840.

Three Month Period Ended September 30, 2011 Compared to Three Month Period Ended September 30, 2010.

Our net loss for the three month period ended September 30, 2011 was $73,550 compared to a net loss of $2,050,268 during the three month period ended September 30, 2010, a change of $1,976,718. During the three month periods ended September 30, 2011 and 2010, we did not generate any revenue from continuing operations.

During the three month period ended September 30, 2011, we incurred operating expenses of $1,350 compared to $45,991 incurred during the three month period ended September 30, 2010, a decrease of $44,641. These expenses incurred during the three month period ended September 30, 2011 consisted of: (i) professional fees of $-0- (2010: $45,800); (ii) other general and administrative expenses of $1,350 (2010: $191). Operating expenses decreased due to the decreased scope and scale of our business operations.

Total other income (expense) was incurred during the three month period ended September 30, 2011 of ($72,200) (2010: ($2,004,277). Other income (expense) during the three month period ended September 30, 2011 consisted of: (i) interest expense (including amortization of beneficial conversion feature) of ($91,480) compared to ($785,992) during the three month period ended September 30, 2010; and (ii) gain (loss) on change in fair value of derivative liability of $19,280 compared to ($1,218,285) during the three month period ended September 30, 2010. We determined to discontinue operations with our Muluncay subsidiary, a mining operation in Ecuador effective December 31, 2009.

Therefore, this resulted in a net loss applicable to common shares during the three month period ended September 30, 2011 of $73,550 compared to a net loss applicable to common shares during the three month period ended September 30, 2010 of $2,050,268.

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LIQUIDITY AND CAPITAL RESOURCES

Nine Month Period Ended September 30, 2011

As at September 30, 2011, our current assets were $50 and other assets of $6,644 representing bond issue costs – related party – for total assets of $6,694.  Our current liabilities were $2,916,146, which resulted in a working capital deficit of ($2,916,096). As of September 30, 2011, our liabilities were primarily comprised of: (i) $248,485 in accounts payable; (ii) $565,000 in convertible notes payable, current; (iii) $1,610,407 of convertible bonds payable, and (iv) a derivative liability is $13,117,278.  The decrease in total assets during the three month period ended September 30, 2011 from fiscal year ended December 31, 2010 was primarily due to the payment of Company expenses.

Stockholders’ deficit increased from $25,591,777 for fiscal year ended December 31, 2010 to $26,872,923 for the nine month period ended September 30, 2011.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the nine month period ended September 30, 2011, net cash flows used in operating activities was $11,400 consisting primarily of a net loss of $1,976,960 offset by loss on settlement of debt of $583,333 and loss on change in fair value of derivative liability of $1,111,629.

Cash Flows from Investing Activities

We did not engage in any investing activities during the nine month period ended September 30, 2011.

Cash Flows from Financing Activities

We did not engage in any financing activities during the nine month period ended September 30, 2011.

Plan of Operation and Funding

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has reported a net loss from operations of $ 1,976,960 for the nine  month period ended September 30, 2011, accumulated deficit of $ 18,314,474 and total current liabilities in excess of current assets of $ 2,916,096 as of September 30, 2011.

The Company is in the pre-exploratory  stage and does not have any revenues from operations and will be dependent on funds raise to satisfy its ongoing capital requirements for at least the next 12 months. The Company will require additional financing in order to execute its operating plan and continue as a going concern. The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, the Company may be unable to implement its current plans for expansion or respond to competitive pressures, any of these circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

Management expects that global economic conditions will continue to present a challenging operating environment through 2012.

While we have been able to manage our working capital needs with the current credit facilities, additional financing is required in order to meet our current and projected cash flow requirements from operations. We cannot predict whether this new financing will be in the form of equity or debt. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments.

Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

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Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

Off- Balance Sheet Arrangement s

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Number of Employees

As of September 30, 2011  the Company had one (1) part-time  employee.

Disclosure of Contractual Obligations

The Company does not have any significant contractual obligations which could negatively impact our results of operations and financial condition.

Item 3.  Quantitative and Qualitative Disclosures About Material Risk

As a smaller reporting company, we are not required to include disclosure under this item.

ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of September 30, 2011, the Company performed an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting Officer), of the effectiveness of the design and operation of its disclosure controls and procedures as defined in Rules 13a - 15(e) or 15d - 15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation and due to the lack of segregation of duties and failure to implement accounting controls, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

The reason for the ineffectiveness of our disclosure controls and procedures was the result of having a limited number of employees and not having proper segregation of duties based on the cost benefit of hiring additional employees solely to address the segregation of duties issue. We compensate for the lack of segregation of duties by employing close involvement of management in day-to-day operations.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures 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 controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

As a small business, without a viable business and revenues, the Company does not have the resources to install a dedicated staff with deep expertise in all facets of SEC disclosure and GAAP compliance. As is the case with many small businesses, the Company will continue to work with its external consultants and attorneys as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future.

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The Company will conduct a review of existing sign-off and review procedures as well as document control protocols for critical accounting spreadsheets. The Company will also increase management's review of key financial documents and records.

As a small business, the Company does not have the resources to fund sufficient staff to ensure a complete segregation of responsibilities within the accounting function. However, Company management does review, and will increase the review of, financial statements on a monthly basis.  These actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.

Changes in Internal Controls

During the fiscal quarter ended September 30, 2011, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to legal proceedings and claims from time to time, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

The Company’s results of operations, financial condition and cash flows can be adversely affected by various risks. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this quarterly report on Form 10-Q. You should carefully consider all of these risks.

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. Mining Safety Disclosures

None.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

Exhibit Number	Description
Exhibit 31.1	Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
Exhibit 31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
Exhibit 32.1	Certification of President 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 Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

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TRILLIANT EXPLORATION CORPORATION

SIGNATURES

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

	TRILLIANT EXPLORATION CORPORATION
Dated: June 05, 2012	By:	/s/ WILLIAM LIEBERMAN
		William Lieberman, President/Chief
		Executive Officer
Dated: June 05, 2012	By:	/s/ WILLIAM LIEBERMAN
		William Lieberman, Chief Financial Officer

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