PALAYAN RESOURCES, INC.

FORM 10-Q

December 31,June 30, 2020

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PALAYAN RESOURCES, INC.

CONDENSED BALANCE SHEETS

See accompanying Notes to the unaudited Financial Statements

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

See accompanying Notes to the unaudited Financial Statements

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICITOPERATIONS

(Unaudited)(unaudited)

See accompanying Notes to the unaudited Financial Statements

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

See accompanying notes to unaudited financial statements

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

See accompanying Notes to the unaudited Financial Statements

PALAYAN RESOURCES, INC.

NOTES TO (UNAUDITED) CONDENSED FINANCIAL STATEMENTS

DECEMBER 31,JUNE 30, 2021 AND 2020 AND 2019

Organization and Business

We were incorporated in the State of Nevada on July 26, 2013 and are a mineral exploration and production company engaged in the exploration, acquisition, and development of mineral properties. On April 2, 2020, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Scythian Mining Group Ltd. (“SMG”), a United Kingdom company, to acquire 100% interest in SMG-Gold B.V. (“SMG-Gold”), a Dutch limited liability company (the “SMG-Gold Acquisition”). While the Exchange Agreement was closed on July 7, 2020, it was never finalized because consideration for the transaction was never fully exchanged. On November 18, 2020, our Board of Directors voted unanimously to rescind the transaction and return the SMG-Gold shares to SMG. See Note 3 for additional information.

As reported in our Form 8-K filed January 13, 2020, onOn January 8, 2021, we entered into a Joint Venture Agreement (the “JV Agreement”) with Provenance Gold Corporation, a Canadian publicly traded company (“PAU”) to fund and develop a series of 102 lode mineral claims (the “Silver Bow Claims”) and one (1) patented mining claim, (the “Blue Horse Claim”) (collectively, the Silver Bow Claims and the Blue Horse Claim shall be hereinafter referred to as the “Project”), all of which are located in Nye County in the State of Nevada (the “Venture”). See Note 9Subsequent to the closing of the JV Agreement, both parties deemed it in their best interests not to move forward with the Venture based on various factors, including, but not limited to, financial constraints and considerations, current global economic factors, and general operational difficulties relating to the initial operations of the Venture. Accordingly, on March 22, 2021, we entered into a Rescission Agreement with PAU rescinding and rendering null and void the JV Agreement, and returning any funds advanced by either party in connection with the JV Agreement.

On May 10, 2021, we issued a press release stating our Company was changing its market focus “ Management recognizes that our Company needs to move in a new direction and will pursue acquisition opportunities that can benefit private companies through our Company’s public status. The benefit to our Company and its shareholders will be built on acquisitions based on growth and revenue of targeted acquisitions.

We will be restructured as a holding company seeking transactions on a managed basis, acquiring controlling interest in acquisition targets as subsidiaries of our Company. Using a holding company strategy, we will be able to mitigate risk while making multiple acquisitions. All targeted acquisitions must be audited or auditable. We will make either majority or minority investments in companies that meet its investment criteria.

As a holding company, we will not manufacture anything, sell any products or services, or conduct any other business operations. Our purpose is to hold the controlling stock or membership interests in other companies.

Our Company is taking an agnostic approach regarding industry, in almost every contemplated acquisition, we will retain the management team of the acquired company. The subsidiary’s own management will run the day-to-day business, as this retention of management post transaction will maintain operational continuity. Our Company’s management will be responsible for additional information.overseeing how the subsidiaries are run and assisting their management as needed.

Our Company is seeking opportunities in mature private companies that are in transition or growth mode.

We have begun sourcing opportunities through a number of third-party organizations. Transactions will be subject to industry standard due-diligence requirements. Of course, no two acquisitions are the same, so the due diligence process will vary from one situation to the next. In general, however, there are up to five types of due diligence; (i) Business; (ii) Accounting; (iii) Legal; (iv) Valuation and (v) Environmental, that will need to be completed as part of the process for any proposed transaction.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on our Company is not currently determinable, but management continues to monitor the situation.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared by us pursuant to the rules and regulations of the United States Securities Exchange Commission (“SEC”). Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the Unites States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with our Company’s historical financial statements and related notes filed with the SEC including our Annual Report on Form 10-K for the fiscal year ended March 31, 20202021 filed on August 5, 2020.July 12, 2021. The results of operations for the three and nine months ended December 31, 2020,June 30, 2021, are not necessarily indicative of the results that may be expected for the full year.

Going Concern Considerations

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States, of America, which contemplate continuation of our Company as a going concern. We currently have no revenues, have incurred net losses, and have an accumulated deficit of $689,587$845,541 as of December 31, 2020.June 30, 2021. Effective December 4, 2020, we entered into a Credit Line Agreement with Mambagone, S.A de C.V. (“Mamgabone”Mambagone”) which allows for advances totaling $1,050,000,$1,050,000, $600,000 of which arewere estimated for general working capital purposes and $450,000 for required payments under the rescinded JV Agreement. While we estimate that these Mambagone advances will cover our general working capital needs for at least the next 12 months, that cannot be assured. As a result, there is reasonable doubt about our ability to continue as a going concern for one year from the date of this report. If our working capital needs are not met with the Mambagone Credit Line Agreement and we are unable to obtain adequate capital, we could be forced to cease operations.

The continuation of our Company as a going concern is dependent upon continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from any future business we may acquire. There are no assurances that we will be successful in obtaining sufficient capital to continue as a going concern.

The accompanying financial statements do not include any adjustments that might be necessary if our Company is unable to continue as a going concern.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2021 and March 31, 2021. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, and accrued expenses. Fair values for these items were assumed to approximate carrying values because they are short-term in nature or they are payable on demand. Fair values for derivative liabilities were determined under level 2 since inputs used are either directly or indirectly observable in the marketplace.

Derivative Financial Instruments

– We account for convertible debt with conversion features representing embedded derivative liabilities in accordance with ASC 815, Derivatives and Hedging. ASC 815-15-25-1 requires that embedded derivative instruments be bifurcated and assessed on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option valuation method, resulting in a reduction of the initial carrying amount of the notes as unamortized debt discount. The unamortized discount is amortized to interest expense over the term of each note using the effective interest method.

The fair value of derivative instruments is recorded and shown separately under liabilities. Changes in the fair value of derivatives liabilityderivative liabilities are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate alleach of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

Basic and Diluted Net Loss Per Share

We compute net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31,June 30, 2021 and 2020, and March 31, 2020, we had no potentially dilutive shares.shares related to our convertible notes payable and Series A Preferred Stock have not been included in the diluted loss per share computations as they would be antidilutive for the periods presented.

New Accounting Pronouncements

We have reviewed all recently issued accounting pronouncements and determined that they were either disclosed in our most recently filed Form 10-K or, based on current operations, are not believed to have a material impact on our financial statements. 

As stated in Note 1, on April 2, 2020, we entered into the Exchange Agreement with SMG and SMG’s wholly owned subsidiary SMG-Gold. Under the Exchange Agreement, SMG agreed to exchange one hundred percent (100%) of the issued and outstanding shares of SMG-Gold for an aggregate of 1,000,000 shares of our Series A Preferred Stock and 1,000,000 shares of our Series C Preferred Stock (the “Preferred Stock Consideration”). In November 2019, SMG-Gold had been assigned the rights and obligations of these participatory interests in Altyn Kokus LLP, a limited liability partnership organized under the laws of Kazakhstan engaged in mining operations, but the assignment was not completed since the participatory interests had not been legally transferred to SMG-Gold as a result of certain payments not being made to Bulat Kulchimbayev (“Bulat”), a Kazakhstan national, in consideration for the sale of the participatory interests.

On May 1, 2020, SMG-Gold and Bulat agreed to modify the obligations payable to Bulat as follows: (1) SMG-Gold would pay Bulat a total of $750,000$750,000 in US Dollars, payable at various dates through October 15, 2020 ($15,000 of which has been paid to date); and (2) in anticipation of the closing of the Exchange Agreement, SMG-Gold would provide that Palayan Resources, Inc. would issue to Bulat 4,000,000 shares of our restricted common stock. We issued the 4,000,000 shares of our common stock to Bulat on June 8, 2020 and recorded a deposit for the proposed SMG-Gold Acquisition of $16,000$16,000 based on an independent third-party valuation of the fair value of our common stock on the date of issuance.

To date, Bulat has notnever received any cash obligations owed to him, except for the $15,000 previously paid by us and hasin July 2020. As such, Bulat did not transferredtransfer the participation interests in Altyn Kokus LLP to SMG-Gold. It appears highly unlikely that any additional cash obligation will be paid to Bulat and, asAs a result, equally unlikely that the participation interests in Altyn Kokus LLP will be transferred to SMG-Gold. As such, the transaction contemplated by the Exchange Agreement has beenwas deemed to be incomplete. Given the uncertainty of being able to complete the transaction,Accordingly, on November 18, 2020, our Board of Directors called a Special Meeting in which they concluded that it was in the best interests of our Company to rescind the SMG-Gold Acquisition. As such, our Board voted unanimously to rescind the Exchange Agreement, to return the parties to their respective positions prior to entering into the Exchange Agreement, to the extent possible, to return the SMG-Gold shares to SMG, and to place a Stop Transfer Order with our transfer agent for the 4,000,000 shares of our common stock issued to Bulat.

In connection withBecause of our Board’s decision to rescind the Exchange Agreement, during the ninethree months ended December 31, 2020, we have recorded a General and Administrative expense totaling $31,000. This amount consists$31,000, consisting of the $15,000$15,000 paid in cash to Bulat plus $16,000 in$16,000 in value for the 4,000,000 common shares issued to Bulat, since the Stop Transfer Order has not yet been put into effect.

As of December 31, 2020, property, plant andJune 30, 2021, equipment consists of a laptop computer. Depreciation wasis being calculated on a straight-line basis over a three-year period and was $283 and $496$93 for the three and nine months ended December 31, 2020.June 30, 2021. There was no0 depreciation for the three and nine months ended December 31, 2019.June 30, 2020.

Payable to Stockholder

From time to time, we have received advances from Joel Cortez, our largest stockholder. As of December 31, 2020,stockholder, which we owe Mr. Cortez $146,425 for amounts advanced. These advances bear no interest and arehad reported on our Balance Sheets under the caption Due to Related Parties. All amounts owed to Mr. Cortez were forgiven by him in January 2021 and, as of June 30, 2021 and March 31, 2021, no amounts are owed to him for the advances. For the nine monthsthree-month period ended December 31, 2020,June 30, 2021, there were no advances received from or repaid to Mr. Cortez.

In addition, on September 10, 2020, we issued an unsecured promissory note to Mr. Cortez in the amount of $25,600 which is reported on our Balance Sheet under the caption Note Payable – Related Party. See Note 6 for additional information.

Employment Agreement

Under an April 1, 2020 Executive Employment Agreement, amended December 2, 2020, we retained the services of Mr. James Jenkins, our CEO and Director, by and through C2C Business Strategies, LLC (formerly Irvine America MB Management, LLCLLC) (“IAMB”C2C”) as reported on Form 8-K filed on April 6, 2020. The employment agreement calls.

During the three months ended June 30, 2021 and 2020, we expensed $24,000 and $22,500 for monthly paymentsthe services of $7,500 to IAMB for Mr. Jenkins services along with business expense reimbursements and employee benefits, if and when offered. No employee benefits are offered at this time. As of December 31, 2020,Jenkins. At June 30, 2021, nothing is owed for the services of Mr. Jenkins.

During the nine months ended December 31, 2020, we have accrued $67,500 for the services of Mr. Jenkins and paid C2CBusiness Strategies LLC (formerly IAMB) $89,905 bringing the amount owed to zero.

Notes payable consists of the following at DecemberJune 30, 2021 and March 31, 2020:2021:

NON-RELATED PARTIES

Unsecured Promissory Notes

During our fiscal year ended March 31, 2020, we issued three unsecured promissory notes to unrelated third parties in the principal amounts aggregating $38,000. During the six months ended September 30, 2020, we issued two unsecured promissory notes to unrelated third parties in the principal amounts aggregating $30,000. Each note contained the same terms, bearing interest at 10% per annum and being repayable on demand. No demand for payment has been made to date with respect to these notes payable and no payments have been made.

Unsecured Convertible Promissory Note

On July 24, 2020, we issued an unsecured convertible promissory note to an unrelated third party in the principal amount of $50,000. The note bears interest at 10% per annum. The note is repayable on the earlier of (1) mandatory and automatic conversion provisions of the note or (2) the two (2) year anniversary of the note. The principal and accrued interest of this note may be converted, in whole, into shares of our common stock at the option of the note holder at any time after 30 days from the issue date. In addition, if at any time prior to maturity (a) the closing price of our common stock for five consecutive trading days equals or exceeds $2.00 per share, and (b) the daily trading volume equals or exceeds 20,000 share during the same five consecutive trading days, then all unpaid principal and accrued interest shall be automatically converted into shares of our common stock. The conversion price for this note is $1.00 per share. We have determined that this convertible note contains a beneficial conversion feature of $18,432 based on the difference between the fair market value of our common stock on the date of issuance and the conversion price. We have recorded this amount as a debt discount and are amortizing the discount on a straight-line basis over the two-year term of the note. During the three and nine months ended December 31, 2020 we recorded amortization expense of $2,323 and $4,040 in connection with this note.

Unsecured Credit Line Agreement

Effective December 4, 2020, we entered into a Credit Line Agreement with MamgaboneMambagone (“the MamgaboneMambagone LOC”) under which Mambagone agreed to advance our Company a total of $1,050,000$1,050,000 on various dates specified in the Mamgabone LOC, $600,000 of which are estimated for general working capital purposes and $450,000 for required payments under the JV Agreement.Mambagone LOC. The MamgaboneMambagone LOC was revised effective January 9, 2021 to reflect an updated schedule of advances. Each advance under the MamgaboneMambagone LOC bears interest at 8%8% per annum and matures, along with all accrued and unpaid interest, on July 31, 2022.

MamgaboneMambagone has the right, but not the obligation, at any time, to convert all or any portion of the outstanding principal amount and accrued interest into fully paid and non-assessable shares of our common stock. The conversion price shall be equal to seventy-five percent (75%) of the average of the closing price of our common stock during the ten (10) trading days immediately preceding the conversion date. We determined that the conversion provisions of the MamgaboneMambagone LOC contain an embedded derivative feature and we valued the derivative feature separately, recording debt discount and derivative liabilities during the three and nine months ended December 31, 2020 in accordance with the provisions of the advances. See Note 7. We are amortizing the debt discount on a straight-line basis over the term of the advances. For the three and nine months ended December 31, 2020,June 30, 2021, we recorded amortization of debt discount for these notes totaled $4,679.of $40,682.

Other Promissory Notes

During the three months ended June 30, 2020, we issued two (2) notes payable to non-related parties totaling $30,000. The notes were unsecured, bore interest at 10% per annum, and were due on demand. All amounts owed to the two note holders were forgiven in January 2021 and, as of June 30, 2021 and March 31, 2021, no amounts are owed under these notes.

RELATED PARTY

Unsecured Promissory Note

On September 10, 2020,March 16, 2021, we issued an unsecured promissory note to a related third party, Mr. Cortez,one of our large stockholders in the amount of $25,600.$25,000. The note bears interest at 10%10% per annum and is payable on demand. No demand for payment has been made to date with respect to these notes payable and nofor payments have been made.against this note.

As stated in Note 6, Notes Payable, we determined that the advances under the unsecured credit line agreement each contained an embedded derivative feature in the form of a conversion provision which was adjustable based on future prices of our common stock. In accordance with ASC 815-10-25, each derivative feature was initially recorded at its fair value using the Black-Scholes option valuation method and then re-valued at the December 31,June 30, 2020 reporting date, with changes in the fair value reported in the statements of operations. Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The following table represents our derivative liability activity for the three and nine months ended December 31, 2020:June 30, 2021: 

The fair value of the derivative features of the convertible notes were calculated using the following assumptions:

Risk-free interest rate: We use the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the issuance.

Volatility: We estimate the expected volatility of the stock price based on the corresponding volatility of our historical stock price for a period consistent with the convertible notes’notes' expected terms.

Dividend yield: We use a 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.

Remaining term: The remaining term is based on the remaining contractual term of the convertible notes.

On June 1, 2020, we amended our Articles of Incorporation to increase the number of authorized shares of our common stock from 75,000,000 to 500,000,000 and to authorize the issuance of up to 100,000,000 shares of blank check preferred stock.

Preferred Stock

We are authorized to issue 100,000,000 shares of our $0.001 $0.001 par value preferred stock and, as of September 30, 2020,March 31, 2021, have designated three (3) series of preferred stock whose rights are described below:

Series A Preferred Stock – we have designated 5,000,000 Series A preferred shares. The Series A preferred ranking is senior to common shares, no dividends are payable, and each share is convertible into common shares at a rate of 15 common shares for each Series A preferred share. The voting rights for the Series A preferred was originally designated to be 100 votes for each Series A preferred share. On September 4, 2020 in the First Amendment to the Exchange Agreement, the voting rights were reduced to 20 votes for each Series A preferred share.

During the three months ended December As of June 30, 2021 and March 31, 2020, we issued a total2021,2,500,000 shares of 2,500,000 Series A preferred shares to our CEO and Director. We valued the preferred shares at $150,000 based on a June 2020 independent third-party transaction.are outstanding.

Series B Preferred Stock – we have designated 5,000,000 Series B preferred shares. The Series B preferred ranking is senior to common stock, no dividends are payable, and each share is convertible into common shares at a rate of 10 common shares for each Series B preferred share. The voting rights for this Series B is designated to be 10 votes for each Series B preferred share. NoNaN Series B preferred shares are issued and outstanding at either December 31, 2020June 30, 2021 or March 31, 2020.2021.

Series C Preferred Stock – we have designated 5,000,000 Series C preferred shares. The Series C preferred ranking is senior to common stock, no dividends are payable, and each share is convertible into common shares at a rate of 30 common shares for each Series C preferred share. The Series C shares have no voting rights. NoNaN Series C preferred shares are issued and outstanding at either December 31, 2020June 30, 2021 or March 31, 2020.2021.

Common Stock

We are authorized to issue 500,000,000 shares of our $0.001$0.001 par value common stock and each holder is entitled to one (1) vote on all matters subject to a vote of stockholders.

During the nine months ended December 31, 2020, the following activity took place with respect to our common stock:

(1) As stated in Note 3, we issued 4,000,000 shares to Bulat at fair value of $16,000 based on an independent third-party valuation of the fair value of our common stock on the date of issuance. 

(2) We issued 30,968 shares for Board of Director services rendered by two individuals. We recorded a general and administrative expense of $124 in the three months ended June 30, 2020 in connection with this issuance based on the fair market value2021, we issued 201,451 shares of our common stock to a vendor for services. These shares had been recorded in “Common Stock to be Issued” at March 31, 2021. We also issued 1,395,348 shares to the same vendor under the terms of a Services Agreement dated April 16, 2021. See Note 9.

On April 16, 2021, we entered into a Services Agreement with Cicero Transact Group, Inc. Under the Agreement, Cicero has agreed to rebuild our website and social media sites and help identify and introduce potential acquisition targets to our Company. Once an acquisition is completed, Cicero has agreed to provide, at their sole discretion, any number of post-acquisition services listed in the Agreement. As consideration for the services, we issued Cicero 1,395,348 shares of our restricted common stock which were vested on the date of issuance.

(3)the Agreement. We issued 315,790 tovalued the shares at $5,581, based on a vendor for servicesvaluation of our Company done by an independent third-party, and recorded a general and administrative expense of $1,263 in the three months ended June 30, 2020 in connection with this issuance based on the fair market value of our common stock on the date of issuance.

(4) We sold 10,000 shares in the three months ended September 30, 2020 for a total of $5,000. 

The JV Agreement

As stated in Note 1, on January 8, 2021, we entered into the JV Agreement with PAU to fund and develop the Project consisting of the Silver Bow Claims (102 lode mineral claims) and the Blue Horse Claim, a patented mining claim, all of which are located in Nye County in the State of Nevada (the “Venture”). The Joint Venture will be carried out through a newly established corporation or such similar structure agreed to by the Venturers (“Newco”).

The Project has already had preliminary work done which, in turn, has led to the planned Phase I exploration program to be completed by the Joint Venture (the “Phase 1 Program”). PAU’s interest in the Project consists of (a) its rights to acquire the Silver Bow Claims, subject to a two percent (2.0%) net smelter returns royalty, pursuant to a property option agreement (the “Underlying Option”) entered into with Donald Jennings and Boies Hall and (b) its control of the Blue Horse Claim, subject to a one percent (1.0%) net smelter returns royalty, pursuant to a mining lease (the “Underlying Lease”) entered into by its wholly owned subsidiary, Provenance Gold USA, with Thomas Perkins, Trustee of The Thomas E Perkins 2000 Trust, the Estate of Ruth Ann McNeilly, and the Estate of Randall Clark Dugan.

PAU will contribute its interest in the Project and its full-time expertise in the mining operations of the Venture, and in exchange, our Company will fund the Venture as follows: (i) on or before January 29, 2021, a cash payment of $100,000 USD to Newco, (ii) on or before February 12, 2021 a cash payment of $50,000 USD to Newco, (iii) on or before February 26, 2021, a cash payment of $125,000 USD to Newco, and (iv) on or before March 12, 2021, a cash payment of $125,000 USD to Newco.

PAU, in combination with PLYN, is currently in the process of transferring all project plans and entitlements, claims, leases, and options in the Silver Bow and Blue Horse Claims to GS Exploration Corporation, the newly formed JV company.

We will provide additional funding to a maximum of $50,000.00 USD on no less than ten (10) days written notice by PAU; which additional funds shall be deposited into Newco and used directly for any overage from the original estimated budget for the Phase 1 Program.

Following completion of the payments, the initial percentage ownership of each of the Venturers will be as follows: (a) PLYN 49.5% and (b) PAU 50.5%. The interest of each Venturer in any profits or losses and/or liabilities that may result from the Venture and their interests in all property and equipment acquired and all money received in connection with the performance of the Project shall be based on the same ownership percentages indicated above. 

In the event we fail to complete the required payments, the Joint Venture shall cease and our percentage ownership in Newco shall be adjusted as follows: ratio of the amount we actually invested over $400,000 (our required total payments) times 49.5%. As an example, if we invest $150,000, our percentage ownership in Newco will be 18.56% ($150,000 divided by $400,000 times 49.5%). We will retain our ownership percentage until such time as PAU contributes further funds to the Project, at which point our interest will be diluted. In the event we invest a minimum of $225,000, then we will have met certain minimum thresholds as set forth in the JV Agreement and the Joint Venture will continue.

The mining operations and management of the Joint Venture shall be conducted by Newco utilizing PAU’s and our Company’s management and consultants.

Debt Mitigation

In January 2021, the certain creditors agreed to cancel the amounts owed to them. The following table reflects the creditors, types of debt and amounts cancelled.

We paid no consideration to these creditors in exchange for the cancellation of their debts. The former founder of the company, Mr. Joel Cortez, through a private share sale to non-related third parties, extinguished his debt and paid these creditors. The transactions will be accounted for as extinguishments of debt during the three-month period ending March 31,ended June 30, 2021.

FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

LiquidityCRITICAL ACCOUNTING POLICIES AND ESTIMATES

Set forth below are certain of our important accounting policies. For a full explanation of these and Capital Resourcesother of our important accounting policies, see Note 2 to Notes to the Financial Statements in our Form 10-K filed with the SEC on July 12, 2021.

Going Concern Considerations

Our financial statements are presented in United States dollars and are prepared using the accrual method of accounting which conforms to US GAAP, which contemplate continuation of our Company as a going concern.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on our Company is not currently determinable, but management continues to monitor the situation.

We have generated no revenues to date and have an accumulated deficit of $845,541 as of June 30, 2021. The continuation of our Company as a going concern is dependent upon the continued financial support from our shareholders, our ability to raise equity or debt financing, and the attainment of profitable operations from our Company’s future business. These factors raise substantial doubt regarding our ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our Company’s plan of action over the next twelve months is to raise capital.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. We are required to make judgments and estimates about the effect of matters that are inherently uncertain. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different assumptions or conditions were to prevail, the results could be materially different from our reported results.

Derivative Financial Instruments

We account for convertible debt with conversion features representing embedded derivative liabilities in accordance with ASC 815, Derivatives and Hedging. ASC 815-15-25-1 requires that embedded derivative instruments be bifurcated and assessed on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option valuation method, resulting in a reduction of the initial carrying amount of the notes as unamortized debt discount. The unamortized discount is amortized over the term of each note using the effective interest method.

The fair value of derivative instruments is recorded and shown separately under liabilities. Changes in the fair value of derivative liabilities are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate each of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

Recent Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial position, future operations or cash flows.

RESULTS OF OPERATIONS

We have limited operational history. From our inception on July 26, 2013 to June 30, 2021, we did not generate any revenues. As a mineral pre-exploration company, we anticipate that we will incur substantial losses for the foreseeable future and do not believe we will be able generate revenues during the next 12 months.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Operating Expenses

During the three months ended June 30, 2021, we incurred operating expenses of $73,567 compared to $60,710 in the previous year. The 2021 period contains a $5,581 expense resulting from our issuance of common stock under the Services Agreement described in Note 9 to the accompanying financial statements. The 2021 period expenses were also slightly higher than in 2020, primarily in the areas of professional fees related to the SMG-Gold transaction.

Other Income and Expense

Interest expense increased $4,150 on higher levels of debt. We incurred derivative expense in the 2021 period of $14,165 related to our indebtedness to Mambagone as explained in Note 7 to the accompanying financial statements. Debt discount amortization in the 2021 period of $40,682 was also related to our Mambagone indebtedness. There was no derivative expense or debt discount amortization in the 2020 period.

Net Loss

Our net loss for the three months ended June 30, 2021 of $133,600 ($0.00 per share) compares to a net loss of $61,746 ($0.00 per share) in the previous year.

LIQUIDITY AND CAPITAL RESOURCES

Since inception we have raised capital through debt financing, advances from related parties and private placements of our common stock aggregating $40,000.stock. Our capital commitments for the coming 12 months consist of administrative expenses, expenses associated with the completion of our planned exploration programinvestment in companies, and costs of distribution of the securities being registered in this report.our securities. We estimate that we will have to incur the following expenses during the next 12 months:

Since our initial share issuances, our company has been unable to raise additional capital forcing us to rely on debt financing and cash advances from related parties to meet current and future liabilities over the foreseeable future. Based on our cash on hand of approximately $22,015$35,409 as of December 31, 2020,June 30, 2021, we will be required to raise additional funds to execute our current plan of operation. Aside from the Mamgabone LOC,Beyond our line of credit agreement with Mambagone, we have no commitment from anyone to contribute funds to our Company. If we are unable to raise sufficient funds to execute our plan of operation, we intend to scale back our operations commensurately with the funds available to us. In that regard, we will prioritize expenditures to (in order of priority): (i) maintain our mineral exploration license; and (ii) to conduct our planned exploration activities. We intend to raise the capital that we require through the private placement of our securities or through loans. However, we have not received any financing commitments and there is no guarantee that we will be successful in so doing.

We have no plant or significant equipment to sell, nor are we going to buy any plant or significant equipment during the next 12 months. We do not intend to hire any employees at this time.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance as an exploration corporation. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.CASH FLOWS

We have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to commence, continue, develop or expand our exploration activities. Even if available, equity financing could result in additional dilution to existing shareholder.

Results of Operations

Revenues

From our inception on July 26, 2013 (date of inception) to December 31, 2020, we did not generate any revenues.

Operating ExpensesActivities

Three months ended December 31, 2020 and 2019

During the three months ended December 31, 2020, we incurred operating expenses of $201,980 compared to $17,243 during the three months ended December 31, 2019. The 2020 period includes a charge of $150,000 for the issuance of preferred stock to our CEO and Director. See Note 8 to the accompanying condensed financial statements. Other major expenses in the 2020 period include professional fees (legal, accounting and consulting fees) totaling about $37,000, debt discount amortization of about $7,000 and edgar services expense amounting to about $3,000. The professional fees in the 2020 period include consulting fees of $22,500 for the services of our Chief Executive Officer and Director. Furthermore, we incurred a significant increase in 2020 compared to 2019 in professional fees relating to audit, accounting and legal costs relating to our increased SEC filing requirements.

Nine months ended December 31, 2020 and 2019

During the nine months ended December 31, 2020, we incurred operating expenses of $376,300 compared to $51,398 during the nine months ended December 31, 2019. The 2020 period includes a charge of $150,000 for the issuance of preferred stock to our CEO and Director. See Note 8 to the accompanying condensed financial statements. The 2020 period also includes a $31,000 loss related to the rescission of the SMG-Gold transaction as well as a $1,387 expense from the issuance of common stock for directors’ fees and consulting services. Additionally, in the 2020 period we incurred consulting fees of $67,500 for the services of our Chief Executive Officer and Director. Furthermore, we incurred a significant increase in 2020 compared to 2019 in professional fees relating to audit, accounting, and legal costs as well as transfer agent and edgar services fees resulting from our increased SEC filing requirements.

Net Loss

During the three and nine months ended December 31, 2020, we incurred net losses of $259,971 and $438,150, respectively. This compares to net losses for the three and nine months ended December 31, 2019 of $18,329 and $52,674, respectively. In addition to our operating expenses, our interest expense during the three- and nine-month periods in 2020 ($4,245 and $8,104, respectively) was higher than the comparable periods in 2019 ($1,086 and $1,276, respectively) due to higher amounts of debt. Furthermore, the three- and nine- month periods in 2020 include $53,746 of derivative expense related to the Mamgabone LOC debt. See Notes 6 and 7 to the accompanying condensed financial statements. Our net loss per share for the three- and nine-month periods in 2020 and 2019 were insignificant.

Liquidity and Capital Resources

At December 31, 2020, our cash balance was $22,015 and our total assets were $22,643 compared with cash and total assets of $77 at March 31, 2020.

At December 31, 2020, our liabilities totaled $478,372 compared to liabilities of $208,475 at March 31, 2020. The increase in liabilities included a $2,669 increase in accounts payable and accrued liabilities relating to unpaid professional fees and day-to-day transactional costs offset by a decrease in due to related party of $17,405. Additionally, there were increases in debt and derivative liabilities of $95,261 and $189,372, respectively, resulting primarily from the Mamgabone LOC debt.

During the nine months ended December 31, 2020, we sold 10,000 shares of our common stock for $5,000 and issued 346,758 common shares with a fair value of $1,387 for services including 30,968 common shares with a fair value of $124 for directors’ fees. We also issued 2,500,000 shares of our Series A Preferred Stock to our CEO and Director with a value of $150,000.

Cash Flows

Operating Activities

During the nine months ended December 31, 2020,June 30, 2021, we used cash of $222,539$63,480 for operating activities compared to $8,982$14,588 during the nine months ended December 31, 2019.same period in 2020. The increase in cash used was mainly attributable to the increase in our net loss, offset to some extent by increases in non-cash items and changes in in accounts payable and accrued liabilities and in due to related parties. Significant non-cash items in the 2021 period which did not exist in the 2020 period included $167,388 for shares issued for an acquisition depositservices of $5,581, derivative expense of $14,165 and for services, as well as $53,746debt discount amortization of $40,682. In addition, there was a decrease in derivative expense.accounts payable and accrued expenses and due to related party liabilities in the 2021 period compared to 2020 of $40,962.

Investing Activities

During the nine months ended December 31, 2020 we had capital expenditures of $1,123. There were nonot investing activities induring the comparable 2019 period.three-month periods ended June 30, 2021 and 2020.

Financing Activities

During the ninethree months ended December 31,June 30, 2020, we received $5,000 from the sale of 10,000 shares of our common stock and $240,600$30,000 in proceeds from the issuance of notes payable. ForThere were no financing activities in the same period in 2019, we received $7,925 in proceeds from the issuance of notes payable.three months ended June 30, 2021.

Trends

We are in the pre-exploration stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable future. Other than potential impacts of Covid-19, we are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term or short term, other than as described in this section or in “Risk Factors”.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The effect of inflation on our revenues and operating results has not been significant.

Critical Accounting Policies

Set forth below are certain of our important accounting policies. For a full explanation of these and other of our important accounting policies, see Note 2 to Notes to the Financial Statements in our Form 10-K filed with the SEC on August 5, 2020.

Our financial statements are presented in United States dollars and are prepared using the accrual method of accounting which conforms to US GAAP. 

Going Concern

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on our Company is not currently determinable, but management continues to monitor the situation.

Our financial statements have been prepared on a going concern basis, which implies that our Company will continue to realize its assets and discharge its liabilities in the normal course of business. We have generated no revenues to date and have an accumulated deficit of $429,616. The continuation of our Company as a going concern is dependent upon the continued financial support from our shareholders, our ability to raise equity or debt financing, and the attainment of profitable operations from our Company’s future business. These factors raise substantial doubt regarding our ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our Company’s plan of action over the next twelve months is to raise capital.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. We are required to make judgments and estimates about the effect of matters that are inherently uncertain. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different assumptions or conditions were to prevail, the results could be materially different from our reported results.

Derivative Financial Instruments

We account for convertible debt with conversion features representing embedded derivative liabilities in accordance with ASC 815, Derivatives and Hedging. ASC 815-15-25-1 requires that embedded derivative instruments be bifurcated and assessed on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option valuation method, resulting in a reduction of the initial carrying amount of the notes as unamortized debt discount. The unamortized discount is amortized to interest expense over the term of each note using the effective interest method.

The fair value of derivative instruments is recorded and shown separately under liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, we use a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

Recent Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial position, future operations or cash flows

None

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the evaluation, both the Principal Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, were not effective as of December 31, 2020.June 30, 2021.

Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Act of 1934) that materially affected, or is reasonably likely to materially affect, such internal control over financial reporting during the quarter ended December 31, 2020.June 30, 2021.

Part II —– OTHER INFORMATION

None.

In addition to other information set forth in this report, you should carefully consider the risk factors described in our Registration Statement on Form S-1, which was declared effective on November 12, 2014. Those factors could materially affect our business, financial condition or future results. In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a materially adverse effect on our business, financial condition and/or operating results.

None.

None.

N/A

None.