Table of Contents

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

 

FORM 10-Q

 

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30,December 31, 2021

 

or

 

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to  __________.

 

Commission File Number: 000-55348

 

Palayan Resources, Inc.
(Exact name of registrant as specified in its charter)

 

Nevada83-4575865
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

 

850 Teague Trail, #580 
Lady Lake, FL32159
(Address of principal executive offices)(Zip code)

 

(407) 536-9422
(Registrant’s telephone number, including area code)

 

(Former name or former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b)12(g) of the Act:

 

Title of ClassTrading Symbol(s)Name of Exchange on which registered
Common StockPLYNOTC Markets

 

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    ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ 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 ☒
Emerging Growth Company ☐ 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act.) Yes ☒ No ☐

 

The number of shares of the Registrant’s common stock, par value $.001 per share, outstanding as of November __January 31, 2022 was 35,973,55737,376,891.

 

 

   

 

 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

 

 ·The availability and adequacy of our cash flow to meet our requirements;

 

 ·Economic, competitive, demographic, business and other conditions in our local and regional markets;

 

 ·Changes or developments in laws, regulations or taxes in our industry;

 

 ·Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities;

 

 ·Competition in our industry;

 

 ·The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;

 

 ·Changes in our business strategy, capital improvements or development plans;

 

 ·The availability of additional capital to support capital improvements and development; and

 

 ·Other risks identified in this report and in our other filings with the Securities and Exchange Commission (“SEC”).

 

This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether resulting from new information, future events or otherwise.

 

Use of Term

 

Except as otherwise indicated by the context, references in this Quarterly Report to the words "we," "our," "us," the "Company," "PLYN," or “Palayan” refer to Palayan Resources, Inc. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

  

 

 1 

 

 

PALAYAN RESOURCES, INC.

 

FORM 10-Q

 

September 30,December 31, 2021

 

TABLE OF CONTENTS

 

   Page
PART I – FINANCIAL INFORMATION3
    
Item 1. Financial Statements3
  Condensed Balance Sheets (unaudited) as of September 30,December 31, 2021 and March 31, 20213
  Condensed Statements of Operations (unaudited) for the Three and SixNine Months Ended September 30,December 31, 2021 and 20204
  Condensed Statements of Shareholders’ Deficit (unaudited) for the Three and SixNine Months Ended September 30,December 31, 2021 and 20205
  Condensed Statements of Cash Flows (unaudited) for the SixNine Months Ended September 30,December 31, 2021 and 20206
  Notes to Condensed Financial Statements (unaudited)(unaudited)7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations1415
Item 3. Quantitative and Qualitative Disclosures About Market Risk1718
Item 4. Control and Procedures1719
    
PART II – OTHER INFORMATION1320
    
Item 1. Legal Proceedings1820
Item 1A. Risk Factors1820
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds1820
Item 3. Defaults Upon Senior Securities1820
Item 4. Mine Safety Disclosures1820
Item 5. Other Information1820
Item 6. Exhibits1820
    
SIGNATURES  1921
    
CERTIFICATIONS   

 

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PALAYAN RESOURCES, INC.

CONDENSED BALANCE SHEETS

 

                
 

September 30,

2021

 

March 31,

2021

  

December 31,

2021

 

March 31,

2021

 
 (unaudited)       (unaudited)     
ASSETS                
Current assets:                
Cash $298  $98,889  $582  $98,889 
Total current assets  298   98,889   582   98,889 
Equipment, net  678   866   584   866 
Total Assets $976  $99,755  $1,166  $99,755 
                
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
Accounts payable and accrued liabilities $29,900  $5,168  $28,273  $5,168 
Note payable – related party  25,000   25,000   25,000   25,000 
Convertible note payable – non-related party, net of debt discount  121,502   0   163,416   0 
Derivative liabilities  245,382   0   209,635   0 
Due to related party  20,500   0   4,000   0 
Total current liabilities  442,284   30,168   430,324   30,168 
Long-term liabilities:                
Convertible note payable – non-related party, net of debt discount  0   34,116   0   34,116 
Derivative liabilities  0   322,285   0   322,285 
Total long-term liabilities  0   356,401   0   356,401 
Total Liabilities  442,284   386,569   430,324   386,569 
                
Commitments and contingencies  0   0   –   – 
                
Stockholders' deficit:                
Preferred stock, $0.001 par value, 100,000,000 shares authorized          –   – 
Series A – 5,000,000 shares authorized; 2,500,000 issued and outstanding at September 30, 2021 and March 31, 2021, respectively  2,500   2,500 
Series B – 5,000,000 shares authorized; NaN issued and outstanding at September 30, 2021 and March 31, 2021, respectively  0   0 
Series C – 5,000,000 shares authorized; NaN issued and outstanding at September 30, 2021 and March 31, 2021, respectively  0   0 
Common stock, $0.001 par value, 500,000,000 shares authorized; 35,973,557 and 34,376,758 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively  35,974   34,377 
Common stock to be issued, NaN and 201,451 at September 30, 2021 and March 31, 2021, respectively  0   201 
Series A – 5,000,000 shares authorized; 2,500,000 issued and outstanding at December 31, 2021 and March 31, 2021, respectively  2,500   2,500 
Series B – 5,000,000 shares authorized; NaN issued and outstanding at December 31, 2021 and March 31, 2021, respectively  0   0 
Series C – 5,000,000 shares authorized; NaN issued and outstanding at December 31, 2021 and March 31, 2021, respectively  0   0 
Common stock, $0.001 par value, 500,000,000 shares authorized; 37,376,891 and 35,973,557 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively  37,377   34,377 
Common stock to be issued, NaN and 201,451 at December 31, 2021 and March 31, 2021, respectively  0   201 
Additional paid-in capital  392,234   388,049   461,031   388,049 
Accumulated deficit  (872,016)  (711,941)  (930,066)  (711,941)
Total Stockholders' Deficit  (441,308)  (286,814)  (429,158)  (286,814)
Total Liabilities and Stockholders’ Deficit $976  $99,755  $1,166  $99,755 

 

 

See accompanying Notes to the unaudited Financial Statements

 

 

 3 

 

 

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

 

                         
 For the
Three Months
Ended
September 30, 2021		 For the
Three Months
Ended
September 30, 2020		 For the
Six Months
Ended
September 30, 2021		 For the
Six Months
Ended
September 30, 2020		  For the Three Months Ended
December 31, 2021		  For the Three Months Ended
December 31, 2020		  For the Nine Months Ended
December 31, 2021		  For the Nine
Months Ended
December 31, 2020		 
                  
Operating expenses:                                
Selling and marketing expense $329  $5,116  $768  $5,116  $329  $1,756  $1,097  $6,872 
General and administrative expense  68,701   108,494   141,829   169,204   59,681   200,224   201,510   369,428 
Total operating expense  69,030   113,610   142,597   174,320   60,010   201,980   202,607   376,300 
                                
Operating loss  (69,030)  (113,610)  (142,597)  (174,320)  (60,010)  (201,980)  (202,607)  (376,300)
                                
Other income (expense):                                
Interest expense  (6,599)  (2,823)  (11,785)  (3,859)  (5,873)  (4,245)  (17,658)  (8,104)
Derivative income  91,068   0   76,903   0 
Derivative income (expense)  35,747   (53,746)  112,651   (53,746)
Debt discount amortization  (41,914)  0   (82,596)  0   (41,914)  0   (124,510)  0 
Gain on extinguishment of debt  14,000   0   14,000   0 
Total other income (expense)  42,555   (2,823)  (17,478)  (3,859)  1,960   (57,991)  (15,517)  (61,850)
                                
Loss before provision for income taxes  (26,475)  (116,433)  (160,075)  (178,179)  (58,050)  (259,971)  (218,124)  (438,150)
                                
Provision for income taxes  0   0   0   0   0   0   0   0 
                                
Net loss $(26,475) $(116,433) $(160,075) $(178,179) $(58,050) $(259,971) $(218,124) $(438,150)
                                
Weighted average shares basic and diluted  35,973,557   34,376,649   35,851,559   32,713,807   35,973,557   34,376,649   35,851,559   33,270,140 
                                
Weighted average basic and diluted loss per common share $(0.00) $(0.00) $(0.00) $(0.01) $(0.00) $(0.01) $(0.01) $(0.01)

 

See accompanying Notes to the unaudited Financial Statements

 

 

 4 

 

 

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

 

                                                                              
Preferred Stock Preferred Stock Preferred Stock   Common Stock Additional   Total  Preferred Stock Preferred Stock Preferred Stock   Common Stock Additional   Total 
Series A Series B Series C Common Stock To Be Issued Paid-In Accumulated Stockholders’  Series A Series B Series C Common Stock To Be Issued Paid-In Accumulated Stockholders’ 
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit  Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit 
                                                     
Balance - March 31, 2021 2,500,000 $2,500 – $– – $– 34,376,758 $34,377 201,451 $201 $388,049 $(711,941)$(286,814)  2,500,000  $2,500   –  $–   –  $–   34,376,758  $34,377   201,451  $201  $388,049  $(711,941) $(286,814)
Common stock issued for services – – – – – – 1,596,799 1,597 (201,451) (201) 4,185 – 5,581 
Shares issued for services  –   –   –   –   –   –   1,596,799   1,597   (201,451)  (201)  4,185   –   5,581 
Net loss –  –  –  –  –  –  –  –  –  –  –  (133,600) (133,600)  –   –   –   –   –   –   –   –   –   –   –   (133,600)  (133,600)
Balance – June 30, 2021 (Unaudited) 2,500,000 2,500 – – – – 35,973,557 35,974 – – 392,234 (845,541) (414,833)  2,500,000   2,500   –   –   –   –   35,973,557   35,974   –   –   392,234   (845,541)  (414,833)
Net loss –  –  –  –  –  –  –  –  –  –  –  (26,475) (26,475)  –   –   –   –   –   –   –   –   –   –   –   (26,475)  (26,475)
Balance – September 30, 2021 (Unaudited) 2,500,000 $2,500  – $–  – $–  35,973,557 $35,974  – $– $392,234 $(872,016)$(441,308)  2,500,000   2,500   –   –   –   –   35,973,557   35,974   –   –   392,234   (872,016)  (441,308)
Shares issued for debt settlement  –   –   –   –   –   –   1,403,334   1,403   –   –   68,797   –   70,200 
Net loss  –   –   –   –   –       –   –   –   –   –   (58,050)  (58,050)
Balance – December 31, 2021 (Unaudited)  2,500,000  $2,500   –  $–   –  $–   37,376,891  $37,377   –  $–  $461,031  $(930,066) $(429,158)

 

 

 

Preferred Stock Preferred Stock Preferred Stock   Common Stock Additional   Total  Preferred Stock Preferred Stock Preferred Stock   Common Stock Additional   Total 
Series A Series B Series C Common Stock To Be Issued Paid-In Accumulated Stockholders’  Series A Series B Series C Common Stock To Be Issued Paid-In Accumulated Stockholders’ 
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit  Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit 
                                                     
Balance - March 31, 2020 – $– – $– – $– 30,020,000 $30,020 – $– $13,019 $(251,437)$(208,398)  –  $–   –  $–   –  $–   30,020,000  $30,020   –  $–  $13,019  $(251,437) $(208,398)
Common stock issued for services – – – – – – 346,758 347 – – 1,040 – 1,387 
Common Stock issued as deposit for acquisition – – – – – – 4,000,000 4,000 – – 12,000     16,000 
Shares issued for services  –   –   –   –   –   –   346,758   347   –   –   1,040   –   1,387 
Shares issued as deposit for acquisition  –   –   –   –   –   –   4,000,000   4,000   –   –   12,000       16,000 
Net loss –  –  –  –  –  –  –  –  –  –  –  (61,746) (61,746)  –   –   –   –   –   –   –   –   –   –   –   (61,746)  (61,746)
Balance June 30, 2020 – – – – – – 34,366,758 34,367 – – 26,059 (313,183) (252,757)
Balance – June 30, 2020 (Unaudited)  –   –   –   –   –   –   34,366,758   34,367   –   –   26,059   (313,183)  (252,757)
Sale of common shares – – – – – – 10,000 10 – – 4,990 – 5,000   –   –   –   –   –   –   10,000   10   –   –   4,990   –   5,000 
Beneficial conversion feature – – – – – – – – – – 18,432 – 18,432   –   –   –   –   –   –   –   –   –   –   18,432   –   18,432 
Net loss –  –  –  –  –  –  –  –  –  –  –  (116,433) (116,433)  –   –   –   –   –   –   –   –   –   –   –   (116,433)  (116,433)
Balance September 30, 2020 – $–  – $–  – $–  34,376,758 $34,377  – $– $49,481 $(429,616)$(345,758)
Balance September 30, 2020 (Unaudited)  –   –   –   –   –   –   34,376,758  $34,377   –   –   49,481   (429,616)  (345,758)
Shares issued for services  2,500,000   2,500   –   –   –   –   –   –   –   –   147,500   –   150,000 
Net loss  –   –   –   –   –   –   –   –   –   –   –   (259,971)  (259,971)
Balance December 31, 2020  2,500,000  $2,500   –  $–   –  $–   34,376,758  $34,377   –  $–  $196,981  $(689,587) $(455,729)

 

 

See accompanying notes to unaudited financial statements

 

 5 

 

 

PALAYAN RESOURCES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

       4  
  For the
Six Months
Ended
September 30,
2021		  For the
Six Months
Ended
September 30,
2020		 
Cash flows from operating activities:        
Net loss $(160,075) $(178,179)
Adjustments to reconcile net loss to net cash used in operating activities:        
Value of shares issued as acquisition deposit  0   16,000 
Shares issued for services  5,581   1,388 
Derivative income  (76,903)  0 
Depreciation and amortization  188   1,929 
Debt discount amortization  82,596   0 
Changes in operating assets and liabilities:        
Accounts payable and accrued liabilities  29,522   32,734 
Due to related parties  20,500   22,499 
Net cash used in operating activities  (98,591)  (103,629)
         
Cash flows from investing activities:        
Capital expenditures  0   (1,123)
Net cash used in investing activities  0   (1,123)
         
Cash flows from financing activities:        
Proceeds from sale of common stock  0   5,000 
Proceeds from issuance of notes payable – non-related parties  0   80,000 
Proceeds from issuance of notes payable – related party  0   25,600 
Net cash provided by financing activities  0   110,600 
         
Net change in cash  (98,591)  5,848 
Cash, beginning of period  98,889   77 
Cash, end of period $298  $5,925 
         
Supplemental disclosures of cash flow information        
Cash paid during the period for:        
Interest $0  $0 
Taxes $0  $0 
         
Supplemental disclosures of non-cash investing and financing activities:        
Beneficial conversion feature $0  $18,432 

         
  For the Nine Months Ended
December 31, 2021		  For the Nine Months Ended
December 31, 2020		 
Cash flows from operating activities:        
Net loss $(218,124) $(438,150)
Adjustments to reconcile net loss to net cash used in operating activities:        
Value of shares issued as acquisition deposit  0   16,000 
Shares issued for services  5,581   151,388 
Shares issued in settlement of debt  (14,000)  0 
Derivative (income) expense  (112,651)  53,746 
Depreciation and amortization  282   9,214 
Debt discount amortization  124,510   0 
Changes in operating assets and liabilities:        
Accounts payable and accrued liabilities  42,895   2,668 
Due to related parties  73,200   (17,405)
Net cash used in operating activities  (98,307)  (222,539)
         
Cash flows from investing activities:        
Capital expenditures  0   (1,123)
Net cash used in investing activities  0   (1,123)
         
Cash flows from financing activities:        
Proceeds from sale of common stock  0   5,000 
Proceeds from issuance of notes payable – non-related parties  0   215,000 
Proceeds from issuance of notes payable – related party  0   25,600 
Net cash provided by financing activities  0   245,600 
         
Net change in cash  (98,307)  21,938 
Cash, beginning of period  98,889   77 
Cash, end of period $582  $22,015 
         
Supplemental disclosures of cash flow information        
Cash paid during the period for:        
Interest $0  $0 
Taxes $0  $0 
         
Supplemental disclosures of non-cash investing and financing activities:        
Beneficial conversion feature $0  $18,432 

 

See accompanying Notes to the unaudited Financial Statements

 

 6 

 

 

PALAYAN RESOURCES, INC.

NOTES TO (UNAUDITED) CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30,DECEMBER 31, 2021 AND 2020

 

 

1.Organization History and Business

 

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.2013. 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.

 

On 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 and one (1) patented mining claim, all of which are located in Nye County in the State of Nevada (the “Venture”). Subsequent 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 relatingan inability to the initial operations ofraise sufficient capital to support 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 as our management recognizesrecognized 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 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 ofseveral 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.

7

Proposed Acquisition

Using this new strategy, on December 9, 2021 we executed a Memorandum of Understanding (the “MOU”) with a Singapore based holding company whose subsidiaries are engaged principally in foreign exchange remittance services. Under the MOU, our Company desires to acquire 100% of the Singapore based company for a purchase price of $80,000,000, consisting of common and preferred stock totaling $70,000,000 and subordinated debt of $10,000,000. The proposed acquisition is subject to due diligence customary to transactions of this type. There can be no assurance that a definitive agreement between the parties to the transaction can be reached.

 

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.

7

 

2.Summary of Significant Accounting Policies

 

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 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, 2021 filed on July 12, 2021. The results of operations for the three and sixnine months ended September 30,December 31, 2021, are not necessarily indicative of the results that may be expected for the full year.

 

Going Concern Considerations

 

The accompanying interim financial statements have been prepared in conformity with generally accepted accounting principles in the United States, 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 $872,016930,066 as of September 30,December 31, 2021. Effective December 4, 2020, we entered into a Credit Line Agreement with Mambagone, S.A de C.V. (“Mambagone”) which allowed for advances totaling $1,050,000. However, after borrowing $260,000advancing us $260,000 under the terms of the Credit Line Agreement, as described inMambagone made no further advances. See Note 6 Mambagone has no more ability to makefor further advances.information. As such, there is uncertainty whether our capital needs over the next 12 months can be met and, 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 we are unable to obtain adequate capital to meet our working capital needs, 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.

8

 

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:

 

 Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
 Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.
 Level 3 - Unobservable inputs which are supported by little or no market activity.

 

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 September 30,December 31, 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 liabilities. 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.

8

 

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.

 

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 September 30,December 31, 2021 and 2020, potentially dilutive shares related to our convertible notes payable and Series A Preferred Stock have not0t been included in the diluted loss per share computations as they would be antidilutive for the periods presented.

9

 

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. 

 

3.SMG-Gold Acquisition

 

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 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 based on an independent third-party valuation of the fair value of our common stock on the date of issuance.

9

 

Bulat never received any cash obligations owed to him, except for the $15,000 paid by us in July 2020. As such, Bulat did not transfer the participation interests in Altyn Kokus LLP to SMG-Gold. As a result, the transaction contemplated by the Exchange Agreement was deemed to be incomplete. Accordingly, on November 18, 2020, our Board of Directors 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.

 

Because of our Board’s decision to rescind the Exchange Agreement, during the three months ended December 31, 2020, we recorded a General and Administrative expense totaling $31,000, consisting of the $15,000 paid in cash to Bulat plus $16,000 in value for the 4,000,000 common shares issued to Bulat, since the Stop Transfer Order was unable to be put into effect.

 

4.Equipment, net

 

As of September 30,December 31, 2021, equipment consists of a laptop computer. Depreciation is being calculated on a straight-line basis over a three-year period and was $9594 and $188282, respectively, for the three and sixnine months ended September 30,December 31, 2021. There was 0 depreciationDepreciation for the corresponding periodsthree and nine months ended September 30, 2020.December 31, 2020 was $283 and $496, respectively.

 

5.Related Party Transactions

 

Due to related party consistsof $4,000 as of December 31, 2021 represents advances by C2C Business Strategies (“C2C”), a large stockholder, to cover certain operating expenses. From time to time, we have received advances from certain of our large stockholders, which we reported on our Balance Sheets under the caption Due to related parties. The advances bear no interest and are repayable on demand. There were 0 Due to related parties balance at March 31, 2021.

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. During the nine months ended December 31, 2021 and 2020, we expensed $96,000 and $67,500, respectively, for the services of Mr. Jenkins.

10

During the three months ended December 31, 2021, we issued shares of our common stock to one shareholder in settlement of amounts owed to them. We issued 1,153,334 shares to C2C in settlement of $69,200 of due to related party amounts owed to them. The shares issued were valued at $4,613 based on an independent third-party valuation of the following at September 30, 2021fair value of our common stock and, March 31, 2021:because this is a related party, the gain was recorded in additional paid-in capital.

 

Schedule of due to related party      
  

September 30,

2021

  March 31,
2021		 
       
Amount owed for working capital advances (1) $1,500  $0 
Amount owed for CEO services under Executive Employment Agreement (2)  19,000   0 
Total $20,500  $0 

During the three months ended December 31, 2020, we issued a total 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 valuation of the fair value of the underlying common stock.

(1)From time to time, we have received advances from certain of our large stockholders, which we reported on our Balance Sheets under the caption Due to related parties. The advances bear no interest and are repayable on demand.

(2)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, LLC) (“C2C”). During the six months ended September 30, 2021 and 2020, we expensed $60,000 and $45,000, respectively, for the services of Mr. Jenkins.

 

6.Notes Payable

 

Notes payable consists of the following at September 30,December 31, 2021 and March 31, 2021:

Schedule of notes payable        
  

September 30,

2021

  March 31,
2021		 
Non-Related Parties:        
Advances under unsecured credit line agreement $260,000  $260,000 
Less debt discount on amounts borrowed  (138,498)  (225,884)
Subtotal – non-related parties  121,502   34,116 
Less current portion  (121,502)  0 
Long-term portion $0  $34,116 
         
Related Party:        
Unsecured promissory note  25,000   25,000 
Subtotal – related party  25,000   25,000 
Less current portion  (25,000)  (25,000)
Long-term portion $0   0 
         

10

Schedule of notes payable        
  

December 31,

2021

  

March 31,

2021

 
Non-Related Parties:        
Advances under unsecured credit line agreement $260,000  $260,000 
Less debt discount on amounts borrowed  (96,584)  (225,884)
Subtotal – non-related parties  163,416   34,116 
Less current portion  (163,416)  0 
Long-term portion $0  $34,116 
         
Related Party:        
Unsecured promissory note  25,000   25,000 
Subtotal – related party  25,000   25,000 
Less current portion  (25,000)  (25,000)
Long-term portion $0   0 

 

NON-RELATED PARTIES

Unsecured Credit Line Agreement

 

Effective December 4, 2020, we entered into a Credit Line Agreement with Mambagone (“the Mambagone LOC”) under which Mambagone agreed to advance our Company a total of $1,050,000 on various dates specified in the Mambagone LOC. Each advance under the Mambagone LOC bears interest at 8% per annum and matures, along with all accrued and unpaid interest, on July 31, 2022. After advancing us $260,000,To date, Mambagone has advanced us $260,000. Despite repeated requests on our part for additional advances as required by the LOC, Mambagone made no more ability to make further advancesadvances. Mambagone’s lack of performance under the LOC created an event of default by the lender and we don’tsent a letter to Mambagone, via Federal Express, dated December 15, 2021 notifying them of such default and of our termination of the LOC which letter was received on December 31, 2021. According to the terms of the LOC, a default by the lender results in a portion of the advances being considered to not be due and payable and shall be considered as forgiven or fully discharged. Under the guidance of ASC 405-20-15-1, derecognition of a debt that has not been paid can only occur if the debtor is legally released from the debt, either judicially or by the creditor. We have not yet met the criteria of the relevant guidance but are attempting to do so. Once met, we expect to receive any additional funds underextinguish at minimum a portion of the Mambagone LOC.debt.

 

Mambagone 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 Mambagone LOC contain an embedded derivative feature and we valued the derivative feature separately, recording debt discount and derivative liabilities 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 sixnine months ended September 30,December 31, 2021, we recorded amortization of debt discount of $41,914 and $82,596124,510, respectively. Amortization for both the three and nine months ended December 31, 2020 was $4,678.

11

 

Other Promissory Notes

 

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, which bore interest at 10% per annum, was convertible at $1.00 per share. We determined that this note contained 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 recorded this amount as a debt discount and were amortizing the discount on a straight-line basis over the two-year term of the note. During the three and nine months ended September 30,December 31, 2020 we recorded amortization expense of $1,716 and $4,040 in connection with this note. In January 2021, all amounts owed under this note were forgiven by its holder and, as of September 30,December 31, 2021 and March 31, 2021, no amounts are owed under this note.

 

During the six months ended September 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 September 30,December 31, 2021 and March 31, 2021, no amounts are owed under these notes.

 

RELATED PARTY

Unsecured Promissory Note

On March 16, 2021, we issued an unsecured promissory note to one of our large stockholders in the amount of $25,000. The note bears interest at 10% per annum and is payable on demand. No demand has been made for payments against this note.

 

7.Derivative Liabilities

 

As stated in Note 6, Notes Payable, we determined that the advances under the unsecured credit line agreement 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 each 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 sixnine months ended September 30,December 31, 2021:

Schedule of derivative liability activity    
Initial measurement of advances $264,203 
Derivative expense  58,082 
Balance at March 31, 2021  322,285 
Derivative expense  14,165 
Balance at June 30, 2021  336,450 
Derivative income  (91,068)
Balance at September 30, 2021 $245,382 

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Schedule of derivative liability activity    
Initial measurement of advances $264,203 
Derivative expense  58,082 
Balance at March 31, 2021  322,285 
Derivative expense  14,165 
Balance at June 30, 2021  336,450 
Derivative income  (91,068)
Balance at September 30, 2021  245,382 
Derivative income  (35,747)
Balance at December 31, 2021 $209,635 

 

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

  

Schedule of assumptions used to calculate derivative features of convertible notes  
  Six

Nine Months Ended September 30,

December 31, 2021

Expected term in years Through 7/31/22
Risk-free interest rate 0.07% to 0.09%0.39%
Annual expected volatility 195%164% to 201%
Dividend yield 0.00%

 

12

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' 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.

 

8.Capital Stock

 

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 preferred stock.

 

Preferred Stock

 

We are authorized to issue 100,000,000 shares of our $0.001 par value preferred stock and 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. As of September 30,December 31, 2021 and March 31, 2021, 2,500,000 shares of Series A preferred shares 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. NaN Series B preferred shares are issued and outstanding at either September 30,December 31, 2021 or March 31, 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. NaN Series C preferred shares are issued and outstanding at either September 30,December 31, 2021 or March 31, 2021.

 

Common Stock

 

We are authorized to issue 500,000,000 shares of our $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 sixnine months ended September 30,December 31, 2021, 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.following shares:

1.201,451 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.
2.1,395,348 shares to the same vendor listed in item 1 above under the terms of a Services Agreement dated April 16, 2021. See Note 9.
3.1,153,334 shares to C2C in settlement of Due to related party debt. See Note 5.
4.250,000 shares to our attorney in settlement of accounts payable of $15,000. The shares were valued at $1,000 based on an independent third-party valuation of the fair value of our common stock and, accordingly, we recorded a gain on extinguishment of debt for this transaction.

 

 

 1213 

 

During the nine months ended December 31, 2020, we issued the following shares:

1.315,790 shares of our common stock to a vendor for services.
2.30,968 shares to two Directors for Board of Director services
3.4,000,000 shares to Bulat – see Note 3.
4.10,000 shares sold for $5,000.

 

9.Services Agreement

 

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 the Agreement. We valued the shares at $5,581, based on a valuation of our Company done by an independent third-party, and recorded a general and administrative expense of that amount during the three-month period ended June 30, 2021.

 

 

 1314 

 

 

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

 

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.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

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 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 $872,016$930,066 as of September 30,December 31, 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.

 

 

 1415 

 

 

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 September 30,December 31, 2021, we did not generate any revenues.

 

Three Months Ended September 30,December 31, 2021 Compared to Three Months Ended September 30,December 31, 2020

 

Operating Expenses

 

During the three months ended September 30,December 31, 2021, we incurred operating expenses of $69,030$60,010 compared to $113,610$201,980 in the previous year. The 2020 period includes a $31,000$150,000 expense related to the rescinded SMG-Gold transactionissuance of Series A Preferred Stock to our CEO and Director as described in Note 35 to the accompanying financial statements. In addition, the accounting expense in 2020 was higher than in 2021 by $12,600, mainly due to work performed on the SMG-Gold transaction.

 

Other Income and Expense

 

Interest expense increased $3,776$1,628 on higher levels of debt. WeIn the 2021 period, we reported derivative income of $35,747 compared to derivative expense of $53,746 in the 20212020 period, of $91,068 relatedall in relation to our indebtedness to Mambagone debt as explained in Note 7 to the accompanying financial statements. Debt discount amortization in the 2021 period of $41,914 was also related to our Mambagone indebtedness. There was no derivative expense orIn the 2021 period, we also reported a gain on extinguishment of debt discount amortization in the 2020 period.of $14,000.

 

Net Loss

 

Our net loss for the three months ended September 30,December 31, 2021 of $26,475$58,050 ($0.00 per share) compares to a net loss of $116,433$259,971 ($0.000.01 per share) in the previous year.

 

SixNine Months Ended September 30,December 31, 2021 Compared to SixNine Months Ended September 30,December 31, 2020

 

Operating Expenses

 

During the sixnine months ended September 30,December 31, 2021, we incurred operating expenses of $142,597$202,607 compared to $174,320$376,300 in the previous year. The difference in operating expenses is principally due2020 period includes a $150,000 expense related to the issuance of Series A Preferred Stock to our CEO and Director as described in Note 5 to the accompanying financial statements. The 2020 period containingalso contains a $31,000 expense related to the rescinded SMG-Gold transaction as described in Note 3 to the accompanying financial statements.

In the 2021 period, professional fees were higher than in 2020 by $18,284.

 

 

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Other Income and Expense

 

Interest expense increased $7,926$9,553 on higher levels of debt. WeIn the 2021 period, we reported derivative income of $112,651 compared to derivative expense of $53,746 in the 20212020 period, of $76,903 relatedall in relation to our indebtedness to Mambagone debt as explained in Note 7 to the accompanying financial statements. Debt discount amortization in the 2021 period of $82,596$124,510 was also related to our Mambagone indebtedness. There was no derivative expense orIn the 2021 period, we also reported a gain on extinguishment of debt discount amortization in the 2020 period.of $14,000.

 

Net Loss

 

Our net loss for the threenine months ended September 30,December 31, 2021 of $160,075$218,124 ($0.000.01 per share) compares to a net loss of $178,179$438,150 ($0.01 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. OurAs described in Note 1 to the accompanying financial statements, on December 9, 2021 we executed an MOU with a Singapore based holding company whose subsidiaries are engaged principally in foreign exchange remittance services. Under the MOU, our Company is proposing to acquire 100% of the Singapore based company for a purchase price of $80,000,000, consisting of common and preferred stock totaling $70,000,000 and subordinated debt of $10,000,000. The proposed acquisition is subject to due diligence customary to transactions of this type. There can be no assurance that a definitive agreement between the parties to the transaction can be reached.

Notwithstanding what may happen with our proposed acquisition, our capital commitments for the coming 12 months consist of administrative expenses, expenses associated with investment in companies, and costs of distribution of our securities. We estimate that we will have to incur the following expenses during the next 12 months:

 

DescriptionEstimated
Completion Date (1)		Estimated
Expenses
($)
Legal and accounting fees and expenses(2)12 months95,000
Investor relations and capital raising12 months125,000
General and administrative expenses12 months207,000
Transfer Agent and Edgar Services12 months18,000
Investment in companies12 months600,000
Total 1,045,000

 

 (1)Budget Items are listed in order of priority.

 (2)Includes $45,000 for accounting and auditing.

 

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 $298$582 as of September 30,December 31, 2021, we will be required to raise additional funds to execute our current plan of operation. 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 presently intend to hire any employees.

 

 

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CASH FLOWS

 

Operating Activities

 

During the sixnine months ended September 30,December 31, 2021, we used cash of $98,591$98,307 for operating activities compared to $103,629$222,539 during the same period in 2020. The decrease in cash used was mainly attributable to the decrease of $211,399 in our net loss offset to some extent by a net decreasethe following changes in non-cash items and changesitems:

1.In the 2020 period, we had non-cash items for shares issued as an acquisition deposit and shares issued for services totaling $167,388 compared to $5,581 in the 2021 period.
2.In the 2021 period we had derivative income of $112,651 compared to derivative expense of $53,746 in 2020.
3.In the 2021 period we recorded debt discount amortization of $124,510 versus zero in 2020.
4.In the 2021 period we recorded a gain on extinguishment of debt of $14,000.

In 2021 there was also a change 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 derivative income of $76,903, debt discount amortization of $82,596 and an expense for shares issued for services of $5,581. The 2020 period included a non-cash expense of $16,000 for shares issued as an acquisition deposit for the SMG-Gold transaction. Finally, there was a decrease in accounts payable and accrued expenses and due to related party liabilitiesparties totaling $116,095, a significant part of which relates to shares issued in settlement of debt discussed in Notes 5 and 8 to the 2021 period compared to 2020 of $5,211.accompanying financial statements.

 

Investing Activities

 

There were no investing activities in the 2021 period. During the sixnine months ended September 30,December 31, 2020 we had capital expenditures of $1,123.

 

Financing Activities

 

There were no financing activities in the comparable 2021 period. During the sixnine months ended September 30,December 31, 2020, we received $5,000 from the sale of 10,000 shares of our common stock and $105,600$240,600 in proceeds from the issuance of notes payable.

 

Trends

 

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 our in Item 1A of our Form 10-K (Risk Factors) filed July 12, 2021.

 

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.

 

Item 3.Quantitative and Qualitative Disclosure about Market Risk

 

None

 

18

Item 4.Controls and Procedures

 

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 September 30,December 31, 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 September 30,December 31, 2021.

 

 

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Part II — OTHER INFORMATION

 

Item 1.Legal Proceedings

 

None.

 

Item 1A.Risk Factors

 

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.

 

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

 

None.

 

Item 3.Defaults Upon Senior Securities

 

None.

 

Item 4.(Removed and Reserved)

Item 5.Other Information

 

None.

 

Item 6.Exhibits

 

Exhibit
Number		 Ref Description of Document
     
31.1   Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002.
31.2   Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.2002.
32.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.2002.
32.2   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.2002.
101 * The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.
104   Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

 

 

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

 

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

 

 PALAYAN RESOURCES, INC.
  
Date: November 10, 2021February 14, 2022By:/s/ James Jenkins
  James Jenkins
  President
  (Principal Executive Officer; Principal Financial Officer)

 

 

 

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