Palayan Resources, Inc. - Quarter Report: 2018 December (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 31, 2018
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)
Nevada |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer |
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223 De La Cruz Road, Pasay, Metro Manila, Philippines |
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(Address of principal executive offices) |
| (Zip code) |
(63)(914) 269 9345
(Registrant’s telephone number, including area code)
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 [X] 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 iles). [X] 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 | [X] |
Emerging Growth Company | [X] |
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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.) [X] Yes [ ] No
The number of shares of the Registrant’s common stock, par value $.001 per share, outstanding as of April 5, 2019 was 30,000,000.
1
Item 1. Financial Statements
Palayan Resources Inc.
December 31, 2018
(unaudited)
Index
Condensed Balance Sheets (unaudited) | 3 |
Condensed Statements of Operations (unaudited) | 4 |
Condensed Statements of Stockholders’ Deficit (unaudited) | 5 |
Condensed Statements of Cash Flows (unaudited) | 6 |
Notes to the Condensed Financial Statements (unaudited) | 7 |
2
Palayan Resources Inc.
Condensed Balance Sheets
(Expressed in U.S. dollars)
(unaudited)
| December 31, 2018 $ (unaudited) |
| March 31, 2018 $
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ASSETS |
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Current Assets |
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Cash | 2,111 |
| 1,918 |
Total Assets | 2,111 |
| 1,918 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Accounts payable and accrued liabilities | 2,677 |
| 1,500 |
Due to related party | 144,175 |
| 117,000 |
Total Liabilities | 146,852 |
| 118,500 |
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Stockholders’ Deficit |
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Common Stock Authorized: 75,000,000 common shares, with par value $0.001 Issued and outstanding: 30,000,000 common shares | 30,000 |
| 30,000 |
Accumulated Deficit | (174,741) |
| (146,582) |
Total Stockholders’ Deficit | (144,741) |
| (116,582) |
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Total Liabilities and Stockholders’ Deficit | 2,111 |
| 1,918 |
3
Palayan Resources Inc.
Condensed Statements of Operations
(Expressed in U.S. dollars)
(unaudited)
| For the three months ended December 31, 2018 $ |
| For the three months ended December 31, 2017 $ |
| For the nine months ended December 31, 2018 $ |
| For the nine months ended December 31, 2017 $ |
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Revenue | – |
| – |
| – |
| – |
Operating Expenses |
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General and administrative | 1,177 |
| 13,205 |
| 14,166 |
| 16,778 |
Professional fees | 3,500 |
| 6,211 |
| 13,993 |
| 18,852 |
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Total Operating Expenses | 4,677 |
| 19,416 |
| 28,159 |
| 35,630 |
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Net Loss | (4,677) |
| (19,416) |
| (28,159) |
| (35,630) |
Net Loss Per Share – Basic and Diluted | (0.00) |
| (0.00) |
| (0.00) |
| (0.00) |
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Weighted Average Shares Outstanding | 30,000,000 |
| 30,000,000 |
| 30,000,000 |
| 30,000,000 |
4
Palayan Resources Inc.
Statement of Stockholders’ Deficit
(Expressed in U.S. dollars)
| Shares # |
| Par Value $ |
| Accumulated Deficit $ |
| Total $ |
Balance as at March 31, 2017 | 30,000,000 |
| 30,000 |
| (106,724) |
| (76,724) |
Net loss for the year | – |
| – |
| (39,858) |
| (39,858) |
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Balance as at March 31, 2018 | 30,000,000 |
| 30,000 |
| (146,582) |
| (116,582) |
Net loss for the period | – |
| – |
| (28,159) |
| (28,159) |
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Balance as at December 31, 2018 (unaudited) | 30,000,000 |
| 30,000 |
| (174,741) |
| (144,741) |
5
Palayan Resources Inc.
Condensed Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
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| For the nine months ended December 31, 2018 $ |
| For the nine months ended December 31, 2017 $ |
Operating Activities |
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Net loss |
| (28,159) |
| (35,630) |
Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities |
| 1,177 |
| – |
Net Cash Used In Operating Activities |
| (26,982) |
| (35,630) |
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Financing Activities |
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Proceeds from related party loan |
| 27,175 |
| 32,000 |
Net Cash Provided By Financing Activities |
| 27,175 |
| 32,000 |
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Increase (Decrease) in Cash |
| 193 |
| (3,630) |
Cash – Beginning of Period |
| 1,918 |
| 8,276 |
Cash – End of Period |
| 2,111 |
| 4,646 |
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Palayan Resources Inc.
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
1.Nature of Operations and Continuance of Business
Palayan Resources Inc. (the “Company”) was incorporated in the State of Nevada on July 26, 2013 and is a mineral exploration and production company engaged in the exploration, acquisition, and development of mineral properties. The Company holds a claim in the Palayan Gold Mine in Nueva Ecija, Philippines and is in the process of exploring these claims, as well as raising additional capital for future acquisitions.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2018, the Company has generated no revenues to date, and has an accumulated deficit of $174,741. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s 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 the Company be unable to continue as a going concern.
The Company’s plan of action over the next twelve months is to raise capital financing to conduct exploration and drilling on its mineral property claims held in Nueva Ecija, Philippines as well as exploring for new mineral property claims.
2.Summary of Significant Accounting Policies
a)Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”), and are expressed in US dollars. The Company’s fiscal year-end is March 31.
b)Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of mineral properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c)Interim Condensed Financial Statements
These interim condensed unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
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Palayan Resources Inc.
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
Summary of Significant Accounting Policies (continued)
d)Basic and Diluted Net Loss per Share
The Company computes 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. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at December 31, 2018 and March 31, 2018, the Company had no potentially dilutive shares.
e)Recent Accounting Pronouncements
In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “Leases”. This new guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease accounting and improve the quality of and comparability of financial information for users. This new guidance would eliminate the concept of off-balance sheet treatment for “operating leases” for lessees for the vast majority of lease contracts. Under ASU No. 2016-02, at inception, a lessee must classify all leases with a term of over one year as either finance or operating, with both classifications resulting in the recognition of a defined “right-of-use” asset and a lease liability on the balance sheet. However, recognition in the income statement will differ depending on the lease classification, with finance leases recognizing the amortization of the right-of-use asset separate from the interest on the lease liability and operating leases recognizing a single total lease expense. Lessor accounting under ASU No. 2016-02 would be substantially unchanged from the previous lease requirements under GAAP. ASU No. 2016-02 will take effect for public companies in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted and for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach. The Company is currently evaluating the new guidance and has not determined the impact this standard may have on the consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Related Party Transactions
As at December 31, 2018, the Company owed $144,175 (March 31, 2018 - $117,000) to the President and Director of the Company. The amount owing is unsecured, non-interest bearing, and due on demand. During the period ended December 31, 2018, the Company received $27,175 (March 31, 2017 - $32,000) from the President and Director of the Company.
4.Subsequent Events
We have evaluated subsequent events through to the date of issuance of the financial statements, and did not have any material recognizable subsequent events after December 31, 2018.
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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.
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. We are an exploration stage company and have not generated any revenues from our exploration activities. We cannot guarantee we will be successful in our exploration activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we must invest in the exploration of our property before we start production of any minerals that we may find. Therefore, we must obtain equity or debt financing to provide the capital required to fully implement both phases of our exploration program. 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, 2018, 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 December 31, 2018 and 2017
During the three months ended December 31, 2018, we incurred total expenses of $4,677 compared to $19,416 during the three months ended December 31, 2017. The decrease in operating expense was due to the fact that the Company incurred costs relating to obtaining its DTC eligibility in the prior year.
Nine months ended December 31, 2018 and 2017
During the nine months ended December 31, 2018, we incurred total expenses of $28,159 compared to $35,630 during the nine months ended December 31, 2017. The decrease in operating expense was due to costs incurred for DTC eligibility status.
Net Loss
During the nine months ended December 31, 2018, we incurred a net loss of $28,159 compared to a net loss of $35,630 for the nine months ended December 31, 2017. For the nine months ended December 31, 2018 and 2017, the Company incurred a loss per share of $nil.
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Our Planned Exploration Program
We must conduct exploration to determine what, if any, amounts of minerals exist on our Gold Claim and if such minerals can be economically extracted and profitably processed.
Our planned exploration program is designed to efficiently explore and evaluate our property.
We will have to raise additional funds within the next 12 months in order to satisfy our ongoing cash requirements and finance work on the Palayan Gold Claim. If we are unable to raise additional funds within the next 12 months, we will need to delay further exploration work on the Palayan Gold Claim.
Liquidity and Capital Resources
At December 31, 2018, we had cash and total assets of $2,111 compared with cash and total assets of $1,918 at March 31, 2018. The increase in cash and total assets was due to an increase in cash as the Company received $27,175 of funding from the President and Director of the Company for day-to-day operations.
At December 31, 2018, we had liabilities of $146,852 compared to liabilities of $118,500 at March 31, 2018. The increase in liabilities is due to additional funding of $27,175 received from our President and Director during the current year, and $1,177 increase in accounts payable and accrued liabilities for unpaid professional fees incurred.
During the nine months ended December 31, 2018, we did not have any equity or capital transactions.
Cash Flows
Cash from Operating Activities
During the nine months ended December 31, 2018, we used cash of $26,982 for operating activities compared to $35,630 during the nine months ended December 31, 2017. In the prior year, the Company used $9,500 for DTC eligibility.
Cash from Investing Activities
During the nine months ended December 31, 2018 and 2017, we did not have any investing activities.
Cash from Financing Activities
During the nine months ended December 31, 2018, we received $27,175 from our President and Director as compared to $32,000 during the nine months ended September 30, 2017. The amounts owed to our President and Director is unsecured, non-interest bearing, and due on demand.
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. 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 of short term.
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.
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The effect of inflation on our revenues and operating results has not been significant.
Critical Accounting Policies
Our financial statements are presented in United States dollars and are prepared using the accrual method of accounting which conforms to US GAAP.
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
The financial statements as of and for the three and nine months ended December 31, 2018 included herein, which have not been audited pursuant to the rules and regulations of the Securities and Exchange Commission, reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods on a basis consistent with the annual audited statements. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for a full year. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading.
Going Concern
The Company’s financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date, and has an accumulated deficit of $174,741. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s 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 the Company be unable to continue as a going concern.
The Company’s plan of action over the next twelve months is to raise capital financing to conduct exploration and drilling on its mineral property claims held in Nueva Ecija, Philippines as well as exploring for new mineral property claims.
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.
Mineral Properties
Mineral property acquisition costs are capitalized in accordance with Codification topic 930 “Extractive Activities - Mining”. Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. To date our company has not established any reserves on its mineral properties.
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Long-lived assets, such as property and equipment, mineral properties, and purchased intangibles with finite lives (subject to amortization), are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with Codification topic 360 “Property, Plant, and Equipment”. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the impairment occurs.
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.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
None
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 December 31, 2018.
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, 2018.
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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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. (Removed and reserved)
None.
Exhibit Number |
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| Description of Document |
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| Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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| Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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| 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. | |
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| 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. | |
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101 |
| * |
| The following materials from this Quarterly Report on Form 10-Q for the quarter ended August 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): |
* 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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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: April 8, 2019 |
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| By: | /s/ Joel Dulatre Cortez |
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| Joel Dulatre Cortez |
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| President |
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| (Principal Executive Officer) |
Date: April 8, 2019 |
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| By: | /s/Mark Christian Soo |
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| Mark Christian Soo |
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| Treasurer and Secretary |
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| (Principal Financial Officer and Principal Accounting Officer) |
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