UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 10-K
_______________________________________
| (Mark One) | |
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended March 31, 2017
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 333-210821
_________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________
| Delaware | 27-2447426 | |||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||
| 762 Perthshire Pl | Abingdon | MD | 21009 | |||
| (Address of principal executive offices) | ( | |||||
(269) 274-7877
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark ifwhether the registrant is a well-known seasonedwell known season issuer, as defined in Rule 405 of the Securities Act. Yes ☐o No ☒
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 ☒o No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒o No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”filer”, “accelerated filerfiler”,” “smaller reporting company,” company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | |||||
| Non-accelerated filer | Smaller reporting company | x | ||||
| 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 any new or revised financial accounting standards provided pursuant to section 13(a)Section 7(a)(2)(B) of the ExchangeSecurities Act.o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report). o ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☒
No market value has been computed based upon the fact that no active trading market existed as of the last business day of the registrant’s most recently completed second fiscal quarter.
The number of the registrant’s common shares, $0.0001 par value per share, outstanding on August 31 was 132,932,159.
| Page | |||
| PART I | |||
| 1. | 4 | ||
| PART II | |||
| PART III | |||
| PART IV | |||
| 2 |
FORWARD LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this report, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management’s beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could”, “intend,” “consider,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative of such terms or other comparable terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change, which has magnified such uncertainties. Readers should bear these factors in mind when considering forward-looking statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those suggested by such statements. In the past, actual results have differed from those suggested by forward looking statements and this may happen again. Important factors that could cause actual results to differ include, but are not limited to, the risks discussed in “Risk Factors” and the following:
| · | adverse effects on our business because of regulatory investigations, litigation, cease and desist orders or settlements; |
| · | our ability to comply with the terms of our settlements; |
| · | increased regulatory scrutiny and media attention; |
| · | any adverse developments in existing legal proceedings or the initiation of new legal proceedings; |
| · | our ability to effectively manage our regulatory and contractual compliance obligations; |
| · | the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with the terms of our debt agreements, including the financial and other covenants contained in them; |
| · | our ability to interpret correctly and comply with liquidity, net worth and other financial and other requirements of regulators as well as those set forth in our debt and other agreements; |
| · | our ability to invest available funds at adequate risk-adjusted returns; |
| · | uncertainty regarding regulatory restrictions on our ability to repurchase our own stock; |
| · | volatility in our stock price; |
| · | our ability to contain and reduce our operating costs; |
| · | our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; |
| · | uncertainty related to legislation, regulations, regulatory agency actions, regulatory examinations, government programs and policies, industry initiatives and evolving best servicing practices; |
| · | the loss of the services of our senior managers and our ability to execute effective chief executive and chief financial officer leadership transitions; |
| · | uncertainty related to general economic and market conditions, delinquency rates, home prices and disposition timelines on foreclosed properties; |
| · | uncertainty related to our ability to continue to collect certain expedited payment or convenience fees and potential liability for charging such fees; |
| · | uncertainty related to our reserves, valuations, provisions and anticipated realization of assets; |
| · | uncertainty related to the ability of third-party obligors and financing sources to fund servicing advances on a timely basis on loans serviced by us; |
| · | uncertainty related to the ability of our technology vendors to adequately maintain and support our systems, including our servicing systems, loan originations and financial reporting systems; |
| · | our ability to effectively manage our exposure to interest rate changes and foreign exchange fluctuations; |
| · | our ability to meet capital requirements established by, or agreed with, regulators or counterparties; |
| · | our ability to protect and maintain our technology systems and our ability to adapt such systems for future operating environments; and |
| · | uncertainty related to the political or economic stability of the United States and of the foreign countries in which we have operations; and |
| · | our ability to maintain positive relationships with our large shareholders and obtain their support for management proposals requiring shareholder approval. |
Further information on the risks specific to our business is detailed within this report, including under “Risk Factors.” Forward-looking statements speak only as of the date they were made, and we disclaim any obligation to update or revise forward-looking statements whether because of new information, future events or otherwise.
| 3 |
COVID-19
COVID-19 has had an unprecedented impact on the travel industry and the Company. As the virus and efforts to contain it spread around the world, demand for Airlines, Railway and travel services have decreased significantly due to series of Contents
REALIGNMENT OF CONTROL
Effective January 01, 2020, the Company has entered into Realignment of control Agreement with PRAMA for realignment of control of PRAMA and PRAMA businesses. As result of Realignment of Control Agreement with PRAMA whereby the Company no longer has the power to govern the financial and operating policies of PRAMA due to the loss of power to cast its votes at meetings of the Board of Directors other than in tandem with founders and management team of PRAMA; accordingly, the Company derecognized related assets, liabilities and noncontrolling interests of PRAMA. The Company did not receive any consideration in the deconsolidation of PRAMA. The cost of investment in PRAMA was fully impaired as PRAMA has a fair value of $0 as of January 1, 2020, through the current date.
Our Services and Products
annual reportThe Company is an eCommerce aggregator and was a hospitality management company. An aggregator model is a form of eCommerce whereby our website, www.tripborn.com aggregates, information on Form 10-Kvarious travel and hospitality vendors and presents them on a contains “forward-looking statements” within the meaningsingle platform, to ease, facilitate, coordinate and effectuate consumer travel and hospitality needs. The Hospitality segment was an Indian based operator of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). All statements other than statements of historical fact24 hotel properties in 18 cities with 1,230 keys under 4 brands (Mango Hotels, Mango Suites, Mango Hotels Select, i-Stay Hotels) but was deconsolidated on January 1, 2020. Mango Suites Select and Apodis Collection are “forward-looking statements” for purposes of federalbrands under development. APODIS and state securities laws, including: any projections of earnings, revenues or other financial items; any statements regarding the adequacy, availabilityIntelliStay function as umbrella brands.
The eCommerce aggregator business functions as a Last Mile Commerce and sources of capital; any statements of the plans, strategiesConnectivity aggregator that delivers product and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in forward-looking statements include those factors set forth in this annual report, particularly under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”
The report further states that by 2027, India’s population will overtake China’s and the middle class will overtake
| 4 |
We are subject to various risks that make an investment in our securities risky. The events and consequences discussed in these risk factors could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a material adverse effect on our business, liquidity, financial condition, and results of operations. In addition, these risks could cause results to differ materially from those we express in forward-looking statements contained in this Annual Report or in other Company communications. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations.
Further information on the risks specific to our business is detailed within this report, including under “Risk Factors.” Forward-looking statements speak only as of the date they were made, and we disclaim any obligation to update or revise forward-looking statements whether because of new information, future events or otherwise.
The following are factors that could have a significant impact on our operations and financial results and could cause actual results or outcomes to differ materially from those discussed in any forward lookingforward-looking statement.
COVID-19 Risks
COVID-19 has been and continues to be a complex and evolving situation, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation; limitations on the size of in-person gatherings; closures of, or occupancy or other operating limitations on, work facilities, lodging facilities, food and beverage establishments, schools, public buildings and businesses; cancellation of events, including sporting events, conferences and meetings; and quarantines and lock-downs. COVID-19 and its consequences have dramatically reduced travel and demand for hotel rooms, which has and will continue to impact our business, operations, and financial results. The extent to which COVID-19 impacts our business, operations, and financial results will depend on the factors described above and numerous other evolving factors that we may not be able to accurately predict or assess, including the duration and scope of COVID-19; the availability and distribution of effective vaccines or treatments; COVID-19’s impact on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; the ability of our owners and franchisees to successfully navigate the impacts of COVID-19; and how quickly economies, travel activity, and demand for lodging recovers after the pandemic subsides. COVID-19 has subjected our business, operations and financial condition to a number of risks, including, but not limited to, those discussed below:
| · | Risks Related to Revenue: COVID-19 has negatively impacted and will in the future negatively impact to an extent we are unable to predict, our revenues from our eCommerce Aggregator and managed and franchised hotels, which are primarily based on hotels’ revenues or profits. In addition, COVID-19 and its impact on global and regional economies, and the hospitality industry in particular, has made it difficult for hotel owners and franchisees to obtain financing on attractive terms, or at all, and increased the probability that hotel owners and franchisees will be unable or unwilling to service, repay or refinance existing indebtedness. This has caused, and may in the future continue to cause, some lenders to declare a default, accelerate the related debt, foreclose on the property or exercise other remedies, and some hotel owners or franchisees to declare bankruptcy. If a significant number of our management or franchise agreements are terminated as a result of bankruptcies, sales or foreclosures, our results of operations could be materially adversely affected. Hotel owners or franchisees in bankruptcy may not have sufficient assets to pay us termination fees or other unpaid fees or reimbursements we are owed under their agreements with us. Even if hotel owners or franchisees do not declare bankruptcy, the significant decline in revenues for most hotels has impacted the timely payment of amounts owed to us by some hotel owners and franchisees and could in the future materially impact the ability or willingness of hotel owners and franchisees to fund working capital or pay us other amounts that we are entitled to on a timely basis or at all, which would adversely affect our liquidity. If a significant number of hotels exit our system as a result of COVID-19, whether as a result of a hotel owner or franchisee bankruptcy, failure to pay amounts owed to us, a negotiated termination, the exercise of contractual termination rights, or otherwise, our revenues and liquidity could be materially adversely affected. COVID-19 has also materially impacted, and could in the future materially impact, other non-hotel related sources of revenues for us, including for example our fees from our co-brand credit card arrangements, which have been and may continue to be affected by COVID-19’s impact on spending patterns of cobrand cardholders and acquisition of new co-brand cardholders. Also, testing our intangible assets or goodwill for impairments due to reduced revenues or cash flows could result in additional charges, which could be material. |
| 5 |
| · | Risks Related to Leased and Managed Hotels: COVID-19 and its impact on travel has reduced demand at nearly all hotels, including our owned and leased hotels and properties owned by entities in which we have an equity investment. As a result, most of our owned and leased hotels and properties in which we have an investment are not generating revenue sufficient to meet expenses, which is adversely affecting our income and could in the future more significantly adversely affect the value of our owned and leased properties or investments. In addition, we have seen and could continue to see entities in which we have an investment experience challenges securing additional or replacement financing to satisfy maturing indebtedness. As a result of the foregoing, we have recognized, and may in the future be required to recognize, significant non-cash impairment charges to our results of operations. |
| · | Risks Related to Operations: Because of the significant decline in the demand for hotel rooms, we have taken steps to reduce operating costs and improve efficiency, including furloughing a substantial number of our associates and implementing reduced work weeks for other associates, implementing a voluntary transition program for certain associates, eliminating a significant number of above-property and on-property positions, and modifying food and beverage offerings and other services and amenities. Such steps, and further changes we could make in the future to reduce costs for us or our hotel owners or franchisees (including ongoing property-level restructuring plans), may negatively impact guest loyalty, owner preference, or our ability to attract and retain associates, and our reputation and market share may suffer as a result. For example, loss of our personnel may cause us to experience operational challenges that impact guest loyalty, owner preference, and our market share, which could limit our ability to maintain or expand our business and could reduce our profits. Further, reputational damage from, and the financial impact of, position eliminations, furloughs or reduced work weeks could lead associates to depart the Company and could make it harder for us or the managers of our franchised properties to recruit new associates in the future. In addition, if we or our hotel owners or franchisees are unable to access capital to make physical improvements to our hotels, the quality of our hotels may suffer, which may negatively impact our reputation and guest loyalty, and our revenue and market share may suffer as a result. We have received demands or requests from labor unions that represent our associates and may face additional demands, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to operate under our COVID-19 mitigation and recovery plans. COVID-19 could also negatively affect our internal control over financial and other reporting, as many of our personnel have departed the Company as a result of position eliminations, and our remaining personnel are often working from home. In addition, new processes, procedures and controls could be required to respond to changes in our business environment. |
| · | Risks Related to Expenses: COVID-19 has caused us to incur additional expenses and will continue to cause us to incur additional expenses in the future which are not fully reimbursed or offset by revenues. For example, we have already incurred certain expenses related to furloughs, our voluntary transition program and position eliminations, and we expect additional charges related to our property-level restructuring activities. |
| · | Risks Related to Growth: Our growth has been, and may continue to be, harmed by COVID-19 and its various impacts as discussed above. Many current and prospective hotel owners and franchisees are finding it difficult or impossible to obtain hotel financing on commercially viable terms. COVID-19 has caused and may continue to cause some projects that are in construction or development to be unable to draw on existing financing commitments or secure additional or replacement financing to complete construction, and additional or replacement financing that is available may be on less favorable terms. COVID-19 has caused and may continue to cause construction delays due to government restrictions and shortages of workers or supplies. As a result, some of the properties in our development pipeline will not enter our system when we anticipated, or at all. We have seen, and may continue to see, opening delays and a decrease in the rate at which new projects enter our pipeline, and we may see an increase in the number of projects that fall out of our pipeline as a result of project cancellations or other factors. These effects on our pipeline have reduced and will continue to reduce our ability to realize fees or realize returns on equity investments from such projects. We expect we could potentially see more existing hotels exit our system as a result of COVID-19, and a significant number of such exits could negatively impact the overall growth of our system and our business prospects. |
| 6 |
| · | Risks Related to Liquidity: In 2020, our liquidity suffered. We may be required to raise additional capital again in the future to fund our operating expenses and repay maturing debt. In addition, we have seen increases in our cost of borrowing as a result of COVID-19 and such costs may increase even further for a time we are unable to determine. If we are required to raise additional capital, our access to and cost of financing will depend on, among other things, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects, our credit ratings, and the outlook for the hotel industry as a whole. If our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our credit rating levels, our industry, or our Company, our access to capital and the cost of debt financing will be further negatively impacted. Accordingly, a downgrade may cause our cost of borrowing to further increase. Additionally, certain of our existing commercial agreements may require us to post or increase collateral in the event of further downgrades. Also, if we are unable to comply with the covenants under our Credit Facility, the lenders under our Credit Facility will have the right to terminate their commitments thereunder and declare the outstanding loans thereunder to be immediately due and payable. There is no guarantee that debt financings will be available in the future to fund our obligations, or will be available on terms consistent with our expectations. Additionally, the impact of COVID-19 on the financial markets is expected to adversely impact our ability to raise funds through equity financings. COVID-19, and the volatile regional and global economic conditions stemming from COVID-19, as well as reactions to future pandemics or resurgences of COVID-19, could also give rise to, aggravate and impact our ability to allocate resources to mitigate the other risks that we identify below, which in turn could materially adversely affect our business, liquidity, financial condition, and results of operations. Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. |
Industry Related Risks
The travel industry in India is highly competitive and fragmented, and we may not be able to compete effectively as Sales and Marketing efforts requires deep understanding of local demographics and local demand. We intend to build our brand in the underserved rural and semi-rural markets through our superior service-oriented travel portal, which requires technology adoption and internet infrastructure to access our services in those areas.
Certain of our travel service suppliers have also been steadily focusing on increasing online demand on their own websites and decreasing or eliminating their dependence on third-party distributors like us. For instance, many low-cost airlines may, subject to applicable regulations, reduce or eliminate commissions to agents such as us or restrict the amount of service fees we are able to charge customers. For instance, local suppliers who sell on their own websites typically do not charge a processing fee, and, in some instances, offer advantages such as their own bonus miles or loyalty points, which could make their offerings more attractive to customers than offerings like ours.
Risks Related to Our Business
We are a development stage company with a limited operating history, which may make it difficult to evaluate our current business and predict our future performance.
We have a limited operating history upon which you can evaluate our future performance. Our operating subsidiary was incorporated under the laws of India in 2010, and it began to focus its operations on the online travel industry in February 2014. Our senior management has limited experience in the online travel industry, and we still are in the process of fully developing our online platform and product offerings. We have generated revenues over a limited operating history and have incurred net losses since our inception. As a result of our short operating history, we have only limited financial data and business information with which to evaluate our business strategies, performance and investment in our common stock.
We have incurred net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.
We expect to incur operating losses in future periods as we incur significant expenses associated with the initial startup of our business. Our expenses will continue to increase as we continue to develop the operations necessary to further our business plan. We cannot now determine the amount by which our expenses will increase as we grow and hire additional employees, implement our sales, marketing and distribution plans, pursue contractual arrangements and partnerships and develop our internet-based infrastructure. Further, we cannot guarantee that we will be successful in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business and a complete loss of our stockholdersstockholder’s investment.
We will require additional financing to support our operations, which financing may not be available on favorable terms or at all; any new equity financing could have a dilutive effect on our existing stockholders.
We will require additional financing to sustain our business, which may not be available on favorable terms, if at all. We estimate that we will require approximately $3,000,000 and $5,000,000 in the next 12 and 24 months respectively, to continue and grow our business. We may seek additional funding through a combination of equity offerings, debt financings or other third-party funding and other collaborations, strategic alliances and licensing arrangements to fully implement our business plan. For instance, in fiscal years 2016 and 2017, we issued convertible notes, which may convert into shares of our common stock in the future.
| 7 |
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiary to meet our obligations.
We are a holding company that does not conduct any business operations of our own. As a result, we are largely dependent upon cash dividends and distributions and other transfers from our Indian operating subsidiary to meet our obligations. The deterioration of income from, or other available assets of, our Indian operating subsidiary for any reason could limit or impair its ability to pay dividends or other distributions to us, which in turn could adversely affect our financial condition and results of operations.
Our lack of insurance leaves us exposed to significant liabilities.
We do not carry insurance for the risks that our business may encounter. Any significant liability may require us to pay substantial amounts, which would adversely affect our financial condition and results of operations, if we are able to continue in business at all.
The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-OxleySarbanes Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effectivecost effective manner.
As a newly public company we now are required to comply with new laws, regulations, requirements and certain corporate governance provisions under the Exchange Act and the Sarbanes-Oxley Act. Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and will significantly increase our costs and expenses and will make some activities more time-consuming and costly. In connection with becoming a reporting company, we need to:
| Ÿ | institute a more comprehensive compliance function; |
| Ÿ | prepare and distribute periodic and current reports under the federal securities laws; |
| Ÿ | establish new internal policies; and |
| Ÿ | involve and retain to a greater degree outside counsel and accountants. |
Our ongoing compliance efforts will increase general and administrative expenses and may divert management’s time and attention from the development of our business, which may adversely affect our financial condition and results of operations. We estimate that we may incur approximately $
Our lack of experienced accounting staff may impact our ability to report our future financial results on a timely and accurate basis, and we need to retain the services of additional accountants and consultants with required accounting experience and expertise.
Our accounting and finance staff lacks depth and skill in the application of generally accepted accounting principles with respect to external financial reporting for Exchange Act reporting companies. We also do not have an audit committee or a member of our board of directors who would satisfy the definition of an audit committee financial expert. We intend to engage the services of additional accounting personnel to assist with our financial accounting and reporting requirements to develop our internal control over financial reporting and to produce timely financial reports. Until we do so, we may experience difficulty producing reliable and timely financial statements, which could cause investors to lose confidence in our reported financial information and the market price of our stock to decline significantly. We also may be unable to obtain additional financing on acceptable terms, and our business and financial condition could be harmed.
If we fail in maintaining effectiveimplementing appropriate internal financial control over financial reporting, the price of our common stock may be adversely affected.
We are required to establish and maintain appropriate internal control over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosure regarding our business, financial condition or results of operations. In addition, our future assessments of internal control over financial reporting may identify additional weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any material weakness that needs to be addressed in management’s assessment of our internal control over financial reporting or in the report on the effectiveness of our internal controls by our independent registered public accounting firm, when and if, applicable, may have an adverse impact on our common stock.
| 8 |
We depend on certain related persons transactions and may continue to rely on related persons for key development and support activities.
As described more fully in “Certain Relationships and Related Person Transactions,” we have entered into, and may continue to enter into, transactions with related persons. We rely on associates and enterprises that our president and vice president control for key development and support activities. While we believe that our related persons’ interests align with our own, we may not have entered into such transactions on an arm’s-length basis. While we presently benefit from free services or deferred payments, in the long-term, we may have achieved more favorable terms had we entered into such transactions with unrelated parties. In addition, if these related persons withdrew their support from our business, the associated loss of preferential business arrangements could significantly increase our operating costs and adversely affect our results of operations to the point that we might be forced to cease operations.
We will not be able to develop or continue our business if we fail to attract and retain key personnel.
Our future success depends on our ability to attract, hire, train and retain a skilled senior management team and other key personnel. Thethe loss of the services of our executive officers or other key employees could adversely affect our business. We face competition in securing qualified personnel possessing the skills necessary to implement our strategy, and we may fail to attract or retain the employees necessary to execute our business model successfully.
Our success depends to a significant degree upon the continued contributions of our key management and other personnel. In particular, we believe that our future success is highly dependent on the technical expertise, financial support and key contracts and arrangements of our executive officers and directors, Deepak Sharma and Sachin Mandloi. Messrs. Sharma and Mandloi may voluntarily terminate their services at any time. We have not entered into employment agreements with them and do not expect to enter into such agreements. If Messrs. Sharma, Mandloi or any other key members of our management team leave the company, our business could suffer and the value of our common stock would likely decline, if we are able to continue in business at all.
Third parties claiming that we infringe on their proprietary rights could cause us to incur significant legal expenses and prevent us from operating our business.
From time to time, we may receive claims that we have infringed the intellectual property rights of others, including claims regarding copyrights and trademarks. Former employers of our former, current, or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary information of these former employers. Any such claim, with or without merit, could result in costly litigation and distract management from day-to-day operations. If we are not successful in defending such claims, we could be required to suspend certain services, redesign our platform, pay monetary damages or enter into royalty or licensing arrangements. We cannot assure you that any royalty or licensing arrangements that we may seek in such circumstances will be available to us on commercially reasonable terms or at all. We may incur significant expenditures to investigate, defend and settle claims related to the use of technology and intellectual property rights.
We cannot be sure that our intellectual property is protected from copying or use by others, including current or potential competitors.
Our websites rely on content, brands and technology, much of which is proprietary. We protect our proprietary content, brands and technology by relying on a combination of trademarks, copyrights, trade secrets, patents and confidentiality agreements. Any misappropriation or violation of our rights could have a material adverse effect on our business. Even with these precautions, it may be possible for another party to copy or otherwise obtain and use our proprietary technology, content or brands without authorization or to develop similar technology, content or brands independently.
| 9 |
Effective intellectual property protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and expenses and the costs of defending our rights. In addition, effective intellectual property protection may not be available in every jurisdiction in which our services are made available and policing unauthorized use of our intellectual property is difficult and expensive. Therefore, in certain jurisdictions, we may be unable to protect our intellectual property adequately against unauthorized third-party copying or use, which could adversely affect our business or ability to compete. We cannot be sure that the steps we have taken will prevent misappropriation or infringement of our intellectual property. Furthermore, we may need to go to court or other tribunals or administrative bodies in order to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. These proceedings might result in substantial costs and diversion of resources and management attention. Our failure to protect our intellectual property in a cost-effective or effective manner could have a material adverse effect on our business and ability to protect our technology, content and brands.
A failure of one or more key information technology systems, networks, processes, associated sites or service providers could have a material adverse impact on the Company’s business or reputation.
The Company relies extensively on information technology (IT) systems, networks and services, including Internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third parties or their vendors, to assist in conducting business. The various uses of these IT systems, networks and services include, but are not limited to:
| · | booking and managing our services from suppliers; |
| · | collecting and storing customer, consumer, employee, investor and other stakeholder information and personal data; |
| · | processing transactions; |
| · | summarizing and reporting results of operations; |
| · | marketing and selling products and services to consumers; |
| · | hosting, processing and sharing confidential and proprietary research, business plans and financial information; |
| · | complying with regulatory, legal or tax requirements; |
| · | providing data security; and |
| · | handling other processes necessary to manage the Company’s business. |
Increased IT security threats and more sophisticated computer crime, including advanced persistent threats, pose a potential risk to the security of the Company’s IT systems, networks and services, as well as the confidentiality, availability and integrity of the Company’s data. The Company’s operations, especially its retail operations, involve the storage and transmission of employees’, customers’ and consumers’ proprietary information, such as credit card and bank account numbers. The Company’s payment services may be susceptible to credit card and other payment fraud schemes, including unauthorized use of credit cards, debit cards or bank account information, identity theft or merchant fraud. If the IT systems, networks or service providers relied upon fail to function properly, or if the Company suffers a loss or disclosure of customers’ and consumers’ data, business or stakeholder information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and business continuity plans do not effectively address these failures on a timely basis, the Company may suffer interruptions in its ability to manage operations, a risk of government enforcement action, litigation and possible liability, and reputational, competitive and/or business harm, which may adversely impact the Company’s results of operations and/or financial condition.
As techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of the Company’s security occurs, the public perception of the effectiveness of the Company’s security measures could be harmed and the Company could lose customers and consumers, which could adversely affect its business.
We need to expand our sales, marketing and support organizations and our distribution arrangements to increase market acceptance of our products and services.
We currently have a limited number of sales, marketing, customer service and support personnel and will need to increase our staff to generate a greater volume of sales and to support any new customers or the expanding needs of existing customers. The employment market for sales, marketing, customer service and support personnel in our industry is very competitive, and we may not be able to hire the kind and number of sales, marketing, customer service and support personnel we are targeting. Our inability to hire qualified sales, marketing, customer service and support personnel may harm our business, operating results and financial condition.
| 10 |
The Company may from time to time become subject to litigation and other legal proceedings. Litigation and other legal proceedings may require the Company to incur significant expenses, including those relating to legal and other professional fees. In addition, litigation and other legal proceedings are inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s financial condition, cash flows, and operating results.
Risks Related to Operations in India
Our operations in India may be adversely affected by social and political uncertainties or change, military activity, health-related risks or acts of terrorism.
From time to time India has experienced instances of civil unrest, terrorism and hostilities among neighboring countries, including Pakistan. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influence the Indian economy and our operations by disrupting operations and communications and making travel within India more difficult and less desirable. Our industry is particularly sensitive to actual or perceived safety concerns such as these, as well as health-related risks such as theCOVID-19, influenza A virus (H1N1), avian flu (H5N1 and H7N9) and Severe Acute Respiratory Syndrome or other epidemics or pandemics. Any of these events in or around India could cause the demand for travel-related services to decline. Political or social tensions also could create a greater perception that investments in companies with Indian operations involve a high degree of risk, which could adversely affect the market and price for our common stock. We do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts and wars, which could subject us to significant financial losses. The realization of any of these risks could cause a material adverse effect on our business, financial condition, results of operations, cash flows, and/or share price.
Our bank accounts in India are not insured or protected against loss, and the failure of any bank in which we deposit our funds could affect our ability to continue in business.
We maintain our cash in India with both private and state-owned banks located in India. These cash accounts are not insured or otherwise protected against loss. Should any bank holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular bank. Loss of cash deposits or the inability to access such cash deposits could impair our operations, and if we are not able to access funds to pay our service providers and employees, we may be unable to continue in business.
If we violate applicable anti-corruption laws or our internal policies designed to ensure ethical business practices, we could face financial penalties and/or reputational harm that would negatively impact our financial condition and results of operations.
We are subject to anti-corruption and anti-bribery laws in the United States and India. India’s reputation for potential corruption and the challenges presented by India’s complex business environment may increase our risk of violating applicable anti-corruption laws. Our commercial relationships with state-owned enterprises may further intensify this risk. We face the risk that we, our employees or any third parties such as our sales agents and distributors that we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws in any jurisdiction in which we conduct business, including the Foreign Corrupt Practices Act of 1977 (“FCPA”), India’s Prevention of Money Laundering Act, 2002 and Indian Penal Code. Any violation of the FCPA or any similar anti-corruptionanticorruption law or regulation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations that might harm our business, financial condition or results of operations. In addition, we have internal ethics policies with which we require our employees to comply in order to ensure that we conduct our business in a manner that our management deems appropriate. If these anti-corruption laws or internal policies were to be violated, our reputation and operations could also be substantially harmed. Further, detecting, investigating and resolving actual or alleged violations is expensive and may consume a significant amount of our senior management’s time and attention.
Natural disasters could have a negative impact on the Indian economy and cause our business to suffer.
India has experienced natural disasters such as earthquakes, tsunamis, floods, landslides and drought in the past few years. For example, in NovemberAll the public transport may get affected by such disaster including Airport, Rails and December 2015, Chennai, the frequently visited capital city of Tamil Nadu, experienced historic flooding that closed its airport for several days and suspended rail service. In addition, in September 2014, the state of Jammu and Kashmir in northern India, another popular tourism destination, experienced widespread floods and landslides.Bus Services. The extent and severity of these natural disasters determines their impact on the Indian economy. Substantially all of our operations and employees are located in India and our operations may be adversely affected by natural disasters in the future. Furthermore, if any of these natural disasters occur in tourist destinations in India, travel within India could be adversely affected, which could have an adverse impact on our business and financial performance.
| 11 |
Necessary infrastructure upgrades in India may not keep pace with increasing internet penetration, which may adversely affect our operations and require us to make additional investments and expenditures.
Our customers complete their bookings through our Indian website. In August 2016, The National Association of Software & Services Companies released a report that forecasts that India’s internet user population would reach 730 million users by 2020, a 59% increase from the current 462 million users. Slowdowns or disruptions in upgrading India’s internet-based infrastructure to meet this demand could reduce the rate of expected increases in the use of the internet and our internet-based services, which may adversely affect our business and results of operations. In addition, any slowdown or negative deviation in the anticipated increase in internet penetration in India may require us to make additional investments in alternative distribution channels, which could strain our financial and human resources, causing our operations and financial condition to suffer.
Restrictions on foreign investment in India may prevent us from making future acquisitions or investments in India, including with respect to our operating subsidiary, which may adversely affect our results of operations, financial condition and financial performance.
India regulates ownership of Indian companies by foreigners. These regulations and restrictions may apply to acquisitions by us of shares in Indian companies or the provision of funding by us to our Indian operating subsidiary. For example, under its consolidated foreign direct investment policy, the Government of India has set out criteria for foreign investments in India, including requirements with respect to downstream investments by Indian companies owned or controlled by foreign entities and the transfer of ownership or control of Indian companies in sectors with caps on foreign investment from resident Indian persons or entities to foreigners. These requirements, which currently include restrictions on valuations and sources of funding for such investments and may include prior approval from the Foreign Investment Promotion Board, may adversely affect our ability to make investments in India, including through our operating subsidiary in India. There can be no assurance that we will be able to obtain any required approvals for future acquisitions or investments in India, or that we will be able to obtain such approvals on satisfactory terms.
We may incur expenses, including penalties imposed by the Reserve Bank of India if we do not comply, or timely comply, with reporting requirements in connection with the acquisition and transfer of our securities by our Indian employees.
Under regulations of the Reserve Bank of India, our operating subsidiary is subject to periodic reporting requirements in connection with the acquisition and transfer of our securities by Indian residents, including with respect to our employees who acquire our shares under employee stock option plans. If we fail to meet our reporting requirements, the Reserve Bank of India may impose penalties or take other action that could adversely affect our financial position and results of operations.
We are subject to regulatory and political uncertainties in India.
We conduct substantially all of our business and operations in India. Consequently, government policies and regulations, including tax policies, in India will impact our financial performance and the market price of our common stock.
| 12 |
We may have exposure to additional tax liabilities.
As a U.S.-based holding company that provides services in India through our operating subsidiary, we are subject to income taxes and non-income based taxes in the United States and in India. Due to economic and political conditions, tax rates and tax regimes in the jurisdictions in which we are located and operate may be subject to significant change. Our future effective tax rates could be affected by changes in the valuation of deferred tax assets or changes in tax laws or their interpretation. Although we believe that our tax filing positions are reasonable and comply with applicable laws, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and accruals. If our effective tax rates were to increase, our cash flows, financial condition and results of operations would be adversely affected.
Judgments that our stockholders obtain against us may not be enforceable
.Substantially all of our assets are located outside of the United States and substantially all of our revenue is derived outside of the United States. In addition, our vice president and director, Sachin Mandloi resides in India and our president and director, Deepak Sharma spends a significant amount of time in India. As a result, it may be difficult for stockholders to effect service of process within the United States upon these persons. It is uncertain whether the courts of India would recognize or enforce judgments of United States or state courts against us or such persons predicated upon the civil liability provisions of the laws of the United States or any state. In addition, there is uncertainty as to whether such Indian courts would be competent to hear original actions brought in India against us or such persons predicated upon the laws of the United States or any state.
Risks Related to Our Industry
We rely on information technology to operate our business and maintain our competitiveness, and any failure to adapt to technological developments or industry trends could harm our business.
We depend on the use of sophisticated information technology and systems, which we have customized for search and reservation for flights and hotels, as well as payments, refunds, customer relationship management, communications and administration. As our operations grow in both size and scope, we must continuously improve and upgrade our systems and infrastructure to offer our customers enhanced services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure in a cost-effective manner. Our future success also depends on our ability to upgrade our services and infrastructure ahead of rapidly evolving consumer demands while continuing to improve the performance, features and reliability of our service in response to competitive offerings.
If the number of travel agents using our services increases substantially, or if critical third-party systems stop operating as designed, we may need to significantly expand and upgrade our technology, transaction processing systems, financial and accounting systems and other infrastructure. We may not be able to upgrade our systems and infrastructure to accommodate such conditions in a timely manner, and, depending on the third-party systems affected, our transactional, financial and accounting systems could be impacted for a meaningful amount of time before upgrade, expansion or repair.
We may not be able to use new technologies effectively, or we may fail to adapt our website, transaction processing systems and network infrastructure to meet consumer requirements or emerging industry standards. If we face material delays in introducing new or enhanced solutions, our customers may forego the use of our services in favor of those of our competitors. Any of these events could have a material adverse effect on our operations.
The travel industry in India is highly competitive, and we may not be able to compete effectively.
The travel market in India is highly competitive. Factors affecting our competitive success include, price, availability and breadth of choice of travel services and products, brand recognition, customer service, fees charged to travelers, ease of use, accessibility and reliability. We currently compete with both established and other emerging providers of travel services and products, including other online travel agencies in India and abroad, such as makemytrip.com, cleartrip.com, expedia.co.in, travelocity.co.in, yatra.com, goibibo.com, booking.com and agoda.com, as well as traditional travel agencies, tour operators, travel suppliers and operators of travel industry reservation databases. Large, established internet search engines have also launched applications offering travel itineraries in destinations around the world, and meta-search companies that can aggregate travel search results also compete against us for customers. Certain of our competitors have launched brand marketing campaigns to increase their visibility with customers. For example, trivago.com has commenced a television advertising campaign in India. Some of our competitors have significantly greater financial, marketing, personnel and other resources than us and certain of our competitors have a longer history of established businesses and reputations in the Indian travel market (particularly in the hotels and vacation packages business) as compared with us. From time to time we may be required to reduce service fees and net revenue margins in order to compete effectively and maintain or gain market share.
| 13 |
Some travel suppliers are seeking to decrease their reliance on distribution intermediaries such as us, by promoting direct distribution channels. Many airlines, hotels, car rental companies and tour operators have call centers and have established their own travel distribution websites and mobile applications. From time to time, travel suppliers offer advantages, such as bonus loyalty awards and lower transaction fees or discounted prices, when their services and products are purchased from supplier-related channels. We also compete with competitors who may offer less content, functionality and marketing reach but at a relatively lower cost to suppliers. If our access to supplier-provided content or features were to be diminished either relative to our competitors or in absolute terms or if we are unable to compete effectively with travel supplier-related channels or other competitors, our business could be materially and adversely affected.
We depend on and expect to continue to depend on a small number of low cost airlines in India for a significant percentage of our air ticketing revenue.
Low cost airlines dominate India’s domestic air travel industry. As we derive a substantial portion of our air ticketing revenue through the base commissions and incentive payments of these domestic airlines, our dependence on a limited number of domestic airlines means that a reduction or elimination in base commissions and incentive payments by any one or all of these airlines could have a material adverse effect on our revenue.
In addition, our reliance on a small number of airline suppliers in India gives those airline suppliers additional bargaining power in negotiating agreements with us. A reduction or elimination of base commissions and incentive payments by any of these domestic airline suppliers, the loss of any of these domestic airline suppliers or a domestic airline supplier exerting significant price and margin pressure on us could materially and adversely affect our business, financial condition and results of operations.
Our processing, storage, use and disclosure of customer data of our travel agent customers or visitors to our website could give rise to liabilities as a result of governmental regulation, conflicting legal requirements such as General Data Protection Regulations, differing views of personal privacy rights or data security breaches.
In the processing of our agent transactions, we receive and store a large volume of customer information. Such information increasingly is subject to legislation and regulations in various jurisdictions and governments are increasingly acting to protect the privacy and security of personal information that is collected, processed and transmitted in or from the governing jurisdiction. We could be adversely affected if legislation or regulations are expanded or amended to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations. As privacy and data protection become more sensitive issues in India, we may also become exposed to potential liabilities. For example, under the Indian Information Technology Act, 2000, as amended, our operating subsidiary is subject to civil liability for wrongful loss or gain arising from any negligence in implementing and maintaining reasonable security practices and procedures with respect to sensitive personal data or information on our computer systems, networks, databases and software. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. Any liability we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect our business and profitability.
We cannot guarantee that our security measures will prevent data breaches. Companies that handle such information have also been subject to investigations, lawsuits and adverse publicity due to allegedly improper disclosure of personally identifiable information. Security breaches could damage our reputation, cause interruptions in our operations, expose us to a risk of loss or litigation and possible liability, and could also cause customers and potential customers to lose confidence in the security of our transactions, which would have a negative effect on the demand for our services and products. Moreover, public perception concerning security and privacy on the internet could adversely affect customers’ willingness to use our websites. A publicized breach of security in India, even if it only affects other companies conducting business over the internet, could inhibit the growth of the internet as a means of conducting commercial transactions, and, therefore, the prospects of our business.
These and other privacy and security developments that are difficult to anticipate could adversely affect our business, financial condition and results of operations.
| 14 |
If we are unable to maintain existing, or establish new arrangements with our travel service suppliers, our business may be adversely affected.
Our business depends on our ability to maintain our relationships and arrangements with existing suppliers, as well as our ability to establish and maintain relationships with new travel suppliers. A substantial portion of our revenue less service cost derives from fees and commissions negotiated with travel suppliers for bookings made through our website. Many of our agreements with our travel service suppliers are short-term contracts that require periodic renewal on a quarterly or yearly basis and provide our counterparties with a right to terminate on short notice or without notice. Adverse changes in existing arrangements, including an inability by any travel supplier to fulfill its payment obligation to us in a timely manner, increasing industry consolidation or our inability to enter into or renew arrangements with these parties on favorable terms, if at all, could reduce the amount, quality, pricing and breadth of the travel services and products that we are able to offer, which could adversely affect our business and financial performance.
We do not have formal arrangements with many of our travel service suppliers.
We rely on travelour suppliers to facilitate the sale of our travel services.and money transfer services . We do not have formal agreements with many of our travel service suppliers, including many hotels, whose booking systems or central reservations systems we rely on for bookings and confirmation as well as certain payment gateway arrangements. In addition,
Our business and results of operations could be adversely affected by global and/or domestic economic conditions.
Due to the discretionary nature of travel expenditures, the travel industry tends to experience weak or reduced demand during economic downturns. Unfavorable changes in the business and economic conditions affecting our market could result in fewer reservations made through our websites and/or lower our net revenue margins and have a material adverse effect on our financial condition and results of operations. In addition, during periods of poor economic conditions, airlines and hotels tend to reduce rates or offer discounted sales to stimulate demand, thereby reducing our commission-based income. The weakness and uncertainty in the global economy have negatively impacted both corporate and consumer spending patterns and demand for travel services, globally and in India, and may continue to do so in the future. These poor economic conditions could adversely impact our growth plans, business, financial condition and results of operations.
Risks Related to Our Common Stock
There is no currentnot now, and there may never be, an active, liquid and orderly trading market for our securities,common stock, which may make it difficult for stockholders to sell their shares of our common stock.
Our common stock quoted on the OTC Markets OTCQB tier, or OTCQB, of OTC Markets Group Inc., an over-the-counter quotation system, and ifthere is not now, nor has there been since our inception, any significant trading activity in our common stock or a market for shares of our common stock, and an active trading market doesfor our shares may never develop or be sustained. As a result, investors in our common stock must bear the economic risk of holding those shares for an indefinite period of time. We do not develop,now, and may not in the future, meet the initial listing standards of any national securities exchange, and our common stock may be quoted on the OTCQB or another over-the-counter quotation system for the foreseeable future. In those venues, our stockholders may find it difficult to obtain accurate quotations as to the market value of their shares of our common stock and may find few buyers to purchase their stock and few market makers to support its price. As a result of these and other factors, stockholders may be unable to resell their shares.
Our significant stockholders exercise significant influence over our company and may have interests that are different from those of our other stockholders.
Our executive officers and directors, Deepak Sharma and Sachin Mandloi, beneficially own 90% ofcontrol the issued and outstanding shares of our common stock. By virtue of such holdings, they have the ability to exercise significant influence over our company and our affairs and business, including the election of directors, amendments to our charter and bylaws, the approval of a merger or sale of substantially all our assets and the approval of most other actions requiring the approval of our stockholders. The interests of these stockholders may be different from or conflict with the interests of our other stockholders and their influence may result in the delay or prevention of a change of management or control of our company.
| 15 |
The reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors, which may lead to volatility and a decrease in the price of our common stock.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from reporting requirements that apply to other public companies that are not emerging growth companies. Investors may find our common stock less attractive because we may rely on these exemptions, which include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected to opt out of the extended transition period for complying with the revised accounting standards. If investors find our common stock less attractive as a result of exemptions and reduced disclosure requirements, there may be a less active trading market for our common stock and our stock price may be more volatile or may decrease.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future; therefore, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.
We have never declared or paid cash dividends on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.
Stockholders may be subject to Indian taxes on income arising through the sale of our common stock.
In India, the Income Tax Act (1961) provides that income arising directly or indirectly through the sale of a capital asset, including shares of a company incorporated outside of India, will be subject to tax in India, if such shares derive, directly or indirectly their value substantially from assets located in India, whether or not the seller of such shares has a residence, place of business, business connection, or any other presence in India, if, on the specified date, the value of such assets located in India (i) exceeds a specified amount, or (ii) represents at least fifty per cent of the value of all the assets owned by the company. Further, the amendment does not deal with the interplay between this provision of Indian tax law and the existing double tax avoidance treaties that India has entered into with the United States. If the Indian tax authorities determine that our common stock derives its value substantially from assets located in India and the provisions of any relevant double tax avoidance treaty are deemed to be inapplicable in this context, stockholders may be subject to Indian income taxes on the income arising, directly or indirectly, through the sale of our common stock.
Stockholders may incur dilution. Our restated certificate of incorporation authorizes the issuance of shares of “blank check” preferred stock.
We are authorized to issue up to 200,000,000 shares of common stock, par value $0.0001 per share, and up to 10,000,000 shares of preferred stock, $0.0001 par value, in one or more series and with such rights, preferences and privileges as our board of directors may determine. The issuance of additional securities may cause substantial dilution to our stockholders.
Our board of directors has authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series. Our board of directors has the authority to determine the terms of each series of preferred stock, within the limits of the restated certificate of incorporation and the laws of the State of Delaware. These terms include the number of shares in a series, dividend rights, liquidation preferences, terms of redemption, conversion rights and voting rights. The issuance of any preferred stock may negatively affect the holders of our common stock. These possible negative effects include diluting the voting power of shares of our common stock and affecting the market price of our common stock.
| 16 |
Our failure to adopt certain corporate governance procedures may prevent us from obtaining a listing on a national securities exchange.
We have only two directors, and each one is not “independent” as that term is defined in the rules of any national securities exchange. As a result, we do not have an Audit or Compensation Committee. The functions of those committees are conducted by the Board. Consequently, there is a potential conflict of interest in Board decisions that may adversely affect our ability of our common stock to be listed on a national securities exchange and, as a result, may adversely affect the liquidity of our common stock.
Our common stock will be and may continue to be subject to the “penny stock” rules of the SEC, which could make transactions in our common stock more cumbersome and may reduce the value of our stockholders’ investment in our common stock.
Rule 15g-9 under the Exchange Act defines a “penny stock” as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. To the extent a market develops for our common stock, we anticipate that our common stock will be, and may continue to be considered a penny stock. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
Shares of our common stock that have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a former “shell company.”
Prior to acquiring our Indian operating subsidiary we were a “shell company” under applicable SEC rules and regulations because we had no or nominal operations and either no or nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets. Resales pursuant to Rule 144 promulgated under the Securities Act of the securities of a former shell company, such as us, are not permitted (i) until at least 12 months have elapsed from the April 18, 2016 initial filing of our Registration Statement on Form S-1, which reflected our status as a non-shellnon shell company and (ii) unless at the time of a proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other than Form 8-K reports. As a result, sales may not be made under Rule 144 unless we and the selling stockholders are in compliance with the requirements of Rule 144. Further, it will be more difficult for us to raise funding to support our operations through the sale of debt or equity securities unless we agree to register such securities under the Securities Act, which could cause us to expend significant time and cash resources. Additionally, our previous status as a shell company could also limit our use of our securities to pay for any acquisitions we may seek to pursue in the future (although none are currently planned). The lack of liquidity of our securities as a result of the inability to sell under Rule 144 for a longer period of time than a non-former shell company could make an investment in our securities less attractive and could cause the share price of our common stock to decline. Currently our stock is not trading.
Limitations on Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
| 17 |
If we fail to maintain an effective system in internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect the investor confidence in the us and, as result, the value of our common stock.
The Company has material weakness to maintain an effective system in internal control over financial reporting. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. We are required under Section 404(a) of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its Section 404(b) attestations, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, investor groups like Institutional Shareholder Services could initiate a withhold vote campaign with respect to the re-election of the members of our audit committee, and we could be subject to sanctions or investigations by the Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Provisions in our charter documents or Delaware law may inhibit a takeover or make it more difficult to effect a change in control, which could adversely affect the value of our common stock.
Our certificate of incorporation and bylaws contain, and Delaware corporate law contains, provisions that could delay or prevent a change of control or changes in our management. These provisions will apply even if some of our stockholders consider the offer to be beneficial or favorable. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline.
Raising additional capital by issuing securities may cause dilution to our stockholders.
We may need or desire to raise substantial additional capital in the future. Our future capital requirements will depend on many factors, including, among others:
| · | The costs of establishing or acquiring sales, marketing, and distribution capabilities for our services. |
| · | The extent to which we acquire or invest in businesses, services or technologies and other strategic relationships; and |
| · | The costs of financing unanticipated working capital requirements and responding to competitive pressures. |
If we raise additional funds by issuing equity or convertible debt securities, we will reduce the percentage ownership of our then-existing stockholders, and the holders of those newly issued equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing stockholders. Additionally, future sales of a substantial number of shares of our common stock or other equity-related securities in the public market could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock
We lease approximately 2,455 square feet of office space for our principal executive officers in Ahmedabad, India. Currently, our president and director, Deepak Sharma leases this space to us at no charge. Since March 2016, we alsoWe have closed the office in Bangalore and lease approximately 2,300 square feet of office space for our call center and operations in Ahmedabad, for which we currently pay $1,255 per month. This lease expires Marchwas cancelled effective from December 31, 2018. We believe these properties suit our operations and business needs and that adequate, suitable lease space will continue to be available to meet our needs.
The Company is party to certain legal proceedings claims and litigation arisingthat arise in the ordinary course and are incidental to its business. On the acquisition of our businessPRAMA, on April 22, 2019, the Company assumed an interest in an arbitration claim. PRAMA made an arbitration claim of approximately $300,000 (21.2 million Indian Rupees) against Ms. Khurana Hotels and otherwise.Apartments Private Limited in the Civil Court Senior Division of Amritsar, India. The ultimate costsclaim is based on the asserted failure of Ms. Khurana Hotels and Apartments Private Limited, as lessor, to resolvecomply with the terms of the lease. The Company has entered into a Realignment of control agreement with PRAMA and has no obligation with respect to any such matters couldpending legal proceedings or obligation. Based on the information currently available, management does not believe that the currently pending arbitration will have a material adverse effect on our financial statements. We could be forced to incur material expenses with respect to these legal proceedings, and in the event there is an outcome in any that is adverse to us, ourCompany’s consolidated financial position, and prospects could be harmed.
PART II
ITEMItem 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is quoted on the OTC Markets OTCQB tier, or OTCQB, of OTC Markets Group, Inc. under the symbol “TRRB.” Owing to the COVID-19 pandemic and the fact our shares are thinly traded, as of March 31, 2020, there was no closing sale price for our common stock as reported on the OTCQB system. Although our common stock is quoted on the OTCQB, there is no established publica limited trading market for our common stock. Westock and there have applied for admissionbeen few trades in our common stock to quotation ofdate. Because our securities on the OTCQB in the future. However, there cancommon stock is thinly traded, any reported sale prices may not be no assurance that our application for quotation will be approved, or that an active trading market will develop. See “Risk Factors — Risks Related to Our Common Stock — There is no current trading market for our securities, and if a trading market does not develop, our stockholders may be unable to resell their shares.”
Holders
As of that date, there were approximately 48 stockholders of record for our common stock. This does not include beneficial owners holding common stock in street name in brokerage accounts. Currently no employee have been granted any Equity from the Employee Stock Option Plan from the company.
Dividends
We have never declared or paid anycash dividends on our common stock. We anticipatestock, have no plans to pay any dividends, and it is unlikely that we will retain allpay any dividends in the foreseeable future. We currently intend to invest future earnings, if any, for theto finance expansion and operation of our business. We do not anticipate payingAny payment of cash dividends forin the foreseeable future.
Unregistered Sales of Equity Securities
During the year ended March 31, 2020, the Company issued an aggregate of 35,741,724 of common shares these events are described in further detail below.
In June 2019, the Company issued 25,462,167 common shares and reduced its liabilities by approximately $1,150,483 in connection with three separate related parties who converted their notes. There were no cash proceeds from the conversion of the notes.
On April 22, 2019, the Company issued 2,632,653 common shares to the shareholders of PRAMA, at a price of $0.28 per share, as part of the consideration for the PRAMA acquisition.
In June 2019, the Company issued 1,571,430 common shares when the warrant holders exercised their warrants and received approximately $15,714 in cash, at an exercise price of $0.01 per warrant.
During the quarter ended June 30, 2019 the Company issued and sold 775,157 units comprising one share and warrant to purchase two share of Company’s common stock; par value $0.0001 pursuant to a private placement. The purchase price per unit was $0.70 resulting in aggregate proceeds of $542,610 to the Company. The Company issued warrants to acquire approximately 1,550,314 common shares pursuant to the 775,157 units listed above during the quarter ended June 30, 2019. These warrants shall be exercisable, in whole or in part, during the three-year term commencing from the issuance date at an exercise price of $0.01.
| 20 |
During the quarter ended September 30, 2019 the Company issued and sold 714,286 units comprising one share and warrant to purchase two share of Company’s common stock; par value $0.0001 pursuant to a private placement. The purchase price per unit was $0.70 resulting in aggregate proceeds of $500,000 to the Company. The Company issued warrants to acquire approximately 1,428,572 common shares pursuant to the 714,286 units listed above during the quarter ended December 31, 2019. These warrants shall be exercisable, in whole or in part, during the three-year term commencing from the issuance date at an exercise price of $0.01.
On January 30, 2017,October 21, 2019 the Company issued and sold 535,715 units comprising one share and warrant to purchase two shares of Company’s common stock; par value $0.0001 pursuant to a private placement. The purchase price per unit was $0.70 resulting in aggregate proceeds of $375,001 to the Company. The Company issued warrants to acquire approximately 1,071,430 common shares pursuant to the 535,715 units listed above during the quarter ended December 31, 2019. These warrants shall be exercisable, in whole or in part, during the three-year term commencing from the issuance date at an exercise price of $0.01.
On October 27, 2019, the Company issued 4,050,316 common shares when the warrant holders exercised their warrants and received approximately $40,503 in cash, an exercise price of $0.01 per warrant.
For the year ended March 31, 2019 the following share issuances occurred:
On August 21, 2018, we issued consulting advisory shares of an aggregate of 478,560 shares of the Company’s common.
On December 21, 2018, we closed on the sale of an aggregate of 633,334214,286 shares of the Company’s common stock pursuant to subscription agreements between us and a totalone investor, resulting in gross proceeds to us of five$150,000.
On March 25, 2019, we closed on the sale of an aggregate of 428,571 shares of the Company’s common stock pursuant to subscription agreements between us and one investor, resulting in gross proceeds to us of $300,000.
On March 29, 2019, we closed on the sale of an aggregate of 357,144 shares of the Company’s common stock pursuant to subscription agreements between us and two investors, resulting in gross proceeds to us of $190,000.
These shares of the Company’s common stock were issued in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof, which exempts transactions by an issuer not involving any public offering. The issuance of these shares of common stock was not a public offering for purposes of Section 4(a)(2) because the offerees status as “accredited investors, and the manner of the issuance, including that the Company did not engage in general solicitation or advertising with regard to the issuance of such shares and did not offer any such shares to the public in connection with the issuance.
Securities Act or Regulation D promulgatedauthorized for issuance under equity compensation plans
See Part III, Item 12 of this annual report for information regarding securities authorized for issuance under the Securities Act. In reliance on these exemptions, we considered the following:
Not applicable.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” of this annual report.
Our audited consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
| 21 |
We are an “emerging growth company,” as defined under the federal securities laws and, as such, we have elected to comply with certain reduced public company reporting requirements for this and future filings. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from reporting requirements that apply to other public companies that are not emerging growth companies. Investors may find our common stock less attractive because we may rely on these exemptions, which include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected to opt out of the extended transition period for complying with the revised accounting standards. If investors find our common stock less attractive as a result of exemptions and reduced disclosure requirements, there may be a less active trading market for our common stock and our stock price may be more volatile or may decrease.
Introduction
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. GAAP. Certain of these data are considered “non-GAAP financial measures” under SEC rules. See the Non-GAAP Financial Measures section for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures. Certain columns and rows within the tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers. Discussions throughout this Management Discussion & Analysis (“MD&A”) are based on continuing operations unless otherwise noted. The Management Discussion and Analysis should be read the following management’s discussion and analysis in conjunction with the consolidated financial statements and related notes to the consolidated financial statements.
Promoters
The promoters and founders of the Company are Deepak Sharma, president and CEO / CFO and Sachin Mandloi, vice president and director. Transactions with the promoters are disclosed in the financial statements.
Forward-Looking Statements
The Company makes forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information currently available to us. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this report, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for TripBorn, Inc. (“TripBorn,our future operations, are forward-looking statements. These statements include declarations regarding our management’s beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “we,“will,” “us,“should,” “our”“could”, “intend,” “consider,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative of such terms or other comparable terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change, which has magnified such uncertainties. Readers should bear these factors in mind when considering forward-looking statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those suggested by such statements.
Any number of risks and uncertainties could cause actual results to differ materially from those we express in our forward-looking statements, including the risks and uncertainties we describe below and other factors we describe from time to time in our periodic filings with the SEC. We therefore caution you not to rely unduly on any forward-looking statement. Important factors that could cause actual results to differ include, but are not limited to, the risks discussed in “Risk Factors” and the “Company”)following:
| · | the material adverse impact of the covid-19 pandemic and the associated governmental restrictions on travel and hospitality and the extent of social distancing and shelter in place behavior conducted by consumers; |
| · | the safety, efficacy, distribution, cost and availability of covid-19 vaccines and therapeutic and hospital treatments for covid-19 impacting travel and hospitality; |
| · | the absence of liquidity in capital markets with third parties and or related parties; |
| · | the adequacy of our financial resources, including our sources of liquidity, including our ability to extend maturities on existing notes, our ability to raise equity capital at the right market terms and our ability to contain and reduce our operating costs; and |
| · | uncertainty related to our reserves, valuations, provisions and anticipated realization of assets. |
| 22 |
Further information on the risks specific to our business is detailed within this report, including under “Risk Factors.” Forward-looking statements speak only as of the date they were made, and we disclaim any obligation to update or revise forward-looking statements whether because of new information, future events or otherwise.
Substantial doubt is deemed to exist concerning our ability to continue as a going concern
Management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.
The Company has historically incurred operating losses and experienced cash outflows from operations and has an accumulated deficit. The Company has also been historically reliant on loans from related parties, loans from third parties and sales of equity securities to fund operations, working capital and complete acquisitions. These trends are expected to continue for the medium term. To the extent that sales of equity securities are not sufficient, the Company expects to curtail or defer discretionary expenses.
Beginning in December 2019, China, experienced an outbreak of a highly infectious form of a respiratory infection caused by a novel Coronavirus. The disease caused by the novel Coronavirus was later termed Covid-19. On March 11, 2020 the World Health Organization declared the Coronavirus outbreak a global pandemic. India reported its first Covid-19 infection in the city of Thrissur, in the state of Kerala, India on January 30, 2020 and the first case fatality on March 10, 2020 in the state of Karnataka, India. On March 25, 2020, India’s Prime Minister Narendra Modi announced a 21-day nationwide lockdown in response to the Covid-19 pandemic. To comply with the Indian lockdown, the Company closed all of its hotel operations, which impacts the Hospitality segment. Also as a result of the Indian lockdown, the Indian government temporarily suspended flights, trains and buses which impacts the e-Commerce Aggregator segment. On June 1, 2020, India partially lifted its lockdown, however the Hospitality and e-Commerce Aggregator segments are still materially adversely impacted by Covid-19. As of the date of filing this Annual Report, hotels, flights, trains and buses are operating to varying degrees by region, however the impact of subsequent waves of COVID-19 on India has been material and severe.
The Company does not have operations in China and the Coronavirus pandemic did not have any impact on the operations or financial results of the Company for the period ended March 31, 2020. However, the pandemic did have a material adverse effect to the Company’s Indian operations, vendors, customers, lessors and employees’ health, balance sheet, liquidity, statement of operations and future prospects for the period ended March 31, 2020 and onwards. As of today’s date, management is in the process of implementing various cost reduction efforts to conserve cash and liquidity, including reducing staffing levels and potentially closing certain hotels permanently, but has not reached fixed conclusions.
Without new equity or loan support and reductions in operating expenses, the Company would not be able to support the current operating plan through twelve months after the date the financial statements are issued. No assurance can be given at this time, however, as to whether we will be able to raise new equity or loan support and / or reduce operating expenses. Due to these factors, substantial doubt exists about the Company’s ability to continue as a going concern through twelve months after the date that the financial statements are issued. If the Company does not obtain sufficient funds when needed, the Company expects it would reduce its operating subsidiary, Sunalpha Green Technologies Private Limited (“Sunalpha”).expenses and defer vendor payments. Management is working on the plan for the business restructuring to ensure the liquidity for the operations and has realigned its focus and strategy on the ecommerce business after PRAMA deconsolidation. Management has taken the steps to reduces the losses significantly by cutting the cost and manpower. Management and existing stockholder plan to support the company in its operational expenses and working capital. The financial statements for the period ended March 31, 2020, do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
| 23 |
Owing to risk factors. We urge you to review carefully the section of this Memorandum entitled “Risk Factors” for a more complete discussioneffects of the risks associatedpandemic, potential investors and readers of these financial statements should not rely on the consolidated statement of operations, balance sheet, cash flow, equity / deficit and comprehensive loss as being indicative of current trading and or liquidity and balance sheet. Management recorded impairments of goodwill, intangible and fixed assets for the period ended and as of March 31, 2020.
Overview
The Company is an eCommerce aggregator and a hospitality management company. An aggregator model is a form of eCommerce whereby our website, www.tripborn.com aggregates, information on various travel and hospitality vendors and presents them on a single platform, to ease, facilitate, coordinate, and effectuate consumer travel and hospitality needs. The Hospitality segment is an Indian based operator of 24 hotel properties in 18 cities with an investment in our common stock. See “Special Note Regarding Forward-Looking Statements.”
The eCommerce aggregator business functions as a Last Mile Commerce and Connectivity aggregator that delivers product and services to as an OTA, that offers travel reservations and related travel services and products to travel agentsoffline consumers using a service agent network in India through our website, www.tripborn.com.website. Currently, we operate as a business to business, or B2B, online travel agencyLast Mile Commerce platform that serves travelbusiness agents and travel companies based in India in bookingproviding travel and financial services and products for their offline customers. Through our internet-based platform,website, our business or travel agent customersagents can search and book domestic and international air tickets, hotels, vacation packages, rail tickets and bus tickets, as well as ancillary travel-related services and e-commercefinancial services including money transfer bill payment, and Micro ATM products. We serve over 3,551travel agents in the Indian states of Gujarat, Maharashtra, Rajasthan, Karnataka and Madya Pradesh. At this time, approximately 85% of our travel agent customers are based in Gujarat, primarily in and around the city of Ahmedabad.
The hospitality business is comprised of our 51% equity interest in our subsidiary, PRAMA, which was acquired on April 22, 2019. Our brands strive to highlight friendly service and reflects a local spin on the lawstravel experience in an environment that allows customers to feel welcome and at home while paying a budget price. For the periods included in this discussion our focus was to anticipate guest needs and pleasantly surprise them with our customer service. Under our asset-light business model, we manage hotels, rather than owning them. Currently, due to the covid-19 pandemic, we are seeking to minimize operating costs and manage occupancy to minimize cash flow losses.
eCommerce Aggregator business overview
We have built, advanced and secure, service-oriented technology platforms, that integrate our sales, customer service and fulfillment operations. Our website is hosted in the cloud and is used by our B2B customers or service agents to enable them to sell our full suite of online travel services to their customers. Our technology platforms are scalable and can be augmented to handle increased traffic and complexity of products with limited additional investment, an example of which is the high traffic generated by promotional rates offered simultaneously by multiple travel operators and suppliers. Our website facilitates the requirements of the Republicgrowing Indian middle-class travel market, which is characterized by lower rates of India in 2010. Sunalpha commenced operations as an OTA in India in February 2014.
We have designed our customer facing websites to be user-friendly to our B2B customer, providing our customers with extensive low-price options and alternative routings. We continuously make improvements to our online booking platforms to enhance the user experience by focusing on automation. Our cloud-based platform has been designed to link to our multiple suppliers’ systems either through “direct connects” or a shell company with nominal or no assets or operations. We were known as PinstripesNYC, Inc. until January 2016. We filed reports as PinstripesNYC, Inc. with the SEC under the Exchange Act from August 2010 until we terminated our registration under the Exchange Act in May 2013. Our fiscal year ends on March 31. We refer to the fiscal year ended March 31, 2017 as fiscal 2017 and the fiscal year ended March 31, 2016 as fiscal 2016.
Currently, due to the recent expansioncovid-19 pandemic, we are seeking to minimize operating costs to minimize cash flow losses.
eCommerce Aggregator operating metrics
In evaluating our eCommerce Aggregator business, we use operating metrics, including gross bookings and revenue margin. Gross bookings are a measure of the total dollar volume of transactions that we process and is used by us to measure our sales forcescale and our expansion intogrowth. We calculate revenue margin as revenue as a percentage of gross bookings.
| 24 |
| Year ended March 31, | |||||
| 2020 | 2019 | ||||
| Gross Bookings1 | $77,251,882 | $71,860,637 | |||
| Net revenues | $701,216 | $472,052 | |||
| Revenue Margin2 | 0.9% | 0.7% | |||
1* Gross bookings represent the statestotal retail value of Maharashtra, Karnatakatransactions booked through us, generally including taxes, fees and Madya Pradesh. In fiscal 2018 we expect to expand into other neighboring states in India.
2* Revenue margin is defined as Net revenues as a largely unbanked country with cash transactions typical. The Indian government’s decision to demonetize their two largest bank notes in circulation on November 8, 2016 caused a disruption throughout India’s economy, slowing growth and forcing customers to focus on day to day expenses. This move slowed India’s GDP during the fourth quarterpercentage of fiscal 2017 to 6.1% causing India to lose its status as being the world’s fastest growing economy. Growth in some of our travel products slowed during the quarter, while our money transfer product grew during this period. We believe that the slowdown in growth will be short lived as the impacts of re-monetization have begun to be felt and GDP growth is projected to be 7.2% and 7.5% in 2017 and 2018.
CONSOLIDATED RESULTS OF OPERATIONS
Impact of CIVID-19
The pandemic had a material adverse impact on the Company and 2016
Acquisition of PRAMA
The following table presents, foracquisition of PRAMA on April 22, 2019, had a material impact on the fiscal years ended March 31, 2017 and 2016, the componentsresults of our consolidated statements of income:
Twelve Months Ended March 31, | |||
| 2017 | 2016 | ||
| Net revenue | $569,843 | $193,415 | |
| Cost of revenue | 293,841 | 30,950 | |
| Gross profit | 276,002 | 162,465 | |
| Operating expenses | |||
| Selling, general, and administrative expenses | 490,829 | 190,852 | |
| Legal and consulting expenses | 246,440 | 129,060 | |
| Income (loss) from operations | (461,267) | (127,447) | |
| Other income (expense) | |||
| Depreciation and amortization | (226,526) | (5,480) | |
| Interest expense | (162,163) | (9,926) | |
| Total other income (expense) | (388,689) | (15,406) | |
| Income (loss) before income tax expense | (849,956) | (172,853) | |
| Income tax benefit (expense) | 167,032 | 32,699 | |
Net income (loss) | (682,924) | (140,154) | |
The pro forma combined revenues and net loss before income taxes, for the combined entity, as though the acquisition of PRAMA had occurred on deriving net cash flow from operations.
| Twelve Months Ended | |||||||||
| March 31, | March 31, | ||||||||
| 2017 | 2016 | ||||||||
| Cash Provided by (Used in): | |||||||||
| Operating Activities | $ | (500,394 | ) | $ | (169,153 | ) | |||
| Investing Activities | (715,551 | ) | (1,042,598 | ) | |||||
| Financing Activities | 1,480,681 | 1,440,142 | |||||||
Deconsolidation of PRAMA
The deconsolidation of PRAMA on January 1, 2020, had a $695,000 upgrade to our Travelcord operating software duringmaterial impact on the results of operations for the year ended March 31, 2017.
CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES
Cash Requirements and Our Credit Facility
The Company does not maintain a credit or borrowing facility. The Company is not profitable and there is substantial doubt over its ability to continue as a going concern. The cash and cash equivalents, current assets, current liabilities, loans to third parties and loans to related parties are disclosed in the consolidated balance sheets and notes to the accounts. The consolidated cash flow statement is disclosed in the financial statements.
The Company has historically incurred operating losses and experienced cash outflows from operations. The Company has also been historically reliant on loans from related parties, loans from third parties and sales of equity securities to fund operations, working capital and complete acquisitions. These trends are expected to continue for the medium term. The Company continues to raise funds from the sale of convertible promissory notes to non-affiliate investors,equity securities. To the sale of common stock, and the issuance of a convertible promissory note in payment for the Travelcord software upgrades. Cash generated from financing activities during the prior year resulted from loans we received from our founders, and fromextent that sales of convertible promissory notesequity securities are not sufficient, the Company expects to non-affiliate investors.curtail or defer discretionary expenses and or curtail or scale back future acquisitions.
| 25 |
Owing to COVID-19, we may be unable to fund operations on a temporary or extended basis. We presentlymonitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to survive through COVID-19.
We do not have a senior credit or revolving credit facilityown hotel properties, and do not expectplan to obtain oneown hotel properties in the foreseeable future.
The current focus of management is to minimize operating expenses and limit cash outflows for the duration of the covid-19 pandemic and associated consumer reluctance to travel and spend until vaccines and therapeutic treatments can abate the health consequences of covid-19. We do not know the estimated duration of the pandemic but do not expect the pandemic to end in the short and medium term for India.
We do not believe a discussion of business segment performance for the year ended March 31, 2020 is meaningful given the current economic and operating environment. The historical results are not representative of current or future results as we address the issues raised by covid-19.
There is no obligation for TripBorn to fund the operating losses and cash requirements of PRAMA.
We will require additional capital to continue to fund our operations and will look to raise funds through public and private offerings of our securities. We estimate that we will require approximately $3.0 million and $5.0 million inOur future liquidity needs are largely impacted by the next 12 and 24 months to support our continued operations.
The Hospitality segment is impacted by Indian national holidays and festivals which change region by region and tend to be spread throughout the year. Accordingly, the Company did not experience significant seasonality during the year ended March 31, 2020.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
CONTROLS AND PROCEDURES
Management’s Report on Disclosure Controls and Procedures
We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and our principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this yearly report on Form 10-K. Based on this evaluation, our management concluded that as of the end of the period covered by this yearly report on Form 10-K, our disclosure controls and procedures were not effective.
| 26 |
Management Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over the Company's financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Our management, with the participation of our principal executive officer and principal financial officer have conducted an assessment, including testing, using the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") (2013). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. This assessment included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2017,2020 The ineffectiveness of the Company's internal control over financial reporting was due to the following material weaknesses, which are indicative of many small companies with small staff:
| (i) | inadequate segregation of duties consistent with control objectives; |
| (ii) | lack of multiple levels of supervision and review; and |
| (iii) | lack of adequate U.S. GAAP and SEC financial reporting knowledge to identify, account for and disclose financial reporting issues on a timely basis; and |
| (iv) | an inability to report financial statements in a timely manner. |
We believe that the weaknesses identified above have not had any material effect on our financial results. We are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the current fiscal year, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.
Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management's Remediation Plan
The weaknesses and their related risks are not uncommon in a company of our size because of the limitations in the size and number of staff. Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible. However, we hadare committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributing to the material weakness are remediated as soon as possible. We continue to implement our remediation plan for the previously reported material weakness in internal control over financial reporting, which includes steps to increase dedicated personnel, improve reporting processes, and enhance related supporting technology.
Because of the inherent limitations in all control systems, no off-balance sheet arrangements.
Management believes that despite our material weaknesses set forth above, our financial statements are fairly stated, in all material respects, in accordance with U.S. GAAP. Because of the time needed to implement these steps and revenue margin. Gross bookings is a measure of total dollar volume of transactionstest the applicable controls in operation, management does not anticipate that we process. This metric is an operating metric usedthe material weaknesses will be fully remediated by management, the investor community, and analysts who follow the travel industry to measureMarch 31, 2022.
Change in Internal Control over Financial Reporting
There was no change in our market share and to measure our scale and growth. We calculate revenue margin as revenue as a percentage of gross bookings.
| Twelve Months Ended March 31 | ||
| 2017 | 2016 | |
Gross Bookings1 | $13,374,314 | $2,413,330 |
Revenue Margin2 | 4.3% | 8.0% |
| 27 |
Share-based compensation
See Note 3 of our products as we increaseConsolidated Financial Statements for more information.
New Accounting Standards
See Note 3 of our agent network and expandConsolidated Financial Statements for our geographic reach. Revenue margin decreased in the twelve months ended March 31, 2017 to 4.3% from 8.0% in the prior year. While gross bookings have increased in all categories, this decrease is driven by margins generated by lower margin offerings in air, bus, and rail ticketing and hotel booking outpacing margins from our higher margin product offerings including vacation packages and payment services.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
See Note 3 of our critical accounting policies requires an evaluation of a number of complex criteria and significant accounting judgments by us. Our management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We evaluate our estimates on a regular basis and make changes accordingly. Actual results may materially differ from these estimates under different assumptions or conditions. If actual results were to materially differ from these estimates, the resulting changes could have a material adverse effect on our financial condition.
Recent Accounting Pronouncements
New Accounting Pronouncements Recently Adopted
See Note 3 of our common stock, or 93% of the then-outstanding shares, for cash consideration of $95,500 pursuant to the Stock Purchase Agreement among us, Arna, and Maxim Kelyfos, LLC dated December 8, 2015.
New Accounting Pronouncements Not Yet Adopted
See Note 3 of Part II of this report.
As a “smaller reporting company”, the Company is not required to provide the information required by this Item.
ITEMItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAFinancial Statements and Supplementary Data
| 28 |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| TripBorn, Inc. Consolidated Financial Statements for the Fiscal Years Ended March 31, | Page |
| 30 | |
| Report of Independent Registered Public Accounting Firm | 31 |
| Consolidated Balance Sheets | 32 |
| Consolidated Statements of Operations | 33 |
| 34 | |
| 35 | |
| 36 | |
| Notes to Consolidated Financial Statements | 37 |
To the Board of Directors and
Stockholders
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheetssheet of Tripborn,TripBorn, Inc. and Subsidiary (the “Company”) as of March 31, 2017 and 20162020, and the related consolidated statements of operations and comprehensive income,loss, stockholders’ equitydeficit, and cash flows for the years then ended. year ended March 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020, and the results of its operations and its cash flows for year ended March 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit of $8,165,386 and suffered recurring losses from operations and has a net working capital deficiency as of March 31, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters also are described in Note 2. The financial statements do not include any adjustments that may result from the outcome of these uncertainties. If the company is unable to successfully raise additional capital to satisfy their obligations, there could be a material adverse effect on the company.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedthe Company’s financial statements based on our audits.
We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included considerationAs part of our audit, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An
Our audit includesincluded performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. AnOur audit also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.
| /s/ Ram Associates | |
| We have served as the Company’s auditor since 2019. | |
| Hamilton, New Jersey | |
| September 10, 2021 | |
| 30 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of TripBorn Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of TripBorn, Inc. and Subsidiary (the “Company”) as of March 31, 2019, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the year ended March 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 20172019, and 2016 the results of its operations and its cash flows for the years thenyear ended March 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Friedman LLP | ||
| We have served as the Company’s auditor since 2019. | ||
| Assets | ||||||||
| 2017 | 2016 | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 516,707 | $ | 251,971 | ||||
| Accounts receivable | 289,089 | 117,379 | ||||||
| Other current assets | 294,203 | 72,981 | ||||||
| Total current assets | 1,099,999 | 442,331 | ||||||
| Property and equipment, net | 13,236 | 10,207 | ||||||
| Intangible assets, net | 1,563,222 | 1,077,226 | ||||||
| Deferred tax assets | 226,331 | 33,680 | ||||||
| Total Assets | $ | 2,902,788 | $ | 1,563,444 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 175,748 | $ | 55,744 | ||||
| Other current liabilities | 460,314 | 35,753 | ||||||
| Total current liabilities | 636,062 | 91,497 | ||||||
| Long-term liabilities | ||||||||
| Loans payable - Related Party | 0 | 23,958 | ||||||
| Convertible notes | 2,355,120 | 1,500,482 | ||||||
| Total current and long-term liabilities | 2,991,182 | 1,615,937 | ||||||
| Stockholders' equity (deficit) | ||||||||
| Preferred stock, par value $0.0001; 10,000,000 authorized | — | — | ||||||
| Common stock, par value $0.0001; 200,000,000 authorized | ||||||||
| 78,971,581 and 76,804,914 shares issued and outstanding as of | ||||||||
| March 31, 2017 and March 31, 2016 respectively. | 7,898 | 7,681 | ||||||
| Additional paid-in capital | 725,492 | 75,708 | ||||||
| Accumulated other comprehensive income (loss) | 6,732 | 9,710 | ||||||
| Retained earnings/(deficit) | (828,516 | ) | (145,592 | ) | ||||
| Total stockholders' equity (defecit) | (88,394 | ) | (52,493 | ) | ||||
| Total liabilities and stockholders' equity | $ | 2,902,788 | $ | 1,563,444 | ||||
| Philadelphia, Pennsylvania | |
| September 12, 2019 |
| 2017 | 2016 | |||||||
| Net revenue | $ | 569,843 | $ | 193,415 | ||||
| Cost of revenue | 293,841 | 30,950 | ||||||
| Gross profit | 276,002 | 162,465 | ||||||
| Operating expenses | ||||||||
| Selling, general and administration expenses | 490,829 | 190,852 | ||||||
| Legal and consulting expenses | 246,440 | 129,060 | ||||||
| Income (loss) from operations | (461,267 | ) | (157,447 | ) | ||||
| Other income (expenses) | ||||||||
| Depreciation and amortization | (226,526 | ) | (5,480 | ) | ||||
| Interest expense | (162,163 | ) | (9,926 | ) | ||||
| Total other income (expense) | (388,689 | ) | (15,406 | ) | ||||
| Income (loss) before income tax expense | (849,956 | ) | (172,853 | ) | ||||
| Income tax benefit | 167,032 | 32,699 | ||||||
| Net income (loss) | (682,924 | ) | (140,154 | ) | ||||
| Other comprehensive income (loss): | ||||||||
| Unrealized foreign currency translation income/(loss) | (2,978 | ) | 8,929 | |||||
| Net comprehensive income/(loss) for the period | $ | (685,902 | ) | $ | (131,225 | ) | ||
| Basic income (loss) per share | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Diluted income (loss) per share | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Basic weighted average number of shares | 77,286,488 | 58,386,281 | ||||||
| Diluted weighted average number of shares | 77,286,488 | 58,386,281 | ||||||
| Table of Contents |
TRIPBORN, INC.
| March 31, | March 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 421,909 | $ | 1,230,012 | ||||
| Accounts receivable, and unbilled revenue (net of allowance of $35,191 and $58,507, respectively) | 98,960 | 178,492 | ||||||
| Due from related parties | - | 14,364 | ||||||
| Other current assets | 442,264 | 570,571 | ||||||
| Total current assets | 963,133 | 1,993,439 | ||||||
| Non current assets: | ||||||||
| Intangible assets, net | 25,000 | 362,717 | ||||||
| Property and equipment, net | 10,056 | 12,247 | ||||||
| Other noncurrent assets | 26,366 | 48,956 | ||||||
| TOTAL ASSETS | $ | 1,024,555 | $ | 2,417,359 | ||||
| LIABILITIES AND DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 295,700 | $ | 310,130 | ||||
| Local duties and taxes | 21,748 | - | ||||||
| Due to related parties | 1,602 | - | ||||||
| Loans and convertible notes due to related parties | 695,000 | 1,838,157 | ||||||
| Interest payable (includes $612,881 and $508,531 due to related parties, respectively) | 660,040 | 536,073 | ||||||
| Salaries and benefits (includes $616,082 and $443,858 due to related parties respectively) | 616,082 | 443,858 | ||||||
| Other current liabilities | 280,395 | 118,111 | ||||||
| Total current liabilities | 2,570,567 | 3,246,329 | ||||||
| Long-term liabilities: | ||||||||
| Long-term portion of loans and convertible notes | - | 250,000 | ||||||
| Total current and long-term liabilities | 2,570,567 | 3,496,329 | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock $.0001 par value | - | - | ||||||
| Authorized shares: 10,000,000, none issued and none outstanding | ||||||||
| Common stock $.0001 par value | 13,294 | 9,720 | ||||||
| Authorized shares: 200,000,000 | ||||||||
| Shares issued and outstanding: 132,932,159 and 97,190,435 | ||||||||
| Additional paid-in capital | 6,585,331 | 3,227,451 | ||||||
| Accumulated deficit | (8,165,386 | ) | (4,355,630 | ) | ||||
| Accumulated other comprehensive income | 20,749 | 39,489 | ||||||
| TOTAL TRIPBORN, INC STOCKHOLDERS’ EQUITY / (DEFICIT) | (1,546,012 | ) | (1,078,970 | ) | ||||
| Noncontrolling interest in consolidated entity (Note 1) | - | - | ||||||
| Total equity (deficit) | (1,546,012 | ) | (1,078,970 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 1,024,555 | $ | 2,417,359 | ||||
The accompanying notes toare an integral part of these consolidated financial statements.
| Common Stock | ||||||||||||||||||||||||
| Shares | Amount | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings/ deficit | Total stockholders’ equity/ (deficit) | |||||||||||||||||||
| Balance at March 31, 2015 | 1,298,701 | $ | 130 | $ | 1,712 | $ | 781 | $ | (5,438 | ) | $ | (2,815 | ) | |||||||||||
| Issue of common shares | 70,129,869 | 7,013 | 74,534 | 81,547 | ||||||||||||||||||||
Recapitalization on December 15, 2015 | 5,376,344 | 538 | (538 | ) | ||||||||||||||||||||
| Other comprehensive income (loss) | 8,929 | 8,929 | ||||||||||||||||||||||
| Net income (loss) | (140,154 | ) | (140,154 | ) | ||||||||||||||||||||
| Balance at March 31, 2016 | 76,804,914 | 7,681 | 75,708 | 9,710 | (145,592 | ) | (52,493 | ) | ||||||||||||||||
| Other comprehensive income (loss) | (2,978 | ) | (2,978 | ) | ||||||||||||||||||||
| Issuance of common shares | 2,166,667 | 217 | 649,784 | 650,001 | ||||||||||||||||||||
| Net income (loss) | (682,924 | ) | (682,924 | ) | ||||||||||||||||||||
| Balance at March 31, 2017 | 78,971,581 | $ | 7,898 | $ | 725,492 | $ | 6,732 | $ | (828,516 | ) | $ | (88,394 | ) | |||||||||||
TRIPBORN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year ended | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| NET REVENUES | $ | 6,944,505 | $ | 472,052 | ||||
| COST OF REVENUES AND EXPENSES | ||||||||
| Cost of revenue | 5,990,788 | 376,207 | ||||||
| Selling, general and administrative expenses | 2,148,989 | 951,331 | ||||||
| Legal and consulting expenses | 413,000 | 150,733 | ||||||
| Impairment on intangibles | 207,494 | |||||||
| Impairment on investment and goodwill | 2,437,143 | - | ||||||
| Depreciation and amortization | 445,827 | 134,118 | ||||||
| 11,643,241 | 1,612,389 | |||||||
| LOSS FROM OPERATIONS | (4,698,736 | ) | (1,140,337 | ) | ||||
| Other income, net | 120,900 | 61,465 | ||||||
| Interest expense | (335,673 | ) | (189,435 | ) | ||||
| Interest income | 54,926 | 260 | ||||||
| Gain on de-consolidation of PRAMA | 277,619 | - | ||||||
| LOSS BEFORE INCOME TAXES | (4,580,964 | ) | (1,268,047 | ) | ||||
| Income tax expense | - | - | ||||||
| NET LOSS | $ | (4,580,964 | ) | $ | (1,268,047 | ) | ||
| Net loss attributable to noncontrolling interests | $ | (771,208 | ) | $ | - | |||
| Net loss attributable to TripBorn, Inc. | $ | (3,809,756 | ) | $ | (1,268,047 | ) | ||
| NET LOSS PER COMMON SHARE | ||||||||
| Basic loss per common share attributable to TripBorn, Inc. | $ | (0.04 | ) | $ | (0.01 | ) | ||
| Diluted loss per common share attributable to TripBorn, Inc. | $ | (0.04 | ) | $ | (0.01 | ) | ||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||||||
| Basic weighted-average number of common shares | 122,563,439 | 96,211,435 | ||||||
| Diluted weighted-average number of common shares | 122,563,439 | 96,211,435 | ||||||
The accompanying notes toare an integral part of these consolidated financial statements.
| 2017 | 2016 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | (682,924 | ) | $ | (140,154 | ) | ||
| Adjustment to reconcile net income (loss) to net cash | ||||||||
| provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 226,526 | 5,480 | ||||||
| Other comprehensive income (loss) | (2,978 | ) | 8,929 | |||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | (171,710 | ) | (50,576 | ) | ||||
| Other current assets | (221,222 | ) | (36,921 | ) | ||||
| Deferred tax asset | (192,651 | ) | (32,641 | ) | ||||
| Increase (decrease) in: | ||||||||
| Accounts payable and accrued expenses | 120,004 | 44,843 | ||||||
| Other current liabilities | 424,561 | 31,887 | ||||||
| Net cash provided by (used in) operating activities | (500,394 | ) | (169,153 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (12,130 | ) | (3,648 | ) | ||||
| Increase in intangible assets | (703,421 | ) | (1,038,950 | ) | ||||
| Net cash used in investing activities | (715,551 | ) | (1,042,598 | ) | ||||
| Cash flows from financing activities | ||||||||
| Increase in common stock | 217 | 7,551 | ||||||
| Increase in additional paid-in capital | 649,784 | 73,996 | ||||||
| Decrease in loan from shareholder | (23,958 | ) | (141,887 | ) | ||||
| Increase in convertible notes | 854,638 | 1,500,482 | ||||||
| Net cash provided by financing activities | 1,480,681 | 1,440,142 | ||||||
| Net change in cash and cash equivalents | 264,736 | 228,391 | ||||||
| Cash and cash equivalents | ||||||||
| Beginning of the year | 251,971 | 23,580 | ||||||
| End of the year | $ | 516,707 | $ | 251,971 | ||||
| Supplementary disclosure of cash flows information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | — | $ | — | ||||
| Income taxes | $ | — | $ | — | ||||
| Table of Contents |
TRIPBORN, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
| Year ended | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Net loss | $ | (3,809,756 | ) | $ | (1,268,047 | ) | ||
| Net loss attributable to noncontrolling interests | (771,208 | ) | - | |||||
| Net loss attributable to TripBorn, Inc. | (4,580,964 | ) | $ | (1,268,047 | ) | |||
| Currency translation adjustment | (18,740 | ) | 24,952 | |||||
| Currency translation adjustment attributable to noncontrolling interests | (68,338 | ) | - | |||||
| Currency translation adjustment attributable to TripBorn, Inc | (87,078 | ) | 24,952 | |||||
| Comprehensive loss | (3,828,496 | ) | (1,243,095 | ) | ||||
| Comprehensive loss attributable to noncontrolling interests | (839,546 | ) | - | |||||
| Comprehensive loss attributable to TripBorn, Inc. | (4,668,042 | ) | (1,243,095 | ) | ||||
The accompanying notes toare an integral part of these consolidated financial statements.
| 34 |
TRIPBORN, INC.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)
| Shares | Common stock | Additional paid in capital | Accumulated other comprehensive income | Accumulated deficit | TripBorn Inc deficit | Noncontrolling interests | Total deficit | |||||||||||||||||||||||||
| (In $ except for number of common stock) | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2018 | 95,711,874 | $ | 9,572 | $ | 2,321,818 | $ | 14,537 | $ | (3,087,583 | ) | $ | (741,656 | ) | $ | - | $ | (741,656 | ) | ||||||||||||||
Sale of common shares and warrants | 1,000,001 | 100 | 699,900 | - | - | 700,000 | - | 700,00 | ||||||||||||||||||||||||
| Issuance of common stock | 478,560 | 48 | 205,733 | - | - | 205,781 | - | 205,781 | ||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | 24,952 | - | 24,952 | - | 24,952 | ||||||||||||||||||||||||
| Net loss | - | - | - | - | (1,268,047 | ) | (1,268,047 | ) | - | (1,268,047 | ) | |||||||||||||||||||||
| Balance as of March 31, 2019 | 97,190,435 | $ | 9,720 | $ | 3,227,451 | $ | 39,489 | $ | (4,355,630 | ) | $ | (1,078,970 | ) | $ | - | $ | (1,078,970 | ) | ||||||||||||||
Common stock issued on purchase of subsidiary | 2,632,653 | 263 | 736,880 | - | - | 737,143 | - | 737,143 | ||||||||||||||||||||||||
Common stock and warrants issued for cash consideration | 2,025,158 | 203 | 1,417,408 | - | - | 1,417,611 | - | 1,417,611 | ||||||||||||||||||||||||
Common stock issued on exercise of warrants | 5,621,746 | 562 | 55,655 | - | - | 56,217 | - | 56,217 | ||||||||||||||||||||||||
Common stock issued on conversion of debt | 25,462,167 | 2,546 | 1,147,937 | - | - | 1,150,483 | - | 1,150,483 | ||||||||||||||||||||||||
Noncontrolling interests arising on acquisition of subsidiary | - | - | - | - | - | - | 2,053,333 | 2,053,333 | ||||||||||||||||||||||||
Deconsolidation of non- controlling interest | - | - | - | - | - | - | (1,213,787 | ) | (1,213,787 | ) | ||||||||||||||||||||||
Currency translation adjustment | - | - | - | (18,740 | ) | - | (18,740 | ) | (68,338 | ) | (87,078 | ) | ||||||||||||||||||||
| Net loss | - | - | - | - | (3,809,756 | ) | (3,809,756 | ) | (771,208 | ) | (4,580,964 | ) | ||||||||||||||||||||
| Balance as of March 31, 2020 | 132,932,159 | $ | 13,294 | $ | 6,585,331 | $ | 20,749 | $ | (8,165,386 | ) | $ | (1,546,012 | ) | $ | - | $ | (1,546,012 | ) | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 35 |
TRIPBORN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended March 31 | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (4,580,964 | ) | $ | (1,268,047 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 445,827 | 134,118 | ||||||
| Impairment on PRAMA | 2,437,143 | - | ||||||
| Impairment on definite live intangibles | 207,494 | - | ||||||
| Gain on deconsolidation of PRAMA | (277,619 | ) | - | |||||
| Stock based compensation | 102,891 | 77,168 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (527,802 | ) | (8,058 | ) | ||||
| Other current assets | (57,182 | ) | 110,605 | |||||
| Other non-current assets | 43,121 | - | ||||||
| Accounts payable | (339,431 | ) | (50,277 | ) | ||||
| Other current liabilities | 2,521,863 | 366,500 | ||||||
| Other non-current liabilities | (586,889 | ) | - | |||||
| Net cash used in operating activities | (611,548 | ) | (637,991 | ) | ||||
| Cash flows from investing activities | ||||||||
| Net cash paid on acquisition of subsidiary | (971,910 | ) | (250,000 | ) | ||||
| Other investments | 32,506 | - | ||||||
| Purchases of fixed assets | (211,112 | ) | (428 | ) | ||||
| Net cash used in investing activities | (1,150,516 | ) | (250,428 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock and exercise of warrants | 1,473,827 | 700,000 | ||||||
| Change in debt, net | (494,290 | ) | 250,000 | |||||
| Net cash used in financing activities | 979,537 | 950,000 | ||||||
| Effect of exchange rate changes on cash | (25,576 | ) | 13,064 | |||||
| Net change in cash | (808,103 | ) | 74,645 | |||||
| Cash | ||||||||
| Beginning of the period | 1,230,012 | 1,155,367 | ||||||
| End of the period | $ | 421,909 | $ | 1,230,012 | ||||
| Non-Cash Disclosure | ||||||||
| Issuance of stock for consulting service | $ | - | $ | 205,781 | ||||
| Supplementary disclosure of cash flows information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest paid | $ | 191,309 | $ | - | ||||
| Income taxes | $ | - | $ | - | ||||
| Conversion of debt to common shares | $ | 1,150,483 | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 36 |
March 31, 20172020 and 2016
1. DESCRIPTION OF BUSINESS
TripBorn, Inc. (“TripBorn” or the “Company”) is an eCommerce aggregator and a business to business online travel agency (“OTA”) that offers travel reservations and related travel services and products to travel agents in India through its proprietary internet-based platform at www.tripborn.com. TripBornhospitality management company. An aggregator model is a holding company that was incorporated in Delaware in January 2010form of eCommerce whereby our website, www.tripborn.com aggregates information from various travel and operated ashospitality vendors and presents them to users on a shell company with nominal or no assets or operations until December 2015 when it acquired substantially all of the outstanding common stock of its operating subsidiary,single platform, to ease, facilitate, coordinate and effectuate consumer travel and hospitality needs. Our eCommerce Aggregator business segment operates through Sunalpha Green Technologies Private Limited (“Sunalpha”), a wholly owned subsidiary. Our hospitality business segment is comprised of our 51% equity interest in our subsidiary PRAMA Hotels and Resorts Private Limited (“PRAMA”), which was acquired on April 22, 2019, for aggregate consideration of $2,137,143. All of the Company’s net revenues are derived from operations in India.
The consolidated financial statements include the accounts and transactions of the Company; its subsidiaries, Sunalpha (ownership interest 100% THROUGH ENTIRE PERIOD); PRAMA (ownership interest 51%) FROM THE DATE OF ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF DECONSOLIDATION ON JANUARY 1, 2020, Apodis Hotels & Resorts Limited (“AHRL”) (ownership interest approximately 30%, derived from 51%*59.15% FROM THE DATE OF ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF DECONSOLIDATION ON JANUARY 1, 2020), IntelliStay Hotels Private Limited (“IHPL”) (ownership interest approximately 26%, derived from 51%*59.15%*86.96% FROM THE DATE OF ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF DE-CONSOLIDATION ON JANUARY 1, 2020), Apodis Foods and Brands Private Limited (“AFBL”) (ownership interest approximately 30%, derived from 51%*59.15%*100% FROM THE DATE OF ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF DECONSOLIDATION ON JANUARY 1, 2020), non-operating subsidiary Apodis Projects Private Limited (“APPL”) (ownership interest approximately 30% derived from 51%*59.15%*100% FROM THE DATE OF ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF DECONSOLIDATION ON JANUARY 1, 2020); and an equity investee, PRAMA Canary Wharf Hotels Private Limited (“PCW”) (ownership interest approximately 15%, derived from 51%*59.15%*50% FROM THE DATE OF SIGNIFICANT INFLUENCE ON ACQUISITION ON APRIL 22, 2019 THROUGH THE DATE OF CESSATION OF SIGNIFICANT INFLUENCE ON JANUARY 1, 2020).
The Company exercises significant influence over PCW, FROM APRIL 22, 2019, THROUGH JANUARY 1, 2020, but did not control the investee and the Company is not the primary beneficiary of the investee’s activities. PCW is accounted for using the equity method FROM APIRL 22, 2019 THROUGH JANUARY 1, 2020. All significant inter-company accounts and transactions are eliminated in consolidation
The Company’s operations are moderately seasonal, with average net revenues normally higher during the Indian summer months and national or regional holidays, than during winter months and non-holiday periods. Also certain of the Company’s managed hotel properties are in remote hillside locations which experience their own distinct weather patterns. As the business is moderately seasonal, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter, or for the full fiscal year.
Acquisition of PRAMA
On April 22, 2019, the Company acquired a 51% equity interest in PRAMA for $2,137,143, consisting of $1,400,000 in cash and the issuance of 2,632,653 shares of common stock of the Company valued at $737,143 or approximately $0.28 per share.
The acquisition of PRAMA was treated as a business combination under U.S. GAAP. During the first quarter, we estimated the allocation of the purchase price to the assets acquired and liabilities assumed based on estimated fair value assessments. The preliminary allocation was estimated and also not revised as of and for year ended March 31, 2020.
The following reflects the net cash paid on acquisition of PRAMA in the year ended March 31, 2020:
| Fair Value | ||||
| Cash paid in twelve-month period ended March 31, 2020 | $ | 1,150,000 | ||
| Net cash on opening balance sheet of PRAMA | (178,090 | ) | ||
| Net cash paid for 51% interest in PRAMA | $ | 971,910 | ||
| 37 |
See segmental reporting for the recognition of revenue and net loss for PRAMA (which comprises the entire Hospitality segment) for the year ended March 31, 2020, related to the acquiree, respectively.
The Company does not believe that pro forma financial information for the year ended March 31, 2020, is meaningful, following the de-recognition of PRAMA on January 1, 2020.
Deconsolidation of PRAMA
In accordance with Share Purchase Agreement that was executed by the Company with PRAMA, the Company was required to contribute approximately USD 1,330,000 equivalent to INR 10,00,00,000/- which was not subscribed by Company due to change in business conditions in India and Company realigning its India and global businesses and their direction and geographies. Hence, On January 01, 2020, it was commercially agreed between Company and PRAMA that for a foreseeable future PRAMA shall continue to be controlled by its founders and management team in India. The Company shall neither have control nor influence over the business and operating decision of PRAMA and/or its subsidiaries companies effective from January 01, 2020. The Company has selectedexperienced significant delay to finalize and document realignment of control due to COVID-19 pandemic. The Company has signed the Realignment of Control agreement with PRAMA on August 31, 2020, with effective date of January 1, 2020, for realignment of control of PRAMA and PRAMA businesses.
As a result of Realignment of Control Agreement with PRAMA whereby the Company no longer has the power to govern the financial and operating policies of PRAMA due to the loss of power to cast its votes at meetings of the Board of Directors other than in tandem with founders and management team of PRAMA; accordingly, the Company derecognized related assets, liabilities and noncontrolling interests of PRAMA. The Company did not receive any consideration in the deconsolidation of PRAMA. The cost of investment in PRAMA was fully impaired as PRAMA has a fair value of $0 as of January 1, 2020, through the current date.
The cash and cash equivalents for PRAMA as of January 1, 2020, amounted to $119,730, which comprised the cash outflow on deconsolidation.
The gain on deconsolidation of PRAMA is shown in the Consolidated Statements of Operations.
The net assets over which the Company lost control as of January 1, 2020, amounted to:
| Fair Value | ||||
| Cash and cash equivalents | $ | 119,730 | ||
| Accounts receivable, net and unbilled revenue | 1,170,887 | |||
| Amounts due from related parties | 905,501 | |||
| Goodwill | 936,788 | |||
| Property and equipment, net | 1,638,710 | |||
| Intangible assets, net | 1,887,864 | |||
| Right to use of assets | 9,624,179 | |||
| Accounts payable | (1,517,567 | ) | ||
| Local duties and taxes | (959,338 | ) | ||
| Amounts due to related party | (864,853 | ) | ||
| Loans and convertible notes due to related parties | (379,813 | ) | ||
| Salaries and benefits | (604,834 | ) | ||
| Other current liabilities | (831,451 | ) | ||
| Loans due within one year with third parties | (235,799 | ) | ||
| Long term loans and convertible notes | (350,337 | ) | ||
| Operating lease liabilities | (9,509,955 | ) | ||
| Other non current liabilities | (596,347 | ) | ||
| Net assets de-recognized | $ | 936,167 | ||
| 38 |
2. LIQUIDITY AND GOING CONCERN
Management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.
The Company has incurred net losses from operations since inception. The Company’s ongoing losses have had a significant negative impact on the Company’s financial position and liquidity. The Company has also been historically reliant on loans from related parties, loans from third parties and sales of equity securities to fund operations, working capital and complete acquisitions.
Beginning in December 2019, China, experienced an outbreak of a highly infectious form of a respiratory infection caused by a novel Coronavirus. The disease caused by the novel Coronavirus was later termed Covid-19. On March 11, 2020, the World Health Organization declared the Coronavirus outbreak a global pandemic. India reported its first Covid-19 infection in the city of Thrissur, in the State of Kerala, India on January 30, 2020, and the first case fatality on March 10, 2020, in the state of Karnataka, India. On March 25, 2020, India’s Prime Minister Narendra Modi announced a 21-day nationwide lockdown in response to the Covid-19 pandemic. To comply with the Indian lockdown, the Company closed all of its hotel operations, which impacts the Hospitality segment. Also as a result of the Indian lockdown, the Indian government temporarily suspended flights, trains and buses which impacts the e-Commerce Aggregator segment. On June 1, 2020, India partially lifted its lockdown, however the Hospitality and e-Commerce Aggregator segments are still materially adversely impacted by Covid-19. As of the date of filing this Form 10-K, hotels, flights, trains, and buses are operating to varying degrees by region.
The pandemic did have a material adverse effect to the Company’s Indian operations, vendors, customers, lessors and employees’ health, balance sheet, liquidity, statement of operations and future prospects for the year ended March 31, 2020, and onwards. As of today’s date, management is in the process of implementing various cost reduction efforts to conserve cash and liquidity, including reducing staffing levels and potentially closing certain hotels permanently, but has not reached fixed conclusions.
The Company will require additional capital and may also require additional financing from related or third parties in the event that operations do not generate the expected revenues, or a recurrence of Covid-19 were to cause another suspension of operations. Such additional capital or financing may not be available on favorable terms, or at all. Due to these factors, substantial doubt exists about the Company’s ability to continue as a going concern through twelve months after the date that the financial statements are issued. If the Company does not obtain sufficient funds when needed, the Company expects it would reduce its fiscaloperating expenses and defer vendor payments, including closure of certain operations and or disposals of assets Management is working on the plan for the business restructuring to ensure the liquidity for the operations and has realigned its focus and strategy on the ecommerce business. Management has taken the steps to reduces the losses significantly by cutting the cost and manpower. Management and existing stockholder plan to support the company in its operational expenses and working capital.
The financial statements for the year end.ended March 31, 2020, recorded impairments to goodwill, intangible assets, fixed assets to reflect the impact of COVID-19.
| 39 |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission under("SEC") and include the Exchange Act from August 2010 until it terminated its registration under the Exchange Act in May 2013.
Principles of Consolidation
The consolidated financial statements include the accounts and transactions of the Company, its wholly owned subsidiary, Sunalpha and its subsidiary, PRAMA which the Company owns a 51% equity interest in. PRAMA was acquired on April 22, 2019 and was deconsolidated on January 1, 2020. Through PRAMA, the Company has an approximate 15% equity interest in PCW, which through December 31, 2019 was accounted for under the equity method, but this was stopped on January 1, 2020 when PRAMA was deconsolidated. The Company does not exercise significant influence over PRAMA and does not account for PRAMA as an equity investee. All significant inter-company accounts and transactions are eliminated in consolidation.
Reclassification
For the fiscal year ending March 31, 2020 certain accounts have been reclassified to conform to the current year's presentation. Such reclassification had no impact on net loss or total assets.
As a result of the acquisition of PRAMA, during the quarter ended June 30, 2019, the Company made a change to its segment reporting structure which resulted in two segments 1) eCommerce Aggregator and 2) Hospitality. As a result, certain prior year amounts have been reclassified to conform to the current year’s presentation, that is they have been classified as relating to the eCommerce Aggregator business. The change in segment structure had no effect on previously reported total net revenues, cost of revenues and other operating expenses, other expenses, net, net loss, basic and fully diluted earnings per share. On January 1, 2020 the Company reverted to a single segment company with the deconsolidation of PRAMA.
Otherwise, we have not reclassified other prior-period amounts to conform to the current-period presentation. Certain columns and rows may not add due to the use of rounded numbers.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally acceptedU.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the United Statesfinancial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of America (“US GAAP”)which form the basis for making judgments about the carrying values of assets and liabilities. Such estimates primarily relate to unsettled transactions and events as detailedof the date of the financial statements. Accordingly, actual results may differ from estimated amounts.
Our significant estimates include elements of revenue recognition, the application of fair value estimates for the purchase price allocation on the acquisition of PRAMA, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software and income taxes. The use of different estimates or assumptions in determining the fair value of our goodwill, indefinite-lived and definite-lived intangible assets may result in different values for these assets, which could result in an impairment or, in the period in which an impairment is recognized, could result in an impairment charge. The Company has recognized an impairment charge for the year ended March 31, 2020.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board’sBoard (“FASB”) Accounting Standards Codificationissued ASU 2014-09, Revenue from Contracts with Customers (“ASC”Topic 606”).
| 40 |
Topic 606 was effective as of April 1, 2018, for the Company, using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. We adopted Topic 606 pursuant to the December 14, 2015method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to accumulated deficit at April 1, 2018.
For revenue recognition arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction are those of Sunalpha and are recorded usingprice, (iv) allocate the historical cost basis. The consolidated financial statements after completion of the December 14, 2015 transaction include the assets, liabilities and results of operations of Sunalpha upprice to the day priorperformance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the closingcustomer. At contract inception, once the contract is determined to be within the scope of Topic 606, we evaluate the goods or services promised within each contract related performance obligation and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Our significant estimates include elements of revenue recognition, the application of fair value estimates for the purchase price allocation on the acquisition of PRAMA, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software and income taxes. The use of different estimates or assumptions in determining the fair value of our goodwill, indefinite-lived and definite-lived intangible assets liabilities and results of operationsmay result in different values for these assets, which could result in an impairment or, in the period in which an impairment is recognized, could result in an impairment charge. The Company has recognized an impairment charge for the year ended March 31, 2020.
The following is a description of the Company and SunalphaCompany’s principal activities, separated by reportable segments, from and after the closing of the transaction on December 14, 2015. All significant related party accounts and transactions betweenwhich the Company generates its revenue.
eCommerce Aggregator revenues:
Air, Rail and Sunalpha have been eliminated upon consolidation.
Vacation Packages. Recognized on a gross basis, upon transfer of control of promised services in an amount which we are entitled to in exchange for the confirmation of the issuance of an airline ticket to the customer. In instances where the Company has procured coupons of airline tickets in advance for an anticipated future demand from customers,service.
Other Revenue. Primarily comprising visa processing fees, money transfer, and assumes the risk of loss for tickets not used, the revenue from the sale of such airline tickets is accounted for on the gross basis.
Hospitality Revenues:
Hospitality Services.
| · | Room revenue: Revenue from hotel operations where customers book rooms and banquets/conference rooms is recognized based on the period for which the customer completes the transaction (i.e. the stayed night occurs or a deposit cancellation provision elapses). Payment is typically received upon check-out. For room revenue, the Company recognizes revenue over time. |
| · | Food & beverages revenue: The Company provides food and beverages that customer consumes as they are provided. The performance obligation is satisfied at point in time. The Company recognizes revenue at the time of sale only. |
| · | Management Fees from Operation & Maintenance Properties: Revenue under management contracts is recognized on the attainment of certain financial results, primarily operating earnings, as specified in each contract. Management fees are typically billed and paid monthly. A time-elapsed output method is used to measure progress and provides a faithful depiction of the transfer of services to the customer as the value transferred to the customer is substantially the same over time. Fees are variable with the uncertainty of base fees being resolved monthly and the uncertainty of incentive fees being resolved annually. These fees are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved. |
| 41 |
Practical expedients. The Company has elected certain of the optional exemptions from the rail and bus ticket reservations is recognized asdisclosure requirement for remaining performance obligations for specific situations in which an agent on a net commission earned basis, asentity need not estimate variable consideration to recognize revenue. Accordingly, the Company does not assume anyapplies the practical expedient to its management fees from contracts with Operation & Maintenance Properties. These contracts are typically long-term, and the performance obligation following the confirmationconsists of the issuance of the ticketproviding hotel management services to the customer.
The Company has elected the practical expedient to not disclose revenue recognition since revenuerelated to remaining performance obligations that are part of a contract with an original expected duration of one year or less, and to not consider the effects of significant financing components in the transaction price when the duration of financing is recognized uponone year or less.
The Company has elected certain of the availment of services byoptional exemptions from the customer.
Cost of Revenue
Cost of revenue is the amount paid or accrued against procurement of these services and products from the respective suppliers and do not include any other operating cost to provide these services or products. Cost of revenue is recognized when incurred, which coincides with the recognition of the corresponding revenue.
Other operating expenses
Other operating expenses includes Selling, general and administrative expenses, Legal and consulting expenses and Depreciation and amortization.
Selling, general and administrative expenses include, costsdirect operating expenses, general and administrative expenses such as advertising and business promotion costs, utilities, rent, payroll, and consultants fees and charges, which are recognized on an accrual basis.
Legal and consulting expenses are recognized on an accrual basis.
Depreciation and amortization costs are amortized over the estimated useful lives of the assets.
Cash and Cash Equivalents
The Company considers all highly-liquid investments (including money market funds)highly liquid debt instruments with an original maturity at acquisition of three months or less, to be cash equivalents. The Company maintains its cash balances,in bank accounts in the U.S. and India, which at times may not be covered by, or exceed federally insured limits.the coverage limit of the Deposit Insurance and Credit Guarantee Corporation of India. The Company does not believe that this results in any significant credit risk.
Receivables and Credit Policies
Accounts receivable are uncollateralized customer obligations due under normal trade terms which generally range from 24 hours to seven to ten days from the time and date of transaction. Accounts receivablereceivables are stated at the amount billedmanagement expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the customer. Customer account balances with invoices exceeding credit terms are considered delinquent. PaymentsCompany's estimate of potential losses inherent in accounts receivable are allocatedbalances, based on historical loss and known factors impacting its customers. The Company does not accrue interest on past due receivables.
| 42 |
The Company performs periodic analyses of each customer’s outstanding accounts receivable balance and assesses, on an account-by-account basis, whether the allowance for doubtful accounts needs to specific invoices identifiedbe adjusted based on currently available evidence such as historical collection experience, current economic trends and changes in customer payment terms. In accordance with the customer’s remittance advice or,Company’s policy, if unspecified, are applied to the earliest unpaid invoices.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is computed on a straight-line basis over the estimated useful lives of the assets. The Company charges repairs and maintenance costs that do not extend the lives of the assets to expenses as incurred.
Intangible Assets
Intangible assets with indefinite useful lives consist exclusively of trademarks and are tested for impairment at least annually. annually, or whenever events or indicators of impairment occur between annual impairment tests. Management expects to use the trademarks indefinitely.
Intangible assets that have limited useful lives are amortized on a straight linestraight-line basis over the shorter of their useful or legal lives.
The fair value of the trade names is determined using a discounted cash flow analysis based on the relief-from-royalty approach. The relief-from-royalty approach is an income approach that utilizes certain market information by reference to the amount of royalty income we could generate if the trade names were licensed, in an arm’s length transaction, to a third party. Based on a comparison of our trade names to the guideline transactions, including an assessment of industry conditions, the age of the trademark/trade name, degree of consumer recognition and life cycle of the brand, a reasonable royalty rate is estimated for the trade names. The principal factors used in the discounted cash flow analysis requiring judgment are the projected net sales, discount rate, royalty rate and terminal value assumptions.
Goodwill
Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics. The reporting units are aligned with our reporting segments. Goodwill is not amortized, but the Company tests goodwill for impairment each year or more frequently should facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. As part of the impairment test, we may elect to concentrationsperform an assessment of credit risk consist primarilyqualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with a quantitative assessment. The quantitative assessment involves calculating an estimated fair value of each reporting unit based on projected future cash flows and cash equivalents and accounts receivable.
Impairment of Long-lived Assets
The Company maintains itsrecords an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. We recorded an impairment charge to long-lived assets for the year ended March 31, 2020 on January 1, 2020 when we deconsolidated PRAMA and recognized the effects of the pandemic.
| 43 |
Business Combinations
When acquiring other businesses or participating in bank deposit accounts,mergers or joint ventures in which we are deemed to be the acquirer, we generally recognize identifiable assets acquired, liabilities assumed and any noncontrolling interests at their acquisition date fair values, and separately from any goodwill that may be required to be recognized. Goodwill, when recognizable, would be measured as the excess amount of any consideration transferred, which is generally measured at fair value, over the acquisition date fair values of the identifiable assets acquired and liabilities assumed.
On the date of acquisition and deconsolidation, the assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair values and removed at their carrying values. The acquiree's results of operations are also included in our consolidated results as of the date of acquisition. Intangible assets that arise from contractual/legal rights or are capable of being separated are measured and recorded at fair value and amortized over the estimated useful life.
Accounting for such transactions requires us to make significant assumptions and estimates. These include, among others, any estimates or assumptions that may be made for the amounts of future cash flows that will result from any identified intangible assets, the useful lives of such intangible assets, the amount of any contingent liabilities, including contingent consideration, to record at the time of the acquisition and the fair values of any tangible assets acquired and liabilities assumed. Although we believe any estimates and assumptions, we make to be reasonable and appropriate at the time they are made, unanticipated events and circumstances may arise that affect their accuracy, causing actual results to differ from those estimated by us.
Foreign Currency Translation
The functional currency of the Company and the currency of the primary economic environment in which it operates is the Indian Rupee. Monetary assets and liabilities in foreign currencies are re-measured into the functional currency at the rates of exchange prevailing at the balance sheet dates. Transactions in foreign currencies are re-measured into functional currency at the rates of exchange prevailing on the date of the transaction. All transaction foreign exchange gains and losses are recorded in the accompanying consolidated statements of operations.
The assets and liabilities of the subsidiaries for which the functional currency is other than the U.S. dollar are translated into U.S. dollars, the reporting currency, at the rate of exchange prevailing on the balance sheet dates. Revenues and expenses are translated into U.S. dollars at average exchange rates in effect for the periods presented. Resulting translation adjustments are included in accumulated other comprehensive income (loss) within stockholders’ equity (deficit).
Earnings and loss per share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation.
Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. The computation of diluted earnings per share does not insured.assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect. The Company has not experienced any lossesoutstanding convertible debt and outstanding warrants which have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive.
Promotion and Advertising expenses
We incur advertising expense consisting of offline costs, including newspaper and media advertising, and online advertising expense to promote our brands. We expense the production costs associated with advertisements in such accounts. the period in which the advertisement first takes place. We expense the costs of communicating the advertisement (e.g., newspaper, short message service (“SMS”) or email campaign) as incurred each time the advertisement or promotion is performed.
| 44 |
Stock-Based Compensation
The Company believesaccounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options over the instruments vesting period. Options awarded to purchase shares of common stock issued to non-employees do not need to be remeasured as per ASU 2018-07 principles. Stock based compensation is recorded in Legal and Consulting expenses in our Statement of Operations.
In the year ended March 31, 2018, the Company issued 478,560 common shares to a non-employee consultant for services to be performed on the Company’s behalf through June 2020. The Company records the corresponding pro-rata expense in Selling, General and Administration expenses in the Statement of Operations and discloses an adjustment to reconcile net loss to net cash used in operating activities in the Statement of Cash flows. The services performed under the agreement reflect administrative services, advisory board services, business development services, consulting services and financial consulting services. The number of shares offered to the non-employee consultant reflected the fair value of the services to be provided by this individual.
Leases
On April 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating prior periods. Results and disclosure requirements for reporting periods beginning after April 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840.
The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carry forward of historical lease classification, on whether a contract was or contains a lease, and of the assessment of initial direct costs for any leases that existed prior to April 1, 2019. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.
The adoption did not impact our beginning or prior period consolidated balance sheets, statement of equity / (deficit), statement of operations and statement of cash flows.
Under Topic 842, the Company determines if an arrangement is a lease and classifies that lease as either an operating or finance lease at inception. If an arrangement is a lease or contains a lease, we then determine whether the lease meets the criteria of a finance lease or an operating lease. Right-of-use (‘ROU’) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, only payments that are fixed and determinable at the time of commencement are considered. As the rate implicit in certain of the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments. The right-of-use asset is recognized at the amount of the lease liability with certain adjustments, if applicable. These adjustments include lease incentives, prepaid rent, and initial direct costs. We reassess if an arrangement is or contains a lease upon modification of the arrangement. At the commencement date of a lease, we recognize a lease liability for contractual fixed lease payments and a corresponding right-of-use asset representing our right to use the underlying asset during the lease term. The lease liability is measured initially as the present value of the contractual fixed lease payments during the lease term. The lease term additionally includes renewal periods only if it is not exposedreasonably certain that we will exercise the options. Contractual fixed leases payments are discounted at the rate implicit in the lease when readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the options will be exercised.
Operating leases are included in Operating lease right-of-use assets, Other current liabilities, and Operating lease liabilities, due after one year, in our Consolidated Balance Sheets.
Employee Benefits
PRAMA had employee benefit plans in the form of statutory and welfare schemes covering statutorily eligible employees which are accounted for in accordance with ASC 715 Compensation – Retirement benefits.
| 45 |
Gratuity
In accordance with the Indian Payment of Gratuity Act, 1972, PRAMA provided for gratuity, a defined benefit retirement plan (the Gratuity Plan) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation. The Gratuity Plan is unfunded. The current service costs for defined benefit plans are accrued in the year to which they relate. Prior service costs, if any, significantresulting from amendments to the plans are recognized and amortized over the remaining period of service of such employees.
Provident
In accordance with Indian law, all eligible employees of the Company, are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both the employee and the Company, contribute monthly at a determined rate (currently twelve percent of contributory wages subject to a maximum cap). These contributions are made to the Government Provident Fund and the Company has no further obligation under Provident Fund, beyond its monthly contributions. The amount contributed for the year ended March 31, 2020 and 2019, amounted to $275,599 and $Nil, respectively.
Vacation
Accruals for Indian statutory vacation pay is determined at the actuarial estimate for the entire unutilized leave balance standing to the credit risk on cash.
Income Taxes
The Company accounts for income taxes under the asset and liability method, in accordance with FASB ASC 740, Accounting for Income Taxes. Deferredwhich requires the recognition of deferred tax assets and liabilities are recognized for the expected future tax consequences attributable toof events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities based on the differences between the financial statement carrying amountsand tax basis of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measuredby using the enacted tax rates expected to apply to taxable income in effect for the yearsyear in which those temporarythe differences are expected to be recovered or settled.reverse. The effect of a change in tax rates on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recordsrecognizes deferred tax assets to the estimated future tax effects of temporary differences between tax bases ofextent that it believes that these assets and liabilities and amounts reported on the balance sheets as well as operating loss and tax credit carryforwards. Deferred taxes are classified as current or noncurrent based on the balance sheet classification of the related assets and liabilities. Deferred income tax results primarily from temporary differences related to net property and equipment for financial and income tax reporting.
The Company has concluded that as of March 31, 2017 and 2016 there are no materialrecords uncertain tax positions taken or expectedin accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the amount of tax benefit that is more than 50 percent likely to be taken that would require recognition of a liability or asset or disclosure inrealized upon ultimate settlement with the financial statements. related tax authority.
Non Income Taxes
The Company is subject to routine auditsIndia Goods and Services Tax and other local duties and non-income taxes on its transactions in India. The Company collects such taxes from customers, and pays such taxes on applicable supplies and inputs, and remits the net amounts to the respective local tax authorities on an accrual basis.
Equity-method Investments
Through PRAMA, the Company has an approximately 15% equity interest in PCW, a non-trading company formed to develop a potential hotel in Bengaluru, India. The Company exercises significant influence over PCW but does not control the investee and the Company is not the primary beneficiary of the investee’s activities. PCW is accounted for using the equity method through December 31, 2019. On January 1, 2020, when PRAMA was deconsolidated, we stopped recording PCW as an equity investee.
| 46 |
Equity investments are accounted for using the equity-method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. The total of our investments in equity-method investees, including identifiable intangible assets, deferred tax liabilities and goodwill, is included within “Other noncurrent assets” on our consolidated balance sheets. Our share of the earnings or losses as reported by taxing jurisdictions; however thereequity-method investees, amortization of the related intangible assets, and related gains or losses, if any, are currentlyclassified as “Equity-method investment activity, net of tax” on our consolidated statements of operations. Our share of the net income or loss of our equity-method investees may in the future include operating and non-operating gains and charges, which may have a significant impact on our reported equity-method investment activity and the carrying value of those investments. We regularly evaluate these investments, which are not carried at fair value, for other-than-temporary impairment.
We record purchases, including incremental purchases, of shares in equity-method investees at cost. Reductions in our ownership percentage of an investee, including through dilution, are generally valued at fair value, with the difference between fair value and our recorded cost reflected as a gain or loss in our equity-method investment activity. In the event we no auditslonger have the ability to exercise significant influence over an equity-method investee, we would discontinue accounting for any tax periodsthe investment under the equity method.
Included in progress.Other Non-Current Assets as of March 31, 2020, is $Nil relating to the fair value of equity-method investments and $Nil relating to the fair value of amounts due from equity-method investee. During the period April 22, 2019, through March 31, 2020, the amounts related to PCW were recognized and then de-recognized with no impact on the Consolidated Statement of Operations for the year ended March 31, 2020.
Related Parties
The Company management believes thatfollows FASB ASC subtopic 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the Company’s income tax returnsrelated parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the last three years remain subjectbenefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to examination basedan extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Recent Accounting Pronouncements
New Accounting Pronouncements Recently Adopted
On April 1, 2019 the Company adopted ASU No. 2016-2, Leases (Topic 842) (ASU 2016-2), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets on normal statutory periods subject to audits, notwithstanding any events or circumstances that may exist which could expand the open period.
Adoption of the standard did not result in adjustment to our prior period Balance Sheets, Statements of Operations or Statements of Cash Flows. When we adopted ASU 2016-02, we applied the package of practical expedients allowed by the standard, and therefore, we did not reassess: a) Whether any expired or existing contracts are translated at average rates in effector contain leases under the new definition; b) The lease classification for any expired or existing leases; or c) Whether previously capitalized costs continue to qualify as initial direct costs.
| 47 |
In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. The new rules will be effective for the periods presented. Company in the first quarter of 2021. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact to the Company's financial statements but does believe it is expected to have a minimal impact on the Company’s financial statements and related disclosures.
New Accounting Pronouncements Not Yet Adopted
No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company's present or future consolidated financial statements.
4. CUSTOMER CONCENTRATION
Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. A significant portion of the Company’s Hospitality revenue has been derived from two customers, which were acquired as part of the PRAMA acquisition on April 22, 2019, and so were not present in the comparable period. For the year ended March 31, 2020, the two largest customers accounted for $2,611,705, and $993,844, in revenue or $3,605,549, in aggregate. There were no significant receivable concentrations as of March 31, 2020. There were no significant revenue and receivable concentrations as of and for the year ended March 31, 2019. Changes in the relationship with these customers could materially and adversely affect the Company’s financial performance and going concern status.
5. EMPLOYEE BENEFITS
With the deconsolidation of PRAMA on December 31, 2019, the Company no longer has significant employee benefit obligations.
The cumulative translation adjustmentchange in benefit obligation of the gratuity and vacation statutory plans are as follows:
| March 31, 2020 | March 31, 2019 | |||||||
| Change in Projected Benefit Obligation | ||||||||
| Projected benefit obligation, beginning of period | $ | — | $ | — | ||||
| Assumed on acquisition on April 22, 2019 | 153,443 | — | ||||||
| Service cost | 13,854 | — | ||||||
| Interest cost | 12,061 | — | ||||||
| Benefits paid | (2,607 | ) | — | |||||
| Deconsolidation on January 1, 2020 | (176,751 | ) | — | |||||
| Projected Benefit Obligation, end of period | $ | — | $ | — | ||||
The components of net periodic pension costs for the gratuity and vacation statutory plans are as follows:
Year ended March 31, 2020 | Year ended March 31, 2019 | |||||||
| Net Periodic Pension Cost | ||||||||
| Service cost benefit earned | $ | 13,854 | $ | — | ||||
| Interest cost on projected benefit obligation | 12,061 | — | ||||||
| Benefits paid | (2,607 | ) | — | |||||
| Foreign currency translation effect | — | — | ||||||
| Net Periodic Pension Cost | $ | 23,308 | $ | — | ||||
There were no amounts recognized in accumulated other comprehensive income.
| 48 |
The range of assumptions used for benefit obligations and net periodic benefit cost for the period April 22, 2019 through December 31, 2019 are as follows:
Discount rate 7.95 to 8.07% per annum
Rate of compensation increase 6% to 8% per annum
Retirement range of 58 to 65 years.
PRAMA evaluated these assumptions based on its employee demographics, budgets, and industry standards.
6. LEASES
With the deconsolidation of PRAMA on December 31, 2019, the Company no longer has significant operating lease right to use of assets and operating lease liabilities. The amounts de-recognized on January 1, 2020, amounted to:
| Operating leases | January 1, 2019 | |||
| Operating lease right-of-use assets | $ | 9,624,179 | ||
| Operating lease liabilities, due within one year | $ | 388,767 | ||
| Operating lease liabilities, due after one year | 9,509,955 | |||
| Total operating lease liabilities | $ | 9,898,722 | ||
The components of lease expense during the year ended March 31, 2020 (all recognized through December 31, 2019) is included in the accumulated other comprehensive gain (loss) within shareholders’ equity (deficit).
| Financial statement line item | Year ended March 31, 2020 | |||||
| Amortization of right-of-use assets | Cost of revenue | $ | 269,785 | |||
| Interest on lease liabilities | Cost of revenue | 941,228 | ||||
| Total lease expense | $ | 1,211,013 | ||||
Lease expense is included in Cost of common stock to Arna Global LLC (“Arna”) for cash considerationrevenue in our Consolidated Statement of $95,500. Arna is wholly-owned by the Company’s President and director, Deepak Sharma. The Company accountedOperation for the change in control transaction with Arna using the acquisition methodyear ended March 31, 2020.
Supplemental other information related to leases were as follows:
| Weighted Average Remaining Lease Term | ||||||||
| Operating leases | 14.1 | Years | ||||||
| Weighted Average Discount Rate | ||||||||
| Operating leases | 14.0 | % | ||||||
There are no significant future maturities of accounting. Arna obtained controllease liabilities as of 93% of the outstanding shares of common stock of PinstripesNYC, Inc. in connection with the Stock Purchase Agreement among PinstripesNYC, Inc., Arna, and Maxim Kelyfos, LLC dated December 8, 2015, and is the acquirer. This transaction resulted in (1) no identifiable assets being acquired, (2) no liabilities being assumed, (3) no goodwill being recognized and (4) no gains being recognized from a bargain purchase.
7. PROPERTY AND EQUIPMENT, NET
Property and Equipment consists of the following as of March 31, 20172020 and 2016. The property and equipment listed below are recorded in the books of Sunalpha.March 31, 2019, respectively.
| March 31, 2020 | March 31, 2019 | |||||||
| Furniture, fixtures and fittings | $ | 33,802 | $ | 32,247 | ||||
| Leasehold improvements | - | |||||||
| Plant and machinery | - | - | ||||||
| Construction in process | - | - | ||||||
| Total | 33,802 | 32,247 | ||||||
| Accumulated depreciation | (23,746 | ) | (20,000 | ) | ||||
| Fixed assets, net | $ | 10,056 | $ | 12,247 | ||||
| 49 |
| March 31, 2017 | March 31, 2016 | |||||||
| Computer | $ | 20,782 | $ | 11,634 | ||||
| Furniture and Fixture | 4,138 | 4,125 | ||||||
| Office Equipment | 5,768 | 2,638 | ||||||
| Software License | 244 | 407 | ||||||
| Total | 30,933 | 18,804 | ||||||
| Accumulated depreciation | (17,697 | ) | (8,597 | ) | ||||
| Fixed assets, net | $ | 13,236 | $ | 10,207 | ||||
Depreciation expense for the year ended March 31, 20172020, and 2016 is $9,100,2019 were $188,505 and $5,2893,865, respectively.
The Company deconsolidated PRAMA on January 1, 2020, and impaired Sunalpha property and equipment on the date.
8. INTANGIBLE ASSETS
Intangible assets with definite lives consist of the following as of March 31, 20172020, and March 31, 2016:
| March 31, 2017 | March 31, 2016 | |||||||
| API Access | $ | 129,876 | $ | 121,455 | ||||
| Software | 1,651,000 | 956,000 | ||||||
| Total | 1,780,876 | 1,077,455 | ||||||
| Accumulated amortization | (217,654 | ) | (229 | ) | ||||
| Intangible assets, net | $ | 1,563,222 | $ | 1,077,226 | ||||
| March 31, 2020 | March 31, 2019 | |||||||
| Software and software access agreement | $ | 880,770 | $ | 1,088,264 | ||||
| Customer relationships | - | - | ||||||
| Total | 880,770 | 1,088,264 | ||||||
| Accumulated amortization | (855,770 | ) | (725,547 | ) | ||||
| Intangible assets with definite lives, net | $ | 25,000 | $ | 362,717 | ||||
Amortization expense for the yearsyear ended March 31, 20172020, and 2019 were $257,322 and $130,283 respectively. The Company deconsolidated PRAMA effective January 1, 2020 and recorded an impairment charge for definite live intangible assets on the same date.
There were no intangible assets with indefinite lives as of March 31, 2020, and March 31, 2016 was $217,425 and $191,2019, respectively.
Intangible assets consistwith indefinite lives are not amortized, they are reviewed for impairment annually, or whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. In these circumstances, they are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values.
The Company wrote off the full amount of Application Programming Interface (API) accessintangible assets with major travel companiesindefinite lives in the amount of $458,272 in the year ended March 31, 2020.
9. AMOUNTS DUE TO AND FROM RELATED PARTIES
Amounts due from related parties
Amounts due from related parties as of December 31, 2019, below, were deconsolidated on January 1, 2020:
| Due from related parties | Description | December 31, 2019 | ||||
| Pramatech Pvt. Ltd | Shareholder in PRAMA, there are also common shareholders in PRAMA and this company | $ | 685,306 | |||
| Mr. B. K. Ashok | Shareholder in PRAMA | 105,108 | ||||
Alchemy Food & Franchisee Solutions Pvt. Ltd | Company partly owned by the Chief Executive Officer of a subsidiary of PRAMA | 35,086 | ||||
Prime Finvest Leasing Limited | Company partly owned by a PRAMA shareholder, has common shareholders with Pramatech Pvt. Ltd above | 35,037 | ||||
| Opus Restaurants Pvt. Ltd | Shareholder in PRAMA, there are also common shareholders in PRAMA and this company | 9,810 | ||||
| Mr. Akbar S Khwaja | Chief Executive Officer of a subsidiary of PRAMA | 30,249 | ||||
| Mr. M. V. Chetan Kumar | Shareholder in PRAMA | 4,905 | ||||
| Total | $ | 905,501 | ||||
| 50 |
The above balances were denominated in Indian Rupees, with the translated amounts in U.S. dollars shown above.
During the year, a brought forward balance of $14,364 from March 31, 2019, was collected from Sachin Mandloi, Director of TripBorn and Sunalpha.
Amounts due to related parties
Amounts due to related parties as of December 31, 2019, below, were deconsolidated on January 1, 2020:
| Due to related parties | Description | December 31, 2019 | ||||
Opus Hotels & Resorts Pvt. Ltd | Shareholder in PRAMA, there are also common shareholders in PRAMA and this company | $ | 657,978 | |||
| Mr. Mahesh Gandhi | Shareholder in PRAMA | 180,933 | ||||
| Mr. Sobha Gandhi | Relative of Mahesh Gandhi, (shareholder above) | 234 | ||||
Navkar Pole Products Ltd | Company partly owned by a PRAMA shareholder | 7,007 | ||||
| Mr. Pravin Rathod | Shareholder in PRAMA | 18,701 | ||||
| Total | $ | 864,853 | ||||
The above balances were denominated in Indian Rupees, with the translated amounts in U.S. dollars shown above.
There was an amount of $1,602 and $1,691 as of March 31, 2020 and 2019, respectively owed to Sachin Mandloi, Director of TripBorn and Sunalpha.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
10. LOANS WITH THIRD PARTIES
There were no loans and borrowings with third parties as of March 31, 2020 and 2019, respectively.
On March 16, 2019 the Company obtained a customized online transaction platform called Travelcord for use$250,000 convertible note from United Techno Solutions, Inc with a maturation date of April 1, 2020 and an embedded interest rate of 8%. The note may convert into 357,143 shares of common stock at the noteholder’s option. The balance outstanding as of December 31, 2019 amounted to $250,000. No interest has been paid on this note. On March 26, 2020, the Company re-paid United Techno Solutions, Inc., $250,000, representing the repayment of principal on the Company’s website, www.tripborn.com. Application Programming Interface components$250,000 loan note which was originally extended on March 16, 2019. The accrued interest has not currently been re-paid.
The loans with Small Industries Development Bank of India, NeoGrowth Credit Private Limited, Advance Finstock Private Limited and HDFC Bank Limited through PRAMA were derecognized on January 1, 2020.
| 51 |
11. LOANS WITH RELATED PARTIES
Loans and borrowings with related parties are used to send/receive/retrieve various data to and from supplier systems for tickets availability, pricing, aggregation and booking information. The API specifies how software components or applications should interact with each other using graphical user interfaces (GUI). These components are automated software components or set of routines, protocols and tools for building and communicating various software applications.
| As of | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Current liabilities: | ||||||||
| Convertible note with Takniki Communications, Inc | $ | 695,000 | $ | 695,000 | ||||
| Convertible note with Arna Global LLC | - | 956,000 | ||||||
| Convertible note with Mr. Deepak Sharma | - | 150,515 | ||||||
| Convertible note with Mr. Sachin Mandloi | - | 36,642 | ||||||
| $ | 695,000 | $ | 1,838,157 | |||||
On December 31, 2016, the Company acquired ownership and development rights to the Travelcord software from Arna for a fee of $956,000 pursuant to a Software Agreement dated December 16, 2015. The Company paid the $956,000 fee to Arna in the form ofissued a convertible promissory note. The Travelcord software was recognized as an intangible asset at historical cost pursuantnote to ASC 350-40 Intangibles – Goodwill and Other, Internal Use Software, and no goodwill was recognized. Arna acquired the Travelcord software from Takniki Communications, which is wholly-ownedInc, an affiliate owned by Sachin Mandloi, our Vice President and a director, Sachin Mandloitotaling $695,000. This note was issued pursuant to a Software Development Agreement dated January 26, 2015.
The loan from Mr. Mahesh Gandhi with PRAMA was derecognized as of January 1, 2020.
The convertible note to the December 31,Arna Global LLC matured on March 7, 2019, maturity date, the outstanding principal balance of the note will automatically convert into 10,303,070 shares of common stock (the “Note Shares”). If the Uplist Transaction does not occur prior to the maturity date, Takniki will have the option to receive full payment of the outstanding principal balance or the Note Shares, each together with accrued unpaidbore interest paid in cash. Takniki also will have the option to receive full payment of the outstanding principal or the note shares, each together with accrued unpaid interest paid in cash, in connection with a “sale of the company” as such term is defined in the convertible promissory note.
12. STOCKHOLDERS’ EQUITY
During the year ended March 31, 2020, the Company completesissued an underwritten public offeringaggregate of 35,741,724 of common shares these events are described in further detail below.
In June 2019, the Company issued 25,462,167 common shares and reduced its common stockliabilities by approximately $1,150,483 in connection with a listing on a national securities exchange (an “Uplist Transaction”), priorthree separate related parties who converted their notes. There were no cash proceeds from the conversion of the notes.
On April 22, 2019, the Company issued 2,632,653 common shares to the July 1, 2019 maturity date, the outstanding principal balanceshareholders of PRAMA, at a price of $0.28 per share, as part of the note will automatically convert into a total of 3,924,088consideration for the PRAMA acquisition.
In June 2019, the Company issued 1,571,430 common shares of common stock (the “Note Shares”). Ifwhen the Uplist Transaction does not occur prior to the maturity date, the noteholder will have the option to receive full payment of the outstanding principal balance of the Note shares each together with accrued unpaid interest paid in cash. The noteholder also will have the option to receive full payment of the outstanding principal or the note shares, together with accrued unpaid interest paidwarrant holders exercised their warrants and received approximately $15,714 in cash, in connection with a “saleat an exercise price of $0.01 per warrant.
During the company” as such term is defined in the convertible promissory note.
During the quarter ended September 30, 2019 the Company issued and sold 714,286 units comprising one share and warrant to purchase two share of Company’s common stock; par value $0.0001 pursuant to a private placement. The purchase price per unit was $0.70 resulting in aggregate proceeds of $500,000 to the Company. The Company issued warrants to acquire approximately 1,428,572 common shares pursuant to the 714,286 units listed above during the quarter ended December 31, 2019. These warrants shall be exercisable, in whole or in part, during the three-year term commencing from the issuance date at an exercise price of $0.01.
| 52 |
On October 21, 2019 the Company issued and sold 535,715 units comprising one share and warrant to purchase two shares of Company’s common stock; par value $0.0001 pursuant to a private placement. The purchase price per unit was $0.70 resulting in aggregate proceeds of $375,001 to the Company. The Company issued warrants to acquire approximately 1,071,430 common shares pursuant to the 535,715 units listed above during the quarter ended December 31, 2019. These warrants shall be exercisable, in whole or in part, during the three-year term commencing from the issuance date at an exercise price of $0.01.
On October 27, 2019, the Company issued 4,050,316 common shares when the warrant holders exercised their warrants and received approximately $40,503 in cash, an exercise price of $0.01 per warrant.
For the year ended March 31, 2019 the following share issuances occurred:
On August 21, 2018, we issued consulting advisory shares of an aggregate of 478,560 shares of the Company’s common.
On December 21, 2018, we closed on the sale of an aggregate of 214,286 shares of the Company’s common stock pursuant to subscription agreements between us and one investor, resulting in gross proceeds to us of $150,000.
On March 25, 2019, we closed on the sale of an aggregate of 428,571 shares of the Company’s common stock pursuant to subscription agreements between us and one investor, resulting in gross proceeds to us of $300,000.
On March 29, 2019, we closed on the sale of an aggregate of 357,144 shares of the Company’s common stock pursuant to subscription agreements between us and two investors, resulting in gross proceeds to us of $250,000.
Warrants:
The following table is the summary of warrant activities during the year:
| Warrants | Number of shares | Weighted average exercise price | Weighted average remaining contractual life in months | Approximate aggregate intrinsic value | |||||||||||||
| Outstanding as of March 31, 2019 | 1,571,430 | $ | 0.01 | 3.0 | $ | 345,000 | |||||||||||
| Issued | 4,050,316 | $ | 0.01 | 34.0 | $ | 890,000 | |||||||||||
| Exercised | (5,621,746 | ) | $ | 0.01 | - | $ | 1,235,000 | ||||||||||
| Expired | - | - | - | - | |||||||||||||
| Outstanding as of March 31, 2020 | - | $ | - | - | $ | - | |||||||||||
Aggregate intrinsic value represents the difference between the Company’s estimate of the fair value of its common shares and the exercise price of outstanding, in-the-money warrants. The Company is not actively traded on the Over the Counter Market. The fair value of warrants granted during the year ended March 31, 2020 approximated $0.23 per warrant, or an intrinsic value of approximately $0.22 per warrant.
13. INCOME TAX
There were no current and deferred income tax provision for the year ended March 31, 2020 and 2019 because the Company has incurred operating losses incurred since inception. A reconciliation of the Company's tax provision for (benefit from) income taxes as computed by applying the U.S. statutory income tax rate to theCompany's effective income tax rate is as follows:
| Year Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Tax expense, at U.S. federal statutory Rate | 21.00 | % | 21.00 | % | ||||
| Foreign jurisdiction income tax | 4.75 | % | 4.75 | % | ||||
| Valuation allowance | (25.75 | )% | (25.75 | )% | ||||
| $ | - | $ | - | |||||
The net deferred income tax asset balance related to the following:
| Year Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Stock Compensation | $ | (5,402 | ) | $ | 16,205 | |||
| Depreciation | 1,1,35 | 585 | ||||||
| Amortization | 31,126 | 97,470 | ||||||
| Net operating losses | 944,570 | 576,103 | ||||||
| Total Deferred tax assets | $ | 971,429 | $ | 690,364 | ||||
| Less: Allowance for deferred tax assets | (971,429 | ) | (690,364 | ) | ||||
| Net deferred tax asset (liability) | $ | - | $ | - | ||||
US Federal net operating loss carry forwards as of March 31, 2020, is $3,490,635. The net operating losses from January 1, 2018, may be carry forward indefinitely and losses prior to January 1, 2018 expire after 20 years under prior law. Foreign subsidiary net operating loss carry forwards as of March 31, 2020, is $840,433. The net operating losses from March 31, 2020, may be carry forward for indefinitely.
US taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets (liabilities) at March 31, 2017 and 2016 are as follows:
| March 31, 2017 | March 31, 2016 | |||||||
| Property and equipment | $ | 26,611 | $ | 992 | ||||
| Carried forward loss | 199,720 | 32,688 | ||||||
| Total deferred income taxes | $ | 226,331 | $ | 33,680 | ||||
| Federal income tax | $ | - | $ | - | ||||
| State income tax | - | - | ||||||
| Foreign jurisdiction income tax | - | - | ||||||
| Total income taxes, current provision | - | - | ||||||
| Deferred income tax expenses/(benefit) | (167,032 | ) | (32,699 | ) | ||||
| Total income taxes expense/(benefit) | $ | (167,032 | ) | $ | (32,699 | ) |
The Company files its income tax returns on a fiscal year basis.
The future effective income tax rate depends on various factors, such as the Company’s income (loss) before taxes, tax legislation and the geographic composition of pre-tax income.
| Years ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| Basic net income (loss) per share: | ||||||||
| Net income (loss) applicable to common shares | $ | (682,924 | ) | $ | (140,154 | ) | ||
| Weighted average common shares outstanding | 77,286,488 | 58,386,281 | ||||||
| Basic net income (loss) per share of common stock | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Diluted net income (loss) per share: | ||||||||
| Net income (loss) applicable to common shares | $ | (682,924 | ) | $ | (140,154 | ) | ||
| Weighted average common shares outstanding | 77,286,488 | 58,386,281 | ||||||
| Dilutive effects of convertible debt | - | - | ||||||
Weighted average common shares, assuming dilutive effect of convertible debt | 77,286,488 | 58,386,281 | ||||||
| Diluted net income (loss) per share of common stock | $ | (0.01 | ) | $ | (0.00 | ) | ||
14. COMMITMENTS AND CONTINGENCIES
The Company is the B2B Principal Agent of the Indian Railway Catering and Tourism Corporation, or IRCTC, which is a government entity that allows the Company to offer reservations through Indian Railways’ passenger reservation system on the Company’s webpage. Indian Railways is India’s state-owned railway, which owns and operates most of India’s rail transportation. The Company has integrated its online portal with IRCTC’s to provide a seamless booking process. Pursuant to an Application Programming Interface (API) agreement, dated October 5, 2015, the Company is required to pay a minimum annual maintenance fee of $7,500 to IRCTC. In the event the agreement is renewed, the amount based on the number of active railway agents that use the Company rail booking services on the Company’s platform will be payable annually. On September 30, 2016,2020, the Company renewed its agreement with the IRCTC and paid an annual maintenance fee of $8,600$15,733 based on the number of active railway agents it has enrolled to book rail tickets.
Through Sunalpha, the Company currently occupies approximately 2,455 square feet of office space owned by a directorthe CEO of the Company on a rent freerent-free basis. As
| 54 |
15. BUSINESS SEGMENTS
Prior to the acquisition of March 31, 2017 and 2016,PRAMA, a hospitality company, the Company has not paid any rent.was a one segment company and following the deconsolidation, on January 1, 2020, the Company reverted to a one segment company. Following, the acquisition of PRAMA, the Company’s chief operating decision maker changed the information he receives to manage, assess, operate the business and to allocate capital. Accordingly, the Company changed its operating segments to comprise: eCommerce aggregation services and Hospitality, respectively. The Company management reviews and evaluates the operating segments, as defined, are components of an enterprise about which separate financial information is expectedavailable that is evaluated regularly by the chief operating decision maker in deciding how to pay market rate rent onceallocate resources and in assessing financial performance. The reportable segments reflect the Company is profitable.
All net revenues are derived from transactions with third party customers, there are no inter-segment revenues. All of the net revenue is derived from operations in India, substantially all of the expenses are borne in India, with certain expenses borne in the US. The Company measures segment performance based on loss from continuing operations. Summarized financial information concerning each of the Company's reportable segments is as follows:
Summarized financial information concerning each of the Company's reportable segments is as follows:
| Period ended March 31, 2020 | ||||||||||||||||
| eCommerce Aggregator | Hospitality | Intersegment elimination | Consolidated total | |||||||||||||
| Segment results and total assets | ||||||||||||||||
| Net revenue | $ | 701,216 | $ | 6,243,289 | $ | - | $ | 6,944,505 | ||||||||
| Cost of revenues | (563,241 | ) | (5,404,204 | ) | - | (5,967,445 | ) | |||||||||
| Operating expenses | (3,842,351 | ) | (1,833,445 | ) | (5,675,796 | ) | ||||||||||
| Loss from operations, before other expense, net | (3,704,376 | ) | (994,359 | ) | $ | - | (4,698,735 | ) | ||||||||
| Other expense, net | (287,931 | ) | (66,092 | ) | - | (354,023 | ) | |||||||||
| Net loss | $ | (3,795,111 | ) | $ | (1,063,471 | ) | $ | - | $ | (4,580,963 | ) | |||||
| Total assets | $ | 1,024,555 | $ | - | $ | - | $ | 1,024,555 | ||||||||
During the year ended March 31, 2020, the Company derived approximately $1,260 per month pursuant90% and 10% of its revenue from its Hospitality and eCommerce Aggregation segments, respectively, compared to 100% of its business from its eCommerce Aggregation segment solely, for the lease agreement.
16. SUBSEQUENT EVENTS
None.
17. LEGAL PROCEEDINGS
The Company was party to certain legal proceedings that arise in the ordinary course and are incidental to its business. On the acquisition of PRAMA, on April 22, 2019, the Company assumed an interest in an arbitration claim. PRAMA made an arbitration claim of approximately $300,000 (21.2 million Indian Rupees) against Ms. Khurana Hotels and Apartments Private Limited in the Civil Court Senior Division of Amritsar, India. The claim is based on the asserted failure by PRAMA of Ms. Khurana Hotels and Apartments Private Limited, as lessor, to comply with the terms of the lease. The Company entered into a consultingRealignment of control agreement effective May 24, 2016 with LogiCore Strategies, LLC (“LogiCore”), pursuantPRAMA and has no obligation with respect to which Richard J. Shaw serves asany pending legal proceedings or obligation. Based on the information currently available, management does not believe that the currently pending arbitration will have a material adverse effect on the Company’s Chief Financial Officer. The Company compensates LogiCore for Mr. Shaw’s time at an annual rateconsolidated financial position, liquidity, or results of $60,000.
| 55 |
None.
Management’s Report on Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our chief executive officer and our principalchief financial officer, evaluatedwe conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, (asas defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act)Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this annual report. DisclosureAnnual Report on Form 10-K (the "Evaluation Date"). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures are designedwere not effective such that the information relating to ensure that informationus required to be disclosed in our Securities and Exchange Commission ("SEC") reports filed under the Exchange Act(i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sSEC rules and forms, and that such information(ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over the Company's financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Our management, with the participation of our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of such date.
| (i) | inadequate segregation of duties consistent with control objectives; and |
| (ii) | lack of multiple levels of supervision and review. |
A “material weakness” is defined as a significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. A “significant deficiency” is defined as a control deficiency, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial information reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. Management identified the following material weaknesses in the Company’s internal control over financial reporting as of March 31, 2020:
| i. | lack of adequate US GAAP accounting knowledge to identify and account significant complex transactions on a timely basis; |
| ii. | unable to report financials in timely manner; |
| iii. | inadequate segregation of duties consistent with control objectives; and |
| iv. | lack of multiple levels of supervision and review. |
Management's Remediation Plan
The weaknesses and their related risks are not uncommon in a company of our independent registered public accounting firm due to a transition period established by the rulessize because of the Securitieslimitations in the size and Exchange Commissionnumber of staff. Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible.
| 56 |
However, we plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes in the current fiscal year as resources allow:
| (i) | Appoint additional qualified personnel to address inadequate segregation of duties and implement modifications to our financial controls to address such inadequacies; and |
| (ii) | We will attempt to implement the remediation efforts. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. |
Management believes that despite our material weaknesses set forth above, our financial statements for newly public companies.
Changes in Internal Control Over Financial Reporting
There hashave been no changechanges in our internal controlcontrols over financial reporting that occurred during the last fiscal quarter covered by this annual report (our fourth fiscal quarter)year ended March 31, 2020 that hashave materially affected, or isare reasonably likely to materially affect, our internal controlcontrols over financial reporting.
On April 22, 2019, the Company acquired a 51% equity interest in PRAMA for $2,137,143, consisting of $1,400,000 in cash and the issuance of 2,632,653 shares of common stock valued at $737,143. The equity interest was acquired from the stockholders of PRAMA. PRAMA is engaged in the business of owning and promoting businesses for operating and managing hotels and food and beverage services in India and nearby markets located in the Indian subcontinent. As previously disclosed, the Company borrowed $300,000 from ARNA Global LLC, an entity owned and controlled by Mr. Sharma, its President and CEO, to partially fund the acquisition of PRAMA. The completion of the acquisition should have been reported on a Current Report on Form 8-K, under Item 2.01 (Completion of Acquisition or Disposition of Assets).
In accordance with Share Purchase Agreement that was executed by the Company with PRAMA, the Company was required to contribute approximately USD 1,330,000 equivalent to INR 10,00,00,000/- which was not subscribed by Company due to change in business conditions in India and Company realigning its India and global businesses and their direction and geographies. Hence, On January 01, 2020, it was commercially agreed between Company and PRAMA that for a foreseeable future PRAMA shall continue to be controlled by its founders and management team in India. The Company will shall neither have control nor influence over the business and operating decision of PRAMA and/or its subsidiaries companies effective from January 01, 2020. The Company has experienced significant delay to finalize and document realignment of control due to COVID-19 pandemic. The Company has signed the Realignment of Control agreement with PRAMA on August 31, 2020, to with effective date of January 1, 2020, for realignment of control of PRAMA and PRAMA businesses.
As result of Realignment of Control Agreement with PRAMA whereby the Company no longer has the power to govern the financial and operating policies of PRAMA due to the loss of power to cast its votes at meetings of the Board of Directors other than in tandem with the founders and management team of PRAMA; accordingly, the Company derecognized related assets, liabilities and noncontrolling interests of PRAMA. The Company did not receive any consideration in the deconsolidation of PRAMA. The cost of investment in PRAMA was fully impaired as PRAMA has a fair value of $0 as of January 1, 2020, through the current date.
| 57 |
PART III
1. Directors and Executive Officers
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as of March 31, 2017.
| Name | Age | Position | Year First Elected Director | |||
| Deepak Sharma | 42 | President, Chief Executive Officer and Director | 2015 | |||
| Sachin Mandloi | 40 | Vice President and Director | 2015 | |||
| Richard J. Shaw | 50 | Chief Financial Officer and Treasurer | N/A |
| Name | Age | Position | Year First Elected Director | |||
| Deepak Sharma | 47 | President, Chief Executive Officer and Director | 2015 | |||
| Sachin Mandloi | 45 | Vice President and Director | 2015 |
Business Experience
The following includesis a brief biography foraccount of the education and business experience during at least the past five years of each director, executive officer and key employee of our directorscompany, indicating the person’s principal occupation during that period, and executive officers, with each director biography including information regarding the experiences, qualifications, attributes or skills that caused our boardname and principal business of directors to determine that each member of our board of directors should serve as a director. There are no family relationships among any of our directors or executive officers.
Deepak Sharma
has served as our President, Chief Executive Officer and a director since December 2015. HeThe board of directors believes that Mr. Sharma’s institutional knowledge as a founder of the company as well as his experience in business development and software product development are crucial to successfully growing our business.
Sachin Mandloi
has served as our Vice President and a director since December 2015. Mr. Mandloi is responsible for technology development, quality assurance and product delivery. Mr. Mandloi is the founder and president of Takniki Communications, an information technology service company formed under the laws of the Republic of India that provides information technology solutions, including software development and maintenance services. Mr. Mandloi has served as the President of Takniki Communications since he founded it in 1998. Mr. Mandloi has served as a director of our Indian operating subsidiary, Sunalpha since 2014.The board of directors believes that Mr. Mandloi’s experience in software development and maintenance in India, as well as his in-depth knowledge of digital marketing and data analytics are crucial to successfully growing our business.
Employment Agreements
We have no formal employment agreements with any of our directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
| 1. | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
| 58 |
| 2. | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| 3. | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| 4. | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| 5. | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 6. | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Code of Ethics
We have not adopted a Code of Business Conduct and Treasurer since May 2016. Mr. Shaw has served asEthics.
Board and Committee Meetings
Our board of directors held twelve formal meetings and executed eight consents during the Presidentyear ended March 31, 2019. All proceedings of LogiCore Strategies, LLC, a financialthe board of directors were conducted by resolutions consented to in writing by all the directors and business advisory services firm, since June 2014. Mr. Shaw also has served as Chief Financial Officerfiled with the minutes of BirchBioMed, Inc., a clinical-stage biomedical company focused on the commercialization, clinical evaluation and developmentproceedings of anti-scarring drugs, autoimmune therapeutics/therapies and novel strategies for transplantation, since March 2016, as Chief Financial Officer of FastPencil, Inc., since February 2017, and as Chief Financial Officer of Jerash Holdings (US), Inc., since May 2017. Previously, Mr. Shaw served as Chief Operating Officer of Roberts Office Furniture Concepts, a designer, manufacturer and remanufacturer of sustainable office furniture and workplace systems, from September 2013the directors. Such resolutions consented to June 2016. Previously, Mr. Shaw served as Chief Financial Officer of High Peaks Hospitality, LLC, an independent hotel ownership, development construction and management company from June 2012 to August 2013, and Chief Financial Officer of Harden Furniture, Inc., a manufacturer of solid wood furniture and upholstery from May 2008 to June 2012. Mr. Shaw earned a BS in Accounting from LeMoyne College and is a Certified Public Accountant, licensedwriting by the Statedirectors entitled to vote on that resolution at a meeting of New York.
Director Independence
Although our shares are not party tolisted on The NASDAQ Capital Market or any employment agreements or other agreements with Messrs.exchange, we use the independence standards of the NASDAQ Listing Rules in evaluating the independence of our directors. Our directors, Deepak Sharma and Sachin Mandloi do not meet the definition of “independent directors” as that prevent them from providing similar servicesterm is defined in Rule 5605(a)(2) of the NASDAQ Listing Rules due to other companies in our industry, which could potentially give rise to a conflict of interest if they chose to offer their services to a competitor. However, under Delaware law,relationships with us as directors, Mr. Sharma and Mr. Mandloi owe a duty of loyalty to our stockholders, which places limits on their ability to enter into transactions that conflict with the interestsfounders of our stockholders.Indian operating subsidiary. In the event that Mr. Sharma or Mr. Mandloi left the Company, they would not be prevented from participating in a venture or business that competes with us.
Committees of the Board of Directors
We expect our board of directors, in the future, to appoint an audit committee, nominating committee and compensation committee and to adopt charters relative to each such committee. We intend to appoint such persons to committees of the board of directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we elect to seek a listing on a national securities exchange. In addition, we intend that at least one of our directors who serves on our audit committee will qualify as an “audit committee financial expert,” within the meaning of Item 407(d)(5) of Regulation S-K, as promulgated by the Securities and Exchange Commission. We do not currently have an “audit committee financial expert” since we currently do not have an audit committee in place.
| 59 |
The consulting agreement has a one-year term that is automatically renewable for subsequent one year terms unless terminated by either party.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Plan Compensation | Change in Pension Value and ($) | All Other Compensation ($) | Total ($) |
Deepak Sharma, President & CEO | 2020 2019 | $ $75,000 | - - | - - | - - | - - | - - | - - | - - |
Sachin Mandloi, Vice President | 2020 2019 | $ $35,743 | - - | - - | - - | - - | - - | - - | - - |
Director Compensation
Each of our directors is an employee of the Company, and therefore do not receive any additional compensation for services as a director. The compensation that we pay to each of our directors is disclosed in the 2017 Summary Compensation Table.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Beneficial Owners
The following table provides information as of June 16, 2017,fiscal year ended March 31, 2020, concerning beneficial ownership of our common stock known to us to be held by (1) our named executive officers, (2) our directors, (3) our executive officers and directors as a group and (4) each person or entity we know to beneficially own more than five percent of our common stock. The percentages of shares owned shown in the table below are based on 80,624,915138,649,198 shares which consist of 97,190,435 of our common stock outstanding as of June 16, 2017.
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
Named Executive Officers and Directors: | ||||||||
Deepak Sharma(1)(2) President, Chief Executive Officer and Director | 35,714,285 | 44.3% | ||||||
All directors and executive officers as a group (3 persons) | 71,428,570 | 88.6% | ||||||
| 5% Stockholder: | ||||||||
Arna Global LLC(3) 4390 US Route 1, Suite 221 Princeton, NJ 08540 | 35,714,285 | 44.3% | ||||||
Sachin Mandloi(4) Vice President and Director | 35,714,285 | 44.3% | ||||||
Name of Beneficial Owner Shares of Common Stock
Beneficially Owned Percentage of Shares
Beneficially Owned Named Executive Officers and Directors: Deepak Sharma*
President and CEO 60,340,900 43.52 % Sachin Mandloi*
Vice President and Director 46,852,907 33.79 %
*ARNA GLOBAL LLC own shares in Tripborn Inc. through features associated with convertible debt. Deepak Sharma is beneficial owner of the ARNA GLOBAL LLC.
* TAKNIKI COMMMUNICATION own shares in Tripborn Inc. through features associated with convertible debt. Sachin Mandloi is beneficial owner of the TAKNIKI COMMMUNICATION.
Equity Compensation Plan Information
The following table set forth certain information, as of March 31, 2017,2020, with respect to securities authorized for issuance under equity compensation plans. The only security being so offered is our common stock.
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future reflected in column (a)) | |||||||||||
| (a) | (b) | (c) | |||||||||||
Equity compensation plans approved by security holders | — | — | 7,680,000 | ||||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||
| Total | — | — | 7,680,000 | ||||||||||
Certain Relationships and Related Person Transactions
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of our development, we have participated in transactions with Deepak Sharma and Sachin Mandloi. Mr. Sharma is the founder and Messrs. Sharma and Mandloi are executive officers and directors of our Indian operating subsidiary, Sunalpha. In addition, Messrs. Sharma and Mandloi have been executive officers and directors of TripBorn since December 2015.
Principal Accountant Fees and Services
Principal accountant fees for professional services provided by RAM Associates CPAs, P.C., our independent registered public accounting firm, during the fiscal year ended March 31, 2017, which we refer to as fiscal year 2017 and the fiscal year ended March 31, 2016, which we refer to as fiscal year 2016.audits were:
| Fiscal Year 2020 | Fiscal Year 2019 | |||||||
| Audit Fees | $ | 110,092 | $ | 63,000 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 110,092 | $ | 63,000 | ||||
| 61 |
| Fiscal Year 2017 | Fiscal Year 2016 | |||||||
| Audit Fees | $ | 17,650 | $ | 30,150 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | |||||||
| Total | $ | 17,650 | $ | 30,150 | ||||
PART IV
| (a) | Financial Statements. See Index to Financial Statements |
| (b) | Financial Statement Schedules. None. |
| (c) | Exhibits. See Index to Exhibits contained in this report. |
| 62 |
Pursuant to the requirements of Section 13 or 15(d) 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.
| Date: September 12, 2021 | By: | / S / Deepak Sharma | ||||||
| Name: | Deepak Sharma | |||||||
| Title: | President | |||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacitatescapacities and on the dates indicated.
Signature | Title | |||
/s/ Deepak Sharma Deepak Sharma | Chief Executive Officer, President, and Director | |||
(Principal Executive Officer) | ||||
/s/ Deepak Sharma Deepak Sharma | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Sachin Mandloi Sachin Mandloi | Vice President and Director | |||
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual reports to security holders covering TripBorn, Inc.’s last fiscal year have been sent to its security holders. No proxy statement, form of proxy or other proxy soliciting material have been sent to TripBorn, Inc.’s security holders during such period.
| 63 |
| Number | Exhibit Description |
Exhibit 31.1 | CERTIFICATION OF CHIEF EXECUTIVE OFFICER |
Exhibit 31.2 | CERTIFICATION OF CHIEF FINANCIAL OFFICER |
Exhibit 32.1 | |
Exhibit 32.2 |
64
Exhibit Number | Description | ||
| 2 | .1 | Stock Purchase Agreement, dated as of December 8, 2015 among PinstripesNYC, Inc., Arna Global LLC and Maxim Kelyfos, LLC, incorporated herein by reference from Exhibit 2.1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 2 | .2 | Share Transfer Agreement, dated December 14, 2015 between PinstripesNYC, Inc. and Sachin Kamalkishore Mandloi, , incorporated herein by reference from Exhibit 2.2 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 3 | .1 | Certificate of Incorporation, incorporated herein by reference from Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 3 | .2 | Certificate of Amendment to the Certificate of Incorporation, incorporated herein by reference from Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 3 | .3 | Amended and Restated Bylaws, incorporated herein by reference from Exhibit 3.3 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 4 | .1 | Form of Common Stock Certificate, incorporated herein by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 4 | .2 | Form of 10% convertible notes due March 7, 2019, incorporated herein by reference from Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 4 | .3 | Form of 6% convertible notes due February 8, 2019, incorporated herein by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .1 | Software Agreement, effective as of December 16, 2015, between Arna Global LLC and TripBorn, Inc., incorporated herein by reference from Exhibit 10.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on July 19, 2016. | |
| 10 | .2 | Software Development Agreement, dated January 26, 2015 between Takniki Communications (India) and Arna Global LLC, incorporated herein by reference from Exhibit 10.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on July 19, 2016. | |
| 10 | .3 | Letter Agreement, dated December 16, 2015, between Arna Global LLC and Sunalpha Green Technologies Private Limited, incorporated herein by reference from Exhibit 10.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on July 19, 2016. | |
| 10 | .4 | Software Licensing Agreement, dated April 1, 2015, between Arna Global LLC and Sunalpha Green Technologies Private Limited, incorporated herein by reference from Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .5 | Agreement, dated October 5, 2015 between Sunalpha Green Technologies Private Limited and Indian Railway Catering and Tourism Corporation Limited, incorporated herein by reference from Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .6 | Note Purchase Agreement between TripBorn Inc. and the Investors party thereto, dated February 8, 2016, incorporated herein by reference from Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .7* | TripBorn, Inc. 2016 Stock Incentive Plan, incorporated herein by reference from Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .8* | Form of Nonqualified Stock Option Award Notice under the TripBorn, Inc. 2016 Stock Incentive Plan, incorporated herein by reference from Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on April 18, 2016. | |
| 10 | .9* | Consulting Agreement, effective May 24, 2016 between TripBorn, Inc. and LogiCore Strategies, LLC, incorporated herein by reference from Exhibit 10.9 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-210821) filed on July 19, 2016. | |
| 10 | .10 | Software Development Agreement, dated September 23, 2016, between TripBorn, Inc. and Takniki Communications, incorporated herein by reference from Exhibit 10.4 to the Company’s quarterly report on Form 10-Q filed on September 23, 2016. | |
| 10 | .11 | Application Programming Interface (API) Agreement, dated September 30, 2016, by and between Sunalpha Green Technologies Private Limited and the Indian Railway Catering and Tourism Corporation Limited, incorporated herein by reference from Exhibit 10.2 to the Company’s quarterly report on Form 10-Q filed on November 21, 2016. | |
| 10 | .12 | 10% convertible note, dated December 31, 2016 issued to Takniki Communications, incorporated herein by reference from Exhibit 10.1 to the Company’s quarterly report on Form 10-Q filed on February 14, 2017. | |
| 21 | List of Subsidiaries, as filed with out Registration on Form S-1 (File No. 333-210821) on April 18, 2016. | ||
| 31 | .1 | Certification of TripBorn, Inc. Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31 | .2 | Certification of TripBorn, Inc. Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32 | .1 | Certification of TripBorn, Inc. Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32 | .2 | Certification of TripBorn, Inc. Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101 | .CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| 101 | .INS | XBRL Instance Document | |
| 101 | .LAB | XBRL Taxonomy Extension Label Linkbase | |
| 101 | .PRE | XBRL Taxonomy Extension Presentation Linkbase | |
| 101 | .SCH | XBRL Taxonomy Extension Schema Linkbase | |
| 101 | .DEF | XBRL Taxonomy Extension Definition Linkbase |