Washington, D.C. 20549
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 past 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.
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our unaudited interim financial statements and related notes appearing elsewhere in this Quarterly Report. Various statements have been made in this Quarterly Report on Form 10-Q that may constitute "forward-looking statements". Forward-looking statements may also be made in our other reports filed with or furnished to the United States Securities and Exchange Commission (the "SEC") and in other documents. In addition, through our management we may make oral forward-looking statements.
Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements. The words "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance, and therefore, you should not put undue reliance upon them. Some of the statements that are forward-looking include: our ability to successfully implement our business plan; our estimates of revenues and of other expenses associated with our operations; and our ability to generate sufficient cash flows and maintain adequate sources of liquidity to finance our ongoing operations and capital expenditures. We undertake no obligation to update or revise any forward-looking statements.
History and Overview
India Ecommerce Corporation ("we," "our," "us," or "the Company") was incorporated on January 19, 2011 under the laws of the State of Nevada.
Plan of Operations
We are in the business of developing, promoting distribution, and managing television networks, television productions and ecommerce websites/mobile applications, targeting a wide-ranging marketplace in the United States and in India in both the consumer and business marketplace. Our goal is to push our television and online services into the marketplace in a quick and efficient manner to capture first mover advantages, and to acquire a user/viewer/subscriber base from which we can build our proprietary ecommerce solutions.
India Ecommerce Corporation launched the development of a number of websites in the third quarter, and all of these have experienced growth in unique visitors in the fourth quarter. Through a partnership with Jeffrey Martin Global Media, LLC, a TV production and management company, we have also begun operating under the brand name "uknowme."
Nyooz and HRelate
Both NyoozFlix.com and HRelate.com continued to gain in unique users in Q4. These websites will undergo major design changes in Q2 in 2015 to boost page views. There is continued interest in "Nyooz" branded TV productions, and those discussions are being led under our "uknowme" brand.
HRelate experienced rapid growth in Q1, and it is expected that the website will reach page view targets to qualify for expanded marketing efforts sometime in Q3.
Zootout
Our partnership with Zootout continued in Q1. Zootout.com is an up and coming website in India focused on events as a location-based directory in India. We will continue to aide Zootout with their technologies and functionality. Zootout will launch mobile apps for the iPhone, Android, and Windows throughout the second quarter of 2015, and has successfully begun its marketing push for paid subscribers at the end of Q1.
ePerty
ePerty.com continues to struggle to find an audience and will undergo a major overhaul throughout the next two quarters
Television
We signed a contract to jointly manage television operations with Jeffrey Martin Global Media, LLC. This operation launched in early February 2015, in three major markets (San Francisco, Chicago and Seattle) in the United States, and is expected to produce revenues towards the end of Q2. The joint venture is doing business as "uknowme." In following quarters, we will expand our reach to other television markets in the United States.
Third Party Marketing
Through partnerships, we will be marketing third party products and services both on television and online. We will launch this in the second quarter of 2015.
Targeting Acquisitions
We are actively searching for acquisitions to jump-start our presence in the market, and are in advanced negotiations with companies that will provide ecommerce and traditional media solutions for the Indian and global markets.
Research and Development
The core of our business model is to develop and modify websites and television for the global Indian population. Websites and mobile applications need continuous attention and refinement. We plan to diversify our service offerings and develop mobile applications for each of our website properties.
Television also requires development. Our company will continue to raise capital to fund television property development, and expand into original content production, as well as advertisement production.
Intellectual Property
We have no patents or other protection for its intellectual property, and will rely on copyrights, trademarks, and corporate secrecy for protection for the foreseeable future.
Competition
The ecommerce market is highly competitive. It includes increasing competition from established companies who are expanding their production and marketing of performance products, as well as from frequent new entrants to the market. We will initially rely on the unique features and applications of our product to gain entrance to the marketplace.
Employees
We want to maintain a small staff on our payroll so that we can be nimble. To accomplish this goal, we will employ contract employees for our initial projects and hire the best performing of these employees going forward. This allows us to avoid mistakes in filling up our human resource roster with underperforming employees.
We have identified top-level advertising salespeople in both the United States and in India that we can add to our team upon receiving funding. We view this as very important to our overall strategy.
Recruiting top level personnel will be aided by share based compensation tied to overall performance.
Executive cash compensation will be minimal due to their equity stakes with our Company. Key executive operations, such as Finance and Human Resources will be outsourced until a full time presence is necessary.
Change of Director and Officer
On January 31, 2015, Rohit Gangwal, resigned from his position as a Director and Officer for the Company. This was a planned departure, and at least one new Director will be announced in Q3.
Subsidiaries
We do not currently have any subsidiaries.
Results of Operations
We are in the business of developing, promoting distribution, and managing television networks, television productions and ecommerce websites/mobile applications, targeting a wide-ranging marketplace in the United States and in India in both the consumer and business marketplace. The following discussion of the financial condition and results of operations should be read in conjunction with the unaudited financial statements included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.
Three and six months ended June 30, 2015 and 2014
We are in our infancy stage and have generated minimal revenue from our core business model. However, we have earned revenue from providing internet and web consulting services during the three and six months ended June 30, 2015. We earned $5,000 of revenue compared to $8,375 during the three months ended June 30, 2015 and the same period in 2014, and $7,500 compared to $12,375 for the six months ended June 30, 2015 and 2914. Our total expenses during those periods were general and administrative expense of $17,992 as compared to $18,330 for the three months ended June 30, 2015 and 2014, respectively; including depreciation expense of $431 in each of the periods; $519 interest expense for the three months ended June 30, 2015 as compared to $1,164 for the same period in 2014. Our general and administrative expenses were $58,694 compared to $43,102 including depreciation expense of $862 in each six month period plus interest charges of $1,004 compared to $11,512 during the six months ended June 30 2015 and 2014, respectively. We also incurred non-cash expenses of $116,702 with regard to the repayment of a convertible loan. General and administrative overhead increased due to the cost of developing and implementing our business plan. Interest cost decreased due to the repayment of loans and the conversion of debt to equity.
Liquidity and Capital Resources
During the six months ended June 30, 2015, we generated cash in the amount of $7,450 from operating activities compared to utilizing cash of $24,084 for the six months ended June 30, 2014. Cash used in operating activity during the six months ended June 30, 2015 included a net loss of $168,899 compared to a net loss of $82,792 for the six months ended June 30. 2014. The net loss for the six months ended June 30, 2015 included non-cash depreciation expense of $862; a charge of $116,687 as the loss on extinguishment of debt related to a $50,000 note payable. The net loss for the six months ended June 30, 2014 was $82,792 which included non-cash depreciation of $862; amortization of prepaid expenses of $13,963; a charge of $4,500 for the cost of common stock issued for services; accrued interest of $11,512; a charge of $15 for the change in a derivative liability. Accounts payable increased by $26,187 for the six months ended June 30, 2015 compared to an increase of $1,561 for the six months ended June 30, 2014.
Investing Activities
We did not use any cash resources for investing activities during the six months ended June 30, 2015 or for the six months ended June 30, 2014.
Financing Activities
There was no financing activity during the six months ended June 30, 2015 compared to the six months ended June 30, 2014, when we received proceeds from notes payable in the amount of $32,500 and repaid notes payable in the amount of $25,000 for net cash provided by financing activities of $7,500. The $32,500 loan plus a prepayment penalty of $16,250 was repaid during the same period.
Going Concern
During the six months, ended June 30, 2015, we incurred a net loss of $168,899, which included a non-cash discount and an extinguishment of debt cost to account for restricted common shares issued at $0.0036, to repay a $50,000 note payable. We have an accumulated deficit of $736,665 since inception. We are in the early stage of operations, and have, only, recently commenced generating revenue which amounted to $7,500 for the six months ended June 30, 2015 compared to $12,375 for the six months ended June 30, 2014. We will continue to generate losses in the near future. These conditions raise substantial doubt about our ability to continue as a going concern.
These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock and ultimately to attain profitability.
Management's plan, in this regard, is to raise additional financing through a combination of equity and debt financing. Management believes this will be sufficient to finance the continuing development for the next twelve months. However, there is no assurance that we will be successful in raising such financing.
During the period ended June 30, 2014, the Company issued a Convertible Promissory Note, to a lender, in the amount of $32,500. The note had an interest rate of 8% per annum, was unsecured and matured December 5, 2014. The note was convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to average of the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a discount in the amount of $32,500 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes. The note was repaid, on September 8, 2014, with cash, including a prepayment penalty of $16,250.
Other than our lines of credit, we currently do not have any other arrangements for financing and we may not be able to obtain the financing required. Obtaining additional financing would be subject to a number of factors, including our ability to attract investments prior to consistent revenue generation, and thereafter our ability to grow our brand and for success in our market. We may also require additional financing to sustain our business operations if we are not successful in earning significant revenues once our business plan is enacted.
On May 7, 2015 the Company entered into a six month exclusive, confidential consulting agreement with a client to provide the client with services designed to launch and manage certain television operations, including the purchase and configuration of the equipment necessary to do so. Because the final total cost of such purchases isn't certain and until such time as the contract purchases have been completed, the Company has determined that the fee minus any expenditures would be disclosed as a customer deposit.
Summary of Significant Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 2 of our unaudited interim financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our unaudited interim financial statements:
Cash
We consider all highly liquid instruments purchased with a maturity of three months or less at date of acquisition to be cash equivalents.
Revenue Recognition
The Company has generated its initial revenue, from consulting fees, during the six months ended June 30, 2014.
Website Development
We capitalize the costs associated with the development of our website. Other costs related to the maintenance of the website are expensed as incurred. Amortization will be provided over the estimated useful life of 3 years using the straight-line method for financial statement purposes.
Recently Issued Accounting Pronouncements
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other things, the amendments in this update removed the definition of development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows and shareholders' equity, (2) label the financial statements as those of a development stage entity; (3) disclose a description of the development stage activities in which the entity is engaged and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments are effective for annual reporting periods beginning after December 31, 2014 and interim reporting periods beginning after December 15, 2015, however entities are permitted to early adopt for any annual or interim reporting period for which the financial statements have yet to be issued. The Company has elected to early adopt these amendments and accordingly have not labeled the financial statements as those of a development stage entity and have not presented inception-to-date information on the respective financial statements.
There are no other recent accounting pronouncements that are expected to have a material effect on the Company's interim unaudited financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).
Item 3 �� Quantitative and Qualitative Disclosures about Market Risk
Not required for a smaller reporting company.
Item 4 Controls and Procedures
Disclosure Controls and Procedures
As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, management concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, these disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses identified in our internal control over financial reporting, as described in our annual report on Form 10-K for the year ended December 31, 2013.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
Item 1 Legal Proceedings
None.
Item 1A Risk Factors
Not required for a smaller reporting company.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered securities during the period covered by this report.
Item 3 Defaults upon Senior Securities
None.
Item 4 Mine Safety Disclosures
N/A.
Item 5 Other Information
None.
Item 6 Exhibits
| Number | Exhibit |
| | |
| 31.1 | Certification of Principal Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS* | XBRL Instance Document |
| 101.SCH* | XBRL Taxonomy Extension Schema Document |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
* Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
