Notes to Consolidated Financial Statements
September 30, 2018
(Unaudited)
|
1.
|
Organization and the Nature of Business
|
TripBorn, Inc.
(“TripBorn” or the “Company”) is 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. TripBorn is a holding company that was incorporated in Delaware in January 2010 and operated as 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, Sunalpha Green Technologies Private Limited (“Sunalpha”). The Company has selected March
31 as its fiscal year end.
TripBorn was known
as PinstripesNYC, Inc. until January 2016. TripBorn filed reports as PinstripesNYC, Inc. with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (“Exchange Act”) from August 2010 until it terminated its registration
under the Exchange Act in May 2013.
On December 14,
2015, the Company acquired all of the outstanding shares of Sunalpha, which was incorporated under the laws of the Republic of
India on November 4, 2010. The transaction was accounted for as a reverse recapitalization. Sunalpha was the acquirer for financial
reporting purposes, and TripBorn was the acquired company.
|
2.
|
Summary of Significant Accounting Policies
|
Accounting Policies
These financial
statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United
States of America (“US GAAP”) as detailed in the Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”).
Basis of Presentation
The acquisition
of all of the outstanding shares of common stock of Sunalpha by TripBorn on December 14, 2015 was accounted for as a reverse recapitalization.
Sunalpha was the acquirer for financial reporting purposes, and TripBorn was the acquired company. Consequently, the assets, liabilities
and results of operations that are reflected in the Company’s consolidated financial statements prior to the December 14,
2015 transaction are those of Sunalpha and are recorded using 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 up
to the day prior to the closing of the transaction, and the assets, liabilities and results of operations of the Company and Sunalpha
from and after the closing of the transaction on December 14, 2015. All significant related party accounts and transactions between
the Company and Sunalpha have been eliminated upon consolidation.
Revenue Recognition
In May 2014, the FASB
issued guidance on revenue from contracts with customers that superseded most current revenue recognition guidance, including industry-specific
guidance. The underlying principle of the guidance is to recognize revenue to depict the transfer of goods or services to customers
at an amount to which the company expects to be entitled in exchange for those goods or services. The new guidance requires an
evaluation of revenue arrangements with customers following a five-step approach: (1) identify the contract with a customer; (2)
identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to
the performance obligations; and (5) recognize revenue when (or as) the company satisfies each performance obligation. Revenues
are recognized when control of the promised services are transferred to the customers in an amount that reflects the expected consideration
in exchange for those services. A customer obtains control when it has the ability to direct the use of and obtain the benefits
from the services. Other major provisions of the guidance include capitalization of certain contract costs, consideration of the
time value of money in the transaction price and allowing estimates of variable consideration to be recognized before contingencies
are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and
uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the provisions of this guidance
effective January 1, 2018 as required under the guidance. The adoption of this guidance did not have any material impact on the
Company’s consolidated condensed financial statements.
Cost of Revenue
Cost of revenue
primarily consists of costs paid to hotel and vacation package suppliers for the acquisition of relevant services and products
for sale to customers and includes the procurement cost of hotel rooms and other services.
Cost of revenue
is the amount paid or accrued to procure 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.
Operating Expenses
Operating expenses
include costs such as advertising and business promotion costs, utilities, rent, payroll and consultants fees and charges, which
are recognized on an accrual basis. Depreciation and amortization costs are amortized over the estimated useful lives of the assets.
Use of Estimates
The preparation
of financial statements in US GAAP requires management to make estimates and assumptions that affect the amounts reported in the
financial statements and footnotes thereto. Actual results could differ significantly from those estimates. The estimates underlying
the Company’s Financial Statements relate to, accruals for travel transactions, valuation of accounts receivable, useful
life of long-lived assets and income taxes.
Cash and Cash Equivalents
The Company considers
all highly-liquid investments (including money market funds) with an original maturity at acquisition of three months or less to
be cash equivalents. The Company maintains cash balances, which may exceed federally insured limits. The Company does not believe
that this results in any significant credit risk.
Sunalpha has fourteen
accounts denominated in Indian Rupees. As of September 30, 2018 and 2017, the cash balance in financial institutions in India was
USD $466,744 and $168,901, respectively. The transactions are undertaken in Indian Rupees and requires a foreign currency translation
adjustment. The Company’s cash deposits in India are not insured against loss. 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 receivable are stated at the amount billed to the customer. Customer account balances
with invoices exceeding credit terms are considered delinquent. Payments of accounts receivable are allocated to specific invoices
identified on the customer’s remittance advice or, 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 are tested for impairment at least annually. Intangible assets that have limited useful lives are
amortized on a straight line basis over the shorter of their useful or legal lives.
Concentration of Credit Risk
Financial instruments
which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts
receivable.
The Company maintains
its cash in bank deposit accounts, which are not insured. The Company has not experienced any losses in such accounts. The Company
believes that it is not exposed to any significant credit risk related to its cash holdings.
Income Taxes
The Company is subject
to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
TripBorn, Inc. was incorporated in the State of Delaware and is subject to Federal income tax in the United States of America.
Sunalpha was incorporated under the laws of the Republic of India and has no operating profit for current tax liabilities. The
Indian corporate income tax rate is 30% for domestic companies.
The Company accounts
for income taxes in accordance with ASC 740, “Income Taxes”, which requires the Company to use the asset and liability
method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences
of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement
carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this
accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes
the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred
tax asset will not be realized.
ASC 740 clarifies the
accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in its financial statements
the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical
merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being
realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company
has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax
expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating
to income taxes have been incurred during the quarters ended September 30, 2018 and 2017.
On December 22, 2017,
the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”).
The Tax Act included a broad range of complex provisions impacting the taxation of multi-national companies. The Tax Act makes
broad and complex changes to the U.S. corporate income tax system and includes a Transition Toll Tax (the “Transition Tax”),
which is a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries’ previously untaxed foreign earnings.
Since the Company’s foreign subsidiary has historically realized net losses, we believe that the Company is not subject to
the Transition Tax.
The Tax Act also imposed
a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective
rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31,
2025) with a partial offset for foreign tax credits. We are still evaluating the impacts of the GILTI tax.
Foreign Currency Translation
The Company translates
the foreign currency financial statements into US Dollars using the year or reporting period end or average exchange rates in accordance
with the requirements of ASC subtopic 830-10, Foreign Currency Matters (“ASC 830-10”). Assets and liabilities
are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect
for the periods presented. The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss)
within shareholders’ equity (deficit).
|
September 30, 2018
|
March 31, 2018
|
September 30, 2017
|
Period-end spot rate
|
US$1=INR 73.3652
|
US$1=INR 65.0792
|
US$1=INR 65.2850
|
Average rate
|
US$1=INR 71.0376
|
US$1=INR 66.6880
|
US$1=INR 65.0729
|
Fair Value of Financial Instruments
ASC 825-10 requires
certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value
are as follows:
|
·
|
Level 1 - Quoted prices in active markets for identical assets and liabilities.
|
|
·
|
Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset
or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
·
|
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques
that use significant unobservable inputs.
|
The Company considers the recorded value
of its financial assets and liabilities, which consist primarily of cash, accounts receivable, other current assets, and other
current liabilities to approximate the fair value of the respective assets and liabilities at September 30, 2018 and March 31,
2018 based upon the short-term nature of these assets and liabilities.
|
3.
|
Change in Control Transaction
|
On December 8,
2015, the Company issued 71,428,570 shares of common stock to Arna Global LLC (“Arna”) for cash consideration of $95,500.
Arna is wholly-owned by the Company’s President and director, Deepak Sharma. The Company accounted for the change in control
transaction with Arna using the acquisition method of accounting. Arna obtained control 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 was 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.
|
4.
|
Acquisition of Sunalpha Green Technologies Private Limited
|
On December 14,
2015, the Company acquired substantially all of the outstanding shares of Sunalpha which was incorporated under the laws of the
Republic of India in November 2010. The transaction was accounted for as a reverse recapitalization. Sunalpha was the acquirer
for financial reporting purposes, and TripBorn was the acquired company. Consequently, the assets, liabilities and results of operations
that are reflected in the Company’s consolidated financial statements prior to the December 14, 2015 transaction are those
of Sunalpha and are recorded using 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 up to the day prior to the closing of
the transaction, and the assets, liabilities and results of operations of the Company and Sunalpha from and after the closing date
of the transaction.
|
5.
|
Increase in Authorized Shares
|
The Company amended
its certificate of incorporation on January 13, 2016 to (1) increase the authorized number of shares of common stock from 100,000,000
to 200,000,000 and (2) change its name from PinstripesNYC. Inc. to TripBorn, Inc.
|
6.
|
Property and Equipment
|
Property and Equipment
consists of the following as of September 30 and March 31, 2018. The property and equipment listed below are recorded in the books
of Sunalpha.
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
Computer
|
|
$
|
13,443
|
|
|
$
|
13,443
|
|
Furniture and Fixture
|
|
|
5,864
|
|
|
|
5,468
|
|
Office Equipment
|
|
|
6,537
|
|
|
|
6,537
|
|
Software License
|
|
|
768
|
|
|
|
768
|
|
Total
|
|
|
26,612
|
|
|
|
26,216
|
|
Accumulated depreciation
|
|
|
(16,523
|
)
|
|
|
(14,057
|
)
|
Fixed assets, net
|
|
$
|
10,523
|
|
|
$
|
12,159
|
|
Depreciation expense for the quarters ended September 30, 2018 and 2017 is $1,636 and ($1,901), respectively.
Intangible
assets consist of the following as of June 30 and March 31, 2018:
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
API Access
|
|
$
|
133,763
|
|
|
$
|
133,763
|
|
Software
|
|
|
1,651,000
|
|
|
|
1,651,000
|
|
Total
|
|
|
1,784,763
|
|
|
|
1,784,763
|
|
Accumulated amortization
|
|
|
(766,700
|
)
|
|
|
(595,264
|
)
|
Intangible assets, net
|
|
$
|
1,018,063
|
|
|
$
|
1,189,499
|
|
Amortization expense
for the quarters ended June 30, 2018 and 2017 was $82,550 and $82,550, respectively.
Intangible assets
consist of Application Programming Interface (API) access with major travel companies and a customized online transaction platform
called Travelcord for use on the Company’s website, www.tripborn.com. Application Programming Interface components 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.
Following the Company’s
acquisition of Sunalpha, 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 of a convertible
promissory note. The Travelcord software was recognized as an intangible asset at historical cost pursuant 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-owned by our Vice President and director, Sachin Mandloi pursuant to a Software Development Agreement,
dated January 26, 2015.
On September 23,
2016, we entered into a software development agreement with Takniki Communications to further develop and enhance our online transaction
platform, Travelcord. Pursuant to this software development agreement, we agreed to pay a fee of $695,000 upon delivery of enhanced
software, which occurred on December 31, 2016. The Company paid for the software development by issuing a convertible promissory
note in the principal amount of $695,000 to Takniki Communications.
The Company, through its internet-based
platform, facilitates the purchase of travel products and services from third party travel service providers. The Company incurs
service taxes at specified rates on the services it acquires from the travel service providers. The Company charges service taxes
at specified rates on sales of travel and travel related products to clients. The net difference of the amount paid while acquiring
services and the amount collected while selling the services is remitted to taxing authorities ("tax recovery charge").
As of September 30, 2018, the Company has a balance with the tax authority to offset future service tax dues.
|
9.
|
Related Party Transactions
|
Mr. Sharma loaned the Company
$156,407, which is evidenced by a convertible promissory note, dated March 8, 2016, which bears interest at an annual rate of 10%.
The principal amount together with accrued and unpaid interest thereon becomes due and payable on March 7, 2019. In the event that
the Company completes an underwritten public offering of its common stock in connection with a listing on a national securities
exchange (an “Uplist Transaction”) prior to the March 7, 2019 maturity date, the outstanding principal balance of the
note will automatically convert into 3,432,234 shares of common stock (the “Sharma Note Shares”). If the Uplist Transaction
does not occur prior to the maturity date, Mr. Sharma will have the option to receive full payment of the outstanding principal
balance or the Sharma Note Shares, each together with accrued unpaid interest paid in cash. Mr. Sharma also will have the option
to receive full payment of the outstanding principal or the Sharma 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.
Mr. Mandloi loaned the Company
$38,076, which is evidenced by a convertible promissory note, dated March 8, 2016, which bears interest at an annual rate of 10%.
The principal amount together with accrued and unpaid interest thereon becomes due and payable on March 7, 2019. In the event that
the Company completes an Uplist Transaction prior to the March 7, 2019 maturity date, the outstanding principal balance of the
note will automatically convert into 835,552 shares of common stock (the “Mandloi Note Shares”). If the Uplist Transaction
does not occur prior to the maturity date, Mr. Mandloi will have the option to receive full payment of the outstanding principal
balance or the Mandloi Note Shares, each together with accrued unpaid interest paid in cash. Mr. Mandloi also will have the option
to receive full payment of the outstanding principal or the Mandloi 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.
In connection with the Software
Agreement described in Note 7 above, Arna, wholly owned by the Company’s president, loaned the Company $956,000, which is
evidenced by a convertible promissory note, dated March 8, 2016, which bears interest at an annual rate of 10%. The principal amount
together with accrued and unpaid interest thereon becomes due and payable on March 7, 2019. In the event that the Company completes
an Uplist Transaction prior to the March 7, 2019 maturity date, the outstanding principal balance of the note will automatically
convert into 21,194,381 shares of common stock (the “Arna Note Shares”). If the Uplist Transaction does not occur prior
to the maturity date, Arna will have the option to receive full payment of the outstanding principal balance or the Arna Note Shares,
each together with accrued unpaid interest paid in cash. Arna also will have the option to receive full payment of the outstanding
principal or the Arna 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.
On September 23, 2016, we entered
into a software development agreement with Takniki Communications to further develop and enhance our online transaction platform,
Travelcord. Pursuant to this software development agreement, we agreed to pay a fee of $695,000 upon delivery of enhanced software,
which occurred on December 31, 2016. The Company paid for the software development by issuing a convertible promissory note in
the principal amount of $695,000 to Takniki Communications with a maturity date of December 31, 2019, and bearing interest at
a rate of 10%. The principal amount of this note is convertible into 10,303,070 shares of our common stock at the noteholder’s
option at maturity. In the event that the Company completes an Uplist Transaction prior to the December 31, 2019 maturity date,
the outstanding principal balance of the note will automatically convert into 10,303,070 shares of common stock (the “Takniki
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 Takniki Note Shares, each together with accrued unpaid interest paid
in cash. Takniki also will have the option to receive full payment of the outstanding principal or the Takniki 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.
iii.
Guarantee
Deposits of the Company’s
President and Managing Director with IndusInd Bank Ltd. serve as collateral for a guarantee in the amount of $50,000 in favor of
the International Air Transport Association (“IATA”) on behalf of Sunalpha. IndusInd Bank Ltd. will pay the guaranteed
amount for claims through September 30, 2018.
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 at September 30, 2018 and March 31, 2018 were $373,384 and
$348,098, respectively.
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.
The Company files income tax
returns in the U.S. Federal jurisdiction and various State jurisdictions. Sunalpha files tax returns in India. The Company is generally
subject to U.S. Federal, State and local examinations by tax authorities for the past three years.
On December 22, 2017, the U.S. government
enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act included
a broad range of complex provisions impacting the taxation of multi-national companies. The Tax Act makes broad and complex changes
to the U.S. corporate income tax system and includes a Transition Toll Tax (the “Transition Tax”), which is a one-time
mandatory deemed repatriation tax on accumulated foreign subsidiaries’ previously untaxed foreign earnings. The Toll Charge
will be paid over an eight-year period, starting in 2018, and will not accrue interest. The Tax Act also imposed a global intangible
low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for
tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial
offset for foreign tax credits. Generally, accounting for the impacts of newly enacted tax legislation is required to be completed
in the period of enactment, however in response to the complexities and ambiguity surrounding the Tax Act, the SEC released Staff
Accounting Bulletin No. 118 (“SAB 118”) to provide companies with relief around the initial accounting for the Tax
Act. Pursuant to SAB 118, the SEC has provided a one-year measurement period for companies to analyze and finalize accounting for
the Tax Act. During the one-year measurement period, SAB 118 allows companies to recognize provisional amounts when reasonable
estimates can be made for the impacts resulting from the Tax Act. TripBorn will finalize accounting for the Tax Act during the
one-year measurement period, and any adjustments to the provisional amounts will be included in income tax expense or benefit in
the appropriate period, and disclosed if material, in accordance with guidance provided by SAB 118.
While our accounting for the Tax
Act is not complete, we do not believe we are subject to the Transition Tax. The Transition Tax is a tax on previously untaxed
accumulated earnings and profits (“E&P”) of our foreign subsidiaries and our foreign subsidiary has historically
generated operating losses. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the
amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings,
if any.
The Tax Act has significant complexity
and our final tax liability may materially differ from provisional estimates due to additional guidance and regulations that may
be issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”) and state and local tax authorities,
and for TripBorn’s finalization of the relevant calculations required by the new tax legislation.
TripBorn continues to analyze the
provisions of the Tax Act which are effective after December 30, 2017, including but not limited to certain global intangible low-tax
income (“GILTI”) from foreign operations.
Under GAAP, companies are allowed
to make an accounting policy election to either treat taxes resulting from GILTI as a current-period expense when they are incurred
or factor such amounts into the measurement of deferred taxes. The Company has not completed its analysis of the effects of the
GILTI provisions and will further consider the accounting policy election within the measurement period as provided under SAB 118.
|
11.
|
New Accounting Pronouncements
|
The Company considers the applicability
and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that
are issued.
New Accounting Pronouncements Recently Adopted
As disclosed in Revenue Recognition
above, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) effective April 1, 2018 using the retrospective
transition method. This new accounting standard outlines a single comprehensive model to use in accounting for revenue arising
from contracts with customers. This standard supersedes existing revenue recognition requirements and eliminates most industry-specific
guidance from US GAAP. The core principle of the new accounting standard is to recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. In addition, the adoption of this new accounting standard resulted in increased disclosure, including
qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from
contracts with customers. Adoption of this standard did not result in significant changes to the Company’s accounting policies,
business processes, systems or controls, or have a material impact on the Company’s financial position, results of operations
and cash flows or related disclosures. As such, prior period financial statements were not recast.
New Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued
ASU No. 2016-02, "Leases” to increase transparency and comparability among organizations by recognizing lease assets
and lease liabilities on the balance sheet with a corresponding liability and disclosing key information about leasing arrangements.
For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including
interim reporting periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal
years beginning after December 15, 2019, and interim reporting periods within fiscal years beginning after December 15, 2020. Early
adoption is permitted. The Company is evaluating the impact of the adoption of this revised guidance on its consolidated financial
statements and related disclosures.
|
12.
|
Net Income (Loss) Per Share
|
A reconciliation of net loss
and weighted average shares used in computing basic and diluted net income per share is as follows:
|
|
Second Quarter Ended
September 30,
|
|
|
Six Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common shares
|
|
$
|
(245,086
|
)
|
|
$
|
(141,454
|
)
|
|
$
|
(498,896
|
)
|
|
$
|
(363,996
|
)
|
Weighted average common shares outstanding
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
Basic net income (loss) per share of common stock
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common shares
|
|
$
|
(245,086
|
)
|
|
$
|
(141,454
|
)
|
|
$
|
(498,896
|
)
|
|
$
|
(363,996
|
)
|
Weighted average common shares outstanding
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
Dilutive effects of convertible debt
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Weighted average common shares, assuming
dilutive effect of convertible debt
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
|
|
91,287,934
|
|
|
|
86,888,168
|
|
Diluted net income (loss) per share of common
stock
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Due to net loss, the shares of
common stock underlying the convertible notes described in Notes 9 and 10 were not included in the calculation of diluted net loss
per share, as they would have had an antidilutive effect.
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, 2018, the Company renewed its agreement with the IRCTC
and paid an annual maintenance fee of $8,600 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 director of the Company on a rent free basis. As
of September 30, 2018 and 2017, the Company has not paid any rent. The Company is expected to pay market rate rent once the Company
is profitable.
The Company has leased office
space in Ahmedabad, India effective from March 1, 2016 for a term of five years. The operations of the Company are being undertaken
from the new premises. The Company will pay approximately $1,260 per month pursuant to the lease agreement.
The Company entered into a consulting agreement effective May 24, 2016 with LogiCore Strategies, LLC (“LogiCore”),
pursuant to which Richard J. Shaw serves as the Company’s Chief Financial Officer. The Company compensates LogiCore for Mr.
Shaw’s time at an annual rate of $60,000. Effective November 12, 2018 Mr. Shaw’s resigned as Chief Financial Officer
of the Company but will continue to provide services to the Company as a consultant.
The Company has
leased 3,400 square feet of office space in Bangalore, India effective from October 9, 2017 for an initial term of three years
and an option to renew the lease for an additional three years. The Bangalore operations of the Company are being undertaken from
these premises. The Company will pay approximately $2,918 per month pursuant to the lease agreement.