Notes to Consolidated Condensed Financial Statements
June 30, 2020
(UNAUDITED)
1. DESCRIPTION OF BUSINESS
Overview
TripBorn,
Inc. (“TripBorn” or the “Company”) is an Financial technology and eCommerce aggregator company. An aggregator
model is a form of eCommerce whereby our website, www.tripborn.com aggregates information from various travel and hospitality vendors
and presents them to users on a 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 which operates out of India, primarily providing services to small business or agents.
The unaudited consolidated financial statements
include the accounts and transactions of the Company; its wholly owned subsidiary, Sunalpha; All significant inter-company accounts and
transactions are eliminated in consolidation.
Acquisitions & Deconsolidation 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 of year 2019. 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 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, 2021, 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.
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 operating 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 ended March 31, 2020, recorded impairments to goodwill, intangible assets, fixed assets to reflect the impact of COVID-19.
The Company has incurred
net losses from operations since inception. The net loss for the quarter ended June 30, 2020, was $163,886 and the accumulated deficit
was $8,329,272 as of June 30, 2020. The Company’s ongoing losses have had a significant negative impact on the Company’s financial
position and liquidity.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The interim unaudited consolidated condensed
financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles
(“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and include the accounts of the Company and its subsidiaries. We have condensed or omitted certain
information and disclosures normally included in financial statements presented in accordance with U.S. “GAAP”. All intercompany
balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim unaudited
condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the
fair presentation of the Company’s financial position, results of operations and cash flows for the periods and dates presented.
These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full
fiscal year or for any subsequent period.
The accompanying condensed consolidated balance sheet as of March 31,
2020, was derived from the audited financial statements as of that date, but does not include all the information and footnotes required
by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included
in Form 10-K for the year ended March 31, 2020.
Use of Estimates
The preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported
and disclosed in the financial 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 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 of 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 not recognized an impairment charge for the quarter ended June 30, 2020.
Revenue Recognition
In May 2014, the Financial Accounting Standards
Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”): Topic 606 which supersedes
nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of Topic 606 is to recognize revenues when promised
goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those
goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment
and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP, including identifying
performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating
the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs
related to obtaining customer contracts.
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 method (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 price, (iv) allocate the transaction
price to the performance 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 customer. 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.
The following is a description
of the Company’s principal activities, from which the Company generates its revenue.
eCommerce Aggregator revenues:
Air, Rail and Bus Ticketing.
Recognized on a net commission basis upon transfer of control of promised services in an amount which we are entitled to in exchange for
the service.
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 service.
Other Revenue. Primarily
comprising visa processing fees, money transfer, and pre-and post-paid expenses are recognized after the services are performed.
Cost of Revenues
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, direct operating expenses, general and administrative expenses such as business promotion costs, utilities,
rent, payroll, 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 debt instruments with maturity of three months or less, to be cash equivalents. The Company maintains its cash in bank
accounts in the U.S. and India, which at times may not be covered by, or exceed the coverage limit of the Deposit Insurance and Credit
Guarantee Corporation of India. The Company does not believe that this results in significant credit risk. As of June 30, 2020, and 2019,
the cash balance in financial institutions in India was $467,135 and $859,189, respectively.
Receivables and Credit
Policies
Accounts receivables
are stated at the amount management 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 Company's estimate of potential
losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. The Company does
not accrue interest on past due receivables.
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 be adjusted based on currently available evidence such as historical collection experience,
current economic trends, and changes in customer payment terms. In accordance with the Company’s policy, if collection efforts have
been pursued and all reasonable and contractually available avenues for collections exhausted, accounts receivable would be written off
as uncollectible.
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 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-line basis over the shorter of their useful or legal lives. Intangible assets with definite useful lives
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
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.
Impairment of Long-lived Assets
The Company records 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.
Business Combinations
When acquiring other businesses or participating
in 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, the assets acquired,
liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair 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 Company translates
the foreign currency financial statements into U.S. Dollars using the year or reporting period end or average exchange rates in accordance
with the requirements of ASC 830, Foreign Currency Matters. 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 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 assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect. The Company
has outstanding 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 Expense
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 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. Promotion and Advertising expense was $0 for the quarter ended June 30, 2020, compared
to $84,906 for the quarter ended June 30, 2019. This increase in Promotion and Advertising expenses is due to the acquisition of PRAMA.
Stock-Based Compensation
The Company accounts 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. During the quarter ended June 30, 2020, and June 30, 2019, $0
and $25,723 was recognized in legal and consulting expenses in the Consolidated Condensed Statements of Operations, respectively, as a
result of an agreement for consulting services.
Income Taxes
The Company accounts for income taxes under the
asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences
of 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 and tax basis of assets and liabilities by using enacted tax rates
in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and
liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to
the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers
all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning
strategies, and results of operations. If the Company determines that it would be able to realize our deferred tax assets in the future
in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce
the provision for income taxes.
The Company records uncertain
tax positions in 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 realized upon ultimate settlement with the related tax authority.
Non Income Taxes
The Company is subject
to India 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.
Related Parties
The Company follows 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 related 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 benefit 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 an 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 the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty
of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842),
Targeted Improvements, which provides an additional, optional transition method with which to adopt the new leases standard.
This additional transition method allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period
of adoption, rather than in the earliest period presented in the financial statements, as originally required by ASU 2016-2.
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 or 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.
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 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 believes 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. PROPERTY AND EQUIPMENT, NET
Property and Equipment consists of the following
as of June 30 and March 31, 2020.
|
|
June 30, 2020
|
|
|
March 31, 2020
|
|
Furniture, fixtures and fittings
|
|
$
|
35,866
|
|
|
$
|
33,802
|
|
Leasehold improvements
|
|
|
-
|
|
|
|
-
|
|
Plant and machinery
|
|
|
-
|
|
|
|
-
|
|
Construction in process
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
35,866
|
|
|
|
33,802
|
|
Accumulated depreciation
|
|
|
(24,631
|
)
|
|
|
(23,746
|
)
|
Fixed assets, net
|
|
$
|
11,235
|
|
|
$
|
10,056
|
|
Depreciation expense for the quarters ended
June 30, 2020, and June 30, 2019 was $885 and $57,822 respectively.
5. INTANGIBLE ASSETS
Intangible assets with definite lives consist
of the following as of June 30 and March 31, 2020:
|
|
June 30, 2020
|
|
|
March 31, 2020
|
|
Software and software access agreement
|
|
$
|
880,770
|
|
|
$
|
880,770
|
|
Customer relationships
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
880,770
|
|
|
|
880,770
|
|
Accumulated amortization
|
|
|
(859,308
|
)
|
|
|
(855,770
|
)
|
Intangible assets with definite lives, net
|
|
$
|
21,462
|
|
|
$
|
25,000
|
|
Amortization expense for the quarters ended June 30, 2020, and June
30, 2019, was $3,538 and $76,483 respectively. The Company has no impairment charge for definite lived intangible assets for the quarter
ended June 30, 2020.
6. AMOUNTS DUE TO AND FROM RELATED PARTIES
The amounts due to related party balance from
the consolidated balance sheet of 1,598 as of June 30, 2020.
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.
7. LOANS WITH THIRD PARTIES
The Company has received SBA disaster loan of
$47,000 on May 27, 2020, which is payable after 2 years.
Economic Injury Disaster Loan
The Company received a federal Economic Injury
Disaster Loan (‘EIDL’) from the SBA in May 2020, of $10,417, which is a grant and qualifies for full forgiveness and in May
2020, of $47,000 which is a loan for a period of 30 years. Interest has been accrued at 3.75% p.a. on the $47,000 of EIDL. The first installment
of the loan is due in March 2022.
Interest of $217.66, accrued for the period ended
June 30, 2020, is shown under current portion of long-term loan.
Loan payable as on December 31,
Years
|
|
Amount
|
|
2021
|
|
$
|
0
|
|
2022
|
|
|
2612
|
|
2023
|
|
|
2612
|
|
2024
|
|
|
2612
|
|
2025
|
|
|
2612
|
|
And thereafter
|
|
|
36,552
|
|
Total loan payable
|
|
|
47,000
|
|
8. LOANS WITH RELATED PARTIES
Loans and borrowings with related parties are
discussed below:
|
|
As of
|
|
|
|
June 30, 2020
|
|
|
March 31, 2020
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Convertible note with Takniki Communications, Inc
|
|
$
|
695,000
|
|
|
$
|
695,000
|
|
|
|
$
|
695,000
|
|
|
$
|
695,000
|
|
On December 31, 2016, the Company
issued a convertible note to Takniki Communications, Inc, an affiliate owned by Sachin Mandloi, our Vice President and a director, totaling
$695,000. This note was issued pursuant to a Software Development Agreement dated September 23, 2016 between Takniki Communications, Inc
and the Company to finance the upgrade of our Travelcord operating software. The note has a maturation of December 31, 2019 and
bears interest at the rate of ten percent payable at maturity. The principal amount of this note is convertible into 10,303,070 shares
of the Company’s common stock at the noteholder’s option at maturity.
9. INCOME TAX
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 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 and PRAMA file
tax returns in India and due to losses, no tax liability or net deferred tax asset is recorded. The Company is generally subject to U.S.
Federal, State and local examinations by tax authorities for the past three years.
Indian taxes
Historically, the Company has not paid Indian
income taxes because of historical losses.
10. EARNINGS AND LOSS PER SHARE
ASC 260, “Earnings Per Share” requires
presentation of basic earnings per share and dilutive earnings per share. The computation of basic earnings (loss) per share is computed
by dividing earnings (loss) available to common shareholders by the weighted average number of outstanding common shares during the period.
Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. The computation of diluted
earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect.
The Company has outstanding convertible debt of
$695,000 which converts into 10,660,213 of the Company’s common stock, which may cause diluted earnings per share. Since the Company
has only incurred losses, basic and diluted loss per share is the same as potentially dilutive shares have been excluded from the calculation
of diluted net loss per share as their effect would be anti-dilutive.
The Company has not issued any shares or warrants
during quarter ended June 30, 2020.
|
|
Quarter Ended
|
|
|
|
June 30, 2020
|
|
|
June 30, 2019
|
|
Basic net loss per share:
|
|
|
|
|
|
|
Net loss attributable to TripBorn, Inc.
|
|
$
|
(163,886
|
)
|
|
$
|
(364,039
|
)
|
Weighted average common shares outstanding
|
|
|
132,932,159
|
|
|
|
97,605,456
|
|
Basic net loss per share attributable to TripBorn Inc. common stockholders
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Due to net loss, the shares of common stock underlying
the convertible notes were not included in the calculation of diluted net loss per share, as they would have had an antidilutive effect.
11. 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. On September 30, 2020, the Company renewed its agreement with the IRCTC and paid an annual maintenance
fee of $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 the CEO of the Company on a rent-free basis.
12. BUSINESS SEGMENTS
Prior to deconsolidation of PRAMA, a hospitality
company, the Company was two segment company. Following, the deconsolidation of PRAMA business, 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 only eCommerce aggregation services.
The Company management currently do not separate
its business in any operating segments and 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:
|
|
Three months ended June 30, 2020
|
|
|
|
eCommerce
Aggregator
|
|
|
Hospitality
|
|
|
Intersegment
elimination
|
|
|
Consolidated total
|
|
Segment results and total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
43,593
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
43,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
(29,185
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(29,185
|
)
|
Operating expenses
|
|
|
(161,219
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(161,219
|
)
|
Loss from operations, before other
expense, net
|
|
|
(146,811
|
)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
(146,811
|
)
|
Other expense, net
|
|
|
(17,075
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,075
|
)
|
Net loss
|
|
$
|
(163,886
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(163,886
|
)
|
Total assets
|
|
$
|
984,207
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
984,207
|
|
During the quarter ended June 30, 2020, the Company derived 100% of
its revenue from eCommerce Aggregation compared to 93% and 7% of its revenue from its Hospitality and eCommerce Aggregation segments,
respectively, for the quarter ended June 30, 2019.
13. SUBSEQUENT EVENTS
None.