UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

For the quarterly period ended: December 31, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

Commission File Number: 333-192399

KM WEDDING EVENTS MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware	46-1290754
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)

11501 Dublin Blvd., Suite 200, Dublin, CA 94568
(Address of principal executive office and zip code)

(925) 891-8029
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐		Smaller reporting company	☒
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The numbers of shares outstanding of the issuer’s class of common stock as of February 10, 2016 was 42,096,160 shares of common stock outstanding.

KM WEDDING EVENTS MANAGEMENT, INC.

FORM 10-Q
For the Nine Months Period Ended December 31, 2015

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	PAGE
ITEM 1. FINANCIAL STATEMENTS	4
Condensed Consolidated Financial Statements	4
Condensed Consolidated Balance Sheets as at December 31, 2015 (unaudited) and March 31, 2015	4
Condensed Consolidated Statements of Income for the Three and Nine Months Ended December 31, 2015 and 2014 (unaudited)	5
Condensed Consolidated Statement in Changes in Equity	6
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2015 and 2014 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2015 and 2014 (unaudited)	8
Notes to Condensed Consolidated Financial Statements (unaudited)	9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 4. CONTROLS AND PROCEDURES	21
PART II - OTHER INFORMATION	22
ITEM 1. LEGAL PROCEEDINGS	22
ITEM 1A. RISK FACTORS	22
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4. MINE SAFETY DISCLOSURES	22
ITEM 5. OTHER INFORMATION	22
ITEM 6. EXHIBITS	23

 

Caution Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended December 31, 2015 filed with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

•

“We,” “us” and “our” refer to KM Wedding Events Management, Inc. and, except where the context requires otherwise, KM India.

 

•

“KM” refers to KM Wedding Events Management, Inc., a Delaware corporation.

 

•

“KM India” refers to KM Wedding Events Management Private Limited, India, which is majority owned by KM.

 

•

“Indian Rupee”, Rs, and “Rupee” refers to Indian Rupee, the legal currency of India.

 

•

“U.S. dollar”, “$” and “US$” refer to the legal currency of the U.S.

 

PART I - FINANCIAL INFORMATION  

ITEM 1.  FINANCIAL STATEMENTS

KM Wedding Events Management, Inc
Interim Condensed Consolidated Balance Sheets
(in US Dollars $ unless otherwise stated)
							As at December 31,				As at March 31,
			Notes				2015				2015
							(unaudited)
ASSETS
Current assets:
Cash and cash equivalents			3				103,781				97,960
Accounts receivable			4				496,549				551,575
Other current assets			5				526,824				603,314
Total current assets							1,127,154				1,252,849
Non-current assets:
Property, plant and equipment, net			6				106,892				124,073
Intangible assets, net			7				14,651				22,465
Goodwill			21				694,856				685,007
Film costs			24				11,334				12,289
Deferred tax asset, net							60,962				4,066
Other non-current assets			8				82,926				97,903
Total non-current assets							971,621				945,803
Total assets							2,098,775				2,198,652
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued liabilities			9				287,146				190,087
Statutory liabilities			10				269,550				247,731
Short-term loans & current portion of long term debt			11				183,900				217,843
Unsecured loans from related parties, net of advances			20				218,144				85,933
Other current liabilities			13				205,385				140,796
Total current liabilities							1,164,125				882,390
Non-current liabilities:
Long-term debt			12				244,872				279,943
Other non-current liabilities			14				21,214				20,412
Total non-current liabilities							266,086				300,355
Equity:
Common stock par value $ 0.001 (shares outstanding: 42,096,160 and 42,096,160 as at December 31, 2015 and March 31, 2015, respectively)			15				42,096				42,096
Additional paid-in-Capital							1,165,712				1,165,712
Accumulated deficit							(493,875	)			(228,981	)
Equity Attributable to equity holders of the company							713,933				978,827
Non-Controlling Interest							(45,369	)			37,080
Total equity							668,564				1,015,907
Total liabilities and equity							2,098,775				2,198,652
The accompanying notes are an integral part to these interim condensed financial statements.

 

KM Wedding Events Management, Inc
Interim Condensed Consolidated Statement of Income
(in US Dollars $ unless otherwise stated)
							For the Three Months ended			For the Three Months ended			For the Nine Months ended			For the Nine Months ended
			Notes				December 31, 2015			December 31, 2014			December 31, 2015			December 31, 2014
							(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues
Matrimonial service income			16				155,251			450,929			452,888			1,053,819
Wedding event management income							—			177,086			38,789			389,364
Wedding infrastructure lease income							6,410			—			16,908			—
Total							161,661			628,015			508,585			1,443,183
Costs and expenses
Matrimonial service expenses			17				64,479			109,496			225,680			291,662
Wedding event management expenses							—			143,610			28,866			315,763
Wedding infrastructure maintenance expenses							3,155			—			7,430			—
Personnel costs							92,153			98,974			255,694			264,188
General and administrative expenses			18				112,770			172,953			349,068			410,716
Depreciation and amortization							8,122			8,654			23,932			22,218
Total							280,678			533,687			890,670			1,304,610
Operating Income / (loss)							(119,017	)		94,328			(382,085	)		138,573
Other income / (expenses)
Foreign exchange gain / (loss)							2,622			6,466			16,978			13,616
Miscellaneous income							—			(275	)		—			—
Interest Income							—			(151	)		—			7,802
Finance charges							(34,773	)		(13,385	)		(75,634	)		(45,943	)
Total other income / (expenses), net							(32,151	)		(7,345	)		(58,656	)		(24,525	)
Income / (loss) before income tax expense							(151,169	)		86,983			(440,741	)		114,048
Income taxes
Provision for Income taxes written back							—			—			12,294			—
Deferred tax benefit							—			31,464			75,371			31,464
Prior Period Taxes							—			(19,545	)		—			(19,545	)
Current Taxes							—			(25,965	)		—			(25,965	)
Net income / (loss)							(151,169	)		72,937			(353,076	)		100,002
Attributable to:
Equity holders of the company							(88,177	)		50,281			(268,238	)		24,449
Non-controlling interest							(62,992	)		22,656			(84,838	)		75,553
Net income / (loss)							(151,169	)		72,937			(353,076	)		100,002
Earnings / (loss) per share - basic and diluted			19				(0.0021	)		0.0012			(0.0064	)		0.0006
The accompanying notes are an integral part to these interim condensed financial statements.

 

 

KM Wedding Events Management, Inc
Interim Condensed Consolidated Statement of Changes in Equity
(in US Dollars $ unless otherwise stated)
			Number of Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Equity Attributable to equity holders of the company				Non-controlling interest				Total Equity
As at March 31, 2014			41,646,160				41,646				1,031,162				(268,403	)			804,405				(53,710	)			750,695
Fresh issue of equity shares*			425,000				425				127,075				Nil				127,500				Nil				127,500
Net income / (loss) for the period [After adjusting Comprehensive Income/(Loss)]			Nil				Nil				Nil				(27,147	)			(27,147	)			51,822				24,675
As at December 31, 2014 (unaudited)			42,071,160				42,071				1,158,237				(295,550	)			904,758				(1,888	)			902,870
* 425,000 no of equity shares of par value $0.001 are issued at $0.30 per share. Also refer note 15 "Common Stock"
As at March 31, 2015			42,096,160				42,096				1,165,712				(228,981	)			978,827				37,080				1,015,907
Net income / (loss) for the period [After adjusting Comprehensive Income/(Loss)]			Nil				Nil				Nil				(264,894	)			(264,894	)			(82,449	)			(347,343	)
As at December 31, 2015 (unaudited)			42,096,160				42,096				1,165,712				(493,875	)			713,933				(45,369	)			668,564
The accompanying notes are an integral part to these interim condensed financial statements.

 

 

KM Wedding Events Management, Inc
Interim Condensed Consolidated Statement of Comprehensive Income
(in US Dollars $ unless otherwise stated)
			For the three months ended				For the three months ended				For the nine months ended				For the nine months ended
			December 31, 2015				December 31, 2014				December 31, 2015				December 31, 2014
			(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net income / (loss)			(151,169	)			72,937				(353,076	)			100,002
Other Comprehensive Loss
Foreign Currency Translation Profit/(Loss)			3,865				(4,210	)			5,733				(6,600	)
Total Other Comprehensive Loss			3,865				(4,210	)			5,733				(6,600	)
Attributable to:
Equity holders of the company			2,254				(2,456	)			3,344				(3,630	)
Non-controlling interest			1,611				(1,754	)			2,389				(2,970	)
Comprehensive Income/(loss)			(147,304	)			68,727				(347,343	)			93,402
The accompanying notes are an integral part to these interim condensed financial statements.

 

 

KM Wedding Events Management, Inc
Interim Condensed Consolidated Statement of cash flow
(in US Dollars $ unless otherwise stated)
		For the Nine Months ended				For the Nine Months ended
		December 31, 2015				December 31, 2014
		(Unaudited)				(Unaudited)
Cash flows from operating activities
Net income / (loss)			(353,076	)			100,022
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization			23,932				22,281
Unrealized foreign exchange (gain) / loss			(16,767	)			(13,616	)
Bad debts			36,915				47,432
Amortization of film costs			27,658				37,222
Marketing Charges - Shares issued as consideration			—				—
Deferred tax benefit			(75,371	)			31,464
Provision for Income taxes written back			(12,294	)			—
Changes in operating assets and liabilities
(Increase) / Decrease in accounts receivables			12,083				(216,015	)
(Increase) / Decrease in other current assets			63,108				26,928
(Increase) / Decrease in film costs			(27,442	)			(34,910	)
(Increase) / Decrease in other non-current assets			9,311				29,075
Increase / (Decrease) in accounts payable			104,618				46,991
Increase / (Decrease) in income tax and other statutory liabilities			37,887				94,196
Increase / (Decrease) in other current liabilities			75,234				(181,201	)
Increase / (Decrease) in other non-current liabilities			2,115				523
Net cash provided by (used in) operating activities			(92,088	)			(9,628	)
Cash flows from investing activities
Additions to property, plant and equipment			(7,341	)			(9,689	)
Investments in long-term investments			—				135,000
Advance given for Investment			—				(60,000	)
Net cash provided by (used in) investing activities			(7,341	)			65,311
Cash flows from financing activities
Proceeds from short term debts			129,929				(188,648	)
Proceeds from issue of Equity Shares			—				127,500
Proceeds from / (repayment of) long term debts			(18,653	)			29,058
Net cash provided by (used in) financing activities			111,276				(32,090	)
Effect of exchange rate changes on cash			(6,026	)			(27,966	)
Net increase in cash and cash equivalents			5,821				(4,373	)
Cash and cash equivalents, beginning of period			97,960				88,616
Cash and cash equivalents, end of period			103,781				84,243
Supplementary disclosures of cash flow information
Cash paid during the year for:
Interest paid			75,634				45,943
Income taxes paid			8,999				16,956
Non-cash items:
Allotment of common stock			—				—
The accompanying notes are an integral part to these interim condensed financial statements.

 

 

KM Wedding Events Management, Inc

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

 

1. General              

KM Wedding Events Management, Inc ('the Company') was incorporated on October 24, 2012 in the state of Delaware, United States of America.

 

Company is a service provider in the matrimonial industry through mass media through its subsidiary KM Wedding Events Management Private Limited (formerly known as "KM Matrimony Private Limited", India) in Tamil Nadu, India. As of December 31, 2015, the Company maintains a 58.33% ownership interest in KM Wedding Events Management Private Limited, India.

 

2. Significant Accounting Policies            

a. Basis of Consolidation            

The company has invested $569,000 to acquire 2,841,398 number of Equity shares of KM Wedding Events Management Private Limited, India. Subsequent to this investment, KM Wedding Events Management Private Limited, India has become subsidiary of this company. The agreement for such acquisition was entered in the month of February 2013 and executed in the month of April 2013.

 

b. Form and Content of the Financial Statements        

The Company maintains its books and records in accordance with generally accepted accounting policies in USA (“US GAAP”). The accompanying financial statements were derived from the Company’s statutory books and records. The financial statements are presented in US Dollars ($), the national currency of USA.

 

Revenue and related expenses generated from our international subsidiary is generally denominated in the currency of Indian Rupee (Rs.). The statements of income of our international subsidiary is translated into U.S. dollars at exchange rates indicative of market rates during each applicable period.

 

The interim condensed financial statements included herein are unaudited and have been prepared in accordance with US GAAP for interim financial reporting (primarily with topic 270, Interim Reporting, of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC")), and do not include all disclosures required by US GAAP. The company has omitted disclosures which would substantially duplicate the information contained in its 2015 audited financial statements, such as accounting policies. Additionally, the company has provided disclosures where significant events have occurred subsequent to the issuance of its 2015 audited financial statements. Management believes that the disclosures are adequate to make the information presented not misleading if these interim condensed financial statements are read in conjunction with the company’s 2015 audited financial statements and the notes related thereto. In the opinion of management, the financial statements reflect all adjustments of a normal and recurring nature necessary to present fairly, the company’s financial position, results of operations and cash flows for the interim reporting periods.

 

The results of operations for nine months ended December 31, 2015 may not be indicative of the results of operations for the full year ending March 31, 2016. Subsequent events have been evaluated through February 11, 2016, the date these financial statements were issued.

 

The closing exchange rate as of December 31, 2015 and March 31, 2015 was 66.326 and 62.591 Indian Rupees to one US dollar, respectively. The average exchange rate for the Nine months ended December 31, 2015 was 64.458 Indian Rupees.

 

c. Management Estimates        

The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the amounts of revenues and expenses recognized during the period. Management believes it has a reasonable and appropriate basis for its judgment pertaining to its estimates and assumptions. However, actual results could differ from those estimates.

 

d. Comprehensive Loss

The company's other comprehensive loss consists of unrealized gains(losses) on foreign currency translation adjustments.

 

 

3. Cash and cash equivalents

Cash and cash equivalents as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (Unaudited)				As at March 31, 2015
(a) Cash on hand			97,072				89,219
(b) Balance with banks on current accounts			6,709				8,741
Total			103,781				97,960

 

4. Accounts receivable

Accounts receivable as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (Unaudited)				As at March 31, 2015
(a) Customers (trade)			496,549				551,575
Total			496,549				551,575

 

5. Other current assets

Other current assets as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Event advances			203,214				216,312
(b) Staff advances			34,956				39,802
(c) Loans and advances			279,255				333,562
(d) Prepaid Expenses			400				13,638
(e) Income tax (net of advance tax)			8,999				–
Total			526,824				603,314

 

 

6. Property, plant and equipment, net

Property, plant and equipment as at December 31, 2015 comprises the following:

 

Particulars		Gross carrying value								Accumulated depreciation								Net carrying value
		Dec 31, 2015 (Unaudited)				Mar 31, 2015				Dec 31, 2015 (Unaudited)				Mar 31, 2015				Dec 31, 2015 (Unaudited)				Mar 31, 2015
(a) Vehicles			39,568				42,118				8,818				6,502				30,750				35,616
(b) Computers & Peripherals			69,333				73,802				65,253				68,367				4,080				5,435
(c) Furniture & Fixtures			13,373				14,234				7,050				6,432				6,323				7,802
(d) Office Equipment			62,845				61,173				35,397				32,533				27,448				28,640
(e) Leashold improvements			75,735				80,616				45,401				42,254				30,334				38,362
(f) Plant & Machinery			10,490				9,295				2,533				1,077				7,957				8,218
Total			271,344				281,238				164,452				157,165				106,892				124,073

 

Operating leases

The total amount of operating lease expenses is as follows:

 

Particulars		For the Nine Months Ended December 31, 2015 (unaudited)				For the Nine Months ended December 31, 2014 (unaudited)
Lease Expenses			17,722				28,157

 

 

7. Intangible assets, net

Intangible assets as at December 31, 2015 comprise the following:

 

Particulars		Gross carrying value								Accumulated depreciation								Net carrying value
		Dec 31, 2015 (Unaudited)				Mar 31, 2015				Dec 31, 2015 (Unaudited)				Mar 31, 2015				Dec 31, 2015 (Unaudited)				Mar 31, 2015
(a) Software			50,409				53,658				35,758				31,193				14,651				22,465
Total			50,409				53,658				35,758				31,193				14,651				22,465

 

 

 

8. Other non-current assets

Other non-current assets as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Rental advance			13,965				25,156
(b) Deposits			56,485				63,536
(c) Software under application development stage			12,476				9,211
Total			82,926				97,903

                                             

9. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities as at December 31,2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Accounts payable			205,377				87,895
(b) Salary payable			9,753				24,094
(c) Current portion of provision for gratuity			2,130				1,701
(d) General and administrative expenses payable			69,886				76,397
Total			287,146				190,087

 

10.  Statutory liabilities

Income tax and other statutory liabilities as at December 31,2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Service tax			183,584				156,573
(b) Provident fund			17,238				25,192
(c) Employees state insurance			2,231				6,291
(d) Professional			5,402				5,554
(e) Tax Deducted at Source			61,095				31,350
(f) Income tax (Net of Advance tax)			—				22,771
Total			269,550				247,731

 

 

11.  Short term borrowings and long term debt

Short term loans and borrowings as at December 31,2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Bank overdraft1			156,486				172,122
(b) Unsecured loan			3,001				23,469
(c) Secured loan			—				196
(d) Current portion of long-term debt			24,413				22,056
Total			183,900				217,843

 

¹ The bank overdraft facility is secured by way of hypothecation of trade receivables, current assets and fixed assets of the company except vehicles financed by other banks / financial institutions

 

12. Long Term Debt

Long term debt comprise the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Secured loan1			251,989				279,161
(b) Vehicle loans2			17,296				22,838
			269,285				301,999
(d) Current portion of long-term debt			(24,413	)			(22,056	)
Total			244,872				279,943

 

 

¹ During the quarter ended March 31, 2015, the company, its directors and relatives of directors have availed a term loan on a joint and several liability basis from ICICI Bank for an amount of $ 715,521. The company’s liability has been initially recognized in the financial statements at $ 275,989 under secured loans. The personal properties of the directors has been provided as security for availing the said loan. The loan is repayable in 120 equated monthly instalments and carries interest at the base rate plus a margin of 1.75%. The loan arrangement has been approved by the Board of Directors in the Board Meeting held on January 12, 2015 and a Memorandum of Understanding has been entered into between the company and its co-obligors. The total outstanding amount as at December 31, 2015 and March 31, 2015 towards this debt arrangement is $ 653,300 and $ 723,745 respectively. The carrying amount of the company’s liability as at December 31, 2015 and March 31, 2015 is $ 251,989 and $ 279,161 respectively.

 

² The interest rates of these Vehicle loans range from 11 % to 16 %. These loans are repayable in monthly installments ranging from 36 months to 60 months. These loans are secured against the respective assets.

 

The scheduled aggregate maturity of long-term debt outstanding as at December 31, 2015 is as follows:

 

Particulars	As at December 31, 2015 (Unaudited)
2016	7,272
2017	25,130
2018	26,035
2019	27,565
2020	26,052
Thereafter		157,231
Total long term debt	269,285

 

 

13. Other current liabilities

Other current liabilities as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Unearned revenue (i.e. billings in excess of revenue)			67,551				95,538
(b) Advances received			137,834				45,258
Total			205,385				140,796

 

14. Other non-current liabilities

Other non-current liabilities as at December 31, 2015 comprises the following:

 

Particulars		As at December 31, 2015 (unaudited)				As at March 31, 2015
(a) Trade Deposits			5,351				5,856
(b) Provision for gratuity			15,863				14,556
Total			21,214				20,412

 

15. Common Stock

The company has only one class of equity shares having par value of $ 0.001 per share. Each holder of equity shares is entitled to one vote per share. The authorized equity share capital (number of shares) of the company is 300,000,000 shares as at December 31, 2015 and March 31, 2015. The issued, subscribed and paid-up equity share capital (number of shares) of the company is 42,096,160 shares as at December 31, 2015 and as at March 31, 2015.

    (i) 4,596,160 number of shares are issued at a price of $ 0.05 per share

    (ii) 4,050,000 number of shares are issued at a price of $ 0.20 per share

    (iii) 33,000,000 number of shares at par value of $ 0.001 per share are issued for consideration other than cash.

    (iv) 200,000 number of shares are issued at a price of $ 0.30 per share

    (v) 250,000 number of shares are issued for consideration other than cash at a price of $ 0.30 per share

The shares are issued at a price mutually agreed by the shareholders pursuant to an agreement entered with them.

     

    Preferred Stock  

The authorized preferred share capital (number of shares) of the company is 10,000,000 shares having a par value of $ 0.001 per share as at December 31, 2015. The issued, subscribed and paid-up Preference share capital is Nil as at December 31, 2015.

   

The Shareholders who have subscribed 4,050,000 number of shares at the rate of $0.20 per share have an option to purchase a warrant for every two shares held which entitles the holder to purchase an additional share at the rate of $0.40 per share for the period of two years from the date of issuance.

     

16. Matrimonial service income

 

Particulars		For the three months ended								For the nine months ended
		Dec 31, 2015				Dec 31, 2014				Dec 31, 2015				Dec 31, 2014
(a) Profile Registration and Event Incomes			134,260				148,343				373,090				536,251
(b) Sponsorship Income and Advertisement Income			1,443				85,525				10,720				161,695
(c) Sale of space or time slot - Television series/ Television Rights			19,547				127,068				69,078				263,781
(d) Sale of products (magazines)			—				(7	)			—				2,092
(e) Franchisee License			—				90,000				—				90,000
Total			155,251				450,929				452,888				1,053,819

 

17. Matrimonial service expenses

 

Particulars		For the three months ended								For the nine months ended
		Dec 31, 2015				Dec 31, 2014				Dec 31, 2015				Dec 31, 2014
(a) Event expenses			7,500				43,191				60,384				114,352
(b) Production and telecast expenses - television series			21,549				25,392				80,003				80,689
(c) Publication expenses			4,949				16,149				19,760				44,848
(d) Subcontracting charges			21,562				—				31,793				—
(e) ARC commission			—				5,091				6,082				14,551
(f) Amortization of film costs			8,919				19,673				27,658				37,222
Total			64,479				109,496				225,680				291,662

 

 

18. General and administrative expenses

 

Particulars		For the three months ended								For the nine months ended
		Dec 31, 2015				Dec 31, 2014				Dec 31, 2015				Dec 31, 2014
(a) Lease expenses			15,355				9,460				49,690				28,157
(b) Repaid & Maintenance			5,299				8,856				12,578				23,363
(c) Insurance			218				(7	)			768				721
(d) Electricity charges			2,291				2,357				8,011				8,141
(e) Audit fees			2,133				2,221				6,399				6,789
(f) Filing charges			—				3,978				3,500				27,806
(g) Bank charges			1,306				1,064				6,056				6,905
(h) Bad debts			29,175				26,544				36,915				47,432
(i) Travelling and conveyance			1,151				12,524				3,203				31,039
(j) Professional charges			15,190				21,302				77,703				47,240
(k) Printing & Stationary			713				1,136				2,870				3,467
(l) Telephone, Courier & Postage			3,355				7,289				12,095				19,886
(m) Security charges			1,024				1,067				3,060				3,259
(n) Business promotion expenses			31,534				70,450				116,465				144,200
(o) Rates and taxes			—				1,812				—				1,812
(p) Others			4,027				2,900				9,755				10,499
Total			112,770				172,953				349,068				410,716

 

19. Earnings / (loss) per share (EPS)

 

Particulars		For the three months ended								For the nine months ended
		Dec 31, 2015				Dec 31, 2014				Dec 31, 2015				Dec 31, 2014
(a) Net income / (loss)			(88,177	)			50,281				(268,238	)			24,449
(b) Weighted average number of equity shares outstanding			42,096,160				41,721,845				42,096,160				41,721,845
Earnings / (loss) per share - basic and diluted			(0.0021	)			0.0012				(0.0064	)			0.0006

 

 

20. Related party disclosures

 

(a) Names of related party and relationship

(i)  Key Management Personnel ('KMP')

(a) Mr. T V Mohan- Chairman and Director

(b) Ms. Meera Nagarajan - President, CEO and Managing Director

(c) Mr. Vijaya Bhaskar Venkatesan- CFO, Director, Treasurer and Director of technologies

(ii)  Relatives of KMP

(a) Mr. Sridhar Kalyanasundaram

 

Particulars		KMP and Relative of KMP
		2015 (unaudited)				2014 (unaudited)
Transactions
Advances given for business purposes			77,922				205,289
Settlement of advances given for business purposes /advance received form the director			348,545				67,193
Repayment of unsecured loans			133,207				6,758
Closing balances
Advances received from Directors (credit bal.)			121,833				–
Advances given for business purposes (debit bal.)			–				205,597
Unsecured loans received (credit bal.) (Refer note below)			96,311				271,124

 

21. Goodwill

Particulars
Goodwill1			679,948
Add: Cumulative Translation adjustment			14,908
Balance as at December 31, 2015			694,856

 

 

¹Goodwill arises in the process of acquiring KM Wedding Events Management Private Limited, India (formerly known as "KM Matrimony Private Limited", India). In April 2013, the Company acquired 55.32% interest of KM Wedding Events Management Private Limited, India (formerly known as "KM Matrimony Private Limited", India). As of December 31, 2015, 58.33% of the shares of KM Wedding Events Management Private Limited are being held by the Company. This acquisition has been accounted as a business combination.

 

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. It is assigned to reporting units as of the acquisition date. As per ASC 805-20-55-6, the value of an acquired intangible asset which are not identifiable as of the acquisition date is subsumed into Goodwill. The assets and liabilities are acquired at book value as there is no significant deviation from fair value. There are no related contingent consideration that has arisen.

 

Impairment of Goodwill will be tested on annual basis at the end of the year.

 

22. Employee Benefits 

Defined Benefit Plan

The liability recognized in the balance sheets as at December 31, 2015 is as follows. The obligations are unfunded as on the dates of balance sheets.

Particulars		As at December 31,
		2015 (unaudited)				2014 (unaudited)
(a) Gratuity liability recognized in the balance sheet			17,993				16,257

  

Weighted average assumptions used to determine net gratuity cost and benefit obligations:

Particulars		For the Nine months ended December 31,
		2015 (unaudited)				2014 (unaudited)
(a) Discount rate			7.80%	p.a.			8.50%	p.a.
(b) Long-term rate of compensation increase			7.50%	p.a.			10.00%	p.a.
(c) Rate of return on plan assets			N.A.				N.A.

 

23. Going Concern 

The financial statements have been prepared on the basis that the company is a going concern & thereby no adjustments are required to be made to the carrying amount of assets and liabilities.

 

24. Film Costs

The amount of unamortized film costs disclosed in the balance sheet pertains to completed and not released films with respect to the television series. The entire amount of unamortized film costs is expected to be amortized during the next one year.

 

25. Commitments and Contingencies

Statutory Dues

Penalties, if any, on account of delay in payment of service tax and other statutory dues are unascertainable.

 

26. Previous Period Figures

Figures of previous period have been regrouped / rearranged, wherever required to confirm to the current period presentation.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF KM WEDDING EVENTS MANAGEMENT, INC. AND THE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Overview of Our Business

We have been involved in the wedding services industry in South India since 2004. “KM” is our brand, which is a short form for ‘KalyanaMalai’ meaning ‘Wedding Garland’ in South Indian language. Our services comprise of Matrimonial (Matchmaking) Services (“Matrimonial Services”) and Wedding Services (until June 30, 2015).Considering various business related aspects (including socio-economic aspects), the Company has decided to have a dedicated focus on Matrimonial Services business commencing July 1, 2015.

Matrimonial Services include matchmaking and partner identification, through multiple delivery channels via print and visual media, website, physical centers and events. In order to increase traction in the Matrimonial services business, we started leasing wedding halls (physical infrastructures where a wedding is conducted, similar to banquet halls of hotels). The first wedding hall has already commenced operations.

In India, we currently focus on the geographic locations of Tamil Nadu and Andhra Pradesh (two of the Southern States in India). We believe that we are well positioned to utilize the potential of the Matrimonial Services market because of our early presence in this market since 2004. We have conducted promotional events across the U.S.to capture the market potential. We are continuing our efforts to expand our presence in the US. Our target customers include the Indian high-income group, higher middle-income group, and other affluent individuals both in the U.S. and India. This segment, being upwardly mobile and comfort and service focused, is the right target group for our business strategy.

We, through our subsidiary KM India, have been servicing the Indian Diaspora in the U.S. through our website since 2004 which was followed up by Community Meets (events focused on bringing together individuals who are seeking a life partner and who share similar backgrounds (e.g., profession, socio-economic background, religion, etc.) conducted during the fiscal year 2011 in 5 cities (New York City, South Windsor (Connecticut), Boston, Houston and San Antonio) which was attended by approximately 1,200 prospective matrimonial customers. In October 2013, we also filmed for SUN TV across 6 different US cities (New York, South Windsor Connecticut), New Brunswick, San Jose, Dallas and Houston), which was attended by over 5,400 South Indian community members.

Based on the experience gained from the above activities, we believe that there is a demand and need in the Indian Diaspora in the U.S. for our Matrimonial Services. We believe a customized and focused approach is required to market to this segment. The current plan for exploring this business opportunity includes setting up offices in the U.S. (fiscal 2015), growing Matrimonial Services for weddings to be fixed in India by Indians in the U.S. launching a customized website for Matrimonial Services in the U.S. market (fiscal 2016-17).

Comparison of Three Months Ended December 31, 2015 and Three Months Ended December 31, 2014

Results of Operations 

Our financial performance for the three months ended December 31, 2015 compared to the three months ended December 31, 2014 are discussed and analyzed below. For the purpose of comparison, conversion of Indian Rupees to USD is done based on the average exchange rate for the period for Income and Expenditure items and at the closing exchange rate for Balance Sheet items. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

For the three months ended December 31, 2015, the Company generated revenue of $161,661 compared to $628,015 for the corresponding period in the previous year.

In terms of revenue mix 96% of the revenues were generated from Matrimonial Services (72% for the corresponding three month period in the previous year); Nil from the Wedding Services (28% for the corresponding three month period in the previous year) and 4% of the revenues were generated from wedding infrastructure leasing services (Nil for the corresponding three month period in the previous year).

During the three month period ended December 31, 2015, the Company incurred $280,678 of operating expenses compared to $533,687 for the corresponding three month period in the previous year, which included:

	•	Matrimonial Service expenses of $64,479 compared to $109,496 for the corresponding three month period in the previous year, which represents 42% of matrimonial revenues.
	•	General and Administrative expense of $112,770 ($172,953 for the corresponding three month period in the previous year) which represents 70% of revenues compared to 28% for the corresponding three month period in the previous year.
	•	Personnel expenses of $92,153 ($98,974 for the corresponding three month period in the previous year) representing 57% of revenues compared to 16% of revenues in the corresponding three month period in the previous year; and
	•	Depreciation and Amortization expenses of $8,122 ($8,654 for the corresponding three month period in the previous year).

For the three months ended December 31, 2015, the Company had operating loss of $119,017 compared to income of $94,328 for the corresponding period in the previous year. In addition, for the three month ended December 31, 2015, the Company had a net loss of $151,169 compared to income of $72,937for the corresponding three month period in the previous year).

Comparison of Nine Months Ended December 31, 2015 and Nine Months Ended December 31, 2014

Results of Operations 

Our financial performance for the nine months ended December 31, 2015 compared to the nine months ended December 31, 2014 are discussed and analyzed below. For the purpose of comparison, conversion of Indian Rupees to USD is done based on the average exchange rate for the period for Income and Expenditure items and at the closing exchange rate for Balance Sheet items. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

For the nine months ended December 31, 2015, the Company generated revenue of $ 508,585 compared to $1,443,183 for the corresponding period in the previous year.

In terms of revenue mix 89% of the revenues were generated from Matrimonial Services (73% for the corresponding nine month period in the previous year); 8% from the Wedding Services (27% for the corresponding nine month period in the previous year) and 3% of the revenues were generated from wedding infrastructure leasing services (Nil for the corresponding nine month period in the previous year).

During the nine month period ended December 31, 2015, the Company incurred $8,90,670 of operating expenses compared to $13,04,610 for the corresponding nine month period in the previous year, which included:

	•	Matrimonial Service expenses of $225,680 compared to $291,662 for the corresponding nine month period in the previous year, which represents 50% of matrimonial revenues.
	•	Wedding Service expense of $28,866 ($315,763 for the corresponding nine month period in the previous year) which represents 74% of wedding services revenues compared to 81 % for the corresponding nine month period in the previous year.
	•	General and Administrative expense of $349,068 ($410716 for the corresponding nine month period in the previous year) which represents 69% of revenues compared to 28% for the corresponding nine month period in the previous year.
	•	Personnel expenses of $255,694 ($264,188 for the corresponding nine month period in the previous year) representing 50% of revenues compared to 18% of revenues in the corresponding nine month period in the previous year; and.
	•	Depreciation and Amortization expenses of $23,932 ($22,281 for the corresponding nine month period in the previous year).

For the nine months ended December 31, 2015, the Company had operating loss of $382,085 compared to income of $138,573 for the corresponding period in the previous year. In addition, for the nine month ended December 31, 2015, the Company had a net loss of $353,076 compared to income of $100,002 for the corresponding nine month period in the previous year.

 Liquidity and Capital Resources

Overview

At December 31, 2015, the Company had cash equivalents of $103,781 and accumulated deficit of $493,875. At December 31, 2015, the Company had a negative working capital (including current portion of long-term debt) of $36,971compared to positive working capital of $370,459 at March 31, 2015, resulting from:

	•	Accounts Receivable of $496,549 at December 31, 2015 compared to $551,575 at March 31, 2015, which represents a 10% decrease;
	•	Account Payable and accrued liabilities relating to accrued interest expense, unpaid professional fees, and unpaid general expenditures of $287,146 at December 31, 2015 compared to $190,087 at March 31, 2015, representing 51% increase;
	•	Statutory liabilities of $269,550 at December 31, 2015 compared to $247,731 at March 31, 2015, representing 9% increase;
	•	Short-term loans and current portion in long-term debt of $183,900 at December 31, 2015 compared to $217,843 at March 31, 2015, representing a decrease of 16%;

 

	•	Unsecured loans of $218,144 at December 31, 2015 compared to $85,933 at March 31, 2015, representing a 158% increase;
	•	Other current liabilities of $205,385 at December 31, 2015 compared to $140,796 at March 31, 2015, representing a 46% increase; and
	•	Non-current liabilities of $266,086 at December 31, 2015 compared to $300,355 at March 31, 2015, representing a reduction of 11%

 

Cash flows from Operating Activities

During the nine month period ended December 31, 2015, net cash used in operating activities was $92,088 compared to net cash used by operations $9,628 during the corresponding period in the previous year.

Cash flows from Investing Activities

During the nine month period ended December 31, 2015, net cash used in investing activities was $7,341 compared to $65,311 cash provided for the corresponding period in the previous year.

Cash flows from Financing Activities

During the nine month period ended December 31, 2015, net cash provided by financing activities was $111,276 compared to $32,090 used by financing activities for the corresponding period in the previous year.

 

Future Capital Needs

At December 31, 2015, our working capital deficit was $36,971. We had $103,781 in cash and cash equivalents. We have evaluated our expected cash requirements over the next twelve months, and have determined that our existing cash resources are not sufficient to meet our anticipated needs during the next twelve months, and that additional financing is required to support current operations. In addition, we anticipate that further additional financing may be required to fund our business plan subsequent to that date, until such time as revenues and related cash flows become sufficient to support our operating costs.

The successful implementation of our business plan is dependent upon us receiving sufficient funds from the sale of securities and/or additional funding from management, the issuance of equity or debt, or through obtaining a credit facility. In additional, substantial expenditures will be required to enable us to expand and scale up our operations and quality of services. We will require additional financing from issuance of equity or debt, or through obtaining a credit facility, to execute our plan of operations. Our established bank-financing arrangements will not be adequate. Although management believes that the additional required funding will be obtained through the sale of securities, there is no guarantee we will be able to obtain the additional required funds in the future or that funds will be available on terms acceptable to us, if at all. If such funds are not available, management will be required to curtail its investments in additional sales and marketing and product development resources, and capital expenditures, which may have a material adverse effect on our future cash flows and results of operations, and its ability to continue operating as a going concern.

Brief Disclosure of Long Term Contractual Obligations

As at December 31, 2015, the Company has long term debts in the form of secured loans amounting to $269,285 and repayable as under:

Less Than One Year		$	7,272
One to Three Years		$	78,730
More than Three Years		$	183,283

 

Recent Accounting Pronouncements

As of December 31, 2015, there are no other recently issued accounting standards not yet adopted that would have a material effect on the Company’s consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The SEC defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our management (with the participation of our Chief Executive Officer and Chief Financial Officer) has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act). Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.

 

Changes in Internal Controls over Financial Reporting

During the quarter ended December 31, 2015, there were no material changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we have disputes that arise in the ordinary course of business. Currently, there are no material legal proceedings to which we are a party, or to which any of our property is subject.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Report

Exhibit No.		Description
31.1		Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Extension Schema*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase*
101.DEF		XBRL Taxonomy Extension Definition Linkbase*
101.LAB		XBRL Taxonomy Extension Label Linkbase*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase*
* Filed herewith

 

 

SIGNATURES

 

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.

	KM WEDDING EVENTS MANAGEMENT, INC.
Date: February 16, 2016
By:	/s/ Meera Nagarajan
	Meera Nagarajan, Chief Executive Officer