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EX-32.2 - EXHIBIT 32.2 - KM WEDDING EVENTS MANAGEMENT, INC.ex32_2.htm
EX-32.1 - EXHIBIT 32.1 - KM WEDDING EVENTS MANAGEMENT, INC.ex32_1.htm
EX-31.2 - EXHIBIT 31.2 - KM WEDDING EVENTS MANAGEMENT, INC.ex31_2.htm
EX-31.1 - EXHIBIT 31.1 - KM WEDDING EVENTS MANAGEMENT, INC.ex31_1.htm

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: September 30, 2016

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 November 1, 2016 was 42,096,160 shares of common stock outstanding.

i
 

KM WEDDING EVENTS MANAGEMENT, INC.

FORM 10-Q
For the Three Months Period Ended September 30, 2016

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION  PAGE 
   
ITEM 1. FINANCIAL STATEMENTS 1
Condensed Consolidated Financial Statements 1
Condensed Consolidated Balance Sheets as at September 30, 2016 (unaudited) and March 31, 2016 1
Condensed Consolidated Statements of Income for the Three and Six Months Ended September 30, 2016 and 2015 (unaudited) 2
Condensed Consolidated Statement in Changes in Equity 3
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended September 30, 2016 and 2015 (unaudited)  4
Condensed Consolidated Statements of Cash Flows for the Six  Months Ended September 30, 2016 and 2015 (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION  15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  19
ITEM 4. CONTROLS AND PROCEDURES  19
   
PART II - OTHER INFORMATION  20
   
ITEM 1. LEGAL PROCEEDINGS  20
ITEM 1A. RISK FACTORS  20
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES  20
ITEM 4. MINE SAFETY DISCLOSURES  20
ITEM 5. OTHER INFORMATION  20
ITEM 6. EXHIBITS  21

2 
 

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 Annual Report on Form 10-K for the period ended March 31, 2016 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.

iii
 

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 September 30,    As at March 31, 
    Notes    2016    2016 
         (unaudited)      
ASSETS               
Current assets:               
Cash and cash equivalents   3    2,402    13,250 
Accounts receivable   4    461,628    448,809 
Other current assets   5    23,051    103,128 
Total current assets        487,081    565,187 
Non-current assets:               
Property, plant and equipment, net   6    84,698    102,387 
Intangible assets, net   7    8,166    12,530 
Goodwill   21    762,235    762,235 
Film costs   24    6,895    3,337 
Deferred tax asset, net        96,547    61,032 
Other non-current assets   8    63,073    63,459 
Total non-current assets        1,021,614    1,004,980 
Total assets        1,508,695    1,570,167 
                
LIABILITIES AND EQUITY               
Current Liabilities:               
Accounts payable and accrued liabilities   9    284,687    270,380 
Statutory liabilities   10    344,046    284,554 
Short-term loans & current portion of long term debt   11    230,813    212,544 
Unsecured loans from related parties, net of advances   20    168,349    179,679 
Other current liabilities   13    180,330    174,375 
Total current liabilities        1,208,225    1,121,532 
                
Non-current liabilities:               
Long-term debt   12    237,991    237,086 
Other non-current liabilities   14    17,244    22,916 
Total non-current liabilities        255,235    260,002 
                
Equity:               
Common stock par value $ 0.001 (shares outstanding: 42,096,160 and 42,096,160 as at September  30, 2016 and March 31, 2016, respectively)   15    42,096    42,096 
Additional paid-in-Capital        1,165,712    1,165,712 
Accumulated deficit        (845,740)   (749,919)
Equity Attributable to equity holders of the company        362,068    457,889 
Non-Controlling Interest        (316,833)   (269,256)
Total equity        45,235    188,633 
Total liabilities and equity        1,508,695    1,570,167 
                
                
The accompanying notes are an integral part to these interim condensed financial statements.

1
 

KM Wedding Events Management, Inc.               
Interim Condensed Consolidated Statement of Income               
(in US Dollars $ unless otherwise stated)               
                
   Notes  For the Three Months ended September 30, 2016 

For the Three Months ended

September 30,

2015

  For the Six Months ended September 30, 2016  For the Six Months ended September 30, 2015
      (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues                         
Matrimonial service income   16    155,037    130,547    289,832    299,012 
Wedding event management income        —      —      —      39,456 
Wedding infrastructure lease income        1,692    2,915    9,400    10,549 
Total        156,729    133,462    299,232    349,017 
                          
Costs and expenses                         
Matrimonial service expenses   17    75,616    96,462    144,435    161,873 
Wedding event management expenses        —      (20,430)   —      31,170 
Wedding infrastructure maintenance expenses        746    1,174    4,331    4,295 
Personnel costs        28,384    66,777    65,639    164,323 
General and administrative expenses   18    59,486    135,241    173,450    235,350 
Depreciation and amortization        6,705    8,093    14,546    15,885 
Total        170,987    287,317    402,401    612,896 
Operating Income / (loss)        (14,208)   (153,855)   (103,169)   (263,879)
                          
Other income / (expenses)                         
Foreign exchange gain / (loss)        (4,127)   8,608    1,409    13,971 
Miscellaneous income        —      —      —      —   
Interest Income        —      —      —      —   
Finance charges        (37,984)   (20,638)   (58,651)   (40,882 
Total other income / (expenses), net        (42,111)   (12,030)   (57,242)   (26,911 
Income / (loss) before income tax expense        (56,319)   (165,885)   (160,411)   (290,790)
                          
Income taxes                         
                          
Provision for Income taxes written back        —      12,353    —      12,353 
Deferred tax benefit        35,906    75,731    35,906    75,731 
Prior Period Taxes        —      —      —      —   
Current Taxes                  —        
Net income / (loss)        (20,413)   (77,801)   (124,505    (202,706)
                          
Attributable to:                         
Equity holders of the company        (19,176)   (66,355)   (84,801)   (163,571)
Non-controlling interest        (1,237)   (11,446)   (39,704)   (39,135)
Net income / (loss)        (20,413)   (77,801)   (124,505)   (202,706)
Earnings / (loss) per share - basic and diluted   19    

(0.0005 

)   (0.0016)   (0.0020)   (0.0039)

 

 The accompanying notes are an integral part to these interim condensed financial statements.

2
 

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 
At March 31, 2015   42,096,160    42,096    1,165,712    (228,981)   978,827    37,080    1,015,907 
Fresh issue of equity shares   —      —      —      —      —      —      —   
Net income / (loss) for the period [After adjusting Comprehensive Income/(Loss)]   —      —      —      (162,261)   (162,261)   (38,200)   (200,461)
At September 30, 2015 (unaudited)   42,096,160    42,096    1,165,712    (391,242)   816,566    (1,120)   815,446 
                                    
                                    
At March 31, 2016   42,096,160    42,096    1,165,712    (749,919)   457,889    (269,256)   188,633 
Net income / (loss) for the period [After adjusting Comprehensive Income/(Loss)]   —      —      —      (95,821)   (95,821)   (47,577)   (143,398)
As at September 30, 2016 (unaudited)   42,096,160    42,096    1,165,712    (845,740)   362,068    (316,833)   45,235 
                                    
                                    
The accompanying notes are an integral part to these interim condensed financial statements.

 

3
 

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 Six months ended    For the Six months ended 
    September 30, 2016    September 30, 2015    September 30, 2016    September 30, 2015 
    (unaudited)    (unaudited)    (unaudited)    (unaudited) 
Net income / (loss)   (20,413)   (77,801)   (124,505)   (202,706)
Other Comprehensive Loss                    
Foreign Currency Translation Profit/(Loss)   (8,508)   1,868    (18,893)   2,245 
Total Other Comprehensive Loss   (8,508)   1,868    (18,893)   2,245 
                     
Attributable to:                    
Equity holders of the company   (4,962)   1,090    (11,020)   1,310 
Non-controlling interest   (3,546)   778    (7,873)   935 
Comprehensive Income/(loss)   (28,921)   (75,933)   (143,398)   (200,461)
                     
                     
The accompanying notes are an integral part to these interim condensed financial statements.

 

4
 

 

KM Wedding Events Management, Inc.
Interim Condensed Consolidated Statement of cash flow
(in US Dollars $ unless otherwise stated)          
           
    For the Six Months ended    For the Six Months ended 
    September 30, 2016    September 30, 2015 
    (Unaudited)    (Unaudited) 
Cash flows from operating activities          
Net income / (loss)   (124,505)   (202,706)
Adjustments to reconcile net income to net cash          
provided by operating activities          
Depreciation and amortization   14,546    15,885 
Unrealized foreign exchange (gain) / loss   (1,205)   (14,213)
Bad debts   —      7,777 
Amortization of film costs   3,329    18,829 
Marketing Charges - Shares issued as consideration   —      —   
Deferred tax benefit   (35,906)   (75,731)
Provision for Income taxes written back   —      (12,353)
           
Changes in operating assets and liabilities          
(Increase) / Decrease in accounts receivables   (13,101)   12,231 
(Increase) / Decrease in other current assets   57,821    66,957 
(Increase) / Decrease in film costs   (6,912)   (27,573)
(Increase) / Decrease in other non-current assets   72    2,987 
Increase / (Decrease) in accounts payable   14,734    62,191 
Increase / (Decrease) in income tax and other statutory liabilities   61,054    24,353 
Increase / (Decrease) in other current liabilities   6,837    137,580 
Increase / (Decrease) in other non-current liabilities   (5,573)   1,256 
Net cash provided by (used in) operating activities   (28,809)   17,470 
           
Cash flows from investing activities          
Additions to property, plant and equipment   (431)   (7,329)
Sale of property, plant and Equipment   7,424    —   
Advance given for Investment   —      —   
Net cash provided by (used in) investing activities   6,993    (7,329)
           
Cash flows from financing activities          
Proceeds from short term debts   9,241    17,146 
Proceeds from issue of Equity Shares   —      —   
Proceeds from / (repayment of) long term debts   1,750    (13,682)
Net cash provided by (used in) financing activities   10,991    3,464 
Effect of exchange rate changes on cash   (23)   (4,959)
Net increase in cash and cash equivalents   (10,848)   8,646 
Cash and cash equivalents, beginning of period   13,250    97,960 
Cash and cash equivalents, end of period   2,402    106,606 
           
Supplementary disclosures of cash flow information          
Cash paid during the year for:          
Interest paid   58,601    40,882 
Income taxes paid   12,217    1,814 
           
           
The accompanying notes are an integral part to these interim condensed financial statements.

 

5
 

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 September 30, 2016, 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 2016 audited financial statements, such as accounting policies. Additionally, the company has provided disclosures where significant events have occurred subsequent to the issuance of its 2016 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 2016 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 three and six months ended September 30, 2016 may not be indicative of the results of operations for the full year ending March 31, 2017. Subsequent events have been evaluated through November 21, 2016 the date these financial statements were issued.

The closing exchange rate as of September 30, 2016 and March 31, 2016 was 66.58 and 66.25 Indian Rupees to one US dollar, respectively. The average exchange rate for the three months ended September 30, 2016 was 66.42 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.

6
 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

3. Cash and cash equivalents

Cash and cash equivalents as at September 30, 2016 comprises the following: 

Particulars 

As at

September 30, 2016

(Unaudited)

 

As at

March 31,

2016

(a) Cash on hand   122    3,515 
(b) Balance with banks on current accounts   2,280    9,735 
Total   2,402    13,250 

4. Accounts receivable

Accounts receivable as at September 30, 2016 comprises the following:

Particulars 

As at

September 30, 2016

(Unaudited)

 

As at

March 31,

2016

(a) Customers (trade)   461,628    448,809 
Total   461,628    448,809 

5. Other current assets

Other current assets as at September 30, 2016 comprises the following:

Particulars 

As at

September 30, 2016

(unaudited)

 

As at

March 31,

2016

(a) Event advances   —      19 
(b) Staff advances   6,583    29,715 
(c) Loans and advances   —      51,949 
(d) Prepaid Expenses   —      147 
(e) Rental Advance   4,281    10,755 
(f) Advance tax (Net of Income tax)   12,187    10,543 
Total   23,051    103,128 

7
 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

6. Property, plant and equipment, net

Property, plant and equipment as at September 30, 2016 comprises the following:

Particulars  Gross carrying value  Accumulated depreciation  Net carrying value
   September 30, 2016 (Unaudited)  March 31, 2016  September 30, 2016 (Unaudited)  March 31, 2016  September 30, 2016 (Unaudited)  March 31, 2016
(a) Vehicles   39,417    39,613    11,474    9,716    27,943    29,897 
(b) Computers & Peripherals   69,449    69,412    66,044    65,668    3,405    3,744 
(c) Furniture & Fixtures   13,321    13,388    8,026    7,392    5,295    5,996 
(d) Office Equipment   63,715    63,982    40,194    37,152    23,521    26,830 
(e) Leasehold improvements   75,446    75,822    50,912    47,344    24,534    28,478 
(f) Plant & Machinery   —      10,502    —      3,060    —      7,442 
Total   261,348    272,719    176,650    170,332    84,698    102,387 

Operating leases

The total amount of operating lease expenses is as follows:

Particulars 

For the

Six Months ended

September 30, 2016

(unaudited)

 

For the

Six Months ended

September 30, 2015

(unaudited)

Lease Expenses   28,987    34,596 

 

7. Intangible assets, net

Intangible assets as at September 30, 2016 comprise the following:

Particulars  Gross carrying value  Accumulated depreciation  Net carrying value
   September 30, 2016 (Unaudited)  March 31, 2016  September 30, 2015 (Unaudited)  March 31, 2016  September 30, 2016 (Unaudited)  March 31, 2016
(a) Software   50,217    50,467    42,051    37,937    8,166    12,530 
Total   50,217    50,467    42,051    37,937    8,166    12,530 

8
 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

8. Other non-current assets

Other non-current assets as at September 30 2016 comprises the following:

Particulars 

As at

September 30,

2016

(Unaudited)

 

As at

March 31,

2016

(a) Rental advance   —      —   
(b) Deposits   49,736    50,512 
(c) Software under application development stage   13,337    12,947 
Total   63,073    63,459 

                       

9. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities as at September 30,2016 comprises the following:

Particulars 

As at

September 30, 2016

(Unaudited)

 

As at

March 31,

2016

(a) Accounts payable   253,860    227,525 
(b) Salary payable   2,023    9,437 
(c) Current portion of provision for gratuity   2,296    2,307 
(d) General and administrative expenses payable   26,508    31,111 
Total   284,687    270,380 

10.  Statutory liabilities

Income tax and other statutory liabilities as at September 30,2016 comprises the following:

Particulars 

As at

September 30, 2016

(unaudited)

 

As at

March 31,

2016

(a) Service tax   225,906    184,508 
(b) Provident fund   31,875    34,300 
(c) Employees state insurance   5,468    4,932 
(d) Professional   6,523    6,555 
(e) Tax Deducted at Source   74,274    54,259 
(f) Income tax (Net of Advance tax)   —      —   
Total   344,046    284,554 

9 
 

 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated) 

11.  Short term borrowings and long term debt

Short term loans and borrowings as at September 30,2016 comprises the following:

Particulars 

As at

September 30, 2016

(unaudited)

 

As at

March 31,

2016

(a) Bank overdraft*   165,914    156,678 
(b) Unsecured loan   41,003    27,774 
(c) Secured loan   —      —   
(d) Current portion of long-term debt   23,896    28,092 
Total   230,813    212,544 

*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

September 30, 2016

(unaudited)

 

As at

March 31,

2016

(a) Secured loan1   249,227    249,347 
(b) Vehicle loans2   12,660    15,831 
    261,887    265,178 
(d) Current portion of long-term debt   (23,896)   (28,092)
Total   237,991    237,086 

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 September 30, 2016 and March 31, 2016 towards this debt arrangement is $625,127 and $643,177 respectively. The carrying amount of the company’s liability as at September 30, 2016 and March 31, 2016 is $242,522 and $249,347 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 September 30, 2016 is as follows:

  

As at

September 30,

2016

Particulars  (Unaudited)
 2017    24,230 
 2018    25,944 
 2019    27,468 
 2020    25,963 
 2021    28,996 
 Thereafter    127,541 
 Total long term debt    260,142 

  

10 
 

 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

13. Other current liabilities

Other current liabilities as at September 30, 2016 comprises the following:

Particulars  As at
September 30, 2016
(unaudited)
  As at
March 31,
2016
(a) Unearned revenue (i.e. billings in excess of revenue)   78,141    69,985 
(b) Advances received   102,189    104,390 
Total   180,330    174,375 

14. Other non-current liabilities

Other non-current liabilities as at September 30, 2016 comprises the following: 

Particulars  As at
September 30, 2016
(unaudited)
  As at
March 31,
2016
(a) Trade Deposits   —      5,435 
(b) Provision for gratuity   17,244    17,481 
Total   17,244    22,916 

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 September 30, 2016 and March 31, 2016. The issued, subscribed and paid-up equity share capital (number of shares) of the company is 42,096,160 shares as at September 30, 2016 and as at March 31, 2016.

(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 September 30, 2016. The issued, subscribed and paid-up Preference share capital is Nil as at September 30, 2016.

11 
 

 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated) 

16. Matrimonial service income

Particulars  For the Three months ended  For the Six months ended
  

September 30,

2016

 

September 30,

2015

 

September 30,

2016

 

September 30,

2015

(a) Profile Registration and Event Incomes   102,565    112,022    211,297    239,923 
(b) Sponsorship Income and Advertisement Income   31,768    4,193    36,246    9,322 
(c) Sale of space or time slot - Television series/ Television Rights   20,704    14,332    42,289    49,767 
(d) Sale of products (magazines)   —      —      —      —   
(e) Franchisee License   —      —      —      —   
Total   155,037    130,547    289,832    299,012 

17. Matrimonial service expenses

Particulars  For the Three months ended  For the Six months ended
   September 30, 2016  September 30, 2015  September 30, 2016  September 30, 2015
(a) Event expenses   20,985    32,041    38,840    53,136 
(b) Production and telecast expenses - television series   30,098    37,584    52,013    58,635 
(c) Publication expenses   4,108    4,973    8,580    14,882 
(d) Subcontracting charges   21,833    10,280    41,673    10,280 
(e) ARC commission   —      2,075    —      6,111 
(f) Amortization of film costs   (1,408)   9,509    3,329    18,829 
Total   75,616    96,462    144,435    161,873 

18. General and administrative expenses

Particulars  For the Three months ended  For the Six months ended
  

September 30,

2016

 

September 30,

2015

  September  30, 2016  September 30, 2015
(a) Lease expenses   14,506    16,577    28,987    34,596 
(b) Repaid & Maintenance   3,571    3,415    7,259    7,314 
(c) Insurance   316    374    461    553 
(d) Electricity charges   2,309    2,550    6,555    5,748 
(e) Audit fees   2,085    2,117    4,141    4,287 
(f) Filing charges   1,800    3,700    1,800    4,000 
(g) Bank charges   1,376    1,617    5,778    4,773 
(h) Bad debts   —      4,924    —      7,777 
(i) Travelling and conveyance   6,112    1,356    8,203    2,062 
(j) Professional charges   13,149    45,208    25,600    62,708 
(k) Printing & Stationary   294    1,026    1,411    2,167 
(l) Telephone, Courier & Postage   3,488    4,315    7,396    8,783 
(m) Security charges   1,001    1,016    1,988    2,046 
(n) Business promotion expenses   8,671    46,172    9,338    14,500 
(o) Rates and taxes   5,328    —      5,550    —   
(p) Others   1,879    874    5,660    3,536 
(q) Marketing Expenses   711    —      711    70,500 
(r) Advances Written off   (7,110)   —      52,612    —   
Total   59,486    135,241    173,450    235,350 

12
 

 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated) 

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

Particulars  For the Three months ended  For the Six months ended
   September 30, 2016  September 30, 2015  September 30, 2016  September 30, 2015
(a) Net income / (loss)   (19,176)   (66,355)   (84,801)   (163,571)
(b) Weighted average number of equity shares outstanding   42,096,160    42,096,160    42,096,160    42,096,160 
Earnings / (loss) per share - basic and diluted   (0.0005)   (0.0016)   (0.0020)   (0.0039)

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

(iii) Affiliated Entity

(a) Naaga Entertainment Media Private Limited (Company Under Common Control)

 

(b) Transactions with related parties

 

Transactions during the six months ended September 30:

 

Particulars  KMP and Relative of KMP  Affiliated Entity
   As at September 30,  As at September 30,
   2016  2015  2016  2015
   (unaudited)  (unaudited)  (Unaudited)  (Unaudited)
Transactions            
Advances given for business purposes   108,401    51,918    —      —   
Settlement of advances given for business purposes /advance received form the director   97,962    235,775    —      —   
Repayment of unsecured loans   —      137,721    —      —   
Sale of Television Rights        —      1,184    —   
Closing balances                    
Advances received from Directors (credit bal.)   72,406    29,409           
Advances given for business purposes (debit bal.)   95,943    —             
Unsecured loans received (credit bal.)   —      97,525           

21. Goodwill

Particulars   
Goodwill1   762,235 
Add: Cumulative Translation adjustment   —   
Balance as at September 30, 2016   762,235 

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 September 30, 2016, 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.

13 
 

KM Wedding Events Management, Inc.

Notes to Interim Condensed Consolidated financial statements

(in US Dollars $ unless otherwise stated)

22. Employee Benefits 

Defined Benefit Plan

The liability recognized in the balance sheets as at September 30, 2016 is as follows. The obligations are unfunded as on the dates of balance sheets.

Particulars  As at
   September 30,
2016
(unaudited)
  March 31,
2016
(a) Gratuity liability recognized in the balance sheet   19,540    19,788 

 

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

Particulars   For the Six months ended September 30,
    2016
(unaudited)
  2015
(unaudited)
(a) Discount rate     7.80% p.a.     7.80% p.a.
(b) Long-term rate of compensation increase     7.50% p.a.     7.50% 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 and 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 in the fiscal year 2016-17. 

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.

14
 

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 include Matrimonial (Matchmaking) Services (“Matrimonial Services”) and Wedding Services (until June 30, 2015). Considering various business related and 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 Wedding 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 2016), 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 2017-18).

Comparison of Three Months Ended September 30, 2016 and Three Months Ended September 30, 2015

Results of Operations 

Our financial performance for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 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.

15 
 

 

For the three months ended September 30, 2016, the Company generated revenue of $156,729 compared to $133,462 for the corresponding period in the previous year.

In terms of revenue mix 99% of the revenues were generated from Matrimonial Services (98% for the corresponding three month period in the previous year) and 1% of the revenues were generated from wedding infrastructure leasing services (2% for the corresponding three month period in the previous year).

During the three month period ended September 30, 2016, the Company incurred $170,987 of operating expenses compared to $287,317 for the corresponding three month period in the previous year, which included:

Matrimonial Service expenses of $75,616 compared to $96,462 for the corresponding three month period in the previous year, which represents 48% of revenues compared to 72% for the corresponding three month period in the previous year.
   
General and Administrative expense of $59,486 ($135,241 for the corresponding three month period in the previous year) which represents 38% of revenues compared to 101% for the corresponding three month period in the previous year.
   
Personnel expenses of $28,384 ($66,777 for the corresponding three month period in the previous year) representing 18% of revenues compared to 50% of revenues in the corresponding three month period in the previous year; and
   
Depreciation and Amortization expenses of $6,705 ($8,093 for the corresponding three month period in the previous year), representing 4% of revenues compared to 6% for the corresponding three month period in the previous year.

 

For the three months ended September 30, 2016, the Company had operating loss of $14,208 compared to operating loss of $153,855 for the corresponding period in the previous year. In addition, for the three month ended September 30, 2016, the Company had a net loss of $20,413 compared to net loss of $77,801 for the corresponding three month period in the previous year).

Comparison of Six Months Ended September 30, 2016 and Six Months Ended September 30, 2015

Results of Operations 

Our financial performance for the six months ended September 30, 2016 compared to the six months ended September 30, 2015 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.

16
 

 

For the six months ended September 30, 2016, the Company generated revenue of $299,232 compared to $349,017 for the corresponding period in the previous year.

In terms of revenue mix 97% of the revenues were generated from Matrimonial Services (86% for the corresponding six month period in the previous year); Nil from the Wedding Services (11% for the corresponding six month period in the previous year) and 3% of the revenues were generated from wedding infrastructure leasing services (3% for the corresponding six month period in the previous year).

During the six month period ended September 30, 2016, the Company incurred $402,401 of operating expenses compared to $612,896 for the corresponding six month period in the previous year, which included:

Matrimonial Service expenses of $144,435 compared to $161,873 for the corresponding six month period in the previous year, which represents 48% of revenues compared to 46% for the corresponding six month period in the previous year.
   
General and Administrative expense of $173,450 ($235,350 for the corresponding six month period in the previous year) which represents 58% of revenues compared to 67% for the corresponding six month period in the previous year.
   
Personnel expenses of $65,639 ($164,323 for the corresponding six month period in the previous year) representing 22% of revenues compared to 47% of revenues in the corresponding six month period in the previous year; and
   
Depreciation and Amortization expenses of $14,546 ($15,885 for the corresponding six month period in the previous year), representing 5% of revenues compared to 5% for the corresponding six month period in the previous year.

 

For the six months ended September 30, 2016, the Company had operating loss of $103,169 compared to operating loss of $263,879 for the corresponding period in the previous year. In addition, for the six month ended September 30, 2016, the Company had a net loss of $124,505 compared to net loss of $202,706 for the corresponding six month period in the previous year).

Liquidity and Capital Resources

At September 30, 2016, the Company had cash equivalents of $2,402 (compared to cash equivalents of $13,250 at March 31, 2016) and accumulated deficit of $845,740 (compared to $749,919 at March 31, 2016). At September 30, 2016, the Company had a working capital deficit (including current portion of long-term debt) of $721,144 compared to working capital deficit of $556,345 at March 31, 2016, resulting from:

Accounts Receivable of $461,628 at September 30, 2016 compared to $448,809 at March 31, 2016, which represents a 3% increase;
   
Account Payable and accrued liabilities relating to accrued interest expense, unpaid professional fees, and unpaid general expenditures of $284,687 at September 30, 2016 compared to $270,380 at March 31, 2016, representing 5% increase;
   
Statutory liabilities of $344,046 at September 30, 2016 compared to $284,554 at March 31, 2016, representing 21% increase;
   
Short-term loans and current portion in long-term debt of $230,813 at September 30, 2016 compared to $212,544 at March 31, 2016, representing an increase of 9%;

Unsecured loans of $168,349 at September 30, 2016 compared to $179,679 at March 31, 2016, representing a 6% decrease;
   
Other current liabilities of $180,330 at September 30, 2016 compared to $174,375 at March 31, 2016, representing a 3% increase; and
   
Non-current liabilities of $255,235 at September 30, 2016 compared to $260,002 at March 31, 2016, representing a reduction of 2%.

17 
 

Cash flows from Operating Activities

During the six month period ended September 30, 2016, net cash used in operating activities was $28,809 compared to net cash provided by operating activities of $17,470 during the corresponding period in the previous year.

Cash flows from Investing Activities

During the six month period ended September 30, 2016, net cash provided by investing activities was $6,993 compared to net cash used in investing activities of $7,329 for the corresponding period in the previous year.

Cash flows from Financing Activities

During the six month period ended September 30, 2016, net cash provided by financing activities was $10,991 compared to net cash provided by financing activities of $3,464 for the corresponding period in the previous year.

Future Capital Needs

At September 30, 2016, our working capital deficit was $721,144 and we had $2,402 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 of September 30, 2016, the Company has long term debts in the form of secured loans amounting to $260,142 and repayable as under:

Less Than One Year   $24,230 
One to Three Years   $79,375 
More than Three Years   $156,537 

Recent Accounting Pronouncements

As of September 30, 2016, 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.

18 
 

 

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 September 30, 2016, 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.

19 
 

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

20 
 

 

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

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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: November 21, 2016  
By: /s/ Meera Nagarajan
  Meera Nagarajan, Chief Executive Officer

 

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