Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - KM WEDDING EVENTS MANAGEMENT, INC. | Financial_Report.xls |
| EX-31.2 - EXHIBIT 31.2 - KM WEDDING EVENTS MANAGEMENT, INC. | kmwe93014form10qex31_2.htm |
| EX-32.1 - EXHIBIT 32.1 - KM WEDDING EVENTS MANAGEMENT, INC. | kmwe93014form10qex32_1.htm |
| EX-32.2 - EXHIBIT 32.2 - KM WEDDING EVENTS MANAGEMENT, INC. | kmwe93014form10qex32_2.htm |
| EX-31.1 - EXHIBIT 31.1 - KM WEDDING EVENTS MANAGEMENT, INC. | kmwe93014form10qex31_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, 2014
| ☐ | 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 ☐
| 1 |
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, 2014 was 42,071,160 shares of common stock outstanding.
| 2 |
KM WEDDING EVENTS MANAGEMENT, INC.
FORM
10-Q
For the Quarterly Period Ended September 30, 2014
TABLE OF CONTENTS
| 3 |
KM WEDDING EVENTS MANAGEMENT, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 4 |
PART I - FINANCIAL INFORMATION
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 year ended September 30, 2014 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” refer to Indian Rupee, the legal currency of India. |
| · | “U.S. dollar,” “USD,” “$” and “US$” refer to the legal currency of the U.S. |
| 5 |
| ITEM 1. | FINANCIAL STATEMENTS |
Vijaya
Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place
: Chennai, Tamil Nadu, India
Date : November 7, 2014
| 6 |
Vijaya
Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place
: Chennai, Tamil Nadu, India
Date : November 7, 2014
| 7 |
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, 2013 | 39,246,160 | 39,246 | 553,562 | (268,635) | 324,173 | (602,566) | (278,393) |
| Fresh issue of equity shares# | 2,400,000 | 2,400 | 477,600 | Nil | 480,000 | Nil | 480,000 |
| Adjustment in
Non- controlling Interest |
Nil | Nil | Nil | Nil | Nil | 943,626 | 943,626 |
| Net income / (loss) for the period | Nil | Nil | Nil | (57,860) | (57,860) | (490,922) | (548,782) |
| As at September 30, 2013 | 41,646,160 | 41,646 | 1,031,162 | (326,495) | 746,313 | (149,862) | 596,451 |
| # 2,400,000 no of equity shares of par value USD 0.001 are issued at USD 0.20 per share. Also refer note 15 "Common stock" | |||||||
| 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 | Nil | Nil | Nil | (27,147) | (27,147) | 51,822 | 24,675 |
| As at September 30, 2014 | 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 USD 0.001 are issued at USD 0.30 per share. Also refer note 15 "Common stock" | |||||||
The accompanying notes are an integral part to these interim condensed financial statements.
For and on behalf of the Board of Directors of KM Wedding Events Management, Inc.
Vijaya Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place
: Chennai, Tamil Nadu, India
Date : November 7, 2014
| 8 |
The accompanying notes are an integral part to these interim condensed financial statements.
For and on behalf of the Board of Directors of KM Wedding Events Management, Inc.
Vijaya Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place : Chennai, Tamil Nadu, India
Date : November 7, 2014
| 9 |
KM Wedding Events Management, Inc.
Interim Condensed Consolidated Statement of Cash Flow
(in US Dollars $ unless otherwise stated)
| For the Six Months Ended | ||
| September 30, 2014 | September 30, 2013 | |
| (Unaudited) | (Unaudited) | |
| Cash flows from operating activities | ||
| Net income / (loss) | 27,065 | (80,191) |
| Adjustments to reconcile net income to net cash | ||
| provided by operating activities | ||
| Depreciation and amortization | 13,627 | 16,114 |
| Deferred tax expense / (benefit) | - | - |
| Unrealized foreign exchange (gain) / loss | (7,150) | - |
| Bad debts | 20,888 | 35,750 |
| Amortization of film costs | 17,549 | 505 |
| Changes in operating assets and liabilities | ||
| (Increase) / decrease in Long term Investments | - | (129,434) |
| (Increase) / decrease in accounts receivables | (79,328) | 19,556 |
| (Increase) in other current assets | (23,825) | (290,608) |
| (Increase) /Decrease in film costs | 17,670 | 579 |
| (Increase) in other non-current assets | 28,764 | (7,792) |
| Increase in accounts payable | 30,586 | (58,899) |
| Increase in income tax and other statutory liabilities | 54,999 | (36,253) |
| Increase / (decrease) in other current liabilities | (161,704) | 246,840 |
| Increase / (decrease) in other non-current liabilities | 369 | (4,568) |
| Net cash provided by (used in) operating activities | (60,490) | (288,401) |
| Cash flows from investing activities | ||
| Additions to property, plant and equipment | (7,704) | (33,559) |
| Investments in long-term investments | 4,186 | - |
| Proceeds from disposal of property, plant and equipment | - | (671) |
| Advance given for Investment | (60,000) | - |
| Acquisition of additional stake in subsidiary | - | (229,000) |
| Net cash issued in investing activities | (63,518) | (263,230) |
Cash flows from financing activities |
||
| Proceeds from short term debts | (18,932) | (209,080) |
| Proceeds from issue of Equity Shares | 127,500 | 480,000 |
| Proceeds from / (repayment of) long term debts | (905) | (46,795) |
| Net cash provided by (used in) financing activities | 107,663 | 224,125 |
| Effect of exchange rate changes on cash | 2,423 | (4,032) |
| Net increase in cash and cash equivalents | (13,922) | (331,538) |
| Cash and cash equivalents, beginning of period | 88,616 | 374,598 |
| Cash and cash equivalents, end of period | 74,694 | 43,060 |
| Supplementary disclosures of cash flow information | ||
| Cash paid during the year for: | ||
| Interest paid | 31,656 | 18,808 |
| Income taxes paid | 2,602 | 1,156 |
| Non-cash items: | ||
| Allotment of common stock | - | - |
The accompanying notes are an integral part to these interim condensed financial statements.
For and on behalf of the Board of Directors of KM Wedding Events Management, Inc.
Vijaya Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place
: Chennai, Tamil Nadu, India
Date : November 7, 2014
| 10 |
KM Wedding Events Management, Inc.
Notes to Interim Condensed Consolidated Financial Statements
(in US Dollars $ (“USD”) 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 (“USA”).
The Company is a leading service provider in the matrimonial industry and recently entered into wedding event management and allied services segments including wedding catering services 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, 2014, the Company maintains a 55.32% ownership interest in KM Wedding Events Management Private Limited, India. With the addition of wedding services, which focuses on the higher end of the value chain in the wedding industry, the Company is able to service the customers already using KM for the matrimonial service. The Company became one of the earliest entrants in the industry to provide an integrated wedding service in Tamil Nadu, India.
| 2. | Significant Accounting Policies |
| a. | Basis of Consolidation |
The Company has invested USD509,000 to acquire 2,513,144 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 the 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 USD ($), the national currency of USA.
Revenue and related expenses generated from our international subsidiaries are generally denominated in the currency of Indian Rupee. The statements of income of our international operations are translated into U.S. dollars at exchange rates indicative of market rates during each applicable period.
Subsequent events have been evaluated through November 7, 2014, the date these financial statements are available to be issued.
The closing exchange rate as of September 30, 2014 and March 31, 2014 was 61.92 and 60 Indian Rupees to one US dollar, respectively. The average exchange rate for the six months ended September 30, 2014 was 60.206.
| 11 |
| 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 of September 30, 2014 comprises the following: | ||||
| Particulars | For the Six Months Ended | For the Year Ended | ||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | |||
| (a) | Cash on hand | 59,696 | 80,046 | |
| (b) | Balance with banks on current accounts | 14,998 | 8,570 | |
| Total | 74,694 | 88,616 | ||
| 4. | Accounts receivable |
| Accounts receivable as of September 30, 2014 comprises the following: | |||
Particulars
|
For the Six Months Ended | For the Year Ended | |
| 30
September, 2014 (Unaudited) |
31 March, 2014 | ||
| (a) | Customers (trade) | 358,185 | 278,857 |
| Total | 358,185 | 278,857 | |
| 12 |
| 5. | Other current assets |
| Other current assets as of September 30, 2014 comprises the following: | ||||
| Particulars | For the Six Months Ended | For the Year Ended | ||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | |||
| (a) | Event advances | 150,927 | 122,423 | |
| (b) | Staff advances | 35,252 | 33,624 | |
| (c) | Advance tax (net of provision for income tax) | 14,269 | 10,728 | |
| (d) | Loans and advances | 264,151 | 329,000 | |
| (e) | Interest accrued on Bank deposits | 16,737 | 10,605 | |
| (f) | Prepaid expenses | 50,319 | 1,450 | |
| Total | 531,655 | 507,830 | ||
| 6. | Long term investments |
| Long-term investments comprise the following: | ||||
| Particulars | For the Six Months Ended | For the Year Ended | ||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | |||
| (a) | Bank deposits 1 | 130,814 | 135,000 | |
| Total | 130,814 | 135,000 | ||
| 1 These bank deposits are for a term of 555 days and earn interest at the rate of 9.10%. These bank deposits are held under lien against short term borrowings from bank. | ||||
| 13 |
| 7. | Property, plant and equipment, net |
| Property, plant and equipment as of September 30, 2014 comprises the following: | |||||||
| Particulars | Gross
Carrying Value |
Accumulated
Depreciation |
Net
Carrying Value | ||||
30 Sep, 2014 |
31 March, 2014 | 30
Sep, 2014 (Unaudited) |
31 March, 2014 | 30
Sep, 2014 |
31 March, 2014 | ||
| (a) | Vehicles | 42,383 | 43,740 | 4,643 | 2,776 | 37,740 | 40,964 |
| (b) | Computers & Peripherals | 73,709 | 75,330 | 68,095 | 69,414 | 5,614 | 5,916 |
| (c) | Furniture & Fixtures | 13,641 | 13,675 | 5,759 | 5,238 | 7,882 | 8,437 |
| (d) | Office Equipment | 56,395 | 57,109 | 28,884 | 25,625 | 27,511 | 31,484 |
| (e) | Leasehold improvements | 79,840 | 82,395 | 38,524 | 35,580 | 41,316 | 46,815 |
| (f) | Plant & Machinery | 5,541 | - | 825 | - | 4,716 | - |
| Total | 271,509 | 272,249 | 146,730 | 138,633 | 124,779 | 133,616 | |
Leased property, plant and equipment, net
The following is the analysis of property, plant and equipment under capital leases as of September 30, 2014 included within property, plant and equipment, net:
| Particulars | For the Six Months Ended | For the Year Ended |
| 30
September, 2014 (Unaudited) |
31 March, 2014 | |
| Vehicles | 42,383 | 43,740 |
| Less: accumulated depreciation | (4,643) | (2,776) |
| Net book value of leased assets | 37,740 | 40,964 |
| 14 |
| Operating leases | ||
| The total amount of operating lease expenses is as follows: | ||
| Particulars | For the Six Months Ended | For the Six Months Ended |
| 30
September, 2014 (Unaudited) |
30
September, 2013 (Unaudited) | |
| Lease Expenses | 18,103 | 14,581 |
| 8. | Intangible assets, net |
| Intangible assets as of September 30, 2014 comprises the following: | |||||||
| Particulars | Gross
Carrying Value |
Accumulated
Amortization |
Net
Carrying Value | ||||
30
Sep, 2014 |
31 March, 2014 | 30 Sep, 2014 |
31 March, 2014 | 30
Sep, 2014 (Unaudited) |
31 March, 2014 | ||
| (a) | Software | 53,996 | 27,974 | 26,825 | 26,801 | 27,171 | 1,173 |
| Total | 53,996 | 27,974 | 26,825 | 26,801 | 27,171 | 1,173 | |
| 15 |
| 9. | Other non-current assets |
| Other non-current assets as of September 30,2014 comprises the following: | ||||||||||||
| Particulars | For the Six Months Ended | For the Year Ended | ||||||||||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | |||||||||||
| (a) | Rental advance | 28,545 | 29,458 | |||||||||
| (b) | Deposits | 6,814 | 6,915 | |||||||||
| (c) | Software under application development stage | - | 27,750 | |||||||||
| Total | 35,359 | 64,123 | ||||||||||
| 10. | Accounts payable and accrued liabilities |
| Accounts payable and accrued liabilities as of September 30,2014 comprise the following: | |||||
| Particulars | For the Six Months Ended | For the Year Ended | |||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | ||||
| (a) | Accounts payable | 48,613 | 42,145 | ||
| (b) | Salary payable | 37,050 | 27,624 | ||
| (c) | Current portion of provision for gratuity | 1,155 | 1,135 | ||
| (d) | General and administrative expenses payable | 65,092 | 50,420 | ||
| Total | 151,910 | 121,324 | |||
| 11. | Income tax and other statutory liabilities |
| Income tax and other statutory liabilities as of September 30,2014 comprises the following: | ||||||
| Particulars | For the Six Months ended | For the Year ended | ||||
| 30 September, 2014 (Unaudited) |
31 March, 2014 | |||||
| (a) | Service tax | 109,231 | 75,903 | |||
| (b) | Provident fund | 35,541 | 24,242 | |||
| (c) | Employees state insurance | 4,940 | 3,771 | |||
| (d) | Professional tax | 3,687 | 3,805 | |||
| (e) | Tax deducted at source | 37,085 | 27,764 | |||
| Total | 190,484 | 135,485 | ||||
| 16 |
| 12. | Short term borrowings and long term debt |
| Short term loans and borrowings as of September 30,2014 comprises the following: | ||||||||||||||||||
| Particulars | For the Six Months Ended | For the Year Ended | ||||||||||||||||
| 30 September, 2014 (Unaudited) |
31 March, 2014 | |||||||||||||||||
| (a) | Bank overdraft2 | 168,291 | 218,816 | |||||||||||||||
| (b) | Loan against Bank deposit | 128,385 | 129,210 | |||||||||||||||
| (c) | Secured loans3 | 34,229 | - | |||||||||||||||
| (d) | Current portion of long-term debt | 7,187 | 8,998 | |||||||||||||||
| Total | 338,092 | 357,024 | ||||||||||||||||
2 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.
3 The secured loan is secured by way of hypothecation / first charge on the cumulative inventory book debt and all current assets of the Company. The interest rate is 12.85 % and repayable in six months with moratorium period of two months.
| Particulars | For the Six Months Ended | For the Year Ended | |
| 30
September, 2014 (Unaudited) |
31 March, 2014 | ||
| (a) | Secured loans4 | 1,408 | 3,233 |
| (c) | Capital lease obligations | 25,739 | 26,630 |
| 27,147 | 29,863 | ||
| (d) | Current portion of long-term debt | (7,187) | (8,998) |
| Total | 19,960 | 20,865 | |
4 The interest rates of the long-term loans range from 11.50 % to 12.50 %. 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 of September 30, 2014 is as follows:
| Particulars | As
of September 30, 2014 (Unaudited) |
| 2015 | 4,165 |
| 2016 | 6,044 |
| 2017 | 6,885 |
| 2018 | 5,514 |
| 2019 | 4,539 |
| Total long term debt | 27,147 |
| 13. | Other current liabilities |
| Other current liabilities as of September 30, 2014 comprises the following: | |||||||||||||||||
| Particulars | For the Six Months Ended | For the Year Ended | |||||||||||||||
| 30
September, 2014 (Unaudited) |
31 March, 2014 | ||||||||||||||||
| (a) | Unearned revenues (i.e. billings in excess of revenue) | 162,495 | 258,399 | ||||||||||||||
| (b) | Advances received | 82,364 | - | ||||||||||||||
| Total | 244,859 | 258,399 | |||||||||||||||
| 14. | Other non-current liabilities |
| Other non-current liabilities as of September 30, 2014 comprises the following: | |||
| Particulars | For the Six Months Ended | For the Year Ended | |
| 30
September, 2014 (Unaudited) |
31 March, 2014 | ||
| (a) | Trade Deposits | 5,893 | 6,082 |
| (b) | Provision for gratuity | 13,289 | 12,731 |
| Total | 19,182 | 18,813 | |
| 17 |
| 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 of September 30, 2014 and March 31, 201 4. The issued, subscribed and paid-up Equity share capital (number of shares) of the Company is 42,071,160 shares as of September 30, 2014 and 41,646,160 shares as of March 31, 2014.
The shares issued are as follows:
| (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) | 425,000 number of shares are issued 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.
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.
Preferred Stock
The authorized Preference share capital (number of shares) of the Company is 10,000,000 shares having a par value of $ 0.001 per share as of September 30, 2014. The issued, subscribed and paid-up Preference share capital is Nil as of September 30, 2014.
| 16. | Matrimonial service income |
| Particulars | For the Six Months Ended 30 September | ||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||
| (a) | Profile Registration and Event Incomes | 387,908 | 354,577 | ||||||||||||||||||
| (b) | Sponsorship Income and advertisement Income | 76,170 | 59,923 | ||||||||||||||||||
| (c) | Sale of space or time slot - Television series | 45,344 | 40,412 | ||||||||||||||||||
| (d) | Sale of television rights | 91,369 | - | ||||||||||||||||||
| (e) | Sale of products (magazines) | 2,099 | 4,171 | ||||||||||||||||||
| Total | 602,890 | 459,083 | |||||||||||||||||||
| 18 |
| 17. | Matrimonial service expenses |
| Particulars | For the Six Months Ended 30 September | |||||||
| 2014 | 2013 | |||||||
| (a) | Event expenses | 71,161 | 69,856 | |||||
| (b) | Production and telecast expenses - Television series | 55,297 | 80,347 | |||||
| (c) | Publication expenses | 28,699 | 42,065 | |||||
| (d) | Franchisee commission | 9,460 | 11,273 | |||||
| (e) | Amortization of film cost | 17,549 | 505 | |||||
| Total | 182,166 | 204,046 | ||||||
| 18. | General and administrative expenses |
| Particulars | For the Six Months Ended 30 September | ||
| 2014 | 2013 | ||
| (a) | Lease expenses | 18,697 | 14,581 |
| (b) | Repairs & Maintenance | 14,507 | 12,338 |
| (c) | Insurance | 728 | 757 |
| (d) | Electricity charges | 5,784 | 5,151 |
| (e) | Audit fees | 4,568 | 4,394 |
| (f) | Filing Charges | 23,828 | - |
| (g) | Bank charges | 5,841 | 4,692 |
| (h) | Bad debts | 20,888 | 35,750 |
| (j) | Travelling and conveyance | 18,515 | 7,608 |
| (k) | Professional charges | 25,938 | 18,232 |
| (l) | Printing & Stationery | 2,331 | 3,860 |
| (m) | Telephone, Courier & Postage | 12,597 | 12,867 |
| (n) | Security charges | 2,192 | 1,266 |
| (o) | Business promotion expenses | 21,750 | 6,462 |
| (p) | Marketing expenses | 52,000 | - |
| (q) | Others | 7,599 | 2,774 |
| Total | 237,763 | 130,732 | |
| 19 |
| 19. | Earnings / (loss) per share (EPS) |
| Particulars | For the Six Months Ended 30 September | ||
| 2014 | 2013 | ||
| (a) | Net income / (loss) | (25,832) | (40,072) |
| (b) | Weighted average number of equity shares outstanding 5 | 41,721,845 | 40,898,619 |
| Earnings / (loss) per share - basic and diluted | (0.0006) | (0.001) | |
5 Refer Note No. 15, 'common stock' with respect to fresh issue of equity shares.
| 20. | Related party disclosures |
(a) Names of related party and relationship
(i) Key Management Personnel (“KMP”)
(a) Mr. T V Mohan (formerly Known as V Venkatesan) - 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
(b) Transactions with related parties
Transactions during the year ending September 30, 2014:
| Particulars | KMP and Relative of KMP | Entity in which KMP has control | ||
| 2014 (unaudited) |
2013 (unaudited) |
2014 (unaudited) |
2013 (unaudited) | |
| Transactions | ||||
| Advances given for business purposes | 198,555 | 115,538 | - | - |
| Settlement of advances given for business purposes | 60,040 | 62,629 | - | - |
| Unsecured loans received | - | 62,097 | - | - |
| Unsecured loans given (Net of receipt) | - | - | - | 193,000 |
| Repayment of unsecured loans | 2,794 | 35,970 | - | - |
| Closing balances | ||||
| Unsecured Loans given | - | - | - | 193,000 |
| Advances given for business purposes (debit balance) | 207,238 | 108,010 | - | - |
| Unsecured loans received (credit balance) 6 | 280,114 | 368,956 | - | - |
6 Unsecured loans from related parties are repayable on demand.
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| 21. | Goodwill |
| Particulars | ||
| Goodwill7 | 679,948 | |
| Add: Cumulative Translation adjustment | 7,006 | |
| Balance as of September 30, 2014 | 686,954 | |
7Goodwill arises in the process of acquiring KM Matrimony Private Limited. In April 2013, the Company acquired a 55.32% interest of KM WEDDING EVENTS PRIVATE LIMITED, India (formerly known as "KM Matrimony Private Limited", India ). As of September 30, 2014, 55.32% of the shares of KM Wedding Events Management Private Limited is held by the Company. This acquisition has been accounted as a business combination. The purchase price of USD 509,000 is allotted as cash & cash equivalent USD 22,141, Plant & Machinery USD 63,402, other assets USD 270,921 and for liabilities as USD (527,422) based on the estimated fair value on the date of acquisition. After allocation, the goodwill is recorded as USD 679,948.
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 acquired intangible assets which are not identifiable as of the acquisition date are applied to Goodwill. The assets and liabilities are acquired at book value as there is no significant deviation from fair value. There are no related contingent considerations.
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 of September 31 is as follows. The obligations are unfunded as on the dates of balance sheets.
| As at September 30 | |||||
| Particulars | 2014 (unaudited) |
2013 (Unaudited) | |||
| (a) | Gratuity liability recognized in the balance sheet | 7,257 | 10,311 | ||
| Weighted average assumptions used to determine net gratuity cost and benefit obligations: | |||||
| For the Six Months Ended September 30, | |||||
Particulars
|
2014 (Unaudited) |
2013 (Unaudited) | |||
| (a) | Discount rate | 8.50% p.a. | 8.50% p.a. | ||
| (b) | Long-term rate of compensation increase | 10.00% 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 and, therefore, 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 three months.
| 25. | Risks and uncertainties |
Credit risk
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. Accounts receivable balances are typically unsecured and are derived from revenues earned from customers. The Company’s management reviews ageing analysis of outstanding accounts receivables and follows up on past due balances. There is no significant concentration of credit risk.
| 26. | Commitments and contingencies |
Statutory Dues
Penalties, if any, on account of delay in payment of service tax and other statutory dues are unascertainable.
| 27. | Previous period figures |
Figures of previous periods have been regrouped / rearranged, wherever required to confirm to the current period presentation.
For
and on behalf of the Board of Directors
of KM Wedding Events Management, Inc.
Vijaya
Bhaskar Venkatesan MEERA NAGARAJAN
Director Managing Director
Place
: Chennai, Tamil Nadu, India
Date : November 7, 2014
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| 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 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 the South Indian language. Our services include Matrimonial (Matchmaking) Services (“Matrimonial Services”) and Wedding Services.
Matrimonial Services include matchmaking and partner identification, through multiple delivery channels via print and visual media, website, physical centers and events. Our Matrimonial Services covers 15 different services, including food and beverages, guest services, decorations, event planning and event management. In order to increase the Wedding Services business, we intend to lease and/or own wedding halls (physical infrastructures where weddings are conducted, similar to banquet halls of hotels) and provide Wedding Services for the weddings conducted in these halls.
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 as of 2004 and respected brand name. Our target customers include the Indian high-income population, higher middle-income population, 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. via 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 five 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 six 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. Our TV show is a 30 minute matrimonial-related program produced by us which telecasts once a week by SUN TV. The TV program introduces profiles of individuals seeking to be matched and also incorporates an entertainment based “debate show” which covers various “topics of social impact” which are discussed and debated upon by professionals and experts.
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 and Wedding 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 2014) , providing Wedding Services for weddings to be conducted in India by Indians in the U.S. (fiscal 2014), launching a customized website for Matrimonial Services in the U.S. market (fiscal 2015) and providing Wedding Services to conduct weddings locally in the U.S. (fiscal 2016-17).
Results of Operations
Our financial performance for the three and six months ended September 30, 2014, compared to the three and six months ended, September 30, 2013 are discussed and analyzed below. For the purpose of comparison, conversion of INR to USD is calculated based on the average exchange rate for the period for Income and Expenditure items and at the closing exchange rate for Balance Sheet items.
Comparison of Three Months Ended September 30, 2014 and Six Months Ended September 30, 2013
For the three months ended September 30, 2014, the Company earned $418,818 compared to $301,997 for the corresponding period in the previous year in revenues. The revenue grew by 38% against the corresponding period in the previous year.
In terms of revenue mix, 79% of the revenues were generated from Matrimonial Services (79% for the corresponding three month period in the previous year) and 21% from the Wedding Services (21% for the corresponding three month period in the previous year).
During the three month period ended September 30, 2014, the Company incurred $409,868 of operating expenses compared to $307,610 for the corresponding three month period in the previous year, which included:
| · | Matrimonial Services expenses of $93,203 compared to $103,709 for the corresponding three month period in the previous year, which represents 28.15% of matrimonial revenues. The decrease of 43.47% is a result of operational efficiency, focus on high margin schemes and cost management. |
| · | Wedding Services expenses of $74,633 ( $49,527 for the corresponding three month period in the previous year) which represents 85% of wedding services revenues (78% for the corresponding three month period in the previous year).; |
| · | General and Administrative expenses of $151,979 ($76,442 for the corresponding three month period in the previous year) which represents 36.29% of income. The increase in expenses is primarily owing to investment in the U.S. markets. |
| · | Personal expenses of $82,860 ($70,093 for the corresponding three month period in the previous year) representing 19.78% of income which was at 23.21% of income in the corresponding three month period in the previous year; and |
| · | Depreciation and Amortization expenses of $7,193 ($7,839 for the corresponding three month period in the previous year). |
For the period from April 1, 2014 to September 30, 2014, the Company had operating income of $44,245 compared to a loss of $65,301 for the corresponding period in the previous year. In addition, for the three month period ended September 30, 2014, the Company had a net income of $8,950 compared to a loss of $5,613 for the corresponding three month period in the previous year. Increases in our operating income and net profit were due to revenue growth, improved operational efficiency and the impact of the depreciation of the Indian rupee against the U.S. dollar.
Comparison of Six Months Ended September 30, 2014 and Six Months Ended September 30, 2013
For the six months ended September 30, 2014, the Company earned $815,168 in revenues, compared to $606,952 for the corresponding six month period in the previous year. The revenue grew by 34.31% against the corresponding six month period in the previous year.
In terms of revenue mix, 74% of the revenues were generated from Matrimonial Services (80% for the corresponding six month period in the previous year) and 26% from Wedding Services (20% for the corresponding six month period in the previous year).
During the six month period ended September 30, 2014, the Company incurred $770,923 of operating expenses compared to $672,253 for the corresponding six month period in the previous year, which included:
| · | Matrimonial Services expenses of $182,166 compared to $204,046 for the corresponding six month period in the previous year, which represents 30% of matrimonial revenues. The decrease from 42% for corresponding six month period in the previous year is a result of operational efficiency and focus on high margin schemes; |
| · | Wedding Services expenses of $172,153 ($100,583 for the corresponding six month period in the previous year) which represents 81% of wedding services revenues (84% for the corresponding six month period in the previous year); |
| · | General and Administrative expenses of $237,763 ($198,804 for the corresponding six month period in the previous year) which represents 29% of income. These expenses have reduced from 33% of the income for the corresponding six month period in the previous year. The decrease in % is on account of Increased Revenue. |
| · | Personal expenses of $165,214 ($152,706 for the corresponding six month period in the previous year) representing 20% of income which was at 25% of income in the corresponding six month period in the previous year; and |
| · | Depreciation and Amortization expenses of $13,627 ($16,114 for the corresponding six month period in the previous year). |
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For the six month period ended September 30, 2014, the Company had operating income of $44,245 compared to a loss of $65,301 for the corresponding six month period in the previous year. In addition, for the six month period ended September 30, 2014, the Company had a net income of $27,065 compared to a loss of $80,191 for the corresponding six month period in the previous year). The increase in our operating income and net profit was due to revenue growth, High Operating Leverage and the impact of the depreciation of the Indian rupee against the U.S. dollar.
Liquidity and Capital Resources
Overview
At September 30, 2014, the Company had cash equivalents of $74,694 and accumulated deficit of $295,550. At September 30, 2014, the Company had a negative working capital (including current portion of long-term debt) of $33,687 compared to negative working capital of $217,969 at March 30, 2014, resulting from:
| · | Accounts Payable and accrued liabilities relating to accrued interest expense, unpaid professional fees, and unpaid general expenditures of $151,910 at September 30, 2014 compared to $121,324 at March 31, 2014, representing a 25% increase; |
| · | Income tax and other statutory liabilities of $190,484 at September 30, 2014 compared to $135,485 at March 31, 2014, representing a 41% increase; |
| · | Short-term loans and current portion in long-term debt of $338,092 at September 30, 2014 compared to $357,024 at March 31, 2014, representing a decrease of 5%; |
| · | Unsecured loans of $72,876 at September 30, 2014 compared to $221,040 at March 31, 2014, representing a 67% reduction; |
| · | Other current liabilities of $244,859 at September 30, 2014 compared to $258,399 at March 31, 2014, representing a 5% reduction; and |
| · | Non-current liabilities of $70,416 at September 30, 2014 compared to $71,953 at March 31, 2014, representing a reduction of 2%. |
Cash flows from Operating Activities
During the six month period ended September 30, 2014, the Company used $60,490 for operating activities compared to $288,401 used for operating activities during the corresponding period in the previous year. Improved accounts receivable has resulted in negative operating cash despite improved revenue and operating efficiency.
Cash flows from Investing Activities
During the six month period ended September 30, 2014, the Company used cash of $63,518 for investing activities compared to $263,230 cash used for the corresponding period in the previous year .
Cash flows from Financing Activities
During the six month period ended September 30, 2014, the Company obtained cash of $107,663 from financing activities compared to $224,125 for the corresponding period in the previous year .
Future Capital Needs
The Company has evaluated its expected cash requirements over the next twelve months which include, but are not limited to, support of current operations, investments in additional sales and marketing and product development resources, capital expenditures, and working capital requirements, and has determined that our existing cash resources are not sufficient to meet our anticipated needs during this period. Our established bank-financing arrangements will not be adequate to provide sufficient funds.Therefore, we will require additional capital from financing through the issuance of equity or debt, or through obtaining a credit facility, to execute our plan of operations. In efforts to raise capital on November 18, 2013, we filed a registration statement number 333-192399, with the SEC to register an offering of 10,000,000 shares of our common stock, at $0.30 per share (the “Offering”). The registration statement was declared effective on March 11, 2014.
The financial statements reflected in this Form 10-Q do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. As discussed below, the successful implementation of our business plan is dependent upon receiving sufficient funding from management, the issuance of equity or debt, or through obtaining a credit facility. Substantial expenditures will be required to enable us to expand and scale up our operations and quality of services. There can be no assurance, however, that such efforts will generate availability of additional funds when needed, or on terms acceptable to us, if at all. Any such additional financing may result in significant dilution to existing stockholders. If adequate funds are not available, we may be required to curtail our expansion plans, which will adversely affect our revenue, profitability and our financial condition.
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Brief Disclosure of Long Term Contractual Obligations
As of September 30, 2014, the Company has long term debts in the form of secured loans against the respective assets/by way of assignment of the trade receivables of the Company and capital lease obligations secured against respective assets. The total long term debt as of September 30, 2014 is $27,147 and repayable in a period of five years or under:
| Less Than One Year | $7,187 |
| One to Three Years | $16,556 |
| More than Three Years | $3,404 |
Recent Accounting Pronouncements
As of September 30, 2014, 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 September 30, 2014, there were no material changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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| 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 |
On August 11, 2014, the Company sold 200,000 shares of our Common Stock to a foreign investor for an aggregate purchase price of $60,000. The sale of the shares of Common Stock was exempt from registration pursuant to Regulation S under the Securities Act of 1933 (the “Securities Act”).
On July 28, 2014, as consideration for consulting services provided by a consultant, the Company issued 225,000 shares of our Common Stock which had a fair market value of $67,500. The shares were issued pursuant to Section 4(2) of the Securities Act, as they were transactions by an issuer not involving a public offering, no underwriters were used and no commissions were paid.
| 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
* Filed herewith.
(1) XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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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 13, 2014 | By: | /s/ Meera Nagarajan | |
| Meera Nagarajan | |||
| Managing Director | |||
| Date: November 13, 2014 | By: | /s/ Venkatesan Vijaya Bhaskar | |
| Venkatesan Vijaya Bhaskar | |||
| Director |
| 26 |