10-Q/A 1 j9919010qa2.htm AMENDMENT NO. 2

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q/A

Amendment No. 2 

 

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

 

For the quarterly period ended June 30, 2018

 

OR

 

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

 

For the transition period from April 01, 2018 to June 30, 2018

 

Commission File Number: 333-210821

 

 

 

TripBorn, Inc.

(Exact name of registrant as specified in its charter)

     
Delaware   27-2447426

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employer Identification No.)
     

812, Venus Atlantis Corporate Park

Near Prahalad Nagar Garden, Satellite

Ahmedabad, Gujarat, India 380 015

(Address of principal executive office) (Zip Code)

 

(91) 79 40191914

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

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   x   No ¨ 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

 

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

 

Large accelerated filer   ¨   Accelerated filer   ¨
       
Non-accelerated filer   ¨    Smaller reporting company   x
        Emerging growth company   x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

 

No market value has been computed based upon the fact that no active trading market existed as of the last business day of the registrant’s most recently completed second fiscal quarter.

 

As of August 1, 2018, there were outstanding 95,711,874 shares of common stock, par value $0.0001 per share.

 

 

 1 

 

EXPLANATORY NOTE

   

Tripborn Inc. is filling this Amendment No. 2 (this “Form 10-Q/A”) to amend our Quarterly Report on Form 10-Q of Tripborn Inc. (the “Company”, “our” or “we”) for the quarter ended June 30, 2018, originally filed with the Securities and Exchange Commission (the “SEC”) on August 13, 2018 (the “Original Filing”);subsequently amended on August 6,2019 and to amend related disclosures including those regarding our disclosure controls and procedures. We have also restated certain unaudited quarterly results related to the quarters ended June 30, 2018, September 30, 2018 and December 31, 2018. This Form 10-Q/A also amends certain items in the Original Filling, as listed in “Items Amended in this Filing below.

 

Background of the Restatement

 

We have restated March 31, 2018 financial statements and learned through our internal reporting assessment that our original filing needs to adjust for the Quarter ended June 30, 2018 to carry forward opening financial results from March 31, 2018 and Reclassification for the selling and general administration expenses and its presentation in the financial statements from June 30, 2018. We also found the violations of our accounting policies and procedures regarding the failure to accrue expenses and liabilities in the quarters ending June 30, 2018. The management has authorized the filing of our unaudited consolidated financial statements for the quarter ended June 30, 2018.

 

Impact of the Restatement

 

As a result of the restatement, reported net income from continuing operations from continuing operations and income from discontinued operations, net of tax, and earnings per diluted share from discontinued operations were adjusted for quarters June 30, 2018 as follows:

 

· For the quarter ended June 30, 2018 our reported net losses from continuing operations was increased from $253,810 to $259,159.
· Accumulated losses increased from $2,146,054 to $3,346,742;
· Our stockholders’ equity decreases from $204,652 to deficit of $999,368.

 

Internal Control Over Financial Reporting and Disclosure Controls and Procedures

 

Management has concluded that a material weakness existed in the Company’s internal control over financial reporting as of June 30, 2018 because the Company did not maintain effective controls within its financial close process. This material weakness resulted in misstatements in the Company’s annual financial statements that were not prevented or detected on a timely basis and led to the restatement described above. Based on this evaluation, management has concluded that, as of June 30, 2018, the Company’s internal control over financial reporting was ineffective.

 

In connection with the restatement described above, the Company’s principal executive officer and principal financial officer re-evaluated the effectiveness of our disclosure controls and procedures and have concluded that Tripborn’s disclosure controls and procedures were not effective. In connection with the assessment described in this Explanatory Note, the Company has identified and implemented, and continues to identify and implement, actions to improve the effectiveness of its internal control over financial reporting and disclosure controls and procedures, including plans to enhance the Company’s resources and training with respect to financial reporting and disclosure responsibilities.

 

Items Amended in this Filing

 

For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing, in its entirety, as amended to reflect the restatement. No attempt has been made in this Form 10-Q/A to update other disclosures presented in the Original Filing, except as required to reflect the effects of the restatement. The following items have been amended as a result of the restatement:

Financial Highlights

Part I, Item 1 - Financial Information

Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part I, Item 4 - Controls and Procedures

Part II, Item 1A – Risk Factors

Part II, Item 6 - Exhibits, Financial Statement Schedules

 

The Company’s Principal Executive Officer and Principal Financial Officer are providing currently dated certifications in connection with this Form 10-Q/A. These certifications are filed as Exhibits 31.1, 31.2, 32.1 and 32.2.

  

 2 

  

TripBorn, Inc.

 

Form 10-Q

 

For the First Quarter Ended June 30, 2018

 

Contents

 

Part I   Financial Information        
     
Item 1   Unaudited Condensed Consolidated Financial Statements     4  
     
    Statements of Operations for the First Quarters Ended June 30, 2018 and 2017     4  
     
    Statements of Comprehensive Income (Loss) for the First Quarters Ended June 30, 2018 and 2017     5  
     
    Balance Sheets as of June 30, 2018 and March 31, 2018     6  
     
    Statements of Stockholders Equity for the First Quarter Ended June 30, 2018     7  
    Statements of Cash Flows for the First Quarters Ended June 30, 2018 and 2017     8  
     
    Notes to Consolidated Financial Statements     9  
     
Item 2   Management’s Discussion and Analysis of Financial Condition and Results of Operations     17  
     
Item 4   Controls and Procedures     21  
     
Part II   Other Information     22  
     
Item 1   Legal Proceedings     22  
     
Item 1A   Risk Factors     22  
     
Item 2   Unregistered Sales of Equity Securities and Use of Proceeds     22  
     
Item 5     Other Information     22  
Item 6   Exhibits     22  
Signature     23  
Index to Exhibits     24  

  

 3 

 

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

 

 

TRIPBORN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

         
   First Quarter Ended
June 30,
 
   2018   2017 
Net revenue  $95,640   $108,542 
           
Cost of revenue   59,960    19,886 
           
Gross profit   35,680    88,656 
           
Operating expenses          
     Selling, general, and administrative expenses   168,584    176,177 
     Legal and consulting expenses   45,871    47,623 
     Depreciation and amortization   39,284    118,904 
           
Income (loss) from operations   (218,059)   (254,048)
           
Other income (expense)          
     Other income   6,143      
           
     Interest income   82      
     Interest expense   (47,325)   (60,494)
Total other income (expense)   (41,100)   (60,494)
           
Income (loss) before income tax expense   (259,159)   (314,542)
     Income tax benefit (expense)   -    92,000 
           
Net income (loss)   (259,159)  $(222,542)
           
Basic income (loss) per share  $(0.00)  $(0.00)
Diluted income (loss) per share  $(0.00)  $(0.00)
           
Basic weighted average number of shares   95,711,874    80,660,849 
Diluted weighted average number of shares   95,711,874    80,660,849 

  

See accompanying notes to consolidated financial statements.

 

 4 

 

TRIPBORN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

         
   First Quarter Ended 
   June 30, 
   2018   2017 
Net income (loss)  $(259,159)  $(222,542)
Other comprehensive income (loss), net of tax          
Unrealized foreign currency translation income/(loss)   1,447    (200)
Other comprehensive income (loss), net of tax   1,447    (200)
Comprehensive loss  $(257,712)  $(222,742)

 

See accompanying notes to consolidated financial statements.  

 

 5 

 

TRIPBORN, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   March 31, 
   2018   2018 
   (Unaudited)     
ASSETS        
Current assets:        
Cash and cash equivalents  $805,657   $1,155,367 
Accounts receivable   292,017    184,798 
Other current assets   619,732    351,519 
Total current assets   1,717,406    1,691,684 
           
Property and equipment, net   9,326    9,896 
Intangible assets, net   460,439    498,758 
           
TOTAL ASSETS  $2,187,171   $2,200,338 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $404,259   $360,407 
Other current liabilities   

942,753

    731,542 
           
Total current liabilities   1,347,012    1,091,949 
           
Long term liabilities          
          Convertible notes   1,839,527    1,850,045 
Total current and long-term liabilities   3,186,539    2,941,994 
Stockholders’ equity (deficit):          
Preferred stock $.0001 par value   -    - 
Authorized shares: 10,000,000          
Common stock $.0001 par value   9,572    9,572 
Authorized shares: 200,000,000          
Shares issued and outstanding: 95,711,874 and 78,971,581          
Additional paid-in capital   2,321,818    2,321,818 
Accumulated other comprehensive income (loss)   15,984    14,537 
Retained earnings (deficit)   (3,346,742)   

(3,087,583

)
Total stockholders’ equity   (999,368)   (741,656)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $2,187,171   $2,200,338 

  

See accompanying notes to consolidated financial statements.

 

 6 

 

TRIPBORN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY (DEFICIT)

(Unaudited)

 

   Common Stock                 
   Shares   Amount   Additional
paid-in
capital
   Accumulated
other
comprehensive
income
   Retained
earnings
(deficit)
   Total
stockholder’s
equity (deficit)
 
Balance at March 31, 2018   95,711,874   $9,572   $2,321,818   $14,537   $(2,391,084)  $(45,157)
                               
Issuance of common stock                              
                               
Other comprehensive income (loss)                  1,447         1,447 
                               
Net income (loss)                       (259,159)   (312,314)
                               
Balance at June 30, 2018   95,711,874    9,572    2,321,818    15,984    (3,346,742)   (999,368)

  

See accompanying notes to consolidated financial statements.

 

 7 

 

TRIPBORN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Quarter Ended June 30 
   2018   2017 
Cash flows from operating activities          
Net income (loss)  $(259,159)  $(222,542)
Adjustment to reconcile net income (loss) to net cash          
 provided by (used in) operating activities:          
Depreciation and amortization   39,284    118,904 
Changes in operating assets and liabilities:          
 (Increase) decrease in:          
Accounts receivable   (107,219)   38,824 
Other current assets   (268,213)   (12,813)
Deferred tax asset   -    (92,478)
 Increase (decrease) in:          
Accounts payable and accrued expenses   43,852    (53,185)
Other current liabilities   211,211    142,366 
Net cash provided by (used in) operating activities   (340,244)   (80,924)
           
Cash flows from investing activities          
 Purchase of property and equipment   (396)   368 
 Increase in intangible assets   -    569 
Net cash provided by (used in) investing activities   (396)   937 
           
Cash flows from financing activities          
 Increase in common stock        182 
 Increase in additional paid-in capital        546,818 
  Increase (Decrease) in loan from shareholders          
  Increase in convertible notes   (10,518)     
Net cash provided by (used in) financing activities   (10,518)   547,000 
           
Effect of exchange rates changes on cash   1,447    (200)
           
Net change in cash and cash equivalents   (349,710)   466,813 
           
Cash          
Beginning of the year   1,155,367    516,707 
End of the year  $805,657   $983,520 
           
Supplementary disclosure of cash flows information          
 Cash paid during the period for:          
Interest  $   $ 
Income taxes  $   $ 

  

See accompanying notes to consolidated financial statements.

  

 8 

 

Notes to Consolidated Financial Statements

 

June 30, 2018

 

(Unaudited)

 

1. DESCRIPTION OF BUSINESS 

 

TripBorn, Inc. (“TripBorn” or the “Company”) is a Last Mile eCommerce aggregator that delivers the products and services to offline consumers using a service agent network in India through our website, www.tripborn.com. Currently, we operate as a business to business, or B2B, Last Mile Commerce platform that serves business agents and companies based in India in providing travel and financial services products for their offline customers offering travel reservations and related travel services and products to travel agents in India through its proprietary internet-based platform at www.tripborn.com.

 

Tripborn, Inc. (“Company”) was incorporated under the law of the state of Delaware in January 2010 office is located at 762 Perthshire Pl, Abingdon, MD 21009. The Company provides Online Travel Agency (OTA) and related services and selling its services to directly to Business customers. The Company primarily operates in India. Tripborn, Inc. formerly known as PinstripesNYC, Inc was operating as a shell company with nominal or no assets or operations until December 14, 2015. Tripborn Inc. was known as PinstripesNYC, Inc. until January 2016.

 

On December 14, 2015, PinstripesNYC, Inc. (the “Registrant”) executed and agreement and Plan of Merger (the, “Agreement”) with Sunalpha Green Technologies Private Limited (“Sunalpha”). Sunalpha registered under the Company Act of 1956, India with principle office located at 812, Venus Atlantis Corporate Park, Near Prahalad Nagar Garden, Satellite, Ahmedabad, Gujarat, India 380 015.

 

As a result of the Merger, Sunalpha became a wholly owned subsidiary of the Registrant (Pinstripes NYC Inc.) now Tripborn Inc. and following the consummation of the Merger and giving effect to the issuance of 76,804,914 Merger Shares by its principle stockholders.

 

For accounting purposes, Sunalpha was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of the Company. Accordingly, Sunalpha’s assets, liabilities, and results of operations are the historical consolidated financial statements of the Company and Company’s assets, liabilities and results of operations are consolidated with Tripborn Inc. effective as of the date of the Merger. No step-up in basis or intangible assets or goodwill was recorded in this transaction. The acquisition of all of the outstanding shares of common stock of Sunalpha by TripBorn on December 14, 2015 is being accounted for as a reverse recapitalization.

 

 

 

2. LIQUIDITY AND GOING CONCERN

 

The Company has reported net loss of $259,159, accumulated loss of $3,346,742 and negative cash flow from operations of $340,244 as of and for the quarter ended June 30, 2018.

 

As of June 30, 2018, we had $805,657 in cash and cash equivalents, compared to $1,155,367 as of March 31, 2018. This $ 349,710 decrease in cash is a result in operating loss generated during the quarter ended June 30, 2018. As of June 30, 2018, we have stockholders’ deficit of $999,368 compared to a deficit of $741,656 as of March 31, 2018.  Our stockholders’ deficit increased as a result of the increase in our operating losses during the quarter.

 

The Company’s operations are subject to number of factors that can affect it operating results and financial conditions. Such factors include, but not limited to: the continuous enhancement of the current products and services; marketing its new services; continue to invest in new technologies; change in domestic and foreign regulations; the price of, and demand for, the company’s products and services and its ability to raise the capital to support its operations.

 

 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles ("GAAP") of the United States.

 

 9 

 

Principles of Consolidation

 

The consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiary, Sunalpha Green Technologies Private Limited. All significant inter-company accounts and transactions are eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto, those estimates, and assumptions affect the reported amounts assets, liabilities and disclosure of contingent assets and liabilities and revenue. Actual results could differ significantly from those estimates.  

 

Our significant estimates include elements of revenue recognition, the realization of deferred tax assets, amounts that may be due under the tax sharing agreement, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, costs to be capitalized as well as the useful life of capitalized software, and contingent liabilities, including taxes related to hotel occupancy. Actual amounts may differ from these estimates. The use of different estimates or assumptions in determining the fair value of our goodwill, indefinite-lived and definite-lived intangible assets may result in different values for these assets, which could result in an impairment or, in the period in which an impairment is recognized, could result in a materially different impairment charge. The Company has no impairment charge for the quarter ending June 30, 2018.

 

Revenue Recognition

 

The Company provides travel products and services to leisure and corporate travelers in India and abroad. The revenue from rendering these services is recognized at the time when significant risk and rewards are transferred to the customer. This is generally the case: 1) on the date of departure for vacation packages, 2) on the date of check in for hotel booking business and 3) on the date of issuance for the sale of airline tickets. 

 

Air Ticketing. Revenue from airline tickets is recognized on net commission basis which includes our nonrefundable surcharges and fees to our service agents. For certain airline transactions, we also receive fees from global distribution systems partners that control the computer systems through which these reservations are booked.

 

Vacation Packages. Revenue from vacation packages, including revenue on airline tickets sold to customers as a part of vacation packages, is accounted for on the gross basis as we are determined to be the primary obligor in the arrangement i.e., the risks and responsibilities are taken by us, including the responsibility for delivery of services.

 

Rail Ticketing. Revenue from rail ticket reservations is recognized on net basis which includes our nonrefundable surcharges and fees to our service agents. We recognized revenue on gross basis for railway service setup fees, which is non-refundable and collected from our service agent at the time of agent enrollment.

 

Money Transfer. To our service agent we provide system connectivity using our internet platform so our service agent can perform Money Transfer services on behalf of their customers. Our internet platform facilitates connectivity between Bank and Service Agent. We recognized revenue on the net basis, we collect service charge or fees to our service agent for performing the money transfer services for their customers. Performance linked incentives from Banks or suppliers are recognized upon achievement of performance obligations and amount is billed to suppliers.   

 

Other Revenue. Revenue from other sources, primarily comprising net commission and fees from bus tickets booking fees, visa processing fees, and pre-and post-paid expenses are recognized after the services are being performed.

 

Cost of Revenue

 

Cost of revenue primarily consists of costs paid to hotel and vacation package suppliers for the acquisition of relevant services and products for sale to customers and includes the procurement cost of hotel rooms and other services.

 

Cost of revenue is the amount paid or accrued against procurement of these services and products from the respective suppliers and do not include any other operating cost to provide these services or products. Cost of revenue is recognized when incurred, which coincides with the recognition of the corresponding revenue.

 

Operating Expenses

 

Operating expenses include costs such as advertising and business promotion costs, utilities, rent, payroll and consultants fees and charges, which are recognized on an accrual basis. Depreciation and amortization costs are amortized over the estimated useful lives of the assets.

 

 10 

 

Cash and Cash Equivalents

 

The Company maintains cash balances, which may exceed federally insured limits. The Company does not believe that this results in any significant credit risk.

 

Sunalpha has twelve accounts denominated in Indian Rupees. As of June 30, 2018, and 2017, the cash balance in financial institutions in India was USD $360,210 and $229,520, respectively. The transactions are undertaken in Indian Rupees and requires a foreign currency translation adjustment. The Company’s cash deposits in India are not insured against loss. The Company does not believe that this results in any significant credit risk. 

 

Receivables and Credit Policies

 

Accounts receivable are stated at the amount’s management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is doubtful due to credit issues. These allowances together reflect the Company's estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers.

 

The Company performs periodic analysis of each customer’s outstanding accounts receivable balance and assesses, on an account-by-account basis, whether the allowance for doubtful accounts needs to be adjusted based on currently available evidence such as historical collection experience, current economic trends and changes in customer payment terms. In accordance with the Company’s policy, if collection efforts have been pursued and all reasonable and contractually available avenues for collections exhausted, accounts receivable would be written off as uncollectible. The Company does use estimate to use a general reserve methodology when estimating the level of allowance for doubtful accounts because the Company believes, due to the unique circumstances of each customer and a limited number of customers, a general reserve methodology would not provide a reasonable estimate of potentially uncollectible accounts.

 

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is computed on a straight-line basis over the estimated useful lives of the assets. The Company charges repairs and maintenance costs that do not extend the lives of the assets to expense as incurred.

 

Intangible Assets

 

Intangible assets with definite useful lives are tested for impairment at least annually for their recoverability. We do not have any intangible assets with indefinite lives. Intangible assets that have limited useful lives are amortized on a straight-line basis over their useful lives.

 

Impairment of Long-lived Assets

 

The Company records an impairment of long-lived assets used in operations, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method.

 

Foreign Currency Translation

 

The Company translates the foreign currency of its foreign subsidiary, whose functional currency is Indian rupee, into US Dollars, the reporting currency using the year or reporting period end or average exchange rates in accordance with the requirements of ASC subtopic 830, Foreign Currency Matters (“ASC 830”). Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented. The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss) within shareholders’ equity (deficit).

 

The value of INR against US$ and other currencies may fluctuate and is affected by, among other things, changes in India’s political and economic conditions. Any significant revaluation of INR may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

 

  June 30, 2018 June 30, 2017
Period-end spot rate US$1=INR 68.7100 US$1=INR 64.6112
Average rate US$1=INR 66.9200 US$1=INR 64.7509

 

 

Earnings and Loss per Share

 

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation.

 

 11 

 

Promotion and Advertising Expense

 

We incur advertising expense consisting of offline costs, including newspaper and media advertising, and online advertising expense to promote our brands. We expense the production costs associated with advertisements in the period in which the advertisement first takes place. We expense the costs of communicating the advertisement (e.g., newspaper, SMS or email campaign) as incurred each time the advertisement or promotion is performed.

 

Stock-Based Compensation

 

The Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options over the instruments vesting period. Options awarded to purchase shares of common stock issued to non-employees do not need to be remeasured as per ASU 2018-07 principles.

 

Leases

 

Leases of assets where the Company has assumed substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized at the lower of the fair value of the leased assets and the present value of the minimum lease payments.

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities based on the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

 

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

 

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it  recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

 

Recent Accounting Pronouncements

 

New Accounting Pronouncements Recently Adopted

 

In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, “Simplifying the Measurement of Inventory”. ASU No. 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business; less reasonably predictable costs of completion, disposal and transportation. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company adopted this guidance in the first quarter of its fiscal year ended March 31, 2018 using a prospective application. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update addresses several aspects of the accounting for share-based compensation transactions including: (a) income tax consequences when awards vest or are settled, (b) classification of awards as either equity or liabilities, (c) a policy election to account for forfeitures as they occur rather than on an estimated basis and (d) classification of excess tax impacts on the statement of cash flows. The Company adopted this guidance in the first quarter of its fiscal year ended March 31, 2018, which did not have a material impact on the consolidated financial statements and related disclosures. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement will be applied prospectively. The Company does not expect the impact to be material to the consolidated results of operations; however, such determination is subject to change based on facts and circumstances at the time when awards vest or settle.

 

 12 

 

We adopted Revenue Recognition - Revenue from Contracts with Customers (ASU 2014-09) for the fiscal year ended March 31, 2018, which amends the guidance in former ASC 605, Revenue Recognition and found no significant impact on the revenue recognition.

 

New Accounting Pronouncements Not Yet Adopted

 

In February 2016, the FASB issued ASU No. 2016-02, "Leases” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet with a corresponding liability and disclosing key information about leasing arrangements. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim reporting periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim reporting periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of the adoption of this revised guidance on its consolidated financial statements and related disclosures.

 

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory”, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The amendments in this ASU should be adopted on a modified retrospective basis. The Company reviewing adoption and its impact of this guidance on its consolidated financial statements and related disclosures.

 

In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. The amendments affect reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. Specifically, the amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. As of fiscal year, ending March 31, 2018 and 2017 we have no variable interest entity under common control with the reporting entity.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

 

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. The new rules will be effective for the Company in the first quarter of 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

 

No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

  

4. PROPERTY AND EQUIPMENT, NET

 

Property and Equipment consists of the following as of June 30 and March 31, 2018. The property and equipment listed below are recorded in the books of Sunalpha.

 

   June 30, 2018   March 31, 2018 
Computer  $13,443   $13,443 
Furniture and Fixture   5,864    5,467 
Office Equipment   6,352    6,352 
Software License   768    768 
Total   26,427    26,030 
Accumulated depreciation   (17,101)   (16,134)
Fixed assets, net  $9,326   $9,896 

 

Depreciation expense for the quarters ended June 30, 2018 and 2017 is $966 and $1,604 respectively.

 

 13 

 

5. INTANGIBLE ASSETS WITH DEFINITE LIVES

 

Intangible assets consist of the following as of June 30 and March 31, 2018: 

 

   June 30, 2018   March 31, 2018 
API Access  $139,472   $139,472 
Software   954,501    954,501 
Total   1,093,973    1,093,973 
Accumulated amortization   (633,534)   (595,215)
Intangible assets, net  $460,439   $498,758 

 

Amortization expense for the quarters ended June 30, 2018 and 2017 was $38,319 and $117,300, respectively.

 

 

 

6. STOCK COMPENSATION

 

During the quarter ended June 30, 2118, we had no stock-based compensation.

 

 

7. CONVERTIBLE NOTES PAYABLE

 

Related Party Convertible Notes

 

The Company issued an $956,000 convertible note with maturity date of March 7, 2019, with annual rate of 10% from ARNA GLOBAL LLC, wholly owned by the Company’s president. The note converts into 21,194,381 shares of common stock (the “Note Shares”).

 

The Company issued an $695,000 convertible note with maturity date of December 19, 2019, with annual rate of 10% from TAKNIKI COMMUNICATION, wholly owned by the Company’s Vice President. The note converts into 10,303,070 shares of common stock (the “Note Shares”).

 

The Company issued an $156,407 convertible note with maturity date of March 7, 2019, with annual rate of 10% from Mr. Sharma, Company’s president. The note converts into 3,432,234 shares of common stock (the “Note Shares”).

 

The Company issued an $38,076 convertible note with maturity date of March 7, 2019, with annual rate of 10% from Mr. Mandloi, Company’s vice president. The note converts into 835,552 shares of common stock (the “Note Shares”).

 

The Company has accrued interest of $47,325 for related parties for the quarter ended June 30, 2018.

 

Non-Affiliate Party Convertible Notes

 

None. 

 

 

8. RELATED PARTY TRANSACTION

 

On April 1, 2017, the board approved the compensation of Deepak Sharma, President of the Corporation, be fixed at USD 250,000/- per year for the next three year period beginning April 1, 2017 to year ending March 31, 2020, payments to be made in monthly installments on the last day of each month. The Company had not paid any compensation for the fiscal year ending March 31, 2018. The Company accrued the total executive compensation payable of $250,000 for the fiscal year ending March 31, 2018.

 

The above related party transactions are not necessarily indicative of the amounts and terms that would have been incurred had comparable transactions been entered with independent parties.

 

 

 

9. STOCKHOLDER’S EQUITY

 

None.

 

Equity Compensation Plan

 

On April 15, 2016, we adopted the TripBorn, Inc. 2016 Stock Incentive Plan, which authorized the issuance of 7,680,000 shares of our common stock pursuant to stock options, restricted stock, restricted stock units or other awards authorized under the terms of the plan. No awards have been issued under the plan.

 

 14 

 

10. INCOME TAX

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. 

 

The Company files its income tax returns on a fiscal year basis.

 

The future effective income tax rate depends on various factors, such as the Company’s income (loss) before taxes, tax legislation and the geographic composition of pre-tax income. The Company files income tax returns in the U.S. Federal jurisdiction and various State jurisdictions. Sunalpha files tax returns in India. The Company is generally subject to U.S. Federal, State and local examinations by tax authorities for the past three years.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act included a broad range of complex provisions impacting the taxation of multi-national companies. The Tax Act makes broad and complex changes to the U.S. corporate income tax system and includes a Transition Toll Tax (the “Transition Tax”), which is a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries’ previously untaxed foreign earnings. The Toll Charge will be paid over an eight-year period, starting in 2018, and will not accrue interest. The Tax Act also imposed a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset for foreign tax credits. Generally, accounting for the impacts of newly enacted tax legislation is required to be completed in the period of enactment, however in response to the complexities and ambiguity surrounding the Tax Act, the SEC released Staff Accounting Bulletin No. 118 (“SAB 118”) to provide companies with relief around the initial accounting for the Tax Act. Pursuant to SAB 118, the SEC has provided a one-year measurement period for companies to analyze and finalize accounting for the Tax Act. During the one-year measurement period, SAB 118 allows companies to recognize provisional amounts when reasonable estimates can be made for the impacts resulting from the Tax Act. TripBorn will finalize accounting for the Tax Act during the one-year measurement period, and any adjustments to the provisional amounts will be included in income tax expense or benefit in the appropriate period, and disclosed if material, in accordance with guidance provided by SAB 118.

 

While our accounting for the Tax Act is not complete, we do not believe we are subject to the Transition Tax. The Transition Tax is a tax on previously untaxed accumulated earnings and profits (“E&P”) of our foreign subsidiaries and our foreign subsidiary has historically generated operating losses. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings, if any.

 

The Tax Act has significant complexity and our final tax liability may materially differ from provisional estimates due to additional guidance and regulations that may be issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”) and state and local tax authorities, and for TripBorn’s finalization of the relevant calculations required by the new tax legislation.

 

 

11. EARNINGS AND LOSS PER SHARE

 

ASC 260, “Earnings Per Share” requires presentation of basic earnings per share and dilutive earnings per share. The computation of basic earnings (loss) per share is computed by dividing earnings (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. The computation of diluted earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect.

A reconciliation of net loss and weighted average shares used in computing basic and diluted net income per share is as follows: 

 

   First Quarter Ended June 30, 
   2018   2017 
Basic net income (loss) per share:        
Net income (loss) applicable to common shares  $(259,159)  $(222,542)
Weighted average common shares outstanding   95,711,874    80,660,849 
Basic net income (loss) per share of common stock  $(0.00)  $(0.00)
Diluted net income (loss) per share:          
Net income (loss) applicable to common shares  $(259,159)  $(222,542)
Weighted average common shares outstanding   95,711,874    80,660,849 
Dilutive effects of convertible debt   -    - 
Weighted average common shares, assuming dilutive effect of convertible 
debt
   95,711,874    80,660,849 
Diluted net income (loss) per share of common stock  $(0.00)  $(0.00)

 

 15 

 

Due to net loss, the shares of common stock underlying the convertible notes described in Notes 7 and 9 were not included in the calculation of diluted net loss per share, as they would have had an antidilutive effect.

 

 

12. COMMITMENTS

 

The Company is the B2B Principal Agent of the Indian Railway Catering and Tourism Corporation, or IRCTC, which is a government entity that allows the Company to offer reservations through Indian Railways’ passenger reservation system on the Company’s webpage. Indian Railways is India’s state-owned railway, which owns and operates most of India’s rail transportation. The Company has integrated its online portal with IRCTC’s to provide a seamless booking process. Pursuant to an Application Programming Interface (API) agreement, dated October 5, 2015, the Company is required to pay a minimum annual maintenance fee of $7,500 to IRCTC. In the event the agreement is renewed, the amount based on the number of active railway agents that use the Company rail booking services on the Company’s platform will be payable annually. On September 30, 2017, the Company renewed its agreement with the IRCTC and paid an annual maintenance fee of $8,600 based on the number of active railway agents it has enrolled to book rail tickets.

 

We lease approximately 2,455 square feet of office space for our principal executive officers in Ahmedabad, India. Currently, our president and director, Deepak Sharma leases this space to us at no charge.

 

Since March 2016, we also lease approximately 4,080 square feet of office space for our technology center in Bangalore, Karnataka India, for which we currently pay approximately $5,896 per month including annual maintenance charges. This lease is continued with expiration dates through December 2024. We believe these properties suit our operations and business needs and that adequate, suitable lease space will continue to be available to meet our needs. Following table describes our obligation for the next five year from the lease.

 

Fiscal Year Estimated Lease Charges
2019 $70,757
2020 $75,272
2021 $80,067
2022 $85,116
2023 $90,549

 

 

13. SUBSEQUENT EVENTS

 

 

The Company has evaluated subsequent events through August 13, 2018, the date on which the financial statements were available to be issued.

 

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

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this report, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management’s beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could”, “intend,” “consider,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative of such terms or other comparable terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change, which has magnified such uncertainties. Readers should bear these factors in mind when considering forward-looking statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those suggested by such statements. In the past, actual results have differed from those suggested by forward looking statements and this may happen again. Important factors that could cause actual results to differ include, but are not limited to, the risks discussed in “Risk Factors” and the following:

 

· adverse effects on our business because of regulatory investigations, litigation, cease and desist orders or settlements;
· our ability to comply with the terms of our settlements;
· increased regulatory scrutiny and media attention;
· any adverse developments in existing legal proceedings or the initiation of new legal proceedings;
· our ability to effectively manage our regulatory and contractual compliance obligations;
· the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with the terms of our debt agreements, including the financial and other covenants contained in them;
· our ability to interpret correctly and comply with liquidity, net worth and other financial and other requirements of regulators as well as those set forth in our debt and other agreements;
· our ability to invest available funds at adequate risk-adjusted returns;
· uncertainty regarding regulatory restrictions on our ability to repurchase our own stock;
· volatility in our stock price;
· our ability to contain and reduce our operating costs;
· our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties;
· uncertainty related to legislation, regulations, regulatory agency actions, regulatory examinations, government programs and policies, industry initiatives and evolving best servicing practices;
· the loss of the services of our senior managers and our ability to execute effective chief executive and chief financial officer leadership transitions;
· uncertainty related to general economic and market conditions, delinquency rates, home prices and disposition timelines on foreclosed properties;
· uncertainty related to our ability to continue to collect certain expedited payment or convenience fees and potential liability for charging such fees;
· uncertainty related to our reserves, valuations, provisions and anticipated realization of assets;
· uncertainty related to the ability of third-party obligors and financing sources to fund servicing advances on a timely basis on loans serviced by us;
· uncertainty related to the ability of our technology vendors to adequately maintain and support our systems, including our servicing systems, loan originations and financial reporting systems;
· our ability to effectively manage our exposure to interest rate changes and foreign exchange fluctuations;
· our ability to meet capital requirements established by, or agreed with, regulators or counterparties;
· our ability to protect and maintain our technology systems and our ability to adapt such systems for future operating environments; and
· uncertainty related to the political or economic stability of the United States and of the foreign countries in which we have operations; and
· our ability to maintain positive relationships with our large shareholders and obtain their support for management proposals requiring shareholder approval.

 

 

Further information on the risks specific to our business is detailed within this report, including under “Risk Factors.” Forward-looking statements speak only as of the date they were made, and we disclaim any obligation to update or revise forward-looking statements whether because of new information, future events or otherwise. The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our latest Annual Report that has been filled on Form 10-K.

 

 17 

 

Overview

 

We are Last Mile Commerce and Connectivity aggregator that delivering the product and services to offline consumer using service agent network in India through our website, www.tripborn.com. Currently, we operate as a business to business, or B2B, Last Mile Commerce platform that serves business agents and companies based in India in providing travel and financial services products for their offline customers. Through our internet-based platform, our business or travel agents can search and book domestic and international air tickets, hotels, vacation packages, rail tickets and bus tickets, as well as ancillary travel-related services and financial services including money transfer bill payment, and Micro ATM products. We serve approximately 6,534 business agents across India. We plan to expand our presence throughout pan-India as opportunities present, with an immediate focus on the states of Gujarat, Maharashtra, Rajasthan, Delhi, Bihar, Jharkhand, Orissa, and Madya Pradesh and South India. Sometimes we also referred as an Online Travel Agency (“OTA”), that offers travel reservations and related travel services and products to travel agents in India through our website, www.tripborn.com.

  

We generate revenue through our ticketing business, which includes rail ticketing, bus ticketing and air ticketing, and our hotel reservations and vacation and business packages business. We also generate revenue by providing online payment services and access to visa processing services.

 

In our ticketing business, our main sources of revenue are (1) commissions and incentive payments from airline suppliers for tickets booked by our travel agent customers through our distribution channels and (2) service fees we charge our customers.

 

 

Corporate History

 

Tripborn, Inc. (“Company”) was incorporated under the law of the state of Delaware in January 2010 office is located at 762 Perthshire Pl, Abingdon, MD 21009. The Company provides Online Travel Agency (OTA) and related services and selling its services to directly to Business customers. The Company primarily operates in India. Tripborn, Inc. formerly known as PinstripesNYC, Inc was operating as a shell company with nominal or no assets or operations until December 14, 2015. Tripborn Inc. was known as PinstripesNYC, Inc. until January 2016.

 

On December 14, 2015, a PinstripesNYC, Inc. (the “Registrant”) executed an agreement and Plan of Merger (the, “Agreement”) with Sunalpha Green Technologies Private Limited. (the, “Sunalpha”) registered under the Company Act of 1956, India with principle office located at 812, Venus Atlantis Corporate Park, Near Prahalad Nagar Garden, Satellite, Ahmedabad, Gujarat, India 380 015.

 

As a result of the Merger, Sunalpha became a wholly owned subsidiary of the Registrant (Pinstripes NYC Inc.) now Tripborn Inc. and following the consummation of the Merger and giving effect to the issuance of the Merger Shares 76,804,914 shares issued and outstanding of the Registrant by its principle stockholders.

 

For accounting purposes, Sunalpha was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of the Company. Accordingly, Sunalpha’s assets, liabilities, and results of operations are the historical consolidated financial statements of the Company and Company’s assets, liabilities and results of operations are consolidated with Tripborn Inc. effective as of the date of the Merger. No step-up in basis or intangible assets or goodwill was recorded in this transaction.

 

Since commencing operations as an OTA in February 2014, we have grown our business by initially processing a few transactions a day to processing approximately 1.0 million plus transactions and 16.9 million searches in March 31, 2018. During fiscal 2018, we have experienced increased traffic on our website due to our efforts in marketing and branding. Our agent customers log in nearly 2,701 times per day in March 31, 2018. We have steadily worked to add suppliers in order to provide additional services and better pricing for our travel agent customers. In the development stages, we have relied on user feedback to enhance our core technology. As internet penetration in India continues to increase, we anticipate that we will be in a position to use our established platform to offer travel services and related services directly to consumers. We believe our online platform is capable of managing hundreds of suppliers and millions of transactions in furtherance of our growth strategies.

 

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OPERATING METRICS

 

In evaluating our business, we use operating metrics, including gross bookings and revenue margin. Gross bookings is a measure of total dollar volume of transactions that we process. This metric is an operating metric used by management, the investor community, and analysts who follow the travel industry to measure our market share and to measure our scale and growth. We calculate revenue margin as revenue as a percentage of gross bookings.

 

 

  Quarter Ended June 30
  2018 2017
     
Gross Bookings1 $13,720,529 $8,903,079
Revenue Margin2 0.7% 1.2%

 

1Gross bookings represent the total retail value of transactions booked through us, generally including taxes, fees and other charges, and are generally reduced for cancellations and refunds.

 

2Revenue margin is defined as revenue as a percentage of gross bookings

 

The increase in gross bookings is driven primarily by increases in incentives, fees, penalty income, and surcharges paid by our travel agent customers. Revenue margin declined quarter over quarter due to price pressure on air ticketing and low margin rail ticketing outpacing higher margin vacation and hotel package offerings.

 

 

RESULTS OF OPERATIONS

During the first quarter of fiscal year 2019, we continued to add new markets and add an increasing number of sales agents that offer our services. These changes drove an increase in our net revenues. Our costs of revenue and operating expenses increased as we expanded our market reach and drove the increase in net loss from operations.

 

   First Quarter Ended
June 30,
 
   2018   2017 
Net revenue  $95,640   $108,542 
           
Cost of revenue   59,960    19,886 
           
Gross profit   35, 680    88,656 
           
Operating expenses          
     Selling, general, and administrative expenses    168,584     176,177 
     Legal and consulting expenses   45,871    47,623 
     Depreciation and amortization    39,284     118,904 
           
           
Income (loss) from operations    (218,059 )   (254,048)
           
Other income (expense)          
           
     Other income   6,143    - 
     Interest income   82      
     Interest expense   (47,325)   (60,494)
           
Total other income (expense)   (41,100)   (60,494 
           
Income (loss) before income tax expense  $ (259,159 )  $(314,542)
     Income tax benefit   -    92,000 
           
Net income (loss)  $ (259,159 )  $(222,542)
           
Basic income (loss) per share  $(0.00)  $(0.00)
Diluted income (loss) per share  $(0.00)  $(0.00)
           
Basic weighted average number of shares   95,711,874    80,660,849 
Diluted weighted average number of shares   95,711,874    80,660,849 

 

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Revenue

 

Net revenues for the first quarter ended June 30, 2018 were $95,640 compared to $108,542 for the first quarter ended June 30, 2017. Revenue for the quarter ended June 30, 2018 consisted of $8,224 from air ticketing compared to $21,900 in the prior year quarter, $4,297 from rail ticketing compared to $8,896 in the prior year quarter, $0 from hotel booking compared to $819 in the prior year quarter, $2,728 from vacation packages compared to $18,873 in the prior year quarter, and $80,391 from incentives from our aggregators and suppliers and fees, penalty income and surcharges from our travel agent customers compared to $51,416 in the prior year. Revenue declined by $6,759 in the current year quarter compared to the prior year quarter. The primary driver was the increase in incentives from our aggregators and suppliers, which was fueled by an increase in the number of transactions that were processed. This increase was offset by declines in air and rail ticketing, hotel booking, vacation packages, and payment services which declines resulted from increased competition for these services.

 

Cost of Revenues and Gross Profit

 

The cost of revenue for the first quarter ended June 30, 2019 was $59,960 compared to $19,886 for the prior year quarter. The cost of revenue represents fees charged by our suppliers. The increase in cost of revenue from the first quarter ended June 30, 2018 compared to the prior year quarter was primarily driven re-classification of some of selling expenses for the quarter ended June 30, 2018. We are continuing to manage our cost of revenue by optimizing pricing from our suppliers and aggregators to increase our profitability and by implementing pricing algorithms and profitability calculations.

 

Gross profit from revenues for the first quarter ended June 30, 2018 was $35,680 compared to $88,656 for the prior year quarter. The $52,976 decrease is driven primarily by re-classification of some of selling expenses for the quarter ended June 30, 2018 and by a decrease in costs to provided revenue.

 

Operating Expenses

 

Total operating expenses for the first quarter ended June 30, 2018 were $253,739 compared to $342,704 for the prior year quarter. Our operating expenses include our sales and marketing, payroll and general and administrative costs, and the increase in these costs was driven by our increased headcount as we ramp up our operations. Included in our operating expenses is $45,871 in legal and consulting expenses associated with our operating as an Exchange Act reporting company, even with $47,623 in the prior year quarter.

 

We expect our sales and marketing expenses to increase as we continue to grow the business and hire experienced personnel to support our growing business and operations. Our general and administrative expenses are expected to continue to increase as we incur expenses associated with being an Exchange Act reporting company and developing an active trading market for our stock on the OTCQB Market.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of June 30, 2018, we had $805,657 in cash and cash equivalents, compared to $1,155,367 as of March 31, 2018. The $349,710 decrease in cash was driven by our operating loss and a use of working capital. As of June 30, 2018, we had stockholder’s deficit of $999,368 compared to stockholder’s deficit of $741,656 at March 31, 2018, which resulted an increase in operating losses during the quarter ended June 30, 2018.

 

Our primary source of working capital to date has been through the sale of common stock and the sale and issuance of convertible notes. Our focus remains on deriving net cash flow from operations.

 

Cash Flows: The following table is a summary of our Consolidated Statements of Cash Flows:

 

    Three Months Ended
    June 30,   June 30,
    2018   2017
Cash Provided by (Used in):                
Operating Activities     $(340,244)       $(80,924)  
Investing Activities     (396)       937  
Financing Activities     (10,518)       547,000  


 

 


Operating Activities: Net cash used by operations was $340,244 during the three months ended June 30, 2018 compared to a cash use from operating activities of $80,924 during the same period in fiscal 2018. The year-over-year increase in cash used by operations is primarily the result of an increase in operating losses plus negative changes in net working capital (defined as current assets less current liabilities).

 

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Investing Activities: During the three months ended June 30, 2018, there was a cash use of $396 from investing activities compared to a cash provision of $937 in the same period in fiscal 2018. These cash uses represent net changes in property, plant, and equipment and intangible assets.

 

Financing Activities: During the three months ended June 30, 2018, there was zero cash provided or used by financing activities compared to a 547,000 cash provision in the same period in fiscal 2018. Cash generated during the three months ended June 30, 2018 resulted from the sale of common stock pursuant to a private placement. We presently do not have a senior credit or revolving credit facility and do not expect to obtain one in the foreseeable future.

 

We will require additional capital to continue to fund our operations and will look to raise funds through public and private offerings of our securities. We estimate that we will require approximately $3.0 million and $5.0 million in the next 12 and 24 months to support our continued operations.

 

We took the following steps during fiscal years 2017 and 2018 to manage our liquidity and to avoid default on any material third-party obligations:

 

·We continue to employ “on demand” procurement processes for travel products that we sell to our customers. We also continue our attempts to collect customer payments promptly based on their payment terms, which has helped us manage our working capital needs.

 

·We raised $150,000 in the first quarter of fiscal 2017 pursuant to the Company’s issuance of a convertible note. The note had a three-year term and accrued interest at the rate of six percent payable at maturity. The principal amount of the note was convertible into shares of the Company’s common stock at the noteholder’s option at maturity. This note was converted into 3,924,088 shares of common stock on July 15 and 16, 2017.

 

·We issued a convertible note to Takniki Communications, an affiliate owned by Sachin Mandloi, our Vice President and a director, totaling $695,000 in the third quarter of fiscal 2017. This note was issued pursuant to a Software Development Agreement dated September 23, 2016 between Takniki Communications and the Company to finance the upgrade of our Travelcord operating software.  The note has a three-year term and bears interest at the rate of ten percent payable at maturity. The principal amount of this note is convertible into shares of the Company’s common stock at the noteholder’s option at maturity.

 

·We sold $460,000 of the Company’s common stock during the third quarter of fiscal 2017 and another $190,000 during the fourth quarter of fiscal 2017.

 

·We sold $547,000 of the Company’s common stock during the first quarter of fiscal 2018 and another $551,000 during the second quarter of fiscal 2018.

 

There are no assurances that these steps will generate sufficient cash flow from operations or that we will be able to obtain sufficient financing necessary to support our working capital requirements. We can also give no assurance that additional capital financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available, we may not be able to continue our operations or execute our business plan.

 

OFF BALANCE SHEET ARRANGEMENTS

 

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Act of 1934, as amended, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer, based on their evaluation of TripBorn’s disclosure controls and procedures as of June 30, 2018, have concluded that TripBorn’s disclosure controls and procedures are effective as of that date.

 

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Changes in Internal Control Over Financial Reporting

 

As a newly public company, we have not yet been required to provide a report of management’s assessment regarding internal control over financial reporting.

 

 

PART II.

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes from the risk factors as previously disclosed in our current Annual Report on Form 10-K for the year ended March 31, 2018.

 

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

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

         
    TRIPBORN, INC.
     

Date: September 10, 2019

  By:  

/ S /    Deepak Sharma

    Name:   Deepak Sharma
    Title:   President & Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates.

 

     

Signature

 

Title

/s/    Deepak Sharma

Deepak Sharma

 

Chief Executive Officer, President, and Director

(Principal Executive Officer)

   

/s/    Deepak Sharma

Deepak Sharma

 

Chief Financial Officer

(Principal Financial and Accounting Officer)

   

/s/    Sachin Mandloi

Sachin Mandloi

  Vice President and Director

 

 

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

 

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INDEX OF EXHIBITS

 

Number Exhibit Description

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

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