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

FORM 10-Q

(Mark One)

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

 

For the quarterly period ended: December 31, 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

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 January 9, 2015 was 41,871,160 shares of common stock outstanding.

1
 

KM WEDDING EVENTS MANAGEMENT, INC.

FORM 10-Q
For the Quarterly Period Ended December 31, 2014

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION  PAGE
   
ITEM 1. FINANCIAL STATEMENTS  5
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  23
ITEM 4. CONTROLS AND PROCEDURES  23
   
PART II - OTHER INFORMATION  23
   
ITEM 1. LEGAL PROCEEDINGS  23
ITEM 1A. RISK FACTORS  23
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  23
ITEM 3. DEFAULTS UPON SENIOR SECURITIES  24
ITEM 4. MINE SAFETY DISCLOSURES  24
ITEM 5. OTHER INFORMATION  24
ITEM 6. EXHIBITS  

2
 

KM WEDDING EVENTS MANAGEMENT, INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

   
CONTENTS PAGE
   
   
CONDENSED CONSOLIDATED BALANCE SHEETS 5
   
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 6
   
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 7
   
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8
   
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 9
   
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 10
   

 

3
 

 

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-K for year ended March 31, 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” refers to Indian Rupee, the legal currency of India.
“U.S. dollar”, “$” and “US$” refer to the legal currency of the U.S.

4
 

ITEM 1.                        FINANCIAL STATEMENTS

KM Wedding Events Management, Inc.      
Interim Condensed Consolidated Balance Sheet at December 31, 2014  
(in US Dollars $ unless otherwise stated)      
   

At

December 31,

At

March 31,

  Notes 2014 2014
    (unaudited)  
ASSETS      
Current assets:      
Cash and cash equivalents 3 84,243 88,616
Accounts receivable 4  461,056 278,857
Other current assets 5 480,902 507,830
Total current assets   1,026,201 875,303
       
Non-current assets:      
Long Term Investments 6 - 135,000
Property, plant and equipment, net 7 118,513 133,616
Intangible assets, net 8 24,402 1,173
Goodwill 21 684,441 687,139
Film costs 24 17,254 19,566
Other non-current assets 9 35,048 64,123
Total non-current assets   879,658 1,040,617
Total assets   1,905,859 1,915,920
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current Liabilities:      
Accounts payable and accrued liabilities 10 168,315 121,324
Income tax and other statutory liabilities 11 229,681 135,485
Short-term loans & current portion of long term debt 12 168,376 357,024
Unsecured loans from related parties, net of advances 65,527 221,040
Other current liabilities 13 232,711 258,399
Total current liabilities   864,610 1,093,272
       
Non-current liabilities:      
Long-term debt 12 49,923 20,865
Deferred tax liabilities   393 32,275
Other non-current liabilities 14 19,336 18,813
Total non-current liabilities   69,652 71,953
       
Equity:      
Common stock par value $ 0.001      
(shares outstanding: 42,071,160 and 41,646,160      
as of December 31, 2014 and March 31, 2014,      
respectively) 15 42,071 41,646
Additional paid-in-Capital   1,158,237 1,031,162
Accumulated deficit    (247,584) (268,403)
Equity Attributable to equity holders of the Company   952,724 804,405
Non-Controlling Interest   18,873 (53,710)
Total equity   971,597 750,695
       
Total liabilities and equity   1,905,859 1,915,920
       
       
The accompanying notes are an integral part to these interim condensed financial statements.
         
       
         

 

5
 

 KM Wedding Events Management, Inc.     
 Interim Condensed Consolidated Statement of Income     
 (in US Dollars $ unless otherwise stated)       
     For the three months ended   For the three months ended   For the nine months ended   For the nine months ended 
   Notes  31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
     (unaudited)   (unaudited)   (unaudited)   (unaudited) 
 Revenues         
 Matrimonial service income            16               450,929               277,256            1,053,819               764,339
 Wedding catering service income                177,086                 98,840               389,364               218,709
 Total                 628,015              376,096           1,443,183              983,048
           
 Costs and expenses       
 Matrimonial service expenses            17               109,496               129,369               291,662               333,415
 Wedding catering service expenses                143,610                 82,897               315,763               183,480
 Personnel costs                  98,974                 92,044               264,188               244,750
 General and administrative expenses            18               172,953                 76,831               410,716               275,635
 Depreciation and amortization                    8,654                 10,290                 22,281                 26,404
 Total                 533,687              391,431           1,304,610           1,063,684
           
 Operating Income / (loss)                  94,328               (15,335)               138,573               (80,636)
           
 Other income / (expenses)       
 Loss on sale of Property Plant & Equipment                         -                            -                            -                            -    
 Unrealized foreign exchange gain / (loss)                    6,466                        -                     13,616                        -    
 Miscellaneous income                     (275)                        -                            -                            -    
 Interest Income                      (151)                   3,450                   7,802                   9,266
 Finance charges                (13,385)               (10,470)               (45,943)               (29,278)
 Total other income / (expenses), net                 (7,345)                (7,020)              (24,525)              (20,012)
           
 Income / (loss) before income tax expense                  86,983               (22,355)               114,048              (100,648)
 Income taxes         
 Current tax                (25,965)                        -                   (25,965)                        -    
 Deferred tax (expense) / benefit                  31,464                        -                     31,464                        -    
 Prior Period Taxes                (19,545)                      (85)               (19,545)                 (1,983)
           
 Net income / (loss)                 72,937              (22,440)              100,002            (102,631)
           
 Attributable to:         
 Equity holders of the Company                  50,281               (44,638)                 24,449               (84,710)
 Non-controlling interest                  22,656                 22,198                 75,553               (17,921)
 Net income / (loss)                 72,937              (22,440)              100,002            (102,631)
           
 Earnings / (loss) per share - basic and diluted            19                         0.0012                       (0.0011)                         0.0006                       (0.0021)
The accompanying notes are an integral part to these interim condensed financial statements.  

6
 

KM Wedding Events Management, Inc.      
Interim Condensed Consolidated Statement of Comprehensive Income    
(in US Dollars $ unless otherwise stated)    
  For the three months ended For the three months ended For the nine months ended For the nine months ended
  31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Net Profit         72,937                (22,440)        100,002              (102,631)
         
Other Comprehensive Loss    
Foreign Currency Translation Profit/(Loss)          (4,210)                        -              (6,600)                        -    
Total Other Comprehensive Loss        (4,210)                       -            (6,600)                       -    
         
Attributable to:      
Equity holders of the Company          (2,455)                        -              (3,630)                        -    
Non-controlling interest          (1,755)                        -              (2,970)                        -    
         
Comprehensive Income/(loss)        68,727              (22,440)        93,402            (102,631)
         
The accompanying notes are an integral part to these interim condensed financial statements.  

 

7
 

KM Wedding Events Management, Inc.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
(in US Dollars $ unless otherwise stated)
  Number of shares Common stock Additional  Paid-in-capital Accumulated deficit Equity Attributable to equity holders of the Company Non - controlling interest Total Equity
 At March 31, 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)
 At December 31, 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" 
 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                     20,819                  20,819             72,583       93,402
 At December 31, 2014              42,071,160        42,071       1,158,237             (247,584)              952,724           18,873     971,597
* 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 condensed consolidated financial statements.      

8
 

KM Wedding Events Management, Inc.
Condensed Consolidated Statement of Cash Flow
(in US Dollars $ unless otherwise stated)
   For the nine months ended 
  31-Dec-14 31-Dec-13
  (Unaudited) (Unaudited)
Cash flows from operating activities    
Net income / (loss)                              100,002                               (102,631)
Adjustments to reconcile net income to net cash    
provided by operating activities    
Depreciation and amortization                                22,281                                  26,404
Deferred tax expense / (benefit)                                31,464  -    
Unrealized foreign exchange (gain) / loss                              (13,616)  -    
Bad debts                                47,432                                  37,342
Amortization of film costs                                37,222                                       527
Changes in operating assets and liabilities    
(Increase) / decrease in Long term Investments                            -                                   -    
(Increase) / decrease in accounts receivables                            (216,015)                                 (13,704)
(Increase) in other current assets                                26,928                               (253,906)
(Increase) /Decrease in film costs                              (34,910)                                 (27,859)
(Increase) in other non-current assets                                29,075                                 (10,259)
Increase in accounts payable                                46,991                                 (33,305)
Increase in income tax and other statutory liabilities                                94,196                                 (16,989)
Increase / (decrease) in other current liabilities                            (181,201)                                233,050
Increase / (decrease) in other non-current liabilities                                     523                                      (582)
Net cash provided by (used in) operating activities                               (9,628)                             (161,912)
Cash flows from investing activities    
Additions to property, plant and equipment                                (9,689)                                 (39,728)
Investments in long-term investments                              135,000                               (130,814)
Proceeds from disposal of property, plant and equipment  -                                   -    
Advance given for Investment                              (60,000)                                   (1,280)
Acquisition of additional stake in subsidiary                             -                                   (229,000)
Net cash provided by (used in) investing activities                              65,311                             (400,822)
Cash flows from financing activities    
Proceeds from short term debts                            (188,648)                               (170,258)
Proceeds from issue of Equity Shares                              127,500                                480,000
Proceeds from / (repayment of) long term debts                                29,058                                 (49,453)
Net cash provided by (used in) financing activities                            (32,090)                              260,289
Effect of exchange rate changes on cash                              (27,966)                                   (9,297)
Net increase in cash and cash equivalents                                (4,373)                               (311,742)
Cash and cash equivalents, beginning of period                                88,616                                374,598
Cash and cash equivalents, end of period                              84,243                                 62,856
     
Supplementary disclosures of cash flow information    
Cash paid during the year for:    
Interest paid                                45,943                                  18,808
Income taxes paid                                16,956                                    1,156
     
Non-cash items:    
Allotment of common stock  -      -    
     
The accompanying notes are an integral part to these  condensed consolidated financial statements.

9
 

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.

 

The Company is a leading service provider in the matrimonial industry and recently entered in to 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 December 31, 2014, the Company maintains a 58.32% 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 USD 509,000 to acquire 2,513,144 no of Equity shares of KM Wedding Events Management Private Limited, India. Subsequent to this investment, KM Wedding Events Management Private Limited, India has become subsidiary of this Company. The agreement for such acquisition was entered in the month of February 2013 and executed in the month of April 2013.

 

b.Form and Content of the Financial Statements

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

 

Revenue and related expenses generated from our international 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 February 23, 2015, the date these financial statements are available to be issued.

 

The closing exchange rate as of December 31, 2014 and March 31, 2014 was 63.04 and 60 Indian Rupees to one US dollar, respectively. The average exchange rates for the nine months ended December 31, 2014 was 60.7596.

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 at December 31, 2014 comprises the following:
Particulars   For the nine Months ended For the year ended
31 December, 2014
(Unaudited)
31 March, 2014
       
(a) Cash on hand                     69,279 80,046
(b) Balance with banks on current accounts                     14,964  8,570
Total                      84,243  88,616
         

 

10
 

 

4.Accounts receivable
Accounts receivable at December 31, 2014 and March 31, 2014, respectively, comprises the following:

Particulars

 

For the Nine Months Ended For the Year Ended
31 December, 2014
(Unaudited)
31 March, 2014
(a) Customers (trade)                   461,056                        278,857
Total                    461,056                       278,857

 

 

5.Other current assets
Other current assets at December 31, 2014 and March 31, 2014, respectively, comprises the following:
  Particulars
  31 December, 2014
(Unaudited)
31 March, 2014
   
(a) Event advances                   172,040                        122,423
(b) Staff advances                     33,832                          33,624
(c) Advance tax (net of provision for income tax)                     (16,343)                          10,728
(d) Loans and advances                   277,044                        329,000
(e) Interest accrued on Bank deposits                     -                          10,605
(f) Prepaid expenses                     14,329                            1,450
Total                  480,902                       507,830

 

6.Long term investments
  Long-term investments at December 31, 2014 and March 31, 2014, respectively, comprise the following:
  Particulars
  31 December, 2014
(Unaudited)
31 March, 2014
       
(a) Bank deposits 1                   -                        135,000
       
Total                  -                       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.
         

 

11
 

7.Property, plant and equipment, net
Property, plant and equipment at December 31, 2014 and March 31, 2014, respectively, comprises the following:
Particulars Gross
Carrying Value
Accumulated
Depreciation
Net
Carrying Value

31 Dec,

2014
(Unaudited)

31 March, 2014 31 Dec, 2014
(Unaudited)
31 March, 2014

31 Dec, 2014
(Unaudited)

31 March, 2014
(a) Vehicles        41,630 43,740 5,524 2,776 36,106 40,964
(b) Computers & Peripherals        72,495 75,330 67,229 69,414 5,266 5,916
(c) Furniture & Fixtures        13,398 13,675 5,998 5,238 7,400 8,437
(d) Office Equipment        57,420 57,109 30,435 25,625 26,985 31,484
(e) Leasehold improvements        78,422 82,395 39,837 35,580 38,585 46,815
(f) Plant & Machinery 5,443               -  1,272                      -  4,171           - 
Total   268,808 272,249 150,295 138,633 118,513 133,616

 

Leased property, plant and equipment, net

The following is the analysis of property, plant and equipment under capital leases as of December 31, 2014 and March 31, 2014, respectively, included within property, plant and equipment, net:

Particulars
31 December, 2014
(Unaudited)
31 March, 2014
Vehicles 41,630 43,740
Less: accumulated depreciation  (5,524)  (2,776)
Net book value of leased assets 36,106 40,964

 

Operating leases
The total amount of operating lease expenses at December 31, 2014 and March 31, 2014, respectively, are as follows:
Particulars
31 December, 2014
(Unaudited)
31 December, 2013
(Unaudited)
Lease Expenses  28,157 22,766
 

 

8.Intangible assets, net
Intangible assets at December 31, 2014 and March 31, 2014, respectively, comprises the following:
Particulars Gross
Carrying Value
Accumulated
Amortization
Net
Carrying Value
   

31 Dec, 2014
(Unaudited)

31 March, 2014

31 Dec,

2014
(Unaudited)

31 March, 2014 31 Dec, 2014
(Unaudited)
31 March, 2014
(a) Software        53,037 27,974 28,635 26,801 24,402 1,173
Total        53,037 27,974 28,635 26,801 24,402 1,173
 

 

12
 

9.Other non-current assets
Other non-current assets at December 31, 2014 and March 31, 2014, respectively, comprises of the following:              
Particulars
31 December, 2014
(Unaudited)
31 March, 2014
(a) Rental advance 28,355 29,458
(b) Deposits 6,693  6,915
(c) Software under application development stage -    27,750
Total   35,048 64,123
         

 

10.Accounts payable and accrued liabilities
Accounts payable and accrued liabilities at December 31, 2014 and March 31. 2014, respectively, comprise of the following:      
Particulars
31 December, 2014
(Unaudited)
31 March, 2014
(a) Accounts payable 73,878 42,145
(b) Salary payable 31,614 27,624
(c) Current portion of provision for gratuity 1,135 1,135
(d) General and administrative expenses payable 61,688 50,420
Total 168,315 121,324

 

11.Income tax and other statutory liabilities
Income tax and other statutory liabilities at December 31, 2014 and March 31, 2014, respectively, comprises of the following:
Particulars  
  31 December, 2014
(Unaudited)
31 March, 2014
(a) Service tax 143,509 75,903
(b) Provident fund 43,700 24,242
(c) Employees state insurance 6,447 3,771
(d) Professional tax 3,622 3,805
(e) Tax deducted at source 32,403 27,764
Total   229,681 135,485
       

 

13
 

12.Short term borrowings and long term debt
Short term loans and borrowings at December 31, 2014 and March 31, 2014, respectively comprises of the following:
Particulars
31 December, 2014
(Unaudited)
31 March, 2014
       
(a) Bank overdraft2 162,124 218,816
(b) Loan against Bank deposit - 129,210
(c) Secured loans3 - -  
(d) Current portion of long-term debt 6,252 8,998
Total   168,376 357,024
             

 

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
31 December, 2014
(Unaudited)
31 March, 2014
(a) Secured loans4 496 3,233
(b) Capital lease obligations 23,953 26,630
(c) Unsecured Loan 31,726 -
    56,175 29,863
(d) Current portion of long-term debt  (6,252)  (8,998)
Total 49,923 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 at December 31, 2014 is as follows:

 

Particulars   At December 31, 2014
(Unaudited)
2015 33,601
2016            5,937
2017 6,763
2018 5,416
2019 4,458
Total long term debt 56,175

 

13.Other current liabilities
Other current liabilities at December 31, 2014 and March 31, 2014, respectively, comprises of the following:
Particulars
31 December, 2014
(Unaudited)
31 March, 2014
           
(a) Unearned revenues (i.e. billings in excess of revenue)     155,617   258,399
(b) Advances received     77,094 -
Total       232,711 258,399
         

 

14
 

14.Other non-current liabilities
Other non-current liabilities at December 31, 2014 and March 31, 2014, respectively, comprises of the following:
Particulars
31 December, 2014
(Unaudited)
31 March, 2014
(a) Trade Deposits 5,788    6,082
(b) Provision for gratuity 13,548   12,731
Total 19,336 18,813

 

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 December 31, 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 December 31, 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 December 31, 2014. The issued, subscribed and paid-up Preference share capital is Nil as of December 31, 2014.

16.Matrimonial service income

  Particulars For the three months ended For the nine months ended
  31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
    (Unaudited) (Unaudited) (Unaudited) (Unaudited)
  (a) Profile Registration and Event Incomes 148,343 200,962 536,251 555,539
  (b) Sponsorship Income and advertisement Income 85,525 43,711 161,695 103,634
  (c) Sale of space or time slot - Television series 22,053 20,828 67,397 61,240
  (d) Franchisee License 90,000                       -    90,000                       -   
  (e) Sale of television rights 105,008 9,391 196,384 37,391
  (f) Sale of products (magazines) - 2,364 2,092 6,535
    Total 450,929 277,256 1,053,819 764,339

 

15
 

17.Matrimonial service expenses

  Particulars For the three months ended For the nine months ended
  31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
    (Unaudited) (Unaudited)
             
  (a) Event expenses 43,191 24,910 114,352 94,766
  (b) Production and telecast expenses - Television series 25,392 74,746 80,689 155,093
  (c) Publication expenses 16,149 24,044 44,848 66,109
  (d) Franchisee commission 5,091 5,647 14,551 16,920
  (e) Amortization of film cost 19,673 22 37,222 527
    Total 109,496 129,369 291,662 333,415

18.General and administrative expenses

Particulars For the three months ended For the nine months ended
31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
           
(a) Lease expenses 9,460 8,185 28,157 22,766
(b) Repairs & Maintenance 8,856 20,318 23,363 62,656
(c) Insurance  (7) 62 721 819
(d) Electricity charges 2,357 2,493 8,141 7,644
(e) Audit fees 2,221 2,491 6,789 6,885
(f) Filing Charges 3,978 6,870 27,806 6,870
(g) Bank charges 1,064 3,137 6,905 7,829
(h) Bad debts 26,544 1,592 47,432 37,342
(j) Travelling and conveyance 12,524 5,950 31,039 14,017
(k) Professional charges 21,302 4,465 47,240 57,697
(l) Printing & Stationery 1,136 3,358 3,467 7,218
(m) Telephone, Courier & Postage 7,289 7,843 19,886 20,935
(n) Security charges 1,067 717 3,259 1,983
(o) Business promotion expenses 5,752 6,232 27,502 12,694
(p) Rates and taxes 1,812                       -    1,812                       -   
(q) Marketing expenses 64,698                       -    116,698                       -   
(r) Others 2,900 3,118 10,499 8,280
  Total 172,953 76,831 410,716 275,635

 

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

Particulars For the three months ended For the nine months ended
31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
           
(a) Net income / (loss) Attributable to Equity holders 50,281 (44,638) 24,449 (84,710)
(b) Weighted average number of equity shares outstanding shares 41,721,845 41,218,524 41,721,845 41,218,524
Earnings / (loss) per share - basic and diluted 0.0012  (0.0011) 0.0006  (0.0021)

 

16
 

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 December 31, 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 205,289 151,251 - -
Settlement of advances given for business purposes 67,193 80,563 - -
Unsecured loans received - 62,758 - -
Unsecured loans given (Net of receipt) - - - 155,000
Repayment of unsecured loans 6,758 36,353 - -
Closing balances
Unsecured Loans given - - - 155,000
Advances given for business purposes (debit balance) 205,597 126,376 - -
Unsecured loans received (credit balance) 5 271,124 738,715 - -

5 Unsecured loans from related parties are repayable on demand.

 

21.Goodwill
Particulars
Goodwill6   679,948
Add: Cumulative Translation adjustment  4,493
Balance as of December 31, 2014 684,441

 

6Goodwill arises in the process of acquiring KM Matrimony Private Limited. In April 2013, the Company acquired 55.32% interest of KM WEDDING EVENTS PRIVATE LIMITED, India (formerly known as "KM Matrimony Private Limited", India). As of December 31, 2014, 58.32% of the shares of KM Wedding Events Management Private Limited are being held by the Company. This acquisition has been accounted as a business combination.

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

 

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 December 31 is as follows. The obligations are unfunded as on the dates of balance sheets.

        As at December 31
    Particulars    2014
(unaudited)
2013 (Unaudited)
  (a) Gratuity liability recognized in the balance sheet    14,683 10,922
  Weighted average assumptions used to determine net gratuity cost and benefit obligations:
        For the Nine Months Ended December 31,
   

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.
           

 

17
 

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.

 

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ITEM2.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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

Overview of Our Business

We have been involved in the wedding services industry in South India since 2004. “KM” is our brand, which is a short form for ‘KalyanaMalai’ meaning ‘Wedding Garland’ in South Indian language. Our services include Matrimonial (Matchmaking) Services (“Matrimonial Services”) and Wedding Services.

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 a wedding is 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 since 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. through our website since 2004 which was followed up by Community Meets (events focused on bringing together individuals who are seeking a life partner and who share similar backgrounds (e.g., profession, socio-economic background, religion, etc.) conducted during the fiscal year 2011 in 5 cities (New York City, South Windsor (Connecticut), Boston, Houston and San Antonio) which was attended by approximately 1,200 prospective matrimonial customers. In October 2013, we also filmed for SUN TV across 6 different US cities (New York, South Windsor Connecticut), New Brunswick, San Jose, Dallas and Houston), which was attended by over 5,400 South Indian community members. 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. (started during the fiscal 2014), providing Wedding Services for weddings to be conducted in India by Indians in the U.S. (started during fiscal 2014), launching a customized website for Matrimonial Services in the U.S. market (fiscal 2015) and providing Wedding Services for conducting weddings locally in the U.S. (fiscal 2016-17).

Results of Operations

Our financial performance for the three and nine months ended December 31, 2014 compared to the three and nine months ended December 31, 2013 are discussed and analyzed below. For the purpose of comparison, conversion of Indian Rupee to US dollar is done based on average exchange rate for the period for Income and Expenditure items and at the closing exchange rate for Balance Sheet items.

19
 

 

Comparison of Three Months Ended December 31, 2014 and Three Months Ended December 31, 2013

For the three months ended December 31, 2014, the Company generated revenue of $628,015 compared to $376,096 for the corresponding period in the previous year. The revenue grew by 67% compared to the corresponding period in the previous year.

In terms of revenue mix 72% of the revenues were generated from Matrimonial Services (74% for the corresponding three month period in the previous year) and 28% from the Wedding Services (26% for the corresponding three month period in the previous year).

During the three month period ended December 31, 2014, the Company incurred $533,687 of operating expenses compared to $391,431 for the corresponding three month period in the previous year, which included:

Matrimonial Service expenses of $109,496 compared to $129,369 for the corresponding three month period in the previous year, which represents 24% of matrimonial revenues. The decrease from 47% of the matrimonial revenues is a result of operational efficiency, focus on high margin schemes and cost management.
Wedding Service expense of $143,610 ($82,897 for the corresponding three month period in the previous year) which represents 81% of wedding services revenues compared to 84 % for the corresponding three month period in the previous year;
General and Administrative expense of $172,953 ($76,831 for the corresponding three month period in the previous year) which represents 28% of revenues compared to 20% for the corresponding three month period in the previous year. The increase in expenses is primarily owing to investment in the US markets.
Personnel expenses of $98,974 ($92,044 for the corresponding three month period in the previous year) representing 16% of revenues compared to 24% of revenues in the corresponding three month period in the previous year; and
Depreciation and Amortization expenses of $8,654 ($10,290 for the corresponding three month period in the previous year).

 

For the period from October 1, 2014 to December 31, 2014, the Company had operating income of $94,328 compared to a loss of $15,335 for the corresponding period in the previous year. In addition, for the three month ended December 31, 2014, the Company had a net income of $72,937 compared to a loss of $22,440 for the corresponding three month period in the previous year). The increase in our operating income and net profit was due to revenue growth and improved operational efficiency.

20
 

 

Comparison of Nine Months Ended December 31, 2014 and Nine Months Ended December 31, 2013

For the nine months ended December 31, 2014, the Company generated revenues of $1,443,183 compared to $983,048 for the corresponding nine month period in the previous year. The revenue grew by 68% compared to the corresponding nine month period in the previous year.

In terms of revenue mix 73% of the revenues were generated from Matrimonial Services (78% for the corresponding nine month period in the previous year) and 27% from the Wedding Services (22% for the corresponding nine month period in the previous year).

During the nine month period ended December 31, 2014, the Company incurred $1,304,610 in operating expenses compared to $1,063,684 for the corresponding nine month period in the previous year, which included:

Matrimonial Service expenses of $291,662 compared to $333,415 for the corresponding nine month period in the previous year, which represents 28% of matrimonial revenues. The decrease from 44% from the corresponding nine month period in the previous year is a result of operational efficiency and focus on high margin schemes;

 

Wedding Service expense of $315,763 ($183,480 for the corresponding nine month period in the previous year) which represents 81% of wedding services revenues compared to 84% for the corresponding nine month period in the previous year;

 

General and Administrative expense of $410,716 ($275,635 for the corresponding nine month period in the previous year) which represents 28% of revenues. This expense remained at the same level of 28% of the revenues for the corresponding nine month period in the previous year;

 

Personal expenses of $264,188 ($244,750 for the corresponding nine month period in the previous year) representing 18% of revenues compared to 25% of revenues in the corresponding nine month period in the previous year; and

 

Depreciation and Amortization expenses of $22,281 ($26,404 for the corresponding nine month period in the previous year).

For the nine month period ended December 31, 2014, the Company had operating income of $138,573 compared to a loss of $80,636 for the corresponding nine month period in the previous year. In addition, for the nine month period ended December 31, 2014, the Company had a net income of $100,002 compared to a loss of $102,631 for the corresponding nine 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 December 31, 2014, the Company had cash equivalents of $84,243 and accumulated deficit of $247,584. At December 31, 2014, the Company had a positive working capital (including current portion of long-term debt) of $161,591 compared to negative working capital of $217,969 at March 31, 2014, resulting from:

Accounts Receivable of $461,056 at December 31, 2014 compared to $278,857 at March 31, 2014, which represents a 65% increase;
Account Payable and accrued liabilities relating to accrued interest expense, unpaid professional fees, and unpaid general expenditures of $168,315 at December 31, 2014 compared to $121,324 at March 31, 2014, representing 39% increase;

Income tax and other statutory liabilities of $229,681 at December 31, 2014 compared to $135,485 at March 31, 2014, representing 70% increase;

 

Short-term loans and current portion in long-term debt of $168,315 at December 31, 2014 compared to $357,024 at March 31, 2014, representing a decrease of 53%;

 

Unsecured loans of $65,527 at December 31, 2014 compared to $221,040 at March 31, 2014, representing a 70% reduction;

 

Other current liabilities of $232,711 at December 31, 2014 compared to $258,399 at March 31, 2014, representing a 10% reduction; and

 

Non-current liabilities of $69,652 at December 31, 2014 compared to $71,953 at March 31, 2014, representing a reduction of 3%.

 

21
 

Cash flows from Operating Activities

During the nine month period ended December 31, 2014, net cash used in operating activities was $9,628 compared to $161,912 during the corresponding period in the previous year. Improved accounts receivable has resulted in decrease in cash used in operating activities.

Cash flows from Investing Activities

During the nine month period ended December 31, 2014, net cash provided by investing activities was $65,311 compared to $400,822 cash used for the corresponding period in the previous year. The reduction was owing to the investment in Indian Subsidiary by the Company during the previous period under comparison.

Cash flows from Financing Activities

During the nine month period ended December 31, 2014, the Company net cash used in financing activities was $32,090 compared to $260,289 provided by financing activities for the corresponding period in the previous year. The decrease in cash used is a result of short term debts being repaid by the Company.

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.

Brief Disclosure of Long Term Contractual Obligations

At December 31, 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 December 31, 2014 is $56,175 repayable in a period of five years or under:

Less Than One Year $33,601
One to Three Years $18,116
More than Three Years $4,458

 

22
 

Recent Accounting Pronouncements

As of December 31, 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 December 31, 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.

PART II -                  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A.                    RISK FACTORS

Not applicable.

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

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.

23
 

 

ITEM 3.                        DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.                        MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.                        OTHER INFORMATION

None

ITEM 6.                        EXHIBITS

The following exhibits are filed as part of this Report

Exhibit No.

Description

 

31.1 Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2 Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 

101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase*
101.DEF   XBRL Taxonomy Extension Definition Linkbase*
101.LAB   XBRL Taxonomy Extension Label Linkbase*
101.FRE   XBRL Taxonomy Extension Presentation Linkbase*

__________________________________

  * Filed herewith.

 

24
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

   KM WEDDING EVENTS MANAGEMENT, INC.
 

 

 

  Date: February 23, 2015 By:/s/ Meera Nagarajan
  Meera Nagarajan, Chief Executive Officer