Item 1. Business
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 9000 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 are a holding company organized in Delaware in 2010. Our
president and director, Deepak Sharma formed our operating subsidiary, Sunalpha Green Technologies Private Limited (“Sunalpha”),
under the laws of the Republic of India in 2010. Sunalpha commenced operations as an Online Travel Agency (“OTA”) in
India in February 2014.
We engineered our internet-based platform, Travelcord using
multiple systems platforms with an emphasis on scalability, performance and reliability. We integrated other software platforms,
applications and database systems into Travelcord. We designed these internal platforms to include open application protocol interfaces
that can provide connectivity to our travel services suppliers. Our travel services suppliers include aggregators and individual
providers, such as individual hotels. Our applications use secure communications and transactions, as appropriate.
Our Market
India’s rapidly growing
economy and rising middle class are driving growth in India’s travel and tourism industry. According to the World Bank India
will continue to be the fastest growing major economy in the world, according to world bank India’s gross domestic product
(“GDP”) is expected to grow at 7.3 % in fiscal year 2018-2019 and accelerate to 7.5% in fiscal year 2019 and 2020.
The World Bank has forecast, attributing it to an upswing in consumption and investment where “India’s long-term growth
has become more steady, stable, diversified, and resilient,” according to the World Bank. A November 2016 World Economic
Forum report stated that the Indian middle class doubled in size over an eight -year period from 300 million in 2004 to 600 million
in 2012 and half of the 1.2 billion population is now middle class. The report further states that by 2027, India’s population
will overtake China’s and India’s middle class will overtake the middle classes of the United States, Europe, and
China. According to an April 2018 report by the International Monetary Fund, nominal per capita income of the Indian population
continues to increase. All of these factors tend to increase discretionary spending in areas such as travel and leisure. According
to Word Travel & Tourisms Council Economic Impact 2018, the travel and tourism sector in India has been increasingly contributing
to overall GDP, accounting for 9.4% in 2017 and forecasting to rise by 7.5% to approximately 10.1% in 2018. Domestic tourists
accounted for over 88% of the travel and tourism spending in 2017.
Although internet penetration and use of debit and credit cards
is rapidly increasing, India continues to have a significant unbanked population, particularly outside of urban areas. According
to an October 2015 report prepared by PricewaterhouseCoopers, 233 million households in India did not have access to banking services
at that time, down from 557 million in 2011. According to Global Findex database it is estimated that in June 2018 there were still
191 million individuals in India who do not have bank accounts. According to India’s 2011 Census, 69% of India’s population
lives in rural areas, while 5% live in semi-urban areas. In addition, lower internet penetration and literacy rates in more rural
areas mean that OTAs are unable to reach a significant portion of the population directly. Due to a combination of these factors,
semi-urban and rural travelers are more likely to require an intermediary to book travel related services and products.
Our Strategy
We manage our OTA business
through Travelcord, our proprietary internet-based online transaction platform. Through our website, www.tripborn.com, we offer
a wide inventory of travel services and products to travel agents who serve the growing middle class of largely offline travelers
in semi-urban and rural regions of India. Through our proprietary technology, we consolidate and provide our travel agents with
access to travel bookings and hotel reservations that otherwise would be costly and time-consuming to obtain for their customers
in an often -fragmented marketplace. While some of our more established competitors have focused on selling directly to consumers
in urban areas, our travel agent partners tend to be small, brick and mortar establishments that serve travelers who rely on more
personalized transactions for their travel booking needs due to language barriers and lack of access to the internet or credit
cards. We have grown our operations through referrals and a focus on addressing our customers’ needs through sophisticated
technology. 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 able to use our established platform to offer travel services and
products directly to consumers. During our fiscal year ended March 31, 2018 (“fiscal year 2018”), we launched a new
money transfer product on our established platform. This product allows users to electronically transfer money and is a value-added
service to our existing customers. We plan to grow our processing volume by increasing the number of services offered on our network,
increasing the number of travel agents on our platform, and increasing the value-added services offered through our network, including
financial products.
We are working with a number of banks to become their banking
correspondents and payment processors to increase our travel agent service offerings, and we plan to continue to expand our number
of partners in order to provide more value to our travel agent base. Our travel agent growth is directly attributable to our organic
sales efforts through our sales team; at the same time, we also grow the number of travel agents on our platform by signing up
existing organizations or cooperatives to our service. Our rapid growth in gross revenue is the result of two key factors: increasing
the number of deposits collected from our travel agents on a daily basis, and by our travel agents offering a diverse and profitable
mix of ticketing services.
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 8,000 transactions per day in March
2019. In our fiscal year ended March 31, 2019 we processed 1,553,759 transactions and 19.4 million searches have been performed
on our platform compared to 1.0 million plus transactions and 16.9 million searches in March 31, 2018. During fiscal 2019, we have
experienced increased traffic on our website due to our efforts in marketing and branding. Our agent customers log in nearly 3,142
times per day, up from 2,701 at 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.
Change in Control Transaction
and Reverse Recapitalization
The audited consolidated financial
statements include the financial statements of the Company and Sunalpha, our wholly owned operating subsidiary. All significant
related party accounts and transactions between the Company and Sunalpha have been eliminated upon consolidation.
The Company was formed by two transactions,
the first being a change in control transaction on December 8, 2015, whereby Arna Global LLC (“Arna”), which is wholly
owned by our president and director, Deepak Sharma, received 71,428,570 shares of our common stock, or 93% of the then-outstanding
shares, for cash consideration of $95,500 pursuant to the Stock Purchase Agreement among us, Arna, and Maxim Kelyfos, LLC dated
December 8, 2015. In the second transaction, which was completed on December 14, 2015, we acquired substantially all of the outstanding
shares of Sunalpha, which was incorporated under the laws of the Republic of India on November 2010. Sunalpha is the acquirer for
financial reporting purposes, and TripBorn (formerly known as PinstripesNYC, Inc.) is the acquired company.
Increase in Authorized Shares
The Company amended its certificate
of incorporation on January 13, 2016 to (a) increase the total number of authorized shares of capital stock of the Corporation
to Two Hundred Ten Million (210,000,000) with Two Hundred Million (200,000,000) shares designated as common stock at $.0001 par
value and Ten Million (10,000,000) shares designated s preferred stock at $.0001 par value. and (b) change its name from
PinstripesNYC. Inc. to Tripborn, Inc.
Our Services and Products
Our internet-based platform at www.tripborn.com provides participating
business or travel agents, travel managers, arrangers and corporations with the ability to quickly search and book the services
described below for their largely offline customers. Many of our arrangements with our service suppliers are informal and provide
our counterparties with the ability to terminate or suspend the arrangements with little or no notice. Our arrangements with our
service suppliers with respect to the terms of our sales targets, incentives, commissions and discounts often are subject to change
at the discretion of our supplier and are negotiated periodically on a quarterly or yearly basis, if not more frequently. Our systems
are connected to booking or reservation systems of our service suppliers. Our suppliers can charge fees, surcharge or commission
for accessing there on an initial and/or ongoing basis. These arrangements are documented using contracts or service agreements.
Air ticketing
Our travel agent customers can book domestic or international
flights through our website. We have agreements with India’s three domestic low-cost carriers. In addition, through our website,
we offer our travel agents access to international air tickets to destinations worldwide as an approved agent of the International
Association of Travel Agents, or “IATA,” and through our aggregators, which have agreed to provide us with access to
their airline ticket inventory.
Our platform at www.tripborn.com allows our customers to search
for available tickets based on their customers’ requirements. Our platform quickly processes the available inventory of our
aggregators and suppliers and displays the results, including availability, schedules and prices. The prices displayed include
the commission that our customers will earn on the ticket sales.
We typically procure tickets from our suppliers and sell them
to our travel agent customers. We earn revenue by charging a markup or adding fees to the ticket price and by charging booking
fees, service charges and/or payment gateway charges for using our website. We also receive revenue from our suppliers by earning
incentives and/or commissions based on the volume of tickets we purchase from our suppliers. We may pre-purchase blocks of air
tickets from our suppliers and hold them to resell within specified time periods. If we are not able to sell these pre-purchased
tickets, we recognize a loss. We also may pay in advance for air tickets to receive a discount on purchases from our suppliers.
These advance payments are credited toward future air ticket sales.
Hotel reservations
We offer access to reservations with 400,000 hotels across the
world, including hotels in India through aggregators that we have directly connected into our booking system. Our platform allows
our travel agent customers to meet their customers’ needs by searching for hotel availability by location and sorting search
results by star ratings and price. Our search results include photos and descriptions of the hotels’ amenities. We arrange
for hotel bookings for our travel agent customers by securing the booking at base rates and earn revenue by including a markup
or fees on the rates billed to our travel agent customers and by charging booking fees, service charges and/or payment gateway
charges for using our website. We also may earn incentives and/or commissions from our suppliers for completing bookings. In some
cases, our employees may arrange for hotel bookings directly with individual hotels. In addition, we may pre-purchase blocks of
reservations from our suppliers and hold them to resell within specified time periods. If we are not able to sell these reservations,
we recognize a loss.
Bus ticketing
Our travel agent customers can book bus tickets in India on
our website through an aggregator that is directly connected into our booking system. Our platform consolidates ticketing for largely
unorganized regional bus services for the benefit of our travel agent customers and their customers. As a value -added service,
our platform allows our travel agent customers to select specific seats by gender, which is of interest to their Indian customers.
We may also procure bus tickets offline from individual bus operators for our travel agent customers. We procure bus tickets for
our travel agent customers at base rates and earn revenue by including a markup or fees on the tickets. We also earn incentives
and commissions from our supplier for completing bookings.
Rail ticketing
We are a B2B Agent of the Indian Railway Catering and Tourism
Corporation, or IRCTC, which is a government entity that allows us to offer reservations through Indian Railways’ passenger
reservation system on our webpage. Indian Railways is India’s state-owned railway, which owns and operates most of India’s
rail transportation. We have integrated our system with IRCTC’s to provide a seamless booking process for our travel agent
customers. According to the 2016-2017 annual report of the Ministry of Railways, Indian Railways sold 209 million tickets in 2016-2017
and carries approximately 23 million passengers daily. Rail travel is the primary mode of transportation for Indians, particularly
in rural areas.
As a Principal Agent, we enroll our travel agent customers to
book rail tickets for their customers through our platform. We earn revenue by collecting enrollment fees from our travel agent
customers, by collecting service charges on each seat booked and by collecting payment gateway charges on the amount of the transaction.
The IRCTC determines ticket prices and the maximum amount of the service charge (currently, between approximately $0.30 and $0.60
per ticket). We also may charge our travel agent customers a fee based on the percentage of the transaction value for payment gateway
charges (currently, up to two percent).
Sunalpha entered into an agreement with IRCTC for a one-year
term that expired in October 2018. On September 30, 2018, Sunalpha renewed its agreement with the IRCTC. The agreement will expire
on October 5, 2019 and may be renewed for an additional annual term in the discretion of the IRCTC. The IRCTC may terminate or
temporarily suspend the agreement without prior notice.
Vacation packages
Our travel agent customers can search our platform for available
vacation packages or submit inquiries regarding their customers’ preferences to be fulfilled by us and/or our third-party
suppliers. Our call center also is available to our travel agent customers to facilitate these requests. We arrange for vacation
package bookings for our travel agent customers by securing the booking at base rates and earn revenue by including a markup or
fees on the rates billed to our travel agent customers and by charging booking fees, service charges and/or payment gateway charges
for using our website. We also may earn incentives and/or commissions from our suppliers for completing bookings. In addition,
we may create packages based on our travel agent customers’ specifications by purchasing the components of the package from
our suppliers as necessary.
Pre- and post-paid services and utilities
As a value-added service, our travel agent
customers may use our internet platform to pay make pre- and post-paid mobile payments and payments for television service and
data cards on behalf of their customers. We pay our suppliers for the services and earn a commission as a percentage of the price
of the services. We also pass a service charge on to our travel agent customers.
Money transfer service
As a value-added service, our business agent customers may use
our internet platform which is connected to intermediary bank settlement system to make cash transfers on behalf of their customers.
We pay our suppliers for the services and earn a commission as a percentage of the price of the services. We also collect a service
charge or fees on to our business agent customers for performing the money transfer services for their customers. We originate
domestic remittance transactions using intermediary banking system, and bank sends money to end customer bank account.
Distribution
Our travel agent customers search and book travel services and
products for their clients through our internet-based Travelcord platform at www.tripborn.com. Our sales and marketing team enrolls
the new travel agent customers and distributors. We train these travel agent customers to use our systems and processes. The travel
agent customers can enroll with us to access some or all of the booking services available on our platform. For example, some travel
agent customers may choose only to access rail ticketing, while others may choose to access our entire offering of services. We
do not have formal arrangements with our travel agent customers, but we evaluate each travel agent customer prior to enrolling
them into our system to assess their credit-worthiness and negotiate payment terms. We require our travel agent customers to provide
payment for services booked through us from within one to ten days. We also charge our travel agent customers a one-time non-refundable
enrollment fee of $75 - $100.
We engineered our internet-based platform using multiple systems
platforms with an emphasis on scalability, performance and reliability to ensure our platform is always available for our customers.
We primarily host our systems infrastructure and web and database servers of our operations through IBM, which provides network
connectivity, networking infrastructure, uninterruptable power supply and 24-hour monitoring and engineering support typical of
hosted data centers. All data center facilities have a continuous power supply system, generators, redundant servers and multiple
back-up systems. Although we take steps to mitigate the effects of any loss or reduction in service at one of our hosting facilities,
if a hosting facility were inaccessible or otherwise experienced a disruption in service for any reason, we could experience a
disruption to our services, loss of transactions and revenue and consumer complaints.
We also maintain a call center to provide customer support and
troubleshooting solutions.
Sales and Marketing
We facilitate the sale of third parties’ travel services
and products through our internet website to travel agents, who book hotels and tickets for their largely offline customers. In
the past three years, we have built a network of over 9000 plus service agents by reputation and word of mouth. Our agent customers
are primarily based in and around the city of Ahmedabad in Gujarat, but also operate in the other states across India. We are expanding
our sales team and hiring employees to expand our marketing and sales efforts.
Competition
The market for travel services and products in India is highly
competitive. We currently compete with both established and other emerging providers of travel services and products, including
other online travel agencies, as well as traditional travel agencies, tour operators, travel suppliers and operators of travel
industry reservation databases. Large, established internet search engines have also launched applications offering travel itineraries
in destinations around the world, and meta-search companies who can aggregate travel search results also compete with us for customers.
Established OTAs such as makemytrip.com, cleartrip.com, expedia.co.in,
travelocity.co.in, yatra.com, goibibo.com, booking.com and agoda.com have achieved strong brand recognition and reliability in
India. Since the travel industry is a high-volume, low-margin business, it can be difficult for emerging participants, such as
us, to capture a meaningful share of the market from OTAs with established brands and resources. We intend to build our brand in
the underserved rural and semi-rural markets through our superior service-oriented travel portal. We believe that being a later
market entrant allows us to develop a superior platform with upto-date technologies.
Certain of our travel service suppliers have also been steadily
focusing on increasing online demand on their own websites and decreasing or eliminating their dependence on third-party distributors
like us. For instance, many low-cost airlines may, subject to applicable regulations, reduce or eliminate commissions to agents
such as us or restrict the amount of service fees we are able to charge customers. Suppliers who sell on their own websites typically
do not charge a processing fee, and, in some instances, offer advantages such as their own bonus miles or loyalty points, which
could make their offerings more attractive to customers than offerings like ours. See “Risk Factors — Risks Related
to Our Industry — The travel industry in India is highly competitive, and we may not be able to compete effectively.”
Intellectual Property
Our affiliate Arna Global LLC (“Arna”), which is
wholly-owned by our president and director, Deepak Sharma, acquired the rights to the Travelcord software from Takniki Communications,
which is wholly-owned by our vice president and director, Sachin Mandloi, pursuant to a Software Development Agreement dated January
26, 2015 (the “Software Development Agreement”). Under this Software Development Agreement, Takniki Communications
agreed to develop Travelcord and provide support for a maximum fee of $906,000. In turn, Arna licensed Travelcord to Sunalpha under
a Software Licensing Agreement dated April 1, 2015 (the “Software Licensing Agreement”). Pursuant to a Software Agreement
with Arna dated December 16, 2015 (the “Software Agreement”), we acquired Arna’s ownership and development rights
to the Travelcord software. Under the Software Agreement, Arna also transferred its right to license the software to Sunalpha under
the Software Licensing Agreement. As a result of these transactions, we agreed to pay Arna $956,000 for Travelcord, which we provided
in the form of a convertible promissory note. By virtue of a letter agreement, we license Travelcord to our operating subsidiary,
Sunalpha. Sunalpha has agreed to pay us a one-time implementation and customization user fee of $956,000 and a fee of $215,000
for each five-year term under the Software Licensing Agreement. Pursuant to a Software Development Agreement between us and Takniki
Communications dated September 23, 2016, the Travelcord software was upgraded, with additional features and capabilities added.
We rely on confidentiality and
non-compete agreements and provisions to protect our intellectual property rights. Our trademark registration in India for our
name, TripBorn was approved on May 30, 2019.
Employees
We currently have 44 employees based in our Ahmedabad, Gujarat
and Bangalore, Karnataka, India offices, all of which are full time employees. None of our employees are represented by a labor
union. We have not experienced any work stoppages and believe that we have satisfactory employee relations.
Government Regulation
In the United States and India, we are subject to or affected
by international, federal, state and local laws, regulations and policies, including anti-bribery rules, trade sanctions, data
privacy requirements, labor laws and anti-competition regulations, which are constantly subject to change. The descriptions of
the laws, regulations and policies that follow are summaries and should be read in conjunction with the texts of the laws and regulations.
The descriptions do not purport to describe all present and proposed laws, regulations and policies that affect our businesses.
We believe that we are in compliance with these laws, regulations
and policies. Although we cannot predict the effect of changes to the existing laws, regulations and policies or of the proposed
laws, regulations and policies that are described below, we are not aware of proposed changes or proposed new laws, regulations
and policies that will have a material adverse effect on our business.
Under the Indian Information Technology Act, 2000, as amended,
we are subject to civil liability to compensate for wrongful loss or gain to any person arising from negligence in implementing
and maintaining reasonable security practices and procedures with respect to sensitive personal data or information that we possess,
deal with or handle in our computer systems, networks, databases and software. India has also implemented privacy laws, including
the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011,
which impose limitations and restrictions on the collection, use and disclosure of personal information.
The consolidated foreign direct investment policy, or the “FDI
Policy,” issued by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of
India and the Foreign Exchange Management Act, 1999, as amended, and the regulations framed thereunder, regulates foreign investment
in India. In addition, the regulations have certain requirements with respect to downstream investments by Indian companies that
are owned or controlled by foreign entities, as well as investments and acquisition by foreign entities in certain sectors with
caps on foreign investments. These requirements currently include restrictions on issuances, pricing and valuation of shares of
Indian companies and sources of funding for such investments, which may, in certain cases, require prior notice to or approval
of the Government of India.
The Companies Act, 2013 and the rules thereunder, or the “new
Companies Act,” contains significant changes to Indian company law, including in relation to the issue of capital by companies,
related party transactions, corporate governance, audit matters, shareholder class actions, restrictions on the number of layers
of subsidiaries, corporate social responsibility spending and a penal provision with respect to non-compliance with the provisions
of the new Companies Act. While several provisions of the new Companies Act are currently effective, the existing Companies Act,
1956 remains in effect with respect to other provisions.
We operate in jurisdictions in which local business practices
may be inconsistent with international regulatory requirements, including anti-corruption and anti-bribery regulations prescribed
under the U.S. Foreign Corrupt Practices Act (“FCPA”), which, among other things, prohibits giving or offering to give
anything of value with the intent to influence the awarding of Government contracts. Also, India’s Prevention of Corruption
(Amendment) Bill 2013 (“PCA”) prohibits giving bribe to a public servant. To help ensure compliance with these laws
and regulations, we have adopted specific risk management and compliance practices and policies, including a specific policy addressing
the FCPA.
Item 1A. Risk Factors
The following are factors that could have a significant impact
on our operations and financial results and could cause actual results or outcomes to differ materially from those discussed in
any forward-looking statement.
The travel industry in India is highly competitive and fragmented,
and we may not be able to compete effectively as Sales and Marketing efforts requires deep understanding of local demographics
and local demand. We intend to build our brand in the underserved rural and semi-rural markets through our superior service-oriented
travel portal, which requires technology adoption and internet infrastructure to access our services in those areas.
Certain of our travel service suppliers have also been steadily
focusing on increasing online demand on their own websites and decreasing or eliminating their dependence on third-party distributors
like us. For instance, many low-cost airlines may, subject to applicable regulations, reduce or eliminate commissions to agents
such as us or restrict the amount of service fees we are able to charge customers. For instance, local suppliers who sell on their
own websites typically do not charge a processing fee, and, in some instances, offer advantages such as their own bonus miles or
loyalty points, which could make their offerings more attractive to customers than offerings like ours.
Risks Related to Our Business
We are a development stage
company with a limited operating history, which may make it difficult to evaluate our current business and predict our future performance.
We have a limited operating history upon which you can evaluate
our future performance. Our operating subsidiary was incorporated under the laws of India in 2010, and it began to focus its operations
on the online travel industry in February 2014. Our senior management has limited experience in the online travel industry, and
we still are in the process of fully developing our online platform and product offerings. We have generated revenues over a limited
operating history and have incurred net losses since our inception. As a result of our short operating history, we have only limited
financial data and business information with which to evaluate our business strategies, performance and investment in our common
stock.
We have incurred net losses
since our inception and anticipate that we will continue to incur net losses for the foreseeable future.
We expect to incur operating losses in future periods as we
incur significant expenses associated with the initial startup of our business. Our expenses will continue to increase as we continue
to develop the operations necessary to further our business plan. We cannot now determine the amount by which our expenses will
increase as we grow and hire additional employees, implement our sales, marketing and distribution plans, pursue contractual arrangements
and partnerships and develop our internet-based infrastructure. Further, we cannot guarantee that we will be successful in achieving
or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business
and a complete loss of our stockholder’s investment.
We will require additional
financing to support our operations, which financing may not be available on favorable terms or at all; any new equity financing
could have a dilutive effect on our existing stockholders.
We will require additional financing to sustain our business,
which may not be available on favorable terms, if at all. We estimate that we will require approximately $5,000,000 and $8,000,000
in the next 12 and 24 months respectively, to continue and grow our business. We may seek additional funding through a combination
of equity offerings, debt financings or other third-party funding and other collaborations, strategic alliances and licensing arrangements
to fully implement our business plan. For instance, in fiscal years 2016 and 2017, we issued convertible notes, which may convert
into shares of our common stock in the future. We have also sold shares of our common stock to certain investors pursuant to subscription
agreements in a private placement. If we raise additional funds through the issuance of equity or convertible debt securities,
our stockholders may experience significant dilution. In addition, these new securities may contain certain rights, preferences
or privileges that are senior to those of the shares of our common stock, which may decrease the value of an investment in our
common stock. If we cannot obtain additional financing, we will not be able to achieve the necessary sales growth to cover our
costs, and our results of operations would be negatively affected.
We are a holding company
and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiary to meet our obligations.
We are a holding company that does not conduct any business
operations of our own. As a result, we are largely dependent upon cash dividends and distributions and other transfers from our
Indian operating subsidiary to meet our obligations. The deterioration of income from, or other available assets of, our Indian
operating subsidiary for any reason could limit or impair its ability to pay dividends or other distributions to us, which in turn
could adversely affect our financial condition and results of operations.
Our lack of insurance
leaves us exposed to significant liabilities.
We do not carry insurance for the risks that our business may
encounter. Any significant liability may require us to pay substantial amounts, which would adversely affect our financial condition
and results of operations, if we are able to continue in business at all.
The requirements of being
a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes
Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements
in a timely or cost effective manner.
As a newly public company we now are required to comply with
new laws, regulations, requirements and certain corporate governance provisions under the Exchange Act and the Sarbanes-Oxley Act.
Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors
and management and will significantly increase our costs and expenses and will make some activities more time-consuming and costly.
In connection with becoming a reporting company, we need to:
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institute a more
comprehensive compliance function;
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prepare and distribute
periodic and current reports under the federal securities laws;
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establish new internal
policies; and
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involve and retain
to a greater degree outside counsel and accountants.
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Our ongoing compliance efforts will increase general and administrative
expenses and may divert management’s time and attention from the development of our business, which may adversely affect
our financial condition and results of operations. We estimate that we may incur approximately $200,000 in costs during the fiscal
year ending March 31, 2019 and $250,000 in the fiscal year ending March 31, 2020 in connection with operating as a public company.
Our lack of experienced
accounting staff may impact our ability to report our future financial results on a timely and accurate basis, and we need to retain
the services of additional accountants and consultants with required accounting experience and expertise.
With the exception of our CEO and Chief Financial Officer, our
accounting and finance staff lacks depth and skill in the application of generally accepted accounting principles with respect
to external financial reporting for Exchange Act reporting companies. We also do not have an audit committee or a member of our
board of directors who would satisfy the definition of an audit committee financial expert. We intend to engage the services of
additional accounting personnel to assist with our financial accounting and reporting requirements to develop our internal control
over financial reporting and to produce timely financial reports. Until we do so, we may experience difficulty producing reliable
and timely financial statements, which could cause investors to lose confidence in our reported financial information and the market
price of our stock to decline significantly. We also may be unable to obtain additional financing on acceptable terms, and our
business and financial condition could be harmed.
If we fail in implementing
appropriate internal financial control over financial reporting, the price of our common stock may be adversely affected.
We are required to establish and maintain appropriate internal
control over financial reporting. Failure to establish those controls, or any failure of those controls once established, could
adversely impact our public disclosure regarding our business, financial condition or results of operations. In addition, our future
assessments of internal control over financial reporting may identify additional weaknesses and conditions that need to be addressed
in our internal control over financial reporting or other matters that may raise concerns for investors. Any material weakness
that needs to be addressed in management’s assessment of our internal control over financial reporting or in the report on
the effectiveness of our internal controls by our independent registered public accounting firm, when may have an adverse impact
on our common stock.
We may not be successful
in implementing our growth strategies.
Our growth strategies involve expanding our network of travel
agents, expanding our service and product offerings, expanding supplier relationships, enhancing our service platforms by investing
in technology and expanding into new geographic markets within India. The following factors may affect our success in implementing
our growth strategies:
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our ability to increase
the number of suppliers, especially suppliers that are directly-connected to us, which depends on the willingness of such suppliers
to invest in new technology;
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our ability to continue
to expand our distribution channels, and market and cross-sell our travel services and products to facilitate the expansion of
our business;
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our ability to build
or acquire the required technology;
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the general condition
of the global and Indian economy and continued growth in demand for travel services, particularly online;
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our ability to compete
effectively with existing and new entrants to the Indian travel industry, including both online travel companies as well as traditional
travel agents and tour providers; and
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the growth of the
internet as a medium for commerce in India.
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Many of these factors are beyond our control and there can be
no assurance that we will succeed in implementing our strategy.
We depend on certain related
persons transactions and may continue to rely on related persons for key development and support activities.
As described more fully in “Certain Relationships and
Related Person Transactions,” we have entered into, and may continue to enter into, transactions with related persons. We
rely on associates and enterprises that our president and vice president control for key development and support activities. While
we believe that our related persons’ interests align with our own, we may not have entered into such transactions on an arm’s-length
basis. While we presently benefit from free services or deferred payments, in the long-term, we may have achieved more favorable
terms had we entered into such transactions with unrelated parties. In addition, if these related persons withdrew their support
from our business, the associated loss of preferential business arrangements could significantly increase our operating costs and
adversely affect our results of operations to the point that we might be forced to cease operations.
We will not be able to
develop or continue our business if we fail to attract and retain key personnel.
Our future success depends on our ability to attract, hire,
train and retain a skilled senior management team and other key personnel. The loss of the services of our executive officers or
other key employees could adversely affect our business. We face competition in securing qualified personnel possessing the skills
necessary to implement our strategy, and we may fail to attract or retain the employees necessary to execute our business model
successfully.
Our success depends to a significant degree upon the continued
contributions of our key management and other personnel. In particular, we believe that our future success is highly dependent
on the technical expertise, financial support and key contracts and arrangements of our executive officers and directors, Deepak
Sharma and Sachin Mandloi. Messrs. Sharma and Mandloi may voluntarily terminate their services at any time. We have not entered
into employment agreements with them and do not expect to enter into such agreements. If Messrs. Sharma, Mandloi or any other key
members of our management team leave the company, our business could suffer and the value of our common stock would likely decline,
if we are able to continue in business at all.
U.S. Federal Income Tax
Reforms could adversely affect us.
On December 22, 2017, the U.S.
government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the “TCJ Act”). The TCJ
Act makes broad and complex changes to the U.S. corporate income tax system and includes a Transition Toll Tax (the “Toll
Charge”), 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 TCJ
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. As our foreign owned subsidiary has no history of operating income
our preliminary estimate is that we will not be subject to the Toll Charge. Management is still finalizing their analysis related
to certain matters, such as developing interpretations of the provisions of the TCJ Act, changes to certain estimates and evaluating
amounts related to the earnings and profits of our foreign subsidiary, and the filing of our tax returns. U.S. Treasury regulations,
administrative interpretations or court decisions interpreting the TCJ Act may require changes in our estimates, which could have
a material adverse effect on our business, results of operations or financial conditions. We do not have any material impact on
our financial results for the fiscal year ended March 31,2019.
Third parties claiming
that we infringe on their proprietary rights could cause us to incur significant legal expenses and prevent us from operating our
business.
From time to time, we may receive claims that we have infringed
the intellectual property rights of others, including claims regarding copyrights and trademarks. Former employers of our former,
current, or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary
information of these former employers. Any such claim, with or without merit, could result in costly litigation and distract management
from day-to-day operations. If we are not successful in defending such claims, we could be required to suspend certain services,
redesign our platform, pay monetary damages or enter into royalty or licensing arrangements. We cannot assure you that any royalty
or licensing arrangements that we may seek in such circumstances will be available to us on commercially reasonable terms or at
all. We may incur significant expenditures to investigate, defend and settle claims related to the use of technology and intellectual
property rights.
We cannot be sure that
our intellectual property is protected from copying or use by others, including current or potential competitors.
Our websites rely on content, brands and technology, much of
which is proprietary. We protect our proprietary content, brands and technology by relying on a combination of trademarks, copyrights,
trade secrets, patents and confidentiality agreements. Any misappropriation or violation of our rights could have a material adverse
effect on our business. Even with these precautions, it may be possible for another party to copy or otherwise obtain and use our
proprietary technology, content or brands without authorization or to develop similar technology, content or brands independently.
Effective intellectual property protection is expensive to develop
and maintain, both in terms of initial and ongoing registration requirements and expenses and the costs of defending our rights.
In addition, effective intellectual property protection may not be available in every jurisdiction in which our services are made
available and policing unauthorized use of our intellectual property is difficult and expensive. Therefore, in certain jurisdictions,
we may be unable to protect our intellectual property adequately against unauthorized third-party copying or use, which could adversely
affect our business or ability to compete. We cannot be sure that the steps we have taken will prevent misappropriation or infringement
of our intellectual property. Furthermore, we may need to go to court or other tribunals or administrative bodies in order to enforce
our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights
of others. These proceedings might result in substantial costs and diversion of resources and management attention. Our failure
to protect our intellectual property in a cost-effective or effective manner could have a material adverse effect on our business
and ability to protect our technology, content and brands.
A failure of one or more key
information technology systems, networks, processes, associated sites or service providers could have a material adverse impact
on the Company’s business or reputation.
The Company relies extensively on information
technology (IT) systems, networks and services, including Internet sites, data hosting and processing facilities and tools and
other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third
parties or their vendors, to assist in conducting business. The various uses of these IT systems, networks and services include,
but are not limited to:
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booking and managing our services from suppliers;
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collecting and storing customer, consumer, employee, investor and
other stakeholder information and personal data;
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processing transactions;
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summarizing and reporting results of operations;
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marketing and selling products and services to consumers;
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hosting, processing and sharing confidential and proprietary research,
business plans and financial information;
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complying with regulatory, legal or tax requirements;
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providing data security; and
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handling other processes necessary to manage the Company’s business.
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Increased IT security threats
and more sophisticated computer crime, including advanced persistent threats, pose a potential risk to the security of the Company’s
IT systems, networks and services, as well as the confidentiality, availability and integrity of the Company’s data. The
Company’s operations, especially its retail operations, involve the storage and transmission of employees’, customers’
and consumers’ proprietary information, such as credit card and bank account numbers. The Company’s payment services
may be susceptible to credit card and other payment fraud schemes, including unauthorized use of credit cards, debit cards or bank
account information, identity theft or merchant fraud. If the IT systems, networks or service providers relied upon fail to function
properly, or if the Company suffers a loss or disclosure of customers’ and consumers’ data, business or stakeholder
information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and business
continuity plans do not effectively address these failures on a timely basis, the Company may suffer interruptions in its ability
to manage operations, a risk of government enforcement action, litigation and possible liability, and reputational, competitive
and/or business harm, which may adversely impact the Company’s results of operations and/or financial condition.
As techniques used to obtain unauthorized
access or to sabotage systems change frequently and generally are not recognized until launched against a target, the Company may
be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of the Company’s
security occurs, the public perception of the effectiveness of the Company’s security measures could be harmed and the Company
could lose customers and consumers, which could adversely affect its business.
We need to expand our
sales, marketing and support organizations and our distribution arrangements to increase market acceptance of our products and
services.
We currently have a limited number of sales, marketing, customer
service and support personnel and will need to increase our staff to generate a greater volume of sales and to support any new
customers or the expanding needs of existing customers. The employment market for sales, marketing, customer service and support
personnel in our industry is very competitive, and we may not be able to hire the kind and number of sales, marketing, customer
service and support personnel we are targeting. Our inability to hire qualified sales, marketing, customer service and support
personnel may harm our business, operating results and financial condition.
Litigation and legal proceedings and the impact
of any finding of liability or damages could adversely impact the Company and its financial condition and operating results.
The Company may from time to time become subject
to litigation and other legal proceedings. Litigation and other legal proceedings may require the Company to incur significant
expenses, including those relating to legal and other professional fees. In addition, litigation and other legal proceedings are
inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s
financial condition, cash flows, and operating results.
Risks Related to Operations in India
Our operations in India
may be adversely affected by social and political uncertainties or change, military activity, health-related risks or acts of terrorism.
From time to time India has experienced instances of civil unrest,
terrorism and hostilities among neighboring countries, including Pakistan. Terrorist attacks, military activity, rioting, or civil
or political unrest in the future could influence the Indian economy and our operations by disrupting operations and communications
and making travel within India more difficult and less desirable. Our industry is particularly sensitive to actual or perceived
safety concerns such as these, as well as health-related risks such as the influenza A virus (H1N1), avian flu (H5N1 and H7N9)
and Severe Acute Respiratory Syndrome or other epidemics or pandemics. Any of these events in or around India could cause the demand
for travel-related services to decline. Political or social tensions also could create a greater perception that investments in
companies with Indian operations involve a high degree of risk, which could adversely affect the market and price for our common
stock. We do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts and wars, which could
subject us to significant financial losses. The realization of any of these risks could cause a material adverse effect on our
business, financial condition, results of operations, cash flows, and/or share price.
The Indian government’s implementation of a new
indirect tax regime may adversely affect our business and financial performance.
The Government of India has rolled out a comprehensive national
goods and services tax, or GST, law that combines taxes and levies by the Central and State Governments into a unified tax structure
with an effective date of July 1, 2017. The implementation of GST has significant impact on overall tax computation and compliance.
We have implemented necessary changes to our business processes, accounting and IT systems in compliance with GST law. However,
some of our suppliers are still in process of making necessary changes to their pricing strategies, product designs and IT systems,
which may pose additional challenges to us in the near term. We will also likely incur additional tax compliance costs under the
new tax law.
Our bank accounts in India
are not insured or protected against loss, and the failure of any bank in which we deposit our funds could affect our ability to
continue in business.
We maintain our cash in India with both private and state-owned
banks located in India. These cash accounts are not insured or otherwise protected against loss. Should any bank holding our cash
deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular
bank. Loss of cash deposits or the inability to access such cash deposits could impair our operations, and if we are not able to
access funds to pay our service providers and employees, we may be unable to continue in business.
If we violate applicable
anti-corruption laws or our internal policies designed to ensure ethical business practices, we could face financial penalties
and/or reputational harm that would negatively impact our financial condition and results of operations.
We are subject to anti-corruption and anti-bribery laws in the
United States and India. India’s reputation for potential corruption and the challenges presented by India’s complex
business environment may increase our risk of violating applicable anti-corruption laws. Our commercial relationships with state-owned
enterprises may further intensify this risk. We face the risk that we, our employees or any third parties such as our sales agents
and distributors that we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws
in any jurisdiction in which we conduct business, including the Foreign Corrupt Practices Act of 1977 (“FCPA”), India’s
Prevention of Money Laundering Act, 2002 and Indian Penal Code. Any violation of the FCPA or any similar anticorruption law or
regulation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations that might
harm our business, financial condition or results of operations. In addition, we have internal ethics policies with which we require
our employees to comply in order to ensure that we conduct our business in a manner that our management deems appropriate. If these
anti-corruption laws or internal policies were to be violated, our reputation and operations could also be substantially harmed.
Further, detecting, investigating and resolving actual or alleged violations is expensive and may consume a significant amount
of our senior management’s time and attention.
Natural disasters could
have a negative impact on the Indian economy and cause our business to suffer.
India has experienced natural disasters such as earthquakes,
tsunamis, floods and drought in the past few years. For example, in November and December 2015, Chennai, the frequently visited
capital city of Tamil Nadu, experienced historic flooding that closed its airport for several days and suspended rail service.
In addition, in September 2014, the state of Jammu and Kashmir in northern India, another popular tourism destination, experienced
widespread floods and landslides. The extent and severity of these natural disasters determines their impact on the Indian economy.
Substantially all of our operations and employees are located in India and our operations may be adversely affected by natural
disasters in the future. Furthermore, if any of these natural disasters occur in tourist destinations in India, travel within India
could be adversely affected, which could have an adverse impact on our business and financial performance.
Necessary infrastructure
upgrades in India may not keep pace with increasing internet penetration, which may adversely affect our operations and require
us to make additional investments and expenditures.
Our customers complete their bookings through our Indian website.
According to Cisco’s Visual Networking Index (VNI) Forecast, India will India’s internet users will grow from 373 million
(28% of the population) in 2016 to 829 million (59% of the population by 2021. Slowdowns or disruptions in upgrading India’s
internet-based infrastructure to meet this demand could reduce the rate of expected increases in the use of the internet and our
internet-based services, which may adversely affect our business and results of operations. In addition, any slowdown or negative
deviation in the anticipated increase in internet penetration in India may require us to make additional investments in alternative
distribution channels, which could strain our financial and human resources, causing our operations and financial condition to
suffer.
Restrictions on foreign
investment in India may prevent us from making future acquisitions or investments in India, including with respect to our operating
subsidiary, which may adversely affect our results of operations, financial condition and financial performance.
India regulates ownership of Indian companies by foreigners.
These regulations and restrictions may apply to acquisitions by us of shares in Indian companies or the provision of funding by
us to our Indian operating subsidiary. For example, under its consolidated foreign direct investment policy, the Government of
India has set out criteria for foreign investments in India, including requirements with respect to downstream investments by Indian
companies owned or controlled by foreign entities and the transfer of ownership or control of Indian companies in sectors with
caps on foreign investment from resident Indian persons or entities to foreigners. These requirements, which currently include
restrictions on valuations and sources of funding for such investments and may include prior approval from the Foreign Investment
Promotion Board, may adversely affect our ability to make investments in India, including through our operating subsidiary in India.
There can be no assurance that we will be able to obtain any required approvals for future acquisitions or investments in India,
or that we will be able to obtain such approvals on satisfactory terms.
We may incur expenses,
including penalties imposed by the Reserve Bank of India if we do not comply, or timely comply, with reporting requirements in
connection with the acquisition and transfer of our securities by our Indian employees.
Under regulations of the Reserve Bank of India, our operating
subsidiary is subject to periodic reporting requirements in connection with the acquisition and transfer of our securities by Indian
residents, including with respect to our employees who acquire our shares under employee stock option plans. If we fail to meet
our reporting requirements, the Reserve Bank of India may impose penalties or take other action that could adversely affect our
financial position and results of operations.
We are subject to regulatory
and political uncertainties in India.
We conduct substantially all of our business and operations
in India. Consequently, government policies and regulations, including tax policies, in India will impact our financial performance
and the market price of our common stock. The Government of India has exercised and continues to exercise significant influence
over many aspects of the Indian economy. Since 1991, successive Indian governments have generally pursued policies of economic
liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector. Nevertheless,
the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained
significant and we cannot assure you that such liberalization policies will continue. The present government has continued to take
initiatives that support the economic growth of the country that have been pursued by previous governments. However, there is no
assurance that it will be able to generate sufficient crossparty support to implement such initiatives. The rate of economic liberalization
could change, and specific laws and policies affecting travel service companies, foreign investments, currency exchange rates and
other matters affecting investments in India could change as well. A significant change in India’s policy of economic liberalization
and deregulation or any social or political uncertainties could adversely affect business and economic conditions in India generally
and our business and prospects.
We may have exposure to
additional tax liabilities.
As a U.S.-based holding company that provides services in India
through our operating subsidiary, we are subject to income taxes and non-income based taxes in the United States and in India.
Due to economic and political conditions, tax rates and tax regimes in the jurisdictions in which we are located and operate may
be subject to significant change. Our future effective tax rates could be affected by changes in the valuation of deferred tax
assets or changes in tax laws or their interpretation. Although we believe that our tax filing positions are reasonable and comply
with applicable laws, the final determination of tax audits or tax disputes may be different from what is reflected in our historical
income tax provisions and accruals. If our effective tax rates were to increase, our cash flows, financial condition and results
of operations would be adversely affected.
Judgments that our stockholders
obtain against us may not be enforceable.
Substantially all of our assets
are located outside of the United States and substantially all of our revenue is derived outside of the United States. In addition,
our vice president and director, Sachin Mandloi resides in India and our president and director, Deepak Sharma spends a significant
amount of time in India. As a result, it may be difficult for stockholders to effect service of process within the United States
upon these persons. It is uncertain whether the courts of India would recognize or enforce judgments of United States or state
courts against us or such persons predicated upon the civil liability provisions of the laws of the United States or any state.
In addition, there is uncertainty as to whether such Indian courts would be competent to hear original actions brought in India
against us or such persons predicated upon the laws of the United States or any state.
Risks Related to Our Industry
We rely on information
technology to operate our business and maintain our competitiveness, and any failure to adapt to technological developments or
industry trends could harm our business.
We depend on the use of sophisticated information technology
and systems, which we have customized for search and reservation for flights and hotels, as well as payments, refunds, customer
relationship management, communications and administration. As our operations grow in both size and scope, we must continuously
improve and upgrade our systems and infrastructure to offer our customers enhanced services, features and functionality, while
maintaining the reliability and integrity of our systems and infrastructure in a cost-effective manner. Our future success also
depends on our ability to upgrade our services and infrastructure ahead of rapidly evolving consumer demands while continuing to
improve the performance, features and reliability of our service in response to competitive offerings.
If the number of travel agents using our services increases
substantially, or if critical third-party systems stop operating as designed, we may need to significantly expand and upgrade our
technology, transaction processing systems, financial and accounting systems and other infrastructure. We may not be able to upgrade
our systems and infrastructure to accommodate such conditions in a timely manner, and, depending on the third-party systems affected,
our transactional, financial and accounting systems could be impacted for a meaningful amount of time before upgrade, expansion
or repair.
We may not be able to use new technologies effectively, or we
may fail to adapt our website, transaction processing systems and network infrastructure to meet consumer requirements or emerging
industry standards. If we face material delays in introducing new or enhanced solutions, our customers may forego the use of our
services in favor of those of our competitors. Any of these events could have a material adverse effect on our operations.
The travel industry in
India is highly competitive, and we may not be able to compete effectively.
The travel market in India is highly competitive. Factors affecting
our competitive success include, price, availability and breadth of choice of travel services and products, brand recognition,
customer service, fees charged to travelers, ease of use, accessibility and reliability. We currently compete with both established
and other emerging providers of travel services and products, including other online travel agencies in India and abroad, such
as makemytrip.com, cleartrip.com, expedia.co.in, travelocity.co.in, yatra.com, goibibo.com, booking.com and agoda.com, as well
as traditional travel agencies, tour operators, travel suppliers and operators of travel industry reservation databases. Large,
established internet search engines have also launched applications offering travel itineraries in destinations around the world,
and meta-search companies that can aggregate travel search results also compete against us for customers. Certain of our competitors
have launched brand marketing campaigns to increase their visibility with customers. For example, trivago.com has commenced a television
advertising campaign in India. Some of our competitors have significantly greater financial, marketing, personnel and other resources
than us and certain of our competitors have a longer history of established businesses and reputations in the Indian travel market
(particularly in the hotels and vacation packages business) as compared with us. From time to time we may be required to reduce
service fees and net revenue margins in order to compete effectively and maintain or gain market share.
Some travel suppliers are seeking to decrease their reliance
on distribution intermediaries such as us, by promoting direct distribution channels. Many airlines, hotels, car rental companies
and tour operators have call centers and have established their own travel distribution websites and mobile applications. From
time to time, travel suppliers offer advantages, such as bonus loyalty awards and lower transaction fees or discounted prices,
when their services and products are purchased from supplier-related channels. We also compete with competitors who may offer less
content, functionality and marketing reach but at a relatively lower cost to suppliers. If our access to supplier-provided content
or features were to be diminished either relative to our competitors or in absolute terms or if we are unable to compete effectively
with travel supplier-related channels or other competitors, our business could be materially and adversely affected.
We depend on and expect
to continue to depend on a small number of low cost airlines in India for a significant percentage of our air ticketing revenue.
Four low cost airlines dominate India’s domestic air travel
industry. As we derive a substantial portion of our air ticketing revenue through the base commissions and incentive payments of
these domestic airlines, our dependence on a limited number of domestic airlines means that a reduction or elimination in base
commissions and incentive payments by any one or all of these airlines could have a material adverse effect on our revenue.
In addition, our reliance on a small number of airline suppliers
in India gives those airline suppliers additional bargaining power in negotiating agreements with us. A reduction or elimination
of base commissions and incentive payments by any of these domestic airline suppliers, the loss of any of these domestic airline
suppliers or a domestic airline supplier exerting significant price and margin pressure on us could materially and adversely affect
our business, financial condition and results of operations.
Our processing, storage,
use and disclosure of customer data of our travel agent customers or visitors to our website could give rise to liabilities as
a result of governmental regulation, conflicting legal requirements such as General Data Protection Regulations, differing views
of personal privacy rights or data security breaches.
In the processing of our agent transactions, we receive and
store a large volume of customer information. Such information increasingly is subject to legislation and regulations in various
jurisdictions and governments are increasingly acting to protect the privacy and security of personal information that is collected,
processed and transmitted in or from the governing jurisdiction. We could be adversely affected if legislation or regulations are
expanded or amended to require changes in our business practices or if governing jurisdictions interpret or implement their legislation
or regulations in ways that negatively affect our business, financial condition and results of operations. As privacy and data
protection become more sensitive issues in India, we may also become exposed to potential liabilities. For example, under the Indian
Information Technology Act, 2000, as amended, our operating subsidiary is subject to civil liability for wrongful loss or gain
arising from any negligence in implementing and maintaining reasonable security practices and procedures with respect to sensitive
personal data or information on our computer systems, networks, databases and software. India has also implemented privacy laws,
including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information)
Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. Any liability
we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect
our business and profitability.
We cannot guarantee that our security measures will prevent
data breaches. Companies that handle such information have also been subject to investigations, lawsuits and adverse publicity
due to allegedly improper disclosure of personally identifiable information. Security breaches could damage our reputation, cause
interruptions in our operations, expose us to a risk of loss or litigation and possible liability, and could also cause customers
and potential customers to lose confidence in the security of our transactions, which would have a negative effect on the demand
for our services and products. Moreover, public perception concerning security and privacy on the internet could adversely affect
customers’ willingness to use our websites. A publicized breach of security in India, even if it only affects other companies
conducting business over the internet, could inhibit the growth of the internet as a means of conducting commercial transactions,
and, therefore, the prospects of our business.
These and other privacy and security developments that are difficult
to anticipate could adversely affect our business, financial condition and results of operations.
If we are unable to maintain
existing, or establish new arrangements with our travel service suppliers, our business may be adversely affected.
Our business depends on our ability to maintain our relationships
and arrangements with existing suppliers, as well as our ability to establish and maintain relationships with new travel suppliers.
A substantial portion of our revenue less service cost derives from fees and commissions negotiated with travel suppliers for bookings
made through our website. Many of our agreements with our travel service suppliers are short-term contracts that require periodic
renewal on a quarterly or yearly basis and provide our counterparties with a right to terminate on short notice or without notice.
Adverse changes in existing arrangements, including an inability by any travel supplier to fulfill its payment obligation to us
in a timely manner, increasing industry consolidation or our inability to enter into or renew arrangements with these parties on
favorable terms, if at all, could reduce the amount, quality, pricing and breadth of the travel services and products that we are
able to offer, which could adversely affect our business and financial performance.
We do not have formal
arrangements with many of our service suppliers.
We rely on our suppliers to facilitate the sale of our travel
and money transfer services . We do not have formal agreements with many of our travel service suppliers, including many hotels,
whose booking systems or central reservations systems we rely on for bookings and confirmation as well as certain payment gateway
arrangements. In addition, the IRCTC may terminate or temporarily suspend our agreement with them without prior notice. We cannot
assure you that these third parties will not terminate these arrangements with us on short notice or without notice. Termination,
non-renewal or suspension or an adverse amendment of any of these arrangements could have a material adverse effect on our business,
financial condition and results of operations.
Our business and results
of operations could be adversely affected by global and/or domestic economic conditions.
Due to the discretionary nature of travel expenditures, the
travel industry tends to experience weak or reduced demand during economic downturns. Unfavorable changes in the business and economic
conditions affecting our market could result in fewer reservations made through our websites and/or lower our net revenue margins
and have a material adverse effect on our financial condition and results of operations. In addition, during periods of poor economic
conditions, airlines and hotels tend to reduce rates or offer discounted sales to stimulate demand, thereby reducing our commission-based
income. The weakness and uncertainty in the global economy have negatively impacted both corporate and consumer spending patterns
and demand for travel services, globally and in India, and may continue to do so in the future. These poor economic conditions
could adversely impact our growth plans, business, financial condition and results of operations.
Risks Related to Our Common Stock
There is not now, and there may never be, an active, liquid
and orderly trading market for our common stock, which may make it difficult for stockholders to sell their shares of our common
stock.
Our common stock quoted on the OTC Markets
OTCQB tier, or OTCQB, of OTC Markets Group Inc., an over-the-counter quotation system, and there is not now, nor has there been
since our inception, any significant trading activity in our common stock or a market for shares of our common stock, and an active
trading market for our shares may never develop or be sustained. As a result, investors in our common stock must bear the economic
risk of holding those shares for an indefinite period of time. We do not now, and may not in the future, meet the initial listing
standards of any national securities exchange, and our common stock may be quoted on the OTCQB or another over-the-counter quotation
system for the foreseeable future. In those venues, our stockholders may find it difficult to obtain accurate quotations as to
the market value of their shares of our common stock and may find few buyers to purchase their stock and few market makers to support
its price. As a result of these and other factors, stockholders may be unable to resell their shares of our common stock at or
above the price for which they purchased them, at or near quoted bid prices, or at all. Further, an inactive market may also impair
our ability to raise capital by selling additional equity in the future and may impair our ability to enter into strategic partnerships
or acquire companies or products by using shares of our common stock as consideration.
Our significant stockholders exercise significant influence
over our company and may have interests that are different from those of our other stockholders.
Our executive officers and directors, Deepak Sharma and Sachin
Mandloi, beneficially own 90% of the issued and outstanding shares of our common stock. By virtue of such holdings, they have the
ability to exercise significant influence over our company and our affairs and business, including the election of directors, amendments
to our charter and bylaws, the approval of a merger or sale of substantially all our assets and the approval of most other actions
requiring the approval of our stockholders. The interests of these stockholders may be different from or conflict with the interests
of our other stockholders and their influence may result in the delay or prevention of a change of management or control of our
company.
The reduced disclosure
requirements applicable to emerging growth companies may make our common stock less attractive to investors, which may lead to
volatility and a decrease in the price of our common stock.
For as long as we continue to be an emerging growth company,
we may take advantage of exemptions from reporting requirements that apply to other public companies that are not emerging growth
companies. Investors may find our common stock less attractive because we may rely on these exemptions, which include not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected
to opt out of the extended transition period for complying with the revised accounting standards. If investors find our common
stock less attractive as a result of exemptions and reduced disclosure requirements, there may be a less active trading market
for our common stock and our stock price may be more volatile or may decrease.
We do not anticipate paying
any cash dividends on our common stock in the foreseeable future; therefore, capital appreciation, if any, of our common stock
will be our stockholders’ sole source of gain for the foreseeable future.
We have never declared or paid cash dividends on our common
stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain
all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation,
if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.
Stockholders may be subject to Indian taxes
on income arising through the sale of our common stock.
In India, the Income Tax Act (1961) provides that
income arising directly or indirectly through the sale of a capital asset, including shares of a company incorporated outside of
India, will be subject to tax in India, if such shares derive, directly or indirectly their value substantially from assets located
in India, whether or not the seller of such shares has a residence, place of business, business connection, or any other presence
in India, if, on the specified date, the value of such assets located in India (i) exceeds a specified amount, or (ii) represents
at least fifty per cent of the value of all the assets owned by the company. Further, the amendment does not deal with the interplay
between this provision of Indian tax law and the existing double tax avoidance treaties that India has entered into with the United
States. If the Indian tax authorities determine that our common stock derives its value substantially from assets located in India
and the provisions of any relevant double tax avoidance treaty are deemed to be inapplicable in this context, stockholders may
be subject to Indian income taxes on the income arising, directly or indirectly, through the sale of our common stock.
Stockholders may incur dilution. Our restated
certificate of incorporation authorizes the issuance of shares of “blank check” preferred stock.
We are authorized to issue up to 200,000,000 shares
of common stock, par value $0.0001 per share, and up to 10,000,000 shares of preferred stock, $0.0001 par value, in one or more
series and with such rights, preferences and privileges as our board of directors may determine. The issuance of additional securities
may cause substantial dilution to our stockholders.
Our board of directors has authority, without further action
by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series. Our board of directors has the
authority to determine the terms of each series of preferred stock, within the limits of the restated certificate of incorporation
and the laws of the State of Delaware. These terms include the number of shares in a series, dividend rights, liquidation preferences,
terms of redemption, conversion rights and voting rights. The issuance of any preferred stock may negatively affect the holders
of our common stock. These possible negative effects include diluting the voting power of shares of our common stock and affecting
the market price of our common stock.
Our failure to adopt certain
corporate governance procedures may prevent us from obtaining a listing on a national securities exchange.
We have only two directors,
and each one is not “independent” as that term is defined in the rules of any national securities exchange. As a result,
we do not have an Audit or Compensation Committee. The functions of those committees are conducted by the Board. Consequently,
there is a potential conflict of interest in Board decisions that may adversely affect our ability of our common stock to be listed
on a national securities exchange and, as a result, may adversely affect the liquidity of our common stock.
Our common stock will
be and may continue to be subject to the “penny stock” rules of the SEC, which could make transactions in our common
stock more cumbersome and may reduce the value of our stockholders’ investment in our common stock.
Rule 15g-9 under the Exchange Act defines a “penny stock”
as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. To the extent a market
develops for our common stock, we anticipate that our common stock will be, and may continue to be considered a penny stock. In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information
and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis
on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in
securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common
stock and could depress the market value of our common stock, to the extent a market develops.
Shares of our common stock
that have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those
set forth in Rule 144(i) which apply to a former “shell company.”
Prior to acquiring our Indian operating subsidiary we were a
“shell company” under applicable SEC rules and regulations because we had no or nominal operations and either no or
nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents
and nominal other assets. Resales pursuant to Rule 144 promulgated under the Securities Act of the securities of a former shell
company, such as us, are not permitted (i) until at least 12 months have elapsed from the April 18, 2016 initial filing of our
Registration Statement on Form S-1, which reflected our status as a nonshell company and (ii) unless at the time of a proposed
sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports and other
materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other
than Form 8-K reports. As a result, sales may not be made under Rule 144 unless we and the selling stockholders are in compliance
with the requirements of Rule 144. Further, it will be more difficult for us to raise funding to support our operations through
the sale of debt or equity securities unless we agree to register such securities under the Securities Act, which could cause us
to expend significant time and cash resources. Additionally, our previous status as a shell company could also limit our use of
our securities to pay for any acquisitions we may seek to pursue in the future (although none are currently planned). The lack
of liquidity of our securities as a result of the inability to sell under Rule 144 for a longer period than a non-former shell
company could make an investment in our securities less attractive and could cause the share price of our common stock to decline.
Currently our stock is trading under $5 and we have no trading volume.
Limitations on Controls
Our disclosure controls and procedures and internal control
over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management
does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent
or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions
and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of
fraud, if any, within the Company have been detected.
If we fail to maintain an effective system in internal
control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations
or cash flows, which may adversely affect the investor confidence in the us and, as result, the value of our common stock.
The Company has material weakness to maintain an effective system
in internal control over financial reporting. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal
controls for financial reporting and disclosure controls and procedures. The term “disclosure controls and procedures,” as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company 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 a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s
management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding
required disclosure. We are required under Section 404(a) of the Sarbanes-Oxley Act to furnish a report by management on, among
other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material
weaknesses identified by our management in our internal control over financial reporting.
Any failure to maintain internal control over financial reporting
could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are
unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting
firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that
firm begins its Section 404(b) attestations, we could lose investor confidence in the accuracy and completeness of our financial
reports, the market price of our common stock could decline, investor groups like Institutional Shareholder Services could initiate
a withhold vote campaign with respect to the re-election of the members of our audit committee, and we could be subject to sanctions
or investigations by the Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our
internal control over financial reporting, or to implement or maintain other effective control systems required of public companies,
could also restrict our future access to the capital markets.
Provisions in our charter documents or Delaware law may
inhibit a takeover or make it more difficult to effect a change in control, which could adversely affect the value of our common
stock.
Our certificate of incorporation and bylaws contain, and Delaware
corporate law contains, provisions that could delay or prevent a change of control or changes in our management. These provisions
will apply even if some of our stockholders consider the offer to be beneficial or favorable. If a change of control or change
in management is delayed or prevented, the market price of our common stock could decline.
Raising additional capital by issuing securities may cause
dilution to our stockholders.
We may need or desire to raise substantial additional capital
in the future. Our future capital requirements will depend on many factors, including, among others:
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Research and development investments (including our investment in
fine powder capabilities for direct printing and our development efforts tied to large format direct and indirect 3D printing machines);
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Our degree of success in capturing a larger portion of the industrial
products production market;
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The costs of establishing or acquiring sales, marketing, and distribution
capabilities for our products;
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The costs of preparing, filing, and prosecuting patent applications,
maintaining and enforcing our issued patents, and defending intellectual property-related claims;
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The extent to which we acquire or invest in businesses, products or
technologies and other strategic relationships; and
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The costs of financing unanticipated working capital requirements
and responding to competitive pressures.
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If we raise additional funds by issuing equity or convertible
debt securities, we will reduce the percentage ownership of our then-existing stockholders, and the holders of those newly-issued
equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing
stockholders. Additionally, future sales of a substantial number of shares of our common stock or other equity-related securities
in the public market could depress the market price of our common stock and impair our ability to raise capital through the sale
of additional equity or equity-linked securities. We cannot predict the effect that future sales of our common stock or other equity-related
securities would have on the market price of our common stock.