Lytus Technologies Holdings PTV. Ltd 6-K, filed Apr 11, 2024
Lytus Technologies Holdings PTV. Ltd. (LYTHF)
About this 6-K
Lytus Technologies Holdings PTV. Ltd filed this 6-K on April 11, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For
the month of April
Commission
File Number
(Translation of registrant’s name into English)
Business Center 1, M Floor
The Meydan Hotel
Nad Al Sheba, Dubai, UAE
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Explanatory Note:
The Registrant is furnishing this Report on Form 6-K to provide its unaudited interim financial statements for the six months ended September 30, 2023.
| Exhibit No. | Description of Exhibit | |
| 99.1 | Unaudited Consolidated Condensed Interim Financial Statements for the six months ended September 30, 2023 | |
| 99.2 | Management Discussion and Analysis for the six months ended September 30, 2023 and 2022 | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 11, 2024
| Lytus Technologies Holdings PTV. Ltd. | |||
| By: | /s/ Dharmesh Pandya | ||
| Name: | Dharmesh Pandya | ||
| Title: | Chief Executive Officer | ||
2
Exhibit 99.1
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
INDEX TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
F-1
LYTUS TECHNOLOGIES HOLDINGS
PTV. LTD.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
| Note No. | As of September 30, 2023 (unaudited) | As of March 31, 2023 | ||||||||||
| (US$) | (US$) | |||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 8 | $ | $ | |||||||||
| Other financial assets | 7 | |||||||||||
| Trade receivables | 6 | |||||||||||
| Other current assets | 9 | |||||||||||
| Total current assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property and equipment, net | 10 | |||||||||||
| Capital work-in-process | ||||||||||||
| Intangible assets and goodwill, net | 11 | |||||||||||
| Intangible assets under development | ||||||||||||
| Other non-current financial assets | ||||||||||||
| Other non-current assets | ||||||||||||
| Deferred tax assets | 5 | |||||||||||
| Total non-current assets | ||||||||||||
| Total assets | $ | $ | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Borrowings | 12 | $ | $ | |||||||||
| Trade payables | 13 | |||||||||||
| Other financial liabilities | 14 | |||||||||||
| Employee benefits obligation | ||||||||||||
| Other current liabilities | 15 | |||||||||||
| Current tax liability | 5 | |||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Financial Liabilities | ||||||||||||
| Borrowings | ||||||||||||
| Other financial liabilities | ||||||||||||
| Employee benefits obligations | ||||||||||||
| Deferred tax liability | ||||||||||||
| Total non-current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Commitments and contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Equity share capital | 16 | |||||||||||
| Other equity | 16 | |||||||||||
| Equity attributable to equity holders of the Company | ||||||||||||
| Non-controlling interest | ||||||||||||
| Total equity | ||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||
The accompanying notes are an integral part of the financial statements
F-2
LYTUS TECHNOLOGIES HOLDINGS PTV LTD.
CONSOLIDATED CONDENSED INTERIM statement
of PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
(Unaudited)
| Note No. | For the 6 month ended September 30, 2023 (Unaudited) | For the 6 month ended September 30, 2022 (Unaudited) | ||||||||||
| (US$) | (US$) | |||||||||||
| Revenues: | ||||||||||||
| Revenue from contract with customers | 3 | |||||||||||
| Other income | 3A | |||||||||||
| Total income | ||||||||||||
| Expenses: | ||||||||||||
| Cost of revenue | 4 | |||||||||||
| Amortization of intangible assets | 11 | |||||||||||
| Depreciation | 10 | |||||||||||
| Legal and professional expense | 4 | |||||||||||
| Staffing expense | 4 | |||||||||||
| Other operating expenses | 4 | |||||||||||
| Total expenses | ||||||||||||
| Finance Income | ||||||||||||
| Finance cost | ||||||||||||
| (Loss)/Income before income tax | ( | ) | ( | ) | ||||||||
| Income tax expense | 5 | ( | ) | |||||||||
| Net loss after tax available to common shareholders | $ | ( | ) | $ | ( | ) | ||||||
| Attributable to: | ||||||||||||
| Controlling interest | $ | ( | ) | $ | ( | ) | ||||||
| Non-controlling interest | ||||||||||||
| Other comprehensive income/(loss) | ||||||||||||
| Items that will not be reclassified to profit or loss | ||||||||||||
| Defined benefit obligation | ( | ) | ( | ) | ||||||||
| Items that may be reclassified subsequently to income | ||||||||||||
| Foreign currency translation reserves of subsidiaries, net of tax | ||||||||||||
| Total other comprehensive (loss)/income for the period | $ | $ | ||||||||||
| Total comprehensive income for the year | ( | ) | ( | ) | ||||||||
| Attributable to: | ||||||||||||
| Controlling interest | $ | ( | ) | $ | ( | ) | ||||||
| Non-controlling interest | $ | $ | ||||||||||
| Basic income per share of common share | $ | ( | ) | $ | ( | ) | ||||||
| Basic weighted average number of shares outstanding | ||||||||||||
| Diluted income per share of common share | $ | ( | ) | $ | ( | ) | ||||||
| Diluted weighted average number of shares outstanding | ||||||||||||
The accompanying notes are an integral part of the financial statements
F-3
LYTUS TECHNOLOGIES HOLDINGS PTV LTD.
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
(Unaudited)
| Shares (Nos.) |
Share capital |
Translation of foreign subsidiaries |
Retained earnings |
Securities Premium reserve |
Employee benefits reclassification |
Total | Non-controlling interest |
Total equity |
||||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Adjustments for Modification of Reachnet Agreement (refer note 19) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Restated Balance | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Issue of shares | ||||||||||||||||||||||||||||||||||||
| Share warrants exercised | ||||||||||||||||||||||||||||||||||||
| Cost of IPO | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Profit/(Loss) for the period | ( |
) | - |
) | ( |
) | ||||||||||||||||||||||||||||||
| Acquired in the business combination (refer to Note 20) | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income for the period | ( |
) | ) | ( |
) | |||||||||||||||||||||||||||||||
| Closing balance as at September 30, 2022 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Adjustments for Modification of Reachnet Agreement (refer to Note 19) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Restated Balance | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Derecognition on disposal of a subsidiary–GHSI (refer to Note 19) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Issue of shares | ||||||||||||||||||||||||||||||||||||
| Share warrants exercised | ||||||||||||||||||||||||||||||||||||
| Cost of IPO | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Profit/(Loss) for the year | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Acquired in the business combination (refer to Note 20) | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income for the year | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Closing balance as at 31 March, 2023 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Issue of shares | ||||||||||||||||||||||||||||||||||||
| Profit / (Loss) for the period | ( |
) | ) | ( |
) | |||||||||||||||||||||||||||||||
| Other comprehensive income for the period | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Closing balance as at September 30, 2023 | ( |
) | ( |
) | ( |
) |
The accompanying notes are an integral part of the financial statements
F-4
LYTUS TECHNOLOGIES HOLDINGS PTV LTD.
CONSOLIDATED CONDENSED INTERIM statement
of CASH FLOWS
(Unaudited)
| For the 6 months period ended September 30, 2023 | For the 6 months period ended September 30, 2022 | |||||||
| (US$) | (US$) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income after tax available to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net income to net cash used in operating activities: | ||||||||
| Deferred Tax expenses | ( | ) | ||||||
| Current Tax expenses | ||||||||
| Depreciation and Amortization of intangible assets | ||||||||
| Fair value gain on share warrant liability | ( | ) | ||||||
| Expected credit loss on trade receivables | ||||||||
| Loss on deconsolidation of subsidiaries | ||||||||
| Remeasurement of the net defined benefit plans | ||||||||
| Write off | ||||||||
| Write back | ( | ) | ( | ) | ||||
| Finance costs | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Trade receivable | ( | ) | ( | ) | ||||
| Other financial assets | ( | ) | ||||||
| Other assets | ( | ) | ( | ) | ||||
| Trade payable | ) | ( | ) | |||||
| Other financial liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ||||||||
| Tax (paid)/refund(net) | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Investment in shares of subsidiary - Sri Sai - net | ( | ) | ||||||
| Goodwill purchased on business combination | ( | ) | ||||||
| Network acquisition advance | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from short term borrowings -net | ||||||||
| Proceeds from short term borrowings - Preferred Conertible Security - Net | ||||||||
| Proceeds from short term borrowings- Related party | ||||||||
| Repayment of short term borrowings - Promissory notes net | ( | ) | ||||||
| Proceeds from issue of equity shares - Referred note below | ||||||||
| Proceeds/(Repayment) from financial institutions(net) | ( | ) | ||||||
| Interest, commission, and other charges paid | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ) | |||||
| CASH AND CASH EQUIVALENTS – beginning of period | ||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Acquired in Business Combination (refer to Note 20) | ||||||||
| CASH AND CASH EQUIVALENTS – end of period | $ | $ | ||||||
Supplemental non-cash disclosures: During the six months period ended September 30, 2022, GPL Ventures LLC has exercised its cashless share warrants to the extent of 421,490 shares. During the six months period ended September 30, 2023, Walleye has exercised its share warrants to the extent of 3,650,000 shares (60,834 shares post reverse split) and shares issued to the services provider and the directors to the extent of 442,105 (7,369 shares post reverse split). (Refer to Note 22). Investments in Lytus Inc. by Lytus BVI and Lytus Inc. to Lytus India $65,000.
The accompanying notes are an integral part of the financial statements
F-5
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Corporate information
Lytus Technologies Holdings
PTV. Ltd. (Reg. No. 2033207) (“Lytus Tech” or the “Company”) was incorporated on March 16, 2020 (date
of inception) under the laws of the British Virgin Islands (BVI). On March 19, 2020, Lytus Tech acquired a wholly owned subsidiary
in India, Lytus Technologies Private Limited (CIN U22100MH2008PTC182085) (“Lytus India”). On April 1, 2022, it acquired
a majority shareholding (
The Company’s registered office is at Business Center 1, M Floor, The Meydan Hotel, Nad Al Sheba, Dubai, UAE. The Consolidated Condensed Interim Financial Statements comprise financial statements of the Company and its subsidiaries (together referred to as “the Group”).
On June 17, 2022, the
Company consummated its initial public offering (“IPO”) on NASDAQ Capital Markets. The Company has listed common shares
on the NASDAQ Capital Market under the trading symbol “LYT”. The Company has raised gross proceeds of $
Statement of compliance
The unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting. The accompanying balance sheet and related notes to accounts as of September 30, 2023 are derived from audited financial statements of March 31, 2023, but these unaudited condensed consolidated interim financial statements do not include all of the financial information and footnotes required by IFRS for complete financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements, wherever applicable.
Basis of preparation
These unaudited condensed consolidated
interim financial statements have been prepared on historical cost basis except for certain financial instruments and defined benefit
plans which are measured at fair value or amortized cost at the end of each reporting period. Historical cost is generally based on the
fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities
have been classified as current and non-current as per the Group’s normal operating cycle. Based on the nature of services rendered
to customers and time elapsed between deployment of resources and the realization in cash and cash equivalents of the consideration for
such services rendered, the Group has considered an operating cycle of
The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents.
The functional and reporting currency of the Company and Group is “INR” and “USD”, respectively and all amounts, are rounded with two decimals, unless otherwise stated. The consolidated financial statements have been prepared under the historical cost convention.
F-6
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Basis of Consolidation
| % Shareholding and Voting Power | ||||||||||
| Name of Subsidiary | Country of Incorporation | As of September 30, 2023 | As of March 31, 2023 | |||||||
| Lytus Technologies Private Limited | % | % | ||||||||
| Sri Sai Cable and Broadband Private Limited | % | |||||||||
| Lytus Technologies Inc. (Deconsolidated on April 1, 2023) (refer to No 21 (a)) | % | |||||||||
| Global Health Sciences, Inc. (Deconsolidated on March 1, 2023) (refer to Note 21 (b)) | % | |||||||||
Note: On June 18, 2022, Share
Transfer Agreement was entered into in respect of the shares of Lytus Health. On February 27, 2023, the Board has approved the pending
fiscal integration and control of Lytus Health with effect from January 1, 2023 and as of March 31, 2023, the Company owns
These Consolidated Condensed Interim Financial Statements are prepared in accordance with IFRS 10 “Consolidated Financial Statements”.
Subsidiaries are entities controlled by the Company. Control is achieved where the Company has existing rights that give it the current ability to direct the relevant activities that affect the Company’s returns and exposure or rights to variable returns from the entity. Subsidiaries are consolidated from the date of their acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases.
The consolidated financial statements of the Company and its subsidiaries are combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses. Intra-group balances and transactions and any unrealized profits or losses arising from intra group transaction, are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Non-controlling interests (NCI) in the net assets of consolidated subsidiaries are identified separately from the Group’s equity. Non-controlling interests consist of the amount of those interests at the date of the acquisition and the non-controlling shareholders’ share of changes in equity since the date of the acquisition.
Going Concern:
Negative working capital and Cash Flow
We have a negative working
capital of $
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditure. As we continue to grow our subscriber base, we expect an initial funding period to grow new products that may have an impact from the timing of device-related cash flows when we provide the devices to customers pursuant to equipment instalment plans.
F-7
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
We expect to utilize free cash flow, cash on hand, and availability under our credit facilities, as well as future refinancing transactions for future business operations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or redemption provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and access to the capital markets to fund our projected cash needs.
As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, dispositions or system swaps, or that any such transactions will be material to our operations or results.
The Consolidated Condensed Interim Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
Critical accounting estimates
The preparation of the consolidated condensed interim financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2.
New, revised or amended Accounting Standards and Interpretations adopted for the six months ended September 30, 2023 are same as adopted for the year ended March 31, 2023.
New, revised or amended Accounting Standards and Interpretations not yet Adopted
The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective.
| ● | Amendments to IFRS 16 Lease Liability in a sale and Leaseback -* |
| ● | Amendments to IAS 1 Non-current Liabilities with Covenants -* |
| ● | Amendments to IAS 1 Classification of Liabilities - * |
| ● | Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements -* |
| ● | Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates -** |
| * | Effective for annual periods beginning on or after January 1, 2024. |
| ** | Effective for annual periods beginning on or after January 1, 2025. |
F-8
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
IFRS 16 – Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued ‘Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)’ with amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The Group does not expect this amendment to have any significant impact in its financial statements.
IAS 1 – Classification of Liabilities
In January 2020, IASB issued the final amendments in Classification of Liabilities as Current or Non-Current, which affect only the presentation of liabilities in the statement of financial position. They clarify that classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the “right” to defer settlement by at least twelve months. The classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability. They make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The Group does not expect the amendments to have any significant impact on its presentation of liabilities in its statement of financial position.
IAS 7 and IFRS 7 – Supplier Finance Arrangements
In May 2023, the IASB issued ’Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)’ which require an entity to provide additional disclosures about supplier finance arrangements. Solely credit enhancements for the entity or instruments used by the entity to settle their dues, are not supplier finance arrangements. Entity will have to disclose information that enables users of financial statements to assess how these arrangements affect its liabilities and cash flows and to understand their effect on an its exposure to liquidity risk and how it might be affected if the arrangements were no longer available to it. The Group does not expect the amendments to have any significant impact on its presentation of liabilities.
IAS 21 – The Effects of Changes in Foreign Exchange Rates
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
F-9
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
An asset is classified as current when: it is either expected to be realized or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realized within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Basis of Deconsolidation
When events or transactions results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognized. Amounts previously recognized in the consolidated statements of comprehensive income within “other comprehensive income” in respect of that entity are also reclassified to the consolidated statements of comprehensive income or transferred directly to retained earnings if required by a specific Standard.
Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognized in the consolidated statements of comprehensive income.
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of India (INR) which is the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in United States dollars.
Transactions and balances
Foreign currency transactions are translated into the presentation currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as of fair value through other comprehensive income are recognized in other comprehensive income.
F-10
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Financial Instruments
Financial Assets
Classification
The Group classifies its financial assets in the following measurement categories:
| ● | those to be measured subsequently at fair value (either through OCI or through profit or loss), and |
| ● | those to be measured at amortized cost. |
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Group business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss.
F-11
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit or loss and presented net within other gains/(losses) in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as other income when the Group right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognized in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Impairment
The Group assesses on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company measures the expected credit loss associated with its trade receivables based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group financial liabilities include trade and other payables, loans, and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
Financial liabilities at amortized cost:
After initial measurement, such financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the Statement of Profit and Loss.
Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the Statement of Profit and Loss over the period of the borrowings using the EIR method.
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the period which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
F-12
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Financial Guarantee Obligations
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries, joint ventures or associates are provided for no compensation, the fair values as of the date of transition are accounted for as contributions and recognized as part of the cost of the equity investment.
Share Warrant Liability
The share warrants can be accounted as either equity instruments, derivative liabilities, or liabilities in accordance with IAS 32 — Financial Instruments: Disclosure and Presentation, depending on the specific terms of the warrant agreement. Share warrants are accounted for as a derivative in accordance with IFRS 9 — Financial Instruments if the share warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative. Share Warrant instruments that could potentially require “net cash settlement” in the absence of express language precluding such settlement are initially classified as financial liabilities at their fair values, regardless of the likelihood that such instruments will ever be settled in cash. The Company will continue to classify the fair value of the warrants that contain “net cash settlement” as a liability until the share warrants are exercised, expire or are amended in a way that would no longer require these warrants to be classified as a liability.
The outstanding warrants are recognized as a warrant liability on the balance sheet and measured at their inceptions date fair value and subsequently re-measured at each reporting period with change being recognised in the consolidated statements of profit or loss and other comprehensive income.
Derecognition
Financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognized in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.
Financial Liability
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognized for prior periods, where applicable.
Deferred tax assets and liabilities are recognized for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
| ● | When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or |
| ● | When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled, and it is probable that the temporary difference will not reverse in the foreseeable future. |
Deferred tax assets are recognized for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
F-13
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
The carrying amount of recognized and unrecognized deferred tax assets are reviewed at each reporting date. Deferred tax assets recognized are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognized deferred tax assets are recognized to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
As of six months period ended September 30, 2023 and as of year ended March 31, 2023, the Group had no significant uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Group recognizes interest and penalties related to significant uncertain income tax positions in other expense. There were no such interest and penalties incurred for the six months period of September 30, 2023 and of September 30, 2022.
Under
section 115-O of the Indian Income Tax Act, 1961, distribution of dividends, paid by Indian company until March 31, 2020 is subject
to dividend distribution tax (DDT) at an effective rate of
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Property and Equipment
Property and Equipment assets are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit or Loss during the reporting period in which they are incurred.
Capital work in progress (CWIP) includes cost of property and equipment under installation/under development, as of balance sheet date. All project related expenditures related to civil works, machinery under erection, construction and erection materials, preoperative expenditure incidental/attributable to the construction of projects, borrowing cost incurred prior to the date of commercial operations and trial run expenditure are shown under CWIP. Property and Equipment are derecognized from the financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Property and Equipment are determined by comparing proceeds with carrying amount. These are recognized in the Statement of Profit or Loss.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated to write off the cost of items of property and equipment less their estimated residual values using the written down method over their estimated useful lives and is generally recognized in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
F-14
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
| Buildings | ||
| Property and equipment | ||
| Fixtures and fittings | ||
| Office equipment | ||
| Plant and Machinery |
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Subsequent expenditure
Subsequent expenditure relating to property, plant and equipment is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the consolidated statements of profit or loss and other comprehensive income when incurred.
Disposal
On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the consolidated statements of profit or loss and other comprehensive income.
Intangible Assets
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
| Customers acquisition | ||
| Trademark/Copy rights | ||
| Computer Software | ||
| Commercial Rights |
The amortization period and the amortization method for definite life intangible assets is reviewed annually.
For indefinite life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis revised estimates.
F-15
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired. When the recoverable amount of an intangible asset is less than its carrying amount, an impairment loss is recognized.
Goodwill on acquisitions of subsidiaries represents the excess of (i) the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (ii) the fair value of the identifiable net assets acquired. Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. These assets are not amortized but are tested for impairment annually.
Gains and losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the entity sold.
IAS 38 requires an entity to recognize an intangible asset, whether purchased or self-created (at cost) if, and only if: [IAS 38.21]
| a. | it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and |
| b. | the cost of the asset can be measured reliably. |
The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. [IAS 38.22] The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. [IAS 38.33]
Para 25 of IAS 38 provides that the price an entity pays to acquire separately an intangible asset will reflect expectations about the probability that the expected future economic benefits embodied in the asset will flow to the entity. In other words, the entity expects there to be an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. Therefore, the probability recognition criteria in Para 21(a) is always considered to be satisfied for separately acquired intangible assets. Para 26 of IAS 38 provides that the costs of a separately acquired intangible asset can usually be measured reliably. This is particularly so when the purchase consideration is in the form of cash or other monetary assets.
Development costs mainly relate to developed computer software programs. Such computer software programs that do not form an integral part of other related hardware is treated as an intangible asset. Development costs that are directly associated with development and acquisition of computer software programs by the Group are capitalized as intangible assets when the following criteria are met:
| ● | it is technically feasible to complete the computer software program so that it will be available for use; |
| ● | management intends to complete the computer software program and use or sell it; |
| ● | there is an ability to use or sell the computer software program; |
| ● | it can be demonstrated how the computer software program will generate probable future economic benefits; |
| ● | adequate technical, financial and other resources to complete the development and to use or sell the computer software programme are available; and |
| ● | the expenditure attributable to the computer software program during its development can be reliably measured. |
Direct costs include salaries and benefits for employees on engineering and technical teams who are responsible for building new computer software programs.
Expenditure that enhances or extends the performance of computer software programs beyond their original specifications and which can be reliably measured is added to the original cost of the software. Costs associated with maintaining computer software programs are recognized as an expense when incurred.
Completed development costs in progress are reclassified to internally developed intangible assets. These internally developed intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. These costs are amortized to the consolidated statements of profit or loss and other comprehensive income using a straight-line method over their estimated useful lives. Development cost in progress is not amortized.
F-16
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Revenue
Revenue is recognized based on the transfer of services to a customer for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is measured at the fair value of consideration received or receivable taking into account the amount of discounts, rebates, outgoing taxes on sales.
To determine whether to recognize revenue, the Group follows a 5-step process:
| 1. | Identifying the contract with a customer |
| 2. | Identifying the performance obligations |
| 3. | Determining the transaction price |
| 4. | Allocating the transaction price to the performance obligations |
| 5. | Recognizing revenue when/as performance obligation(s) are satisfied |
Further information about each source of revenue from contracts with customers and the criteria for recognition follows.
Subscription revenues
Subscription income includes subscription from subscribers. Revenue is recognized upon completion of services based on underlying subscription plan or agreements with the subscribers. Invoice for subscription revenue is raised on a monthly basis. These services are consumed by the client and their members in accordance with the service programs selected by the client included in the client services agreements.
Client service agreements are renewed on an annual bass and can be terminated based upon terms specified in the agreements.
Carriage/Placement/Marketing Incentive revenues
Carriage/Placement/Marketing Incentive fees are recognized upon completion of services based on agreements with the broadcasters.
Advertising revenues
Advertisement income is recognized when relevant advertisements are telecasted.
Goods and Service Tax on all income
The Company collects Goods and Service Tax (GST) on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.
Cost recognition
Costs and expenses are recognized when incurred and have been classified according to their primary functions in the following categories:
Cost of revenue
Cost of revenue consists primarily of cost of materials consumed, broadcaster/subscription fees and leaseline charges. Costs of revenue are recognized when incurred and have been classified according to their primary function.
Other operating expenses
Other operating expenses consist primarily of general and administrative expenses like electricity, software running expenses, repairs and maintenance, travelling expenses etc.
F-17
LYTUS
TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as finance cost.
Deferred Offering Costs
Deferred
Offering Costs consists of legal, accounting, underwriter’s fees, and other costs incurred through the balance date that are directly
related to the proposed Initial Public Offering (IPO) and that would be charged to stockholder equity upon completion of the proposed
IPO. Should the proposed IPO prove unsuccessful, deferred costs and additional expenses to be incurred would be charged to operations.
As of September 30, 2023 and March 31, 2023, the Company had deferred offering costs of $
Issued Capital
Common shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividend distributions to the Group’s shareholders are recognized as a liability in the financial statements in the period in which the dividends are approved.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Lytus Tech, excluding any costs of servicing equity other than common shares, by the weighted average number of common shares outstanding during the financial year, adjusted for bonus elements in common shares issued during the financial year.
F-18
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (cont.)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential common shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential common shares.
Trade and Other Receivable
Assessment as to whether the trade receivables and other receivables from Reachnet are impaired: When measuring Expected Credit Loss (ECL) of receivables and other receivables related to Reachnet the Group uses reasonable and supportable information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
The payment protocols with respect to the Telecast and OTT services are very closely regulated by the Ministry of Telecommunications along with other departments of the Government of India. The payment gateways reporting protocols for the cable industry are very robust, with most of the transactional interactions with the customers in this industry being subject to independent audits by the government. Payments processed online by customers electronically are reported promptly.
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments.
Reclassification:
Previous year/period figures have been regrouped and reclassified to conform with the current year classification
NOTE 2 — CRITICAL ACCOUNTING JUDGEMENTS, ASSESSMENTS, AND ASSUMPTIONS
Under IFRS 1, the Group is required to make estimates and assumptions in presentation and preparation of the financial statements for the six months ending September 30, 2023 and for the year ended March 31, 2023.
Key estimates considered in preparation of the financial statement that were not required under the previous GAAP are listed below:
Fair Valuation of financial instruments carried at Fair Value Through Profit or Loss (“FVTPL”) and/or Fair Value Through Other Comprehensive Income (“FVOCI”). See Note 1 on Financial Instruments on page F-11 – F-13 for additional discussion on FVTPL and FVOCI
Impairment of financial assets based on the expected credit loss model.
Determination of the discounted value for financial instruments carried at amortized cost.
Fair value estimation of share warrants.
Critical judgement over capitalisation of internally developed intangible assets and development cost in progress.
F-19
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 2 — CRITICAL ACCOUNTING JUDGEMENTS, ASSESSMENTS, AND ASSUMPTIONS (cont.)
| ● | Impairment of property and equipment and intangible assets excluding goodwill |
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the end of a reporting period that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.
NOTE 3 — REVENUE FROM CONTRACT WITH CUSTOMERS
| Disaggregated revenue information | For
the 6 months period ended September 30, 2023 | For
the 6 months period ended September 30, 2022 | ||||||
| (In USD) | (In USD) | |||||||
| Types services | ||||||||
| Subscription Income | ||||||||
| Carriage/Placement fees | ||||||||
| Advertisement Income | ||||||||
| Telemedicine service charges | ||||||||
| Device activation fees | ||||||||
| Total revenue from contract with customers | ||||||||
| Timing of revenue recognition | ||||||||
| Product transferred at point in time | ||||||||
| Services transferred over time | ||||||||
F-20
LYTUS TECHNOLOGIES HOLDINGS
PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 3 — REVENUE FROM CONTRACT WITH CUSTOMERS (cont.)
Contract balances:
| For the 6 months period ended September 30, 2023 | For the 6 months period ended September 30, 2022 | |||||||
| (US$) | (US$) | |||||||
| Receivables, which are included in ‘trade receivables | $ | $ | ||||||
| Receivables, acquired in a business combination | ||||||||
Performance obligations:
Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it transfers control over a good or service to a customer.
NOTE 3A — OTHER INCOME
| Other income | For the 6 months period ended September 30, 2023 | For the 6 months period ended September 30, 2022 | ||||||
| Fair value gain on warrant liability | ||||||||
| Sundry Balances written back | ||||||||
NOTE 4 — EXPENSES
| For the 6 months period ended September 30, 2023 | For the 6 months period ended September 30, 2022 | |||||||
| (US$) | (US$) | |||||||
| Cost of revenue | $ | |||||||
| Amortization of intangible assets (refer to Note 11) | $ | |||||||
| Depreciation (refer to Note 10) | ||||||||
| Legal and professional expenses | ||||||||
| Staffing expense | ||||||||
| Other operating expenses | ||||||||
| Total expenses | $ | $ | ||||||
F-21
LYTUS
TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 5 — INCOME TAX
| For the 6 months period ended September 30, 2023 | For the 6 months period ended September 30, 2022 | |||||||
| (US$) | (US$) | |||||||
| Current tax expenses | $ | $ | ||||||
| Deferred tax expense | ( | ) | ||||||
| Income tax expense | $ | ( | ) | $ | ||||
Deferred
tax related to the translations of foreign operations consists of Lytus Technologies Private Limited a Wholly owned subsidiary from INR
to USD have been calculated at the rate of the jurisdiction in which a subsidiary situated i.e. in India (at the rate
Accounting for Income Taxes
British Virgin Islands
Under the current laws of BVI, Lytus Technology Holdings PTV. Ltd. is not subject to tax on income or capital gains. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the BVI.
India (subsidiaries in India)
Income tax expense represents the sum of the current tax and deferred tax.
The charge for current tax is based on the result for the period adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Current and deferred tax is recognized in the income statement unless the item to which the tax relates was recognized outside the income statement being other comprehensive income or equity. The tax associated with such an item is also recognized in other comprehensive income or equity respectively.
NOTE 6 — TRADE RECEIVABLES (CURRENT)
| As of September 30, 2023 | As of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Receivable from related parties | $ | $ | ||||||
| Receivable from others | ||||||||
| $ | $ | |||||||
| Less: allowance for doubtful debts (expected credit loss) | ||||||||
F-22
LYTUS
TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 7 — OTHER NON-CURRENT FINANCIAL ASSETS
| As of September 30, 2023 | As of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Non Current | ||||||||
| Deposits | ||||||||
| Total (A) | ||||||||
| Current | ||||||||
| Deposits | ||||||||
| Advances for network acquisition | ||||||||
| Loans and advances to related parties | ||||||||
| Other loans and advances | ||||||||
| Total (B) | ||||||||
| Total (A) + (B) | ||||||||
NOTE 8 — CASH AND CASH EQUIVALENTS
| As of September 30, 2023 | As of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Cash and cash equivalents | ||||||||
| Maintained locally | ||||||||
| Maintained overseas, unrestricted in use | ||||||||
| Cash and cash equivalents | ||||||||
NOTE 9 — OTHER CURRENT ASSETS
| As of September 30, 2023 | As of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Prepaid expenses | ||||||||
| Balances with government authorities | ||||||||
| Advance to suppliers | ||||||||
| Advance to staff | ||||||||
| TDS Receivables | ||||||||
| Advance payment of interest on loans | ||||||||
| Advance payment of commission on loans | ||||||||
| Other receivables - Balance with a Director | ||||||||
F-23
LYTUS
TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 10 — PROPERTY AND EQUIPMENT
In (US$) |
||||||||||||||||||||||||||||||||
| Description | ROU-office premises | Building | Plant and equipment | Furniture and fittings | Vehicles | Office equipments | Computer equipments | Total | ||||||||||||||||||||||||
| Gross carrying value | ||||||||||||||||||||||||||||||||
| As at 31 March, 2022 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| Acquisition through business combination (refer to Note 20) | ||||||||||||||||||||||||||||||||
| As at 30 September, 2022 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| Acquisition through business combination (refer to Note 20) | ||||||||||||||||||||||||||||||||
| As at 31 March, 2023 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| As at 30 September, 2023 | ||||||||||||||||||||||||||||||||
| Accumulated depreciation and impairment loss | ||||||||||||||||||||||||||||||||
| As at 31 March, 2022 | ||||||||||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||||||||||
| As at 30 September, 2022 | ||||||||||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||||||||||
| As at 31 March, 2023 | ||||||||||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||||||||||
| As at 30 September, 2023 | ||||||||||||||||||||||||||||||||
| Net block as at 31 March, 2022 | ||||||||||||||||||||||||||||||||
| Net block as at 30 Sept 2022 | ||||||||||||||||||||||||||||||||
| Net block as at 31 March, 2023 | ||||||||||||||||||||||||||||||||
| Net block as at 30 Sept 2023 | ||||||||||||||||||||||||||||||||
F-24
LYTUS
TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 11 — INTANGIBLE ASSETS AND GOODWILL
Intangible assets
| (In (US$)) | ||||||||||||||||||||||||
| Description | Customer acquisition List | Goodwill | Commercial rights | Softwares | Total | Intangible asset under development | ||||||||||||||||||
| Gross carrying value | ||||||||||||||||||||||||
| As at 31 March, 2022 | ||||||||||||||||||||||||
| Write off (refer to Note 19) | ( | ) | ( | ) | ||||||||||||||||||||
| Exchange differences | ( | ) | ( | ) | ||||||||||||||||||||
| Acquisition through business combination (refer to Note 20) | ||||||||||||||||||||||||
| As at 30 Sept 2022 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Derecognized on 'Disposals of a subsidiary (refer to Note 21 (b)) | ( | ) | ( | ) | ||||||||||||||||||||
| Write off (refer to Note 19) | ( | ) | ( | ) | ||||||||||||||||||||
| Exchange differences | ( | ) | ( | ) | ||||||||||||||||||||
| Acquisition through business combination (refer to Note 20) | ||||||||||||||||||||||||
| As at 31 March, 2023 | ||||||||||||||||||||||||
| Write off | ( | ) | ||||||||||||||||||||||
| Exchange differences | ||||||||||||||||||||||||
| As at 30 Sept 2023 | ||||||||||||||||||||||||
| Accumulated amortization | ||||||||||||||||||||||||
| As at 31 March, 2022 | ||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||
| Write off (refer to Note 19) | ( | ) | ( | ) | ||||||||||||||||||||
| As at 30 Sept 2022 | ||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||
| Write off (refer to Note 19) | ( | ) | ( | ) | ||||||||||||||||||||
| As at 31 March, 2023 | ||||||||||||||||||||||||
| Charge for the year | ||||||||||||||||||||||||
| As at 30 Sept 2023 | ||||||||||||||||||||||||
| Net block as at 31 March, 2022 | ||||||||||||||||||||||||
| Net block as at 30 Sept, 2022 | ||||||||||||||||||||||||
| Net block as at 31 March, 2023 | ||||||||||||||||||||||||
| Net block as at 30 Sept, 2023 | - | |||||||||||||||||||||||
Notes:
The above intangible assets are other than internally generated.
F-25
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 12 — BORROWINGS
Borrowings
| As at September 30, 2023 | As at March 31, 2023 | |||||||||||||||||||||||
| (In US$) | (In US$) | |||||||||||||||||||||||
| Current | Non current | Total | Current | Non current | Total | |||||||||||||||||||
| Particulars | ||||||||||||||||||||||||
| Vehicles Loans from Financial Institutions | ||||||||||||||||||||||||
| Total secured borrowings | ||||||||||||||||||||||||
| Unsecured | ||||||||||||||||||||||||
| Series A preferred convertible security (refer to Note 22) | ||||||||||||||||||||||||
| Loan from the Related Parties | ||||||||||||||||||||||||
| Loan from Directors | ||||||||||||||||||||||||
| Loan from Others | ||||||||||||||||||||||||
| Total borrowings | ||||||||||||||||||||||||
Loan from directors and relatives are interest free and is repayable on demand.
F-26
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 13 — TRADE PAYABLES
| As
of September 30, 2023 | As
of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Trade payables due to related parties | ||||||||
| Employee related payables | ||||||||
| Others | ||||||||
NOTE 14 — OTHER FINANCIAL LIABILITIES
| As
of September 30, 2023 | As
of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Other financial liabilities (Current) | ||||||||
| Lease liabilities | ||||||||
| Audit fee payable | ||||||||
| Options payable | ||||||||
| Share Warrant Liability - Common stock (refer to Note 22) | ||||||||
| Share Warrant Liability - Preferred stock (refer to Note 22) | ||||||||
NOTE 15 — OTHER CURRENT LIABILITIES
| As
of September 30, 2023 | As
of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Other current liabilities: | ||||||||
| Advances from customers | ||||||||
| Cheques receivables/Payable | ||||||||
| Statutory liabilities | ||||||||
| Others - capital creditors | ||||||||
F-27
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 16 — EQUITY
| The total number of shares of common shares issued: | For the 6 months ended September 30, 2023 | As of March 31, 2023 | ||||||
| (US$) | (US$) | |||||||
| Common shares | ||||||||
| 50,000 shares were allotted after September 30, 2023 | ||||||||
| Common shares after reverse splits (refer to Note 24) | ||||||||
| 834 shares were allotted after September 30, 2023 | ||||||||
| Shares | Amount | |||||||
| (US$) | ||||||||
| Balance as of March 31, 2022 | $ | |||||||
| Shares issued | ||||||||
| Balance as of March 31, 2023 | $ | |||||||
| Additional issue of shares | ||||||||
| Balance as of September 30, 2023 | ||||||||
Movements in Common Shares after reverse split:
| Shares | Amount | |||||||
| (US$) | ||||||||
| Balance as of March 31, 2022 | $ | |||||||
| Shares issued | ||||||||
| Balance as of March 31, 2023 | $ | |||||||
| Additional issue of shares | ||||||||
| Balance as of September 30, 2023 | ||||||||
Mr. Dharmesh Pandya,
the then sole shareholder of the Company, has subscribed to these shares and held
NOTE 17 — EARNINGS PER SHARE
| For
the 6 months ended September 30, 2023 | As
of March 31, 2023 | |||||||
| (US$) | (US$) | |||||||
| Loss for the year available to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares | ||||||||
| Par value | $ | $ | ||||||
| Earnings/(loss) per common share: | ||||||||
| Basic earnings/(loss) per common share | $ | ( | ) | $ | ( | ) | ||
| Diluted earnings/(loss) per common share | $ | ( | ) | $ | ( | ) | ||
Share Warrants kept as reserves for exercised of warrants from the date of issue. Considered as potential equity shares Since this result would, in turn, produce a larger earnings per shares, hence warrants are anti-dilutive and not considered.
F-28
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 18 — RESTATEMENT DUE TO MODIFICATION AGREEMENT
Notes on Restatement of September 30, 2022 condensed interim consolidated financials due to modification of earlier arrangements and acquisition of Sri Sai as refer in Note 19.
CONSOLIDATED CONDENSED INTERIM statement
of PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME -Restated impact
Lytus Technologies Holdings Pvt.Ltd
Notes on Restatement of September 30, 2022 condensed interim consolidated financials due to modification of Reachnet Agreement.
| Sept 22 Restated Vs Sept 22 | ||||||||||||||||||||||||
| For the period ended 30 September 2022 - Restated | For the period ended 30 September 2022 | Impact of restatement | Modification of Reachnet Agreement | Acquisition of Sri sai | Impact of Restatement | |||||||||||||||||||
| ($US) | ($US) | |||||||||||||||||||||||
| STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||||||
| Operating revenue | $ | |||||||||||||||||||||||
| Other Income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||
| Other operating expenses | ( | ) | ||||||||||||||||||||||
| Legal and professional expenses | ||||||||||||||||||||||||
| Staffing expenses | ||||||||||||||||||||||||
| Depreciation and amortisation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Interest expenses | ||||||||||||||||||||||||
| Interest income | - | |||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Income tax | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||
| Items that will not be reclassified to profit or loss | ||||||||||||||||||||||||
| Reclassification of defined benefit obligation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Items that may be reclassified subsequently to income | ||||||||||||||||||||||||
| Foreign currency translation reserves, net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Total comprehensive income for the period | $ | ( | ) | ( | ) | |||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||
| Controlling interest | $ | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Non-controlling interest | ||||||||||||||||||||||||
| Basic income per common share | ( | ) | ( | ) | ||||||||||||||||||||
| Diluted income per common share | ( | ) | ( | ) | ||||||||||||||||||||
F-29
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 18 — RESTATEMENT DUE TO MODIFICATION AGREEMENT (cont.)
| As
at September 30, 2022 - (Restated) | As
at September 30, 2022 | Modification
of Reachnet Agreement | Accusation
of Sri Sai | Total
Impact of Restatement | ||||||||||||||||
| (In USD) | (In USD) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| a) Financial assets | ||||||||||||||||||||
| (i) Other receivables | ( | ) | ( | ) | ||||||||||||||||
| (ii) Trade receivables | ||||||||||||||||||||
| (iii) Cash and cash equivalents | ||||||||||||||||||||
| (iv) Others financial assets | ||||||||||||||||||||
| b) Other current assets | ||||||||||||||||||||
| Total current assets | ( | ) | ( | ) | ||||||||||||||||
| Non-current assets | ||||||||||||||||||||
| a) Property, plant and equipment, net | ||||||||||||||||||||
| b) Capital work-in-process | ||||||||||||||||||||
| c) Intangible assets and Goodwill | ( | ) | ( | ) | ||||||||||||||||
| d) Intangible assets under development | ||||||||||||||||||||
| e) Financial assets | ||||||||||||||||||||
| (i) Other investments | ||||||||||||||||||||
| (ii) Trade receivables | ||||||||||||||||||||
| (ii) other non-current financial assets | ||||||||||||||||||||
| f) Other non-current assets | ( | ) | ( | ) | ||||||||||||||||
| g) Deferred tax assets | ( | ) | ( | ) | ||||||||||||||||
| Total non-current assets | ( | ) | ( | ) | ||||||||||||||||
| Asset held for sale | ||||||||||||||||||||
| Total assets | ( | ) | ( | ) | ||||||||||||||||
| EQUITY AND LIABILITIES | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| a) Financial liabilities | ||||||||||||||||||||
| (i) Borrowings | ||||||||||||||||||||
| (ii) Trade payables | ||||||||||||||||||||
| (iii) Other financial liabilities | ( | ) | ||||||||||||||||||
| b) Employee benefits obligation | ||||||||||||||||||||
| c) Other current liabilities | ( | ) | ( | ) | ||||||||||||||||
| b) Customer acquisation payable | ( | ) | ( | ) | ||||||||||||||||
| d) Provisions | ||||||||||||||||||||
| e) Current tax liability | ( | ) | ( | ) | ||||||||||||||||
| Total current liabilities | ( | ) | ( | ) | ||||||||||||||||
| Non-current liabilities | ||||||||||||||||||||
| a) Financial liabilities | ||||||||||||||||||||
| (i) Borrowings | ||||||||||||||||||||
| (ii) Other financial liabilities | ||||||||||||||||||||
| b) Customer acquisition payable, net of current portion | ( | ) | ( | ) | ||||||||||||||||
| c) Employee benefits obligations | ||||||||||||||||||||
| d) Provisions | ||||||||||||||||||||
| e) Deferred tax liability | ( | ) | ( | ) | ||||||||||||||||
| Total non-current liabilities | ( | ) | ( | ) | ||||||||||||||||
| Total liabilities | ( | ) | ( | ) | ||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Equity | ||||||||||||||||||||
| a) Equity share capital | ||||||||||||||||||||
| b) Other equity | ( | ) | ( | ) | ||||||||||||||||
| Equity attributable to owners of the Company | ( | ) | ( | ) | ||||||||||||||||
| Non-controlling interests | ||||||||||||||||||||
| Total equity | ( | ) | ( | ) | ||||||||||||||||
| Liabilities directly associated with the assets held for sale | ||||||||||||||||||||
| Total equity and liabilities | ( | ) | ( | ) | ||||||||||||||||
F-30
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 19 — MODIFICATION OF EARLIER ARRANGEMENT AND ACQUISITION OF SRI SAI
The
Company has acquired
A modification in contract is regarded as a revision to the existing contract:
| ● | The management discussed the terms and conditions of the new arrangement, (a) that is in continuation of the earlier arrangement, and (b) that has arisen on account of new circumstances, new conditions or new events that differ in substance from those previously occurring. |
| ● | The modification in contract (a) is with the same erstwhile partner, (b) is part of the same arrangement (future subscriber base), (c) adjusts the consideration already paid in the earlier arrangement and (d) the erstwhile partner was instrumental in the acquisition of Sri Sai. |
The relevant facts and the agreements are provided as under:
| ● | On December 6, 2019, the Company purchased the right
to subscriber’s connection (present and future) along with the revenue entitlement rights, for a consideration of $ |
| ● | On July 27, 2022, the Board discussed the independent
reviewer report. The independent reviewer observed that the current network requires significant additional investment to maintain and
grow the cable subscribers, to match Lytus’s business plan, approximately $ |
| ● | The Board reviewed the modification plan as submitted
by the management. On January 17, 2023, our Board approved the Modification Agreement that was signed and executed on December 11,
2022, with the erstwhile partner. The initial term was to acquire subscribers’ connection (present as well as future subscribers’
connections) from the erstwhile partner, whereas under the modified term, the Company would now acquire only the future subscriber’s
connection from the erstwhile partner for a consideration of $ |
| ● | Accordingly, the Board approved the Deed of Assignment, executed on December 12, 2022, in respect of investment in Sri Sai, that originally was with the erstwhile partner, based on the earlier Memorandum of Understanding dated April 1, 2022 and the Agreement to Invest in Sri Sai dated August 11, 2022. Both these agreements were linked to the Company’s Agreement to Acquire Customers and it was agreed between the then parties (Sellers of Sri Sai and the erstwhile partner) that the subscriber base of Sri Sai when acquired would be for the benefit of Lytus as required under the original Agreement to Acquire Customers dated December 6, 2019. |
| ● | On March 7, 2023, the Board of Sri Sai approved the
Deed of Assignment and executed the Share Purchase Agreement dated March 27, 2023 for the acquisition of |
| ● | Our Board has observed the significant advantage from the above modification with the erstwhile partner, assignment of rights from the erstwhile partner and the last step of acquisition of Sri Sai business. |
| ● | We have extended the original Agreement to Acquire Customers,
to acquire nearly |
| 3 | The foreign exchange regulatory policy on foreign direct investment
provides that an overseas entity can purchase |
F-31
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 19 — MODIFICATION OF EARLIER ARRANGEMENT AND ACQUISITION OF SRI SAI (cont.)
| ● | The Company’s earlier commitment and liability to pay
$ |
| ● | The Company’s accounting policy under earlier arrangement had “other income” for the period ended March 31, 2022. Presently, the Company’s accounting policy under modified arrangement has “Revenue from Contract with Customers” for the year ended March 31, 2023. |
| ● | The Company has greater control of the business affairs of the Sri Sai business. Earlier, the Company had control over the subscribers and its revenue entitlement rights only. |
| ● | The acquisition of the Sri Sai business includes IPTV business. It has higher technology readiness in integration with the Lytus platform services. It is to be noted that Lytus India would directly bill subscribers for any services through Lytus platform. |
| ● | As per IFRS 10.20, a parent shall consolidate financial statements of an investee from the date the investor obtains or gains control of the investee. Upon advice received from the accounting and legal consultant, our Board has determined the effective modification date and the effective acquisition date would be April 1, 2022. |
On date April 1, 2022,
the Company is stated to have obtained control of the business affairs of Sri Sai, by controlling the Board and the management activities
of Sri Sai, with the non-binding purpose and object to acquire Sri Sai at a subsequent date. On 27 March 2023, through multiple agreements
between the Company, the erstwhile partner and the sellers of Sri Sai, the Company acquired
The Company obtained control of the business affairs of Sri Sai on April 1, 2022. Hence, the effective date of acquisition shall be determined to be April 1, 2022. The erstwhile partner has mandated the modification of the terms should be on April 1, 2022. Hence, the effective date of modification shall be determined to be April 1, 2022
F-32
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 19 — MODIFICATION OF EARLIER ARRANGEMENT AND ACQUISITION OF SRI SAI (cont.)
| Extract from Financial Statements | As at April 1, 2022 (Pre-adjustment) |
Adjustments | As at April 1, 2022 (Post-adjustment) |
As at March 31, 2023 |
||||||||||||
| Assets items | ||||||||||||||||
| Non-current assets | ||||||||||||||||
| Intangible (Customer Acquisition, net of amortisation) | ( |
) | ||||||||||||||
| Deferred tax assets* | ( |
) | ||||||||||||||
| Current assets | ||||||||||||||||
| Other receivables | ( |
) | ||||||||||||||
| Total of assets | ( |
) | ||||||||||||||
| Liabilities Items | ||||||||||||||||
| Non-current liabilities | ||||||||||||||||
| Customer Acquisition List Payable, net of current portion | ( |
) | ||||||||||||||
| Less: Part Payment made towards Customer Acquisition during the year ended March 31, 2023 | ( |
) | ||||||||||||||
| Net of payments during the year ended March 31, 2023 | ( |
) | ||||||||||||||
| Deferred tax liability* | ( |
) | ||||||||||||||
| Current liabilities | ||||||||||||||||
| Other financial liabilities | ||||||||||||||||
| Interest on tax payable | ( |
) | ||||||||||||||
| Other current liabilities: | ||||||||||||||||
| CSR expenses payable | ( |
) | ||||||||||||||
| Statutory liabilities* | ( |
) | ||||||||||||||
| Customer acquisition payable | ( |
) | ||||||||||||||
| Current tax liability | ( |
) | ||||||||||||||
| Total of liabilities | ( |
) | ||||||||||||||
| Net balances adjusted | ( |
) | ||||||||||||||
| Retained earnings (refer to Consolidated Statement of Changes in Equity) | ( |
) | ( |
) | ||||||||||||
| * |
F-33
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 20 — ACQUISITION OF SRI SAI CABLE AND BROADBAND PRIVATE LIMIETED
The Group has acquired
On March 7, 2023, the
Board of Sri Sai approved the Deed of Assignment and executed the Share Purchase Agreement dated March 27, 2023 for the acquisition
of
The Group assumed control
in Sri Sai from 1 April 2022 (Refer Note 19).
| Calculation of Goodwill upon Acquisition | (USD) | |||
| Consideration transferred | $ | |||
| Add: Non-controlling interest – | ||||
| Less: Sri Sai Net Assets | ||||
| Goodwill | $ | |||
| (In Us $) | ||||||||
| Amount settled in cash | $ | |||||||
| Proportionate value of Non-controlling interest in Sri Sai | ||||||||
| Total | ||||||||
| Recognized amounts of identifiable net assets: | ||||||||
| Property and equipment | ||||||||
| Intangible assets | ||||||||
| Deposits | ||||||||
| Non-current loans and advances | ||||||||
| Trade and other receivables | ||||||||
| Cash and cash equivalents | ||||||||
| Deferred tax assets | ||||||||
| Other current assets | ( | ) | ||||||
| Borrowings | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Trade and other payables | ( | ) | ||||||
| Net identifiable assets and liabilities | ||||||||
| Goodwill | $ | |||||||
Non-controlling interest in Sri Sai
The non-controlling interest in Sri Sai is measured at the proportionate value of net assets at the acquisition date.
F-34
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 20 — ACQUISITION OF SRI SAI CABLE AND BROADBAND PRIVATE LIMIETED (cont.)
Goodwill
Goodwill recognized on the
acquisition relates to the expected growth, cost synergies and the value of Sri Sai’s workforce which cannot be separately recognized
as an intangible asset.
| Changes in Goodwill (Gross Carrying Amount) | (USD) | |||
| Balance at 31 March 2022 | $ | |||
| Acquired through business combination | ||||
| Net exchange differences | ||||
| Balance at 30 September 2022 | $ | |||
| Changes in Goodwill (Gross Carrying Amount) | (USD) | |||
| Balance at 31 March 2022 | $ | |||
| Acquired through business combination | ||||
| Net exchange differences | ||||
| Balance at 31 March 2023 | $ | |||
| Acquired through business combination | ||||
| Net exchange differences | ( | ) | ||
| Balance at 30 September 2023 | $ | |||
Sri Sai has contributed to
the Group’s revenues by $ and profit by $
The Company has also agreed
to infuse capital investment of $
NOTE 21 — DECONSOLIDATION
(a) LYTUS INC.
The Company has decided to acquire from January 1, 2023 a wholly owned subsidiary in United States, Lytus Technologies Inc. that supports its United States operations. Presently, absent United States operations, the Company has agreed to not to acquire shares of Lytus Technologies Inc., however, it would continue to consolidate balances to the extent it relates to the transactions for or on behalf of the Company.
| Loss attributable to the Company on deconsolidation of a Subsidiary: | For the year ended September 30, 2023 ($) | |||
| Fair Value Consideration receivable/received | ||||
| Less ; Lytus BVI (Groups) share of net assets at disposal | ||||
| Lytus Inc. share capital at disposal | ||||
| Add : Retained earnings at disposal date | ||||
| Total of Net assets at disposal | ||||
| Group Share - | ||||
| Less Goodwill at acquisition date | ||||
| Total Loss on deconsolidation date | ( | ) | ||
(b) GHSI
The consolidated financial statements have been prepared based on the books and records maintained by the Group. However, due to non-alignment of the management with respect to the business plan and strategy, due to non-transfer of shares of GHSI (the “Deconsolidated Subsidiary”), the directors of the Company had been unable to obtain control of the business affairs of the Deconsolidated Subsidiary and resolved that the Group no longer had the controlling power to govern the financial and operating policies of the Deconsolidated Subsidiary so as to benefit from their activities, and accordingly the control over the Deconsolidated Subsidiary was deemed to have lost since March 1, 2023.
F-35
LYTUS TECHNOLOGIES HOLDINGS PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 21 — DECONSOLIDATION OF SUBSIDIARY (cont.)
Loss attributable to the Company on deconsolidation of a Subsidiary:
Calculation of resulting gain or loss in profit or loss attributable to parent in a consolidated accountsof Lytus BVI
| Loss attributable to the Company on deconsolidation of a Subsidiary: | For the year ended March 31, 2023 ($) | |||
| Fair Value Consideration receivable/received | ||||
| Less; Lytus BVI (Groups) share of net assets at disposal | ||||
| GHSI share capital at disposal | ||||
| Add: Retained earnings at disposal date | ||||
| Total of Net assets at disposal | ||||
| Group Share – | ||||
| Less Goodwill at acquisition date | ||||
| Total Loss on deconsolidation date | ( | ) | ||
Due to above reasons, the Board has been unable to access control of the business affairs of the Deconsolidated Subsidiary even though the Board has taken all reasonable steps and has used its best endeavors to resolve the matter. The Board is of the view that the Group does not have the records to prepare accurate and complete financial statements for Deconsolidated Subsidiary for the financial year ended March 31, 2023.
Given these circumstances,
the Directors have not consolidated the financial statements of the Deconsolidated Subsidiary in the consolidated financial statements
of the Company for the year ended March 31, 2023. As such, the results of the Deconsolidated Subsidiary for the year ended March 31,
2023, and the assets and liabilities of the Deconsolidated Subsidiary as of March 31, 2023, have not been included into the consolidated
financial statements of the Group. Considering above the liability of $
NOTE 22 — SERIES A PREFERRED COVERTIBLE SECURITY
On August 31, 2023, the Company
entered into a Securities Purchase Agreement (the “September 2023 Purchase Agreement”) with a certain accredited investor
as purchaser, pursuant to which, the Company sold $
F-36
LYTUS TECHNOLOGIES HOLDINGS
PTV. LTD.
NOTES TO CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE 22 — SERIES A PREFERRED COVERTIBLE SECURITY (cont.)
On November 9, 2022, we
entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with a certain accredited investor as purchaser
(the “Investor”). Pursuant to the Securities Purchase Agreement, we sold, and the Investor purchased, $
As of April 10, 2024, all the warrants and the preferred stock (stated above) have been converted to common stock and the liability has been repaid in full.
NOTE 23 – ISSUE OF SHARES
| Name | Nos. of Common Stock | |||
| Skyline Corporate Communications Group | ||||
| Acorn Management Partners LLC | ||||
| Rajeev Kheror, an independent director | ||||
| Robert Damante, an independent director | ||||
NOTE 24 — SUBSEQUENT EVENTS
Management has evaluated subsequent events to determine if events or transactions occurring through, except for the disclosures related to subsequent events described below, as to which the date is April 10, 2024, the dates the financial statements were available for issuance, require potential adjustment to or disclosure in the financial statement and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.
On February 5, 2024, the Company
has announced a reverse stock split of its issued and outstanding ordinary shares, par value $
| Name | Nos. of Common Stock | |||
| Dharmesh Pandya, Global CEO and Lytus Trust (creating a bank of shares for potential partners, key employees, etc.) | ||||
F-37
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition as of September 30, 2023 and March 31, 2023 and results of operations for the six months ended September 30, 2023 and 2022 in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Report, and our Annual Report on Form 20‑F for the year ended March 31, 2023 as filed with the SEC on August 18, 2023.
Some of the statements contained in this Form 6-K constitute forward-looking statements that do not directly or exclusively relate to historical facts. You should not place undue reliance on such statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “outlook” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are those described in discussions herein, and in “Item 3. Key Information—D. Risk Factor Summary” section of our most recent Annual Report on Form 20-F filed with the SEC and incorporated herein by reference, and those described from time to time in our future reports to be filed with the SEC.
These risks could cause actual results to differ materially from those implied by forward-looking statements in this Form 6-K.
You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We do not undertake any obligation to update or revise any forward-looking statements after the date of this Form 6-K, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncertainties, you should keep in mind that any event described in a forward-looking statement made in this Form 6-K or elsewhere might not occur.
Company Overview
We are a growing platform services company primarily providing content streaming/telecasting services with over four million active users located all across India.15 Our Lytus platform provides a wide range of streaming services and telemedicine services with local assistance through local Health Centers. Through our platform, our customers are well connected via CPE devices/STBs and have access to multi-dimensional services including telemedicine service we place to offer in the future.
We believe that our strong customer base and expansive market presence position us to expand our portfolio of offerings. We have been focused on adopting and implementing technologies that can change the landscape of being a conventional streaming services provider. Partnering with those who share our passion, we strive to provide India’s semi-urban, urban population with unmatched services across tele-healthcare.
We intend to benefit from India’s e-commerce boom and the recent tele-medicine regulation through the acquisition of Sri Sai and other similar companies. We will recruit management teams of Sri Sai having many years of pioneering experience in IPTV business and telemedicine in India and USA, which we believe will help us create a profitable and sustainable business model with rapid growth prospects. We believe that our deep understanding and local expertise have enabled us to create solutions that address the needs and preferences of our consumers in the most comprehensive and efficient way. We possess extensive local knowledge of the logistics and payment landscapes in the markets in which we operate, which we consider to be a key component of our success.
The historical results for the year ended March 31, 2022, discussed hereunder no longer reflect our current operations or future results of operations and financial condition. We have modified our earlier arrangement and have reorganized the business by only acquiring the Sri Sai business, whereas our initial arrangement was to acquire erstwhile partner’s subscriber base and its revenue generating contracts. Under the modified arrangement, we own a controlling stake in Sri Sai’s business, whereby we control the infrastructure hub that supports services, and have a direct and unrestricted relationship with key partners. A more detailed discussion can be found in Note 19 and Note 20 to our financial statements included herein.
We are focused on consolidating our subscriber base for future technology services, such as telemedicine and healthcare services and at the same time, on developing our technology platform for a better service experience. We expect the technology services to be provided through our proprietary unified technology platform. Presently, we provide streaming and internet services through our platform. We are simultaneously working to strengthen our platform services, including advancing our platform with the state-of-art technology.
| 15 | Calculation based upon approximately 1 million paid home subscribers which based on industry standards translates to more than 4 million viewers on an average of 4.6 viewers per household in India. Source: United Nations, Department of Economic and Social Affairs, Population Division (2019) — Database on Household Size and Composition 2019. Available at https://population.un.org/Household/index.html#/countries/356. |
Key Factors For Our Performance
The following factors are the principal factors that have affected and will continue to affect our business, financial condition, results of operations and prospects.
| ● | Number of Subscribers: our revenue growth and long-term profitability are affected by our ability to increase our subscriber base because we derive a substantial portion of our revenue from streaming services and via client contracts that provide subscribers access to our Lytus platform in exchange for a contractual based monthly fee. Revenue is driven primarily by the number of subscribers, the number of services contracted for by a subscriber and the contractually negotiated prices of our services and online content that is specific to that particular subscriber. We believe that increasing our subscriber base is an integral objective that will provide us with the ability to continually innovate our services and support initiatives that will enhance subscriber experiences and lead to increasing or maintaining our existing annual net dollar retention rate. The number of subscribers pertaining to Sri Sai business were 856,127 for six months period ending September 30, 2023 and 877,318 for the year ended March 31, 2023. The decrease in subscribers was primarily driven by competition in the OTT streaming market. However, management believes that the decrease is marginal and will be retained when platform services are launched. |
| ● | Cluster of customized online content: the Lytus platform provides an opportunity to customize the online content to meet the needs of that particular subscriber. We plan to form partnership with other companies to develop our telemedicine business and entertainment and education online content. Revenues arising from this segment will be driven primarily by the customizable content formats aligned with the customer satisfaction. We believe that increasing our current subscriber utilization rate is a key objective in order for our subscribers to realize tangible healthcare savings with our service. |
Six months ended September 30, 2023, compared to six months ended September 30, 2022
Significant Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS).
Basis of Deconsolidation
When events or transactions results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in the consolidated statements of comprehensive income within “other comprehensive income” in respect of that entity are also reclassified to the consolidated statements of profit or loss and other comprehensive income or transferred directly to retained earnings if required by a specific Standard.
Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in the consolidated statements of profit or loss and other comprehensive income.
Share Warrant Liability
We account for share warrants as either equity instruments, derivative liabilities, or liabilities in accordance with IAS 32 — Financial Instruments: Disclosure and Presentation, depending on the specific terms of the warrant agreement. Share warrants are accounted for as a derivative in accordance with IFRS 9 — Financial Instruments if the share warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative. Share Warrant instruments that could potentially require “net cash settlement” in the absence of express language precluding such settlement are initially classified as financial liabilities at their fair values, regardless of the likelihood that such instruments will ever be settled in cash. We will continue to classify the fair value of the warrants that contain “net cash settlement” as a liability until the share warrants are exercised, expire or are amended in a way that would no longer require these warrants to be classified as a liability.
The outstanding warrants are recognized as a warrant liability on the balance sheet and measured at fair value on inception date and subsequently re-measured at each reporting period with change recognised in the consolidated statements of profit or loss and other comprehensive income.
Intangible assets
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
2
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a written down basis over the period of their expected useful lives. Estimated useful lives by major class of finite-life intangible assets are as follow:
| Customers acquisition | 5 Years | |
| Trademark/Copy rights | 5 Years | |
| Computer Software | 5 Years | |
| Commercial rights | 5 – 10years |
The amortization period and the amortization method for definite life intangible assets is reviewed annually.
For indefinite life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis revised estimates.
Goodwill on acquisitions of subsidiaries represents the excess of (i) the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (ii) the fair value of the identifiable net assets acquired. Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. These assets are not amortized but are tested for impairment annually.
Gains and losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the entity sold.”
IAS 38 requires an entity to recognize an intangible asset, whether purchased or self-created (at cost) if, and only if: IAS 38.21
| a. | it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and |
| b. | the cost of the asset can be measured reliably. |
The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. IAS 38.22 The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. IAS 38.33
Para 25 of IAS 38 provides that the price an entity pays to acquire separately an intangible asset will reflect expectations about the probability that the expected future economic benefits embodied in the asset will flow to the entity. In other words, the entity expects there to be an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. Therefore, the probability recognition criteria in Para 21(a) is always considered to be satisfied for separately acquired intangible assets. Para 26 of IAS 38 provides that the costs of a separately acquired intangible asset can usually be measured reliably. This is particularly so when the purchase consideration is in the form of cash or other monetary assets.
Development costs mainly relate to developed computer software programmes. Such computer software programmes that do not form an integral part of other related hardware is treated as an intangible asset. Development costs that are directly associated with development and acquisition of computer software programmes by the Group are capitalised as intangible assets when the following criteria are met:
| ● | it is technically feasible to complete the computer software programme so that it will be available for use; |
| ● | management intends to complete the computer software programme and use or sell it; |
| ● | there is an ability to use or sell the computer software programme; |
| ● | it can be demonstrated how the computer software programme will generate probable future economic benefits; |
| ● | adequate technical, financial and other resources to complete the development and to use or sell the computer software programme are available; and |
| ● | the expenditure attributable to the computer software programme during its development can be reliably measured. |
Direct costs include salaries and benefits for employees on engineering and technical teams who are responsible for building new computer software programmes.
3
Expenditure that enhances or extends the performance of computer software programmes beyond their original specifications and which can be reliably measured is added to the original cost of the software. Costs associated with maintaining computer software programmes are recognised as an expense when incurred.
Completed development costs in progress are reclassified to internally developed intangible assets. These internally developed intangible assets are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the consolidated statements of profit or loss and other comprehensive income using a straight-line method over their estimated useful lives. Development cost in progress is not amortised.
Deferred offering costs
Deferred Offering Costs consists of legal, accounting, underwriter’s fees, and other costs incurred through the balance date that are directly related to the proposed Initial Public Offering (IPO) and that would be charged to stockholder equity upon completion of the proposed IPO. Should the proposed IPO prove unsuccessful, deferred costs and additional expenses to be incurred would be charged to operations. The Company has no deferred offering costs for the period ended September 30, 2023 and/or for the year ended March 31, 2023. As of September 30, 2022, the Company had deferred offering costs of $34,165.
Revenue from Contract with Customers and Other Income
We derive substantially all of our revenue from usage-based fees earned from customers subscribing to our streaming/telecasting, content management services and other products. Generally, customers enter into 12-month contracts and are invoiced monthly in advance based on usage. Refer to Note 19 and 20 for details on modification and acquisition of Sri Sai.
During the six months ended September 30, 2023, our total income of $9,712,550 comprised of Revenue from Contract with Customers of 9,660,331 and other income of $52,219, whereas during the six months ended September 30, 2022, our total income of $10,132,338 comprised of Revenue from Contract with Customers of $9,771,496 and other income of $360,842.
The overall decrease of $419,788 or 4%, which is primarily comprised of (a) decrease in Revenue from Contract with Customers by $111,165 or 1%; and (b) decrease in Other Income by $308,623 or 86% arising from balances written back.
| STATEMENT OF OPERATIONS DATA: | For the year ended September 30, 2023 | For the year ended September 30, 2022 | Change | |||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||
| Operating revenue | 9,660,331 | 99 | % | 9,771,496 | 96 | % | (111,165 | ) | -1 | % | ||||||||||||||
| Other Income | 52,219 | 1 | % | 360,842 | 4 | % | (308,623 | ) | -86 | % | ||||||||||||||
| Total Revenue | 9,712,550 | 100 | % | 10,132,338 | 100 | % | (419,788 | ) | -4 | % | ||||||||||||||
4
The revenue from contract with customers and other income consist of:
Disaggregated revenue information
| Revenue from contract with customers | For the 6 months ended September 30, 2023 | For the year ended March 31, 2023 | Change Sept 23 vs March 23 | |||||||||||||
| (In USD) | (In USD) | (In USD) | % | |||||||||||||
| Types services | ||||||||||||||||
| Subscription Income | 6,760,470 | 7,100,862 | (340,392 | ) | -5 | % | ||||||||||
| Carriage/Placement Fees | 2,548,959 | 1,635,824 | 913,135 | 56 | % | |||||||||||
| Advertisement Income | 244,074 | 827,517 | (583,443 | ) | -71 | % | ||||||||||
| Activation fees | 106,828 | 207,293 | (100,465 | ) | -48 | % | ||||||||||
| Total revenue from contract with customers | 9,660,331 | 9,771,496 | (111,165 | ) | -1 | % | ||||||||||
| Other income | ||||||||||||||||
| Fair value gains on remeasurement of warrant liability | 2,106 | - | 2,106 | 100 | % | |||||||||||
| Sundry Balances written back | 50,113 | 360,842 | (310,729 | ) | -86 | % | ||||||||||
| Total Other Income | 52,219 | 360,842 | (308,623 | ) | -85 | % | ||||||||||
| Total Income | 9,712,500 | 10,132,338 | (419,788 | ) | -4 | % | ||||||||||
Cost recognition
Costs and expenses are recognized when incurred and have been classified according to their primary functions in the following categories:
Cost of revenue
The Company has incurred cost of revenue for the six months period ended September 30, 2023, of $7,757,172, which is relating to Sri Sai business, whereas it has incurred costs of revenue for the six months period ended September 30, 2022 of $7,163,929. The increase of $593,243 or 8% is on account of decrease in subscriber levels and fixed costs remaining the same.
5
Staffing Expenses
For the six-month ended September 30, 2023, the staffing costs was $471,181, representing an increase of $156,460 from the six months ended September 30, 2022, of $314,721. The increase was primarily due to the acquisition of Sri Sai.
Amortisation and other expenses
Other operating expenses consist primarily of general and administrative expenses like electricity, software running expenses, repairs and maintenance, travelling expenses etc.
Legal and professional expenses were $259,837 for the six months ended September 30, 2023, representing a decrease of $1,432,554 or 85% from $1,692,391 in the six months ended September 30, 2022.
Amortization and depreciation costs were $453,791, for the six months ended September 30, 2023, representing a decrease of $152,415 or 51% from $301,376 in the six months ended September 30, 2022.
Other operating expenses was $1,464,296 for the six months ended September 30, 2023, representing an increase of $388,754 or 36% from $1,075,542 in the six months ended September 30, 2022.
Finance and other cost
For the six months ended September 30, 2023, the most significant components of finance expenses were share warrant expenses, which was $619,593, representing an increase of $386,158 or 165% from $233,435 in the six months ended September 30, 2022.
Liquidity and Capital Resources
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures. As we continue to grow our subscriber base, we expect an initial funding period to grow new products as well as working capital impacts from the timing of device-related cash flows when we provide the devices to customers pursuant to equipment instalment plans. Further, the Company has acquired 51% of Sri Sai, as part of the earlier arrangement and has correspondingly modified its earlier arrangement with the erstwhile partner, in terms of the residuary transaction (refer Note 20 for detailed discussion) as a plan to expand its subscriber base.
6
Off-balance Sheet Arrangements
Under SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:
| ● | Any obligation under certain guarantee contracts, |
| ● | Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets, |
| ● | Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, |
| ● | Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us. |
| ● | We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States. |
| ● | We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. |
The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to the allowance for doubtful accounts, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets, valuation of deferred tax assets, fair value estimation of warrants and critical judgement over capitalisation of internally developed intangible assets and development cost in progress.
We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
We did not have any undisclosed off-balance sheet arrangements as of September 30, 2023 and September 30, 2022.
Trade Receivable
Assessment as to whether the trade receivables from Sri Sai business are impaired: When measuring Expected Credit Loss (ECL) of receivables and other receivables related to Sri Sai business the Group uses reasonable and supportable information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
7
The payment protocols with respect to the Telecast and OTT services are very closely regulated by the Ministry of Telecommunications along with other departments of the Government of India. The payment gateways reporting protocols for the cable industry are very robust, with most of the transactional interactions with the customers in this industry being subject to independent audits by the government. Payments processed online by customers electronically are reported promptly.
Please refer Note 19 and Note 20 relating to modification of earlier arrangement and acquisition of Sri Sai.
Impairment of property and equipment and intangible assets excluding goodwill:
At each reporting date, the Group reviews the carrying amounts of its property and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the end of a reporting period that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.”
Assessment as to whether the trade receivables and other receivables from The erstwhile partner are impaired
When measuring Expected Credit Loss (ECL) of receivables related to Sri Sai business the Group uses reasonable and supportable information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
A widespread health crisis could adversely affect the global economy, resulting in an economic downturn that could impact demand for our services. The future impact of the outbreak is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have a material adverse impact on our future results. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus.
8
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of its total revenues.
| STATEMENT OF OPERATIONS DATA: | For the 6 months ended 30 September 2023 | % | For the 6 months ended 30 September 2022 (Restated) | % | Change | |||||||||||||||||||
| $ | $ | $ | % | |||||||||||||||||||||
| Operating revenue | 9,660,331 | 99 | % | 9,771,496 | 96 | % | (111,165 | ) | -1 | % | ||||||||||||||
| Other Income | 52,219 | 1 | % | 360,842 | 4 | % | (308,623 | ) | -86 | % | ||||||||||||||
| Total Revenue | 9,712,550 | 100 | % | 10,132,338 | 100 | % | (419,788 | ) | -4 | % | ||||||||||||||
| Cost of revenue | 7,757,172 | 80 | % | 7,163,929 | 74 | % | 593,243 | 8 | % | |||||||||||||||
| Other operating expenses | 1,464,296 | 15 | % | 1,075,542 | 11 | % | 388,754 | 36 | % | |||||||||||||||
| Legal and professional expenses | 259,837 | 3 | % | 1,692,391 | 17 | % | (1,432,554 | ) | -85 | % | ||||||||||||||
| Staffing expenses | 471,181 | 5 | % | 314,721 | 3 | % | 156,460 | 50 | % | |||||||||||||||
| Depreciation and amortisation | 453,791 | 5 | % | 301,376 | 3 | % | 152,415 | 51 | % | |||||||||||||||
| Net income | (693,727 | ) | -7 | % | (415,621 | ) | -4 | % | (278,106 | ) | 67 | % | ||||||||||||
| Interest expenses | 619,593 | 6 | % | 233,435 | 2 | % | 386,158 | 165 | % | |||||||||||||||
| Interest income | - | 0 | % | - | 0 | % | - | 0 | % | |||||||||||||||
| Income (loss) from continuing operations before income taxes | (1,313,320 | ) | -14 | % | (649,056 | ) | -7 | % | (664,264 | ) | 102 | % | ||||||||||||
| Income tax | (31,380 | ) | 0 | % | 256,950 | 3 | % | (288,330 | ) | -112 | % | |||||||||||||
| Net income after tax | (1,281,940 | ) | -13 | % | (906,006 | ) | -9 | % | (375,934 | ) | 41 | % | ||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||
| Items that may be reclassified subsequently to income | - | - | ||||||||||||||||||||||
| Foreign currency translation reserves of subsidiaries, net of tax | 104,316 | 266,091 | (161,775 | ) | -61 | % | ||||||||||||||||||
| Total comprehensive income for the period | (1,177,624 | ) | (639,915 | ) | (537,709 | ) | 84 | % | ||||||||||||||||
| Attributable to: | - | - | - | |||||||||||||||||||||
| Controlling interest | (1,391,842 | ) | (931,509 | ) | (460,333 | ) | 49 | % | ||||||||||||||||
| Non-controlling interest | 213,737 | 291,233 | (77,496 | ) | -27 | % | ||||||||||||||||||
| Basic income per common share | (1.98 | ) | (1.55 | ) | ||||||||||||||||||||
| Diluted income per common share | (1.98 | ) | (1.55 | ) | ||||||||||||||||||||
Revenue
We derive substantially all of our revenue from usage-based fees earned from customers subscribing to our streaming, content management services and other products. Generally, customers enter into 12-month contracts and are invoiced monthly in advance based on usage.
Lytus Technologies Private Limited (“Lytus India”), our wholly-owned subsidiary incorporated in India, did not have significant operations during the six months ended September 30, 2023 and during the fiscal year ended March 31, 2023. Lytus India has acquired Sri Sai that has active business operations and that meets the criteria (5 steps) for recognizing revenue from contracts with customers in pursuant to IFRS 15.
9
During the six months ended September 30, 2023, our total income of $9,712,550 comprised of Revenue from Contract with Customers of $9,660,331 and other income of $52,219, whereas during the six months ended September 30, 2022, our total income of $10,132,338 comprised of Revenue from Contract with Customers of $9,771,496 and other income of $360,842.
The overall decrease of $419,788 or 4%, which is primarily comprised of (a) decrease in Revenue from Contract with Customers by $111,165 or 1%; and (b) decrease in Other Income by $308,623 or 86% arising from balances written back.
The number of subscribers pertaining to Sri Sai business were 801,763 for six months period ending September 30, 2023 and 877,318 for the year ended March 31, 2023. The decrease in subscribers was primarily driven by competition in the OTT streaming market. However, management believes that the decrease is marginal and will be retained when platform services are launched.
Other Income/Application of IFRS 15
The following table presents other income (including fair value gains on warrant liability) for the six months period ended September 30, 2023 and for the year ended March 31, 2023.
| Revenue from contract with customers | For the 6 months ended September 30, 2023 | For the year ended March 31, 2023 | Change Sept 23 vs March 23 | |||||||||||||
| Other income | ||||||||||||||||
| Fair value gains on remeasurement of warrant liability | 2,106 | - | 2,106 | 100 | % | |||||||||||
| Sundry Balances written back | 50,113 | 360,842 | (310,729 | ) | -86 | % | ||||||||||
| Total Other Income | 52,219 | 360,842 | (308,623 | ) | -85 | % | ||||||||||
The Group acquired approximately 1 million subscriber connections from a licensed streaming company (Sri Sai), effective from April 1, 2022.
Cost recognition
Costs and expenses are recognized when incurred and have been classified according to their primary functions in the following categories:
Cost of revenue
The Company has incurred cost of revenue for the six months period ended September 30, 2023, of $7,757,172, which is relating to Sri Sai business, whereas it has incurred costs of revenue for the six months period ended September 30, 2022 of $7,163,929. The increase of $593,243 or 8% is on account of decrease in subscriber levels and fixed costs remaining the same.
10
Staffing Expenses
For the six-month ended September 30, 2023, the staffing costs was $471,181, representing an increase of $156,460 from the six months ended September 30, 2022, of $314,721. The increase was primarily due to the acquisition of Sri Sai.
Amortisation and other expenses
Other operating expenses consist primarily of general and administrative expenses like electricity, software running expenses, repairs and maintenance, travelling expenses etc.
Legal and professional expenses were $259,837 for the six months ended September 30, 2023, representing a decrease of $1,432,554 or 85% from $1,692,391 in the six months period ended September 30, 2022.
Amortization and depreciation costs were $453,791, for the six months ended September 30, 2023, representing a decrease of $ 152,415 or 51% from $301,376 in the six months period ended September 30, 2022.
Other operating expenses was $1,464,296 for the six months ended September 30, 2023, representing an increase of $388,754 or 36% from $1,075,542 in the six months ended September 30, 2022.
Finance and other cost
For the six months period ended September 30, 2023, the most significant components of finance expenses were share warrant expenses, which was $619,593, representing an increase of $386,158 or 165% from $233,435 in the six months ended September 30, 2022.
Foreign Currency Exchange Rate Risk
As a result of our operations, primarily in India and the United States, we are exposed to currency translation impacts. Our reporting currency is the U.S. dollar. Our functional currency is the U.S. dollar and the functional currency of Lytus India, Sri Sai and DDC (deconsolidated on April 1, 2021), which generate the majority of our revenue, is the Indian Rupees (“INR”). The financial statements of our subsidiaries whose functional currency is the INR are translated to U.S. dollars using period end rates of exchange for assets and liabilities, average rate of exchange for revenue and expenses and cash flows, and at historical exchange rates for equity. As a result, as the Rupee depreciates or appreciates against the U.S. dollar, our revenue presented in U.S. dollars, as well as our Dollar-Based Net Expansion Rate, will be negatively or positively affected. Constant Currency Dollar-Based Net Expansion Rate is calculated using fixed exchange rates to remove the impact of foreign currency translations.
As a result of foreign currency translations, which are a non-cash adjustment, we reported exchange difference on foreign currency translation of subsidiaries, net of tax of $104,316 for the six months ended September 30, 2023 and $266,091 for the six months ended September 30, 2022.
Interest Rate Sensitivity
Cash and short-term investments were held primarily in bank and time deposits. The fair value of our cash and short-term investments would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
11
B. Liquidity and Capital Resources
Liquidity and Capital Resources:
The components of cash flow for the six months ended September 30, 2023 and September 30, 2022:
| For the year September 30, 2023 | For the year September 30, 2022 | |||||||
| Net cash provided by/(used in) operating activities | $ | 372,260 | $ | (1,858,087 | ) | |||
| Net cash used in investing activities | (2,477,923 | ) | (6,081,553 | ) | ||||
| Net cash provided by financing activities | 1,880,059 | 11,608,358 | ||||||
| Cash acquired in business combination (refer note 23) | - | 432,138 | ||||||
| Exchange rate effect on cash | (1,098 | ) | (5,792 | ) | ||||
| Net cash inflow (outflow) | $ | 85,108 | $ | 4,103,822 | ||||
Cash provided by/used in Operating Activities
Net cash provided by operating activities was $372,260 for the six months ended September 30, 2023 and net cash used in operating activities was $1,858,087 for the six months ended September 30, 2022.
Cash used in Investing Activities
Net cash used in investing activities was $2,477,923 for the six months ended September 30, 2023 and net cash used in investing activities was $6,081,553 for the six months ended September 30, 2022.
Cash provided by Financing Activities
Net cash provided by financing activities was $1,880,059 for the six months ended September 30, 2023 and net cash provided by financing activities was $11,608,358 for the six months ended September 30, 2022.
12
Going Concern:
Negative working capital and Cash Flow
We have a negative working capital of $10,192,682 as of September 30, 2023 and $8,932,501 as of March 31, 2023 and cash flow from operating activities to the extent of $372,260 for the six months ended September 30, 2023 and to the extent of $1,153,335 for the year ended March 31, 2023. Further, the current liabilities of the company as of September 30, 2023, were $19,014,035 and as of March 31, 2023, were $15,258,547 and non-current liabilities as of September 30, 2023, were $752,316 and as of March 31, 2023, were $882,749.
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditure. As we continue to grow our subscriber base, we expect an initial funding period to grow new products that may have an impact from the timing of device-related cash flows when we provide the devices to customers pursuant to equipment instalment plans.
We expect to utilize free cash flow, cash on hand, and availability under our credit facilities, as well as future refinancing transactions for future business operations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or redemption provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and access to the capital markets to fund our projected cash needs.
As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, dispositions or system swaps, or that any such transactions will be material to our operations or results.
The Consolidated Condensed Interim Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
Critical Accounting Estimates
Under IFRS 1, the Group is required to make estimates and assumptions in presentation and preparation of the financial statements for the year ended March 31, 2023 and March 31, 2022.
Key estimates considered in preparation of the financial statement that were not required under the previous GAAP are listed below:
Fair Valuation of financial instruments carried at Fair Value Through Profit or Loss (“FVTPL”) and/or Fair Value Through Other Comprehensive Income (“FVOCI”). See Note 1 on Financial Instruments on page F-13 – F-15 for additional discussion on FVTPL and FVOCI.
Impairment of financial assets based on the expected credit loss model.
Determination of the discounted value for financial instruments carried at amortized cost.
Fair value estimation of share warrants.
Critical judgement over capitalisation of internally developed intangible assets and development cost in progress.
13
Assessment as to whether the trade receivables are impaired.
When measuring Expected Credit Loss (ECL) of receivables the Group uses reasonable and supportable information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
A widespread health crisis could adversely affect the global economy, resulting in an economic downturn that could impact demand for our services. The future impact of the outbreak is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have a material adverse impact on the future results of the Company. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus.
| ● | Impairment of property and equipment and intangible assets excluding goodwill |
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the end of a reporting period that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.
Note on Subsequent Events
Management has evaluated subsequent events to determine if events or transactions occurring through, except for the disclosures related to subsequent events described below, as to which the date is April 10, 2024, the dates the financial statements were available for issuance, require potential adjustment to or disclosure in the financial statement and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.
On February 5, 2024, the Company has announced a reverse stock split of its issued and outstanding ordinary shares, par value $0.01 per share at a ratio of 1-for-60 so that every 60 shares issued is combined to 1 share. As a result of the Reverse Split, the Company’s issued and outstanding ordinary shares was reduced from 93,679,260 shares to 1,561,309 shares.
On November 24, 2023, the Company has additionally issued stock registered on Form S-8 to the following persons:
| Name | Nos. of Common Stock | |||
| Dharmesh Pandya, Global CEO and Lytus Trust (creating a bank of shares for potential partners, key employees, etc.) | 40,000,000 | |||
14