istreet network ltd Management discussions

Industry and the Company Business Model:

The company was in Internet & Retail Catalogue business and was developing a hybrid/fusion model for Retail. The business model of the company was fusion of offline and online retail. Through its innovative business model, the company was empowering the smaller retailers to expand their product offerings by adopting the concept of Internet Retail, as promoted by the company. The company was providing virtual inventory thru internet to these smaller and marginal retailers in order them to offer the same to their customers. It had solved two major problems of these small retailers one space constrains and the second one was working capital. The companys Internet Retail Stores were known as ‘iStreet Bazaar. Through this business model, common people who had constraints in buying products online, could do so at these neighborhood retail stores. The companys network of these Internet Retail Stores was one of the major assets for the company to run its business. These network retailers gave eCommerce shopping experience to customers based on trust and relationship. This model was unique and innovative. However, the company failed in raising the required capital and therefore it had to pause the project in 2017. The company has been trying to raise capital for the project and also working on its revised business strategy in order to focus on profitability.

AI is an emerging area that is widely known for its vast potential, its rapid scaling of capability and applications and the high value markets that are growing and require capabilities, products and services worldwide. At this stage there are four areas Computer Vision, Machine and Deep Learning, Analytics and Data Mining and Natural Language Processing that AI is playing a large role and these are the areas in which there is a need to develop competence, capabilities and expertise. The company plans to have its foot print in this space and working on these.

The company believes that there will be a huge requirements of AI professionals in the coming short to medium term. And accordingly, the company has also started working on AI Education project. The company is preparing for the same in collaboration with few companies in this space.

All these developments at the company, which have been the outcome of its innovative approach driven by research and the latest technologies, will yield good results in the near future in order to build a robust business model.

Discussion on Financial Position Relating to Operational Performance:

There is no change in the Share capital and Securities Premium account of the company. There are 70 lacs Equity Warrants outstanding as on 31^st March 2023. The other comparative expenses are given below: Rs. In Lacs

Particulars	FY 2022-23	FY 2021-22	Change	Remarks
Share Capital	852	852	-	No Change
Reserves & Surplus:
i. Securities Premium Account	228.36	228.36	-	No Change
ii. Capital Reserve	8.60	8.60	-	No Change
iii. Profit and Loss	-24.06	0.54	-23.52	No revenue
Long Term Borrowings	180	200	20	Repayment done
Short Term Borrowings	-	-	-	-
Trade Payables	1.97	2.6	0.63	No major change
Other Current Liabilities	8.82	11.97	3.15	No major change
Fixed Assets :
Tangible Assets	-	-	-
Intangible Assets	-	-	-
Non-Current Investments	0.66	0.66	-	No Change
Long-Term Loans and Advances	-	-	-
Inventories	-	-	-
Trade Receivables	9.13	9.13	-	No Change
Cash and Cash Equivalents	10.5	65.2	54.7	Deploy for operations
Short-Term Loan & Advances	-	-	-
Other Current Assets	1.14	-	1.14

Performance of Business:

The company didnt have any revenue during the year. It is expected to start its operations soon in order to generate the revenue.

The company had invested huge resources to build its Internet Retail business. The present accounting standards does not recognize such spending as value of intangibles assets like network of retailers, technology, last mile delivery infrastructure, supply chain, branding etc.

In March 2017, the company had been classified into the Graded Surveillance Measure (GSM) list by BSE. The criteria for classifying the company into GSM was not very clear to us. Consequent to classifying into GSM, the company was unable to raise fresh capital for the business and hence suspended its operation wef April, 2017 for the identifying new business model. The company is implementing its new business strategy with a focus on ‘profitability with available internal resources. The company carried out certain pilots of new ventures like B2B market place, green mobility bike sharing etc. However, it could not take these forward due to certain trade practices like credits, delivery, GST, pandemic etc. However, it has controlled its operational expenses to a great extent while working on the new business opportunity. The company is now exploring the opportunity in Artificial Intelligence space.

The comparative performance and the reasons of variation is given in the following table:

(Rs. in Lakhs.)

Particulars	FY 2022-23	FY 2021-22	Change	Remarks
Revenue from Operations	-	16.83	16.83	No billing for FY 22-23
Employee Benefit Expense	3.01	0.01	3	Payment to employees
Depreciation & Amortization	-	0.15	0.15	No depreciable assets
Expenses	21.97	16.16	5.81	Business related expenses gone up
	-	-	-
Finance Cost				-
Other Expenses	31.97	16.16	15.81	Business related expneses gone up
Net Profit/(Loss)	-24.06	0.54	-24.6	Loss due to the higher business expenses

Overall Business during FY 2022- 23

Business details

There was no major commercial business during the year. However, the company continues to look for the new opportunities including Retail eCommerce, Artificial Intelligence and related areas. The company shall keep informed thru announcements as it progresses in the new ventures in time to come.

Legal Compliances:

The Company is legally compliant and taken all the necessary steps to protect its brand image at all levels. The company timely complies with all the mandatory compliances with regulatory authorities

Internal controls: for the preparation and presentation of the financial statements, in particular, the assertions on the internal financial controls in accordance with broader criteria established by the Company. We have established an internal control system for the Company, comprising of the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to

Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation and presentation of reliable financial information.

Opportunity & Our Focus:

The company is exploring the opportunities in Retail eCommerce and Artificial Intelligence (AI). AI is an emerging space widely known for its vast potential and its rapid scalability. The same way, eCommerce (Retail) is also expanding very rapidly. The company should be able to move forward soon in these identified areas.

Risk & Concerns

The companys business has always been running on technology. Changing technology is changing the business landscape rapidly. The company is making efforts for reviving its Retail eCommerce in its new AVATAR along with the other latest technology tools like AI.

Fresh fund / capital raising is another major concern for the company. However, it has been managing its cashflow successfully so far and now that it has also issued 70 lacs Equity Share Warrants in order to raise the capital. In the present scenario, the operational expenses are tightly controlled and major resources are deployed at a very low or no cost basis till the company reaches to a stage of revenue.

Fund Raising:

Our Business was an Asset Light Business Internet Retail which required huge capital to fund its project. The funds were required for running and scaling business in various heads like technology, marketing, branding, fulfillment infrastructure etc. The company faced this as the biggest risk during the past times. The Company has been making efforts to raise money through various routes like Preferential Issue,

Venture funds, Private Equity etc. It became even more difficult due to classification of the Companys shares into Graded Surveillance Measure (GSM) list by Bombay Stock Exchange (BSE). It has led to a complete roadblock in terms of raising of further capital and thus new fund raising has become an extremely challenging and a daunting task.

However, with its constant efforts to raise funds for its new business opportunity and to meet its working capital requirements, the company was able to raise small funds by issuing 70 lacs Equity Warrants for Rs. 4 each during March, 2022 which will be converted into equity shares upon receiving FULL amount in the next 18 months, as per the terms of issue.

Future Outlook

The company is working on different models of business driven by e-commerce, Retail and AI. The technologies in all these areas have application in several sectors, functions etc. The company is in the process of choosing the best possible route which gives faster profitability. The company has been able to reduce its operating expenses in order to minimize the losses during the year. For update, we request you to keep visiting our website www.istreetnetwork.com.

Cautionary Statement

The report contains forward-looking statements, identified by words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘believes, ‘intends, ‘projects, ‘estimates and so on. All statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.