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.

While we acknowledge that the current situation on the ground on account of the COVID-19 pandemic is grim, with the efforts currently implemented by the Indian government in conjunction with the U.S. and other countries, the number of new cases reported is already seeing a steady decline in major metro areas where most of the Company’s customers reside.

The Company’s business continues to be adversely affected by the COVID-19 crisis in India. However, we believe that steps implemented by the Company since the last lockdown in April 2020 and successive lockdowns thereafter, will enable the Company to keep the disruption caused by the COVID-19 pandemic to a minimum.

The Company does not expect the lockdown to cause any asset impairment. While we expect the lockdown to delay the collection processes from various offices in the country temporarily, there should be no impact on collectability of those payments from customers. In response to the current lockdown, the Company’s management has been in close communication with the Reachnet’s operational team to identify and address any impact to the business. Upon the relaxation of the lockdown, the Company will work expeditiously to resume normal functionality.

Given that Reachnet is an ongoing operations partner of Lytus India with respect to the telecasting business, the collectability of the amounts does not pose a significant risk for the following reasons:

1.      Reachnet is a licensed cable company and is regularly audited by the Ministry of Information and Broadcasting. These audits regularly confirm number of subscribers and subscriptions fees reported in the Nationwide SMS platform (Subscriber Management Platform);

2.      The Management of the Company and Reachnet have implemented protocols requiring the finance teams of both companies to closely monitor the amounts receivable and payable providing relevant confirmations periodically;

3.      To the extent that Reachnet is unable to collect or pay the amounts owed to the Company, the Company has the ability to set those amounts off against any future payments to Reachnet in conjunction with the ongoing operations of the company;

4.      The Company has the ability to take legal action against Reachnet and or its directors for non-payment of dues owed to the Company. Under Indian law, remedies pursued against the management of Reachnet can be both civil remedies as well as remedies under the Indian Penal Code; and

5.      Upon ending of the lockdown and reconciliation of all payments with Reachnet, the Company intends to implement a direct billing system with its customers so that it has better visibility and control over revenue streams from customers.

Please refer accounting policy relating to intangible asset on page F-17 for assumptions and estimates.

____________

4          Under IFRS 1, the Group is required to make estimates and assumptions in presentation and preparation of the financial statements for the period March 16, 2020 (date of inception) through March 31, 2020. and for the year ended March 31, 2021.

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-12 – F-14 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.

          Previous GAAP figures of subsidiaries have been reclassified/regrouped to confirm the presentation requirements under IFRS.

          As such there are no material differences or impact due to transition from Indian GAAP to IFRS and hence restated summaries of equity and profit & loss not given for subsidiaries.

Impairment of property, plant 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. 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 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.

COVID-19 pandemic and re-lockdown measures taken by the government of Maharashtra, India is of short-term nature and ought to have no impact on collectability of the $0.4 million Trade Receivable and $35.6 million Other Receivables due from DDC CATV and Reachnet as of March 31, 2021, respectively.

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.

Effective April 2, 2021, the Indian Government in an effort to control the COVID-19 Pandemic has imposed lockdown in different parts of India, extending until the restriction is relaxed. As of date, the lockdown restriction is not relaxed. With the number of new COVID-19 cases stabilizing in the major metro areas, we expect the lockdown to be relaxed soon. However, future lockdowns cannot be ruled out because of the nature of the pandemic.

Results of Operations

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-own subsidiary in India, did not have significant operations during the fiscal year ended March 31, 2020, and for the fiscal year ended March 31, 2021.

For the fiscal year ended March 31, 2021, Lytus Group had an operating revenue income of approximately $2 million as compared to NIL in the fiscal period ended March 31, 2020.

The Company has derived income of approximately $16 million from cable business and approximately $0.34 million from telemedicine services for the year ended March 31, 2021. Further, the Company has generated profits before tax from continuing operations of approximately $2 million from cable business and approximately $0.06 million from telemedicine services for the year ended March 31, 2021.

Other Income/Application of IFRS 15

We had other income of $15.7 million, net for the period March 16, 2020 (date of inception) through March 31, 2020, and $14.6 million, net for the year ended March 31, 2021. The Company’s financial performance was substantially similar to its previous year. The other income decreased by $1 million from the prior year on account of the fact that the lockdown in March 2021 temporarily impacted the ability of the company to collect subscription fees from its customers prior to its fiscal year end on March 31, 2021. The company did collect the other income relating to March 2021 in the subsequent months.

The Company intends to continue growing its subscriber base through strategic identified acquisitions and partnerships. It also intends to grow its revenue base through increased offerings in the Telemedicine space.

Cost recognition

Costs and expenses are recognised 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. It consists primarily of cost of materials consumed ($147,309); broadcaster/subscription fees ($658,840); and leaseline charges ($118,785). Costs of revenue are recognised when incurred and have been classified according to their primary function

Staffing Expenses

For the fiscal year ended March 31, 2021, the most significant components of operating expenses are staffing expense, which was $446,022, consisting of salaries, benefits and bonuses, representing an increase of $430,245 for the year ending March 31, 2021, from $15,777 for the period March 16, 2020 (date of inception) through March 31, 2020.

Amortisation and other expenses

Other operating consists primarily of general and administrative expenses like electricity, software running expenses, repairs and maintenance, travelling expenses etc. For the fiscal year ended March 31, 2021, we incurred legal and professional expenses of $392,954, amortization and depreciation costs of $12,171,832 and other operating expenses of $584,734, while during the period March 16, 2020, through March 31, 2020, we incurred legal and professional expenses of $272,894, amortization costs of $204,086 and other operating expenses of $8,463.

Following the completion of this offering, we expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services. We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future. Although these expenses may fluctuate as a percentage of our total revenue from period to period, over the long term, we expect general and administrative expense to gradually decline as a percentage of revenue as we scale our business.

Income Taxes

Our income tax consists of the following as of March 31, 2020: $3,894,674 as our income tax expenses, including current tax of $1,987,659 and deferred tax of $1,907,015.

Deferred tax related to the translations of foreign operations of Lytus India and DDC from INR to USD has been calculated at the rate of the jurisdiction in which a subsidiaries are situated, i.e. in India (at the rate of 25.17%).

During the fiscal year ended March 31, 2021, our income tax expenses of $616,893, includes current tax of $371,021 and deferred tax of $245,872.

Going Concern, Liquidity and Capital Resources

Note on Going Concern:

Impact of COVID-19 on operations

The COVID-19 crisis has had a significant impact on the economy of India. While the pandemic, has increased the demand for streaming and telemedicine services globally, there continue to be significant uncertainties associated with the COVID-19 pandemic, including with respect to the ultimate spread of the virus, the severity of the disease, the duration of the lockdowns and further actions that may be taken by governmental authorities around the world to contain the virus or to treat its impact. The pandemic has particularly impacted the working capital, cash flow and the timing of receipt of significant receivables and payables of the Company. These restrictions have also severely impacted the mobility of the Company’s staff and resources and its access to banks and customer worksites, impairing its normal operations. The lockdown in India is strict with limited domestic travel. Local travel within a city was not allowed, either. Therefore we have had limited access to various cities, such as Hyderabad, where our customers reside. Many offices were closed and banks were severely affected. As a result of the lockdown policy in India, we also have had restricted access to banking services, Subscriber Management System (SMS) report, prior to settlement, and service providers certifying the adequacy of the fiber held by Reachnet. Moreover, in India most of the collections by local cable operators are still in cash and these have been affected/delayed due to lockdown. On September 18, 2020, the restriction under Section 144 of the Code of Criminal Procedure was also passed, prohibiting movement and gathering of people, except for listed emergency and non-emergency services. While the lockdown measures have been relaxed across many parts of the country, specific areas of major metros continue to see high incidence of new cases of COVID-19. Specific pockets of the country where the Company’s customers are based, are expected to see continued lockdowns through October 2021.

The intermittent inability to process accounts receivables and receive cash payments has resulted in liquidity issues and impacted the operations of both the Company and Reachnet. However, the Company, in collaboration with Reachnet’s management, has taken necessary steps, including communicating with all relevant commercial partners, seeking deferral of its payment obligations where possible, to mitigate the impact of COVID-19 on the Company’s liquidity.

On February 5, 2021, Lytus India and Reachnet entered into the Third Supplemental Agreement to the original subscriber acquisition agreement dated June 20, 2019, pursuant to which the parties have agreed to, on a good faith basis, settle payments upon completion of the third party’s systems and operational review of Reachnet and its subscribers. The commercial terms to the agreement remain intact and are not subject to any contingency. Given the uncertainty with respect to another potential lockdown caused by a recent COVID-19 resurgence in India, the parties have also agreed that setting off the amounts due, can be an option, if required. With the impending threat of a “third wave”, international and domestic travel continue to remain interrupted.

The Company engaged an independent third-party reviewer to carry out a systems audit of Reachnet’s operations before making any payments under the contract. This independent review was commenced on April 1, 2021 and was interrupted on account of COVID-19 related nationwide lockdowns that were implemented in different states starting April 11, 2021. During such lockdown, the third party audit team had restricted access to the sites and employees of Reachnet and was not able to complete the audit.

The following verification had been completed when nationwide lockdown was imposed:

•        Virtual verification of Subscriber Management Systems and its status from time to time;

•        Partial physical verification of Subscriber Management System;

•        Verification of headend equipments in major metros in Maharashtra;

The following verification remains pending in the States of: West Bengal, Andhra Pradesh, Kerala, Haryana, certain parts of national capital region, rural parts of Maharashtra and Karnataka:

•        Physical verification of overhead fiber;

•        Physical verification of underground fiber;

•        Verification of nodes in smaller metros;

•        Technology redundancy review of all servers;

•        Physical verification of final active customers; and

•        Physical verification of the local cable office resources.

Currently the local cable operator locations in the states of rural Maharashtra, certain parts of the National Capital Region, Madhya Pradesh, West Bengal and Kerala continue to be impacted by the lockdown. Metro Mumbai and metro Pune have lifted most COVID-19 related restrictions. The incidences of new infections in India have substantially reduced with the government of India reaching a critical milestone of administering 1 billion vaccinations. Banking services have largely resumed functionality and are no longer an issue. The Subscriber Management System is partially accessible in areas where the restrictions have been lifted. The Company has commenced the third-party review with respect to the operations and is committed to completing the review before the end of December 31, 2021. However, there is uncertainty regarding the impact of Omicron variant and any potential lockdown related to it. Any such lockdown imposed may have an impact on the timing of the third-party review.

As per the terms of the third supplemental agreement dated February 5, 2021, the Company has committed to making all payment due to Reachnet upon submission of a final report from an independent consultant retained to carry out a routine business technical review of the operations. This exercise was undertaken to ensure a smooth transition of the operational system to the Company. The submission of the independent consultant’s final report has been delayed on account of the impending lockdown in different parts of India.

Once the report is submitted to the board and the transition implementation is complete, the following steps are expected to be implemented:

•        Both the parties shall determine the total receivables as of the date of settlement.

•        Reachnet will pay the Company all amounts due to the company (approximately US$35.6 million) as of March 31, 2021.

No money has currently been paid to Reachnet under the contract pending the submission of the independent consultant’s report. Post implementation of this payment settlement, the Company intends to, on a going forward basis, directly bill subscribers and maintain direct relationships with the local agents responsible for collecting subscription revenue from customers.

The payment processing issues triggered by the series of COVID-19 related lockdowns and potential write-off of outstanding balances owed have not impacted our subscriber numbers. As of the date of this prospectus, we still have approximately 1.9 million subscribers connections that are regularly paying their monthly subscription fees.

The subscribers pay service fees in advance for the streaming services. The subscriber fee is collected through an independent agent as per the industry practice, i.e. through a local cable operator functioning in that locality. Presently, the Company is relying on the ability of Reachnet for collection of service fees. The service is terminated if the service fees are not received in advance.

The subscribers are recorded in the Subscribers Management System (SMS), a mandatory co-system with Conditional Access System (CAS) for streaming of services as per the directives issued by TRAI. SMS captures all details of the subscribers like name, address, and contact details, type of streaming device and bouquets / a-la-cartes as chosen by the subscribers. CAS receives all commands from the SMS. Once CAS receives command from the SMS, it entitles the streaming device thereby completing the transaction initiated by the streaming service operator. The platform is so designed that if encryption is violated (criminal offense as per regulation), any command that is initiated by SMS will not hit the streaming device through CAS. In effect, the network is completely protected and services cannot reach the subscribers without initiating the same through SMS and CAS.

There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the economy of India, U.S. and international markets and, as such, the extent of the business disruption and the related financial impact cannot be reasonably estimated at this time.

Negative working capital and Cash Flow

The Company currently has negative working capital and cash flow aggravated by the COVID-19 lockdown. In particular, it has increased the difficulty in collecting cash from operating offices and customers located in different parts of the country on a timely basis, many of which are currently under total lockdown.

The Company has negative cash used in operating activities to the extent of ($716) as of March 31, 2020, and ($25,493) for the period ending March 31, 2021. Upon ending of the COVID-19 lockdown, the Company expects to be able to carry out its operations in the normal course of business and generate a minimum of Rs. 130 ($1.8) from its approximately 1.8 million customer connections per month, as prescribed by the Telecom Regulatory Authority of India guidelines. This would enable the Company to improve its cash position significantly.

The Company further believes that in the coming 12 months, upon the ending of COVID-19 lockdown restrictions, cash flow from operating activities should improve for the following reasons:

•        Monthly subscription fees paid by our customers will be billed and collected at the beginning of each month in advance;

•        The contracted operating expense for the streaming business is 61%, ensuring a confirmed net surplus of revenue for the Company.

•        Additional product offerings to customers such as our telemedicine business are expected to generate additional cash flow for the Company.

To further mitigate the impact of the current negative working capital and cash flow, the Company has also taken additional precautionary steps by approaching financial institutions and credit partners in India to create and avail credit lines and bridge financing against the company’s future cash flows;

Large Payment Obligation by the Company

On March 31, 2020, under the terms of its Customer Acquisition Agreement with Reachnet, the Company is obligated to make payments to Reachnet. This amount represents the largest payment obligation of the Company and is payable in four equal installments (25% each) on or before July 31, 2020 (or at a mutually agreeable date upon the ending of the COVID-19 lockdown restrictions), March 31, 2021, March 31, 2022, and March 31, 2023, respectively. Per the agreement, dated July 31, 2020, payment has not been paid and will be paid at a mutually agreed date after the COVID-19 restrictions have been lifted and the third party operations review has been completed. The amount due to Reachnet as of March 31, 2021, has still not been paid and continues to remain unpaid until such time as the independent consultant’s report is completed and provided to the Company. As of the date of this prospectus, the Company has not decided to offset the balances payable. Refer to Note 23 on Acquisition of Customers of our consolidated financial statements.

Under the terms of the agreement with Reachnet, the Company was also scheduled to receive ‘Other Receivables’ due of approximately $15.7 million from Reachnet for the period of April 1, 2019, through March 31, 2020, as reflected in its books of accounts, and $14.6 million for the fiscal year ended March 31, 2021. The COVID-19 lockdown has delayed the settlement of this accounts receivable under its contract with Reachnet. The Company expects that this settlement will be implemented as soon as possible, upon the relaxation of COVID-19 restrictions in India. Upon such settlement and upon resumption of normal operations, the company expects to have sufficient available cash to be able to meet its current liabilities associated with the business. Please refer to the section below in this note on Other Income/Application of IFRS 15.

Furthermore, the Company is contemplating discussions with Reachnet’s Management to consider modifying its agreement with Reachnet by offering Reachnet stock in lieu of its current payment obligations. This modification, if implemented, should help substantially mitigate cash liquidity requirements for the Company.

Based on the above, we believe that upon lifting of the COVID-19 lockdown restrictions in India, the Company’s available potential cash balances should be sufficient to meet its requirements to carry out its operations effectively. After this offering, the Company may decide to enhance its liquidity position or increase its cash reserve for future investments through additional capital and finance funding.

Cash (used in) Operating Activities

Net cash used in operating activities was $25,493 for the year ended March 31, 2021. Cash used in operating activities for the year ended March 31, 2021 consisted primarily of non-cash adjustments for amortization of $11,931,668. Further, it consists of ‘changes in other receivable’ of ($17,285,198) and changes in ‘other current liabilities’ of $2,787,012.

Net cash used in operating activities was $716 for the period March 16, 2020 (date of inception) through March 31, 2020. Cash used in operating activities for the year ended March 31, 2020 consisted primarily of non-cash adjustments for deferred tax expenses of $1,907,015, current tax expenses of $1,989,659, and amortization of $204,086. Further, it comprises of changes in ‘other receivable’ of ($19,089,070), changes in ‘other assets’ of ($4,450,896), and changes in ‘other current liabilities’ of $7,777,661.

Cash (used in) provided by Investing Activities

Net cash used in investing activities was $157,303 for the year ended March 31, 2021. The investment activity was primarily comprised of purchase of property, plant and equipment of $93,776, and purchase of share of GHSI of $70,000.

Net cash provided by investing activities was $42,343 for the period March 16, 2020 (date of inception) through March 31, 2020. The investment activity was primarily comprised of cash acquired in business combination of $40,760.

Cash provided by (used in) Financing Activities

Net cash provided by financing activities was $166,271 for the year ended March 31, 2021. During the period, cash provided financing activities consisted of proceeds from short term borrowings of 376,990 and repayment of short term borrowings of $212,719.

Net cash used in financing activities was $583 for the period March 16, 2020 (date of inception) through March 31, 2020. During the period, cash provided financing activities consisted of proceeds from issuance of shares $3,000 and repayment of short term borrowing of $3,583.

Note on Liquidity and Capital Resources

The principal amount of our debt as of March 31, 2020, was $1,587,216 and as of March 31, 2021, was $1,456,131. Our business does not require significant cash to fund principal and interest payments on our debt.

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 negative working capital impacts from the timing of device-related cash flows when we provide the devices to customers pursuant to equipment installment plans.

In order to establish our customer base, the Company has acquired customers from Reachnet, through an Agreement to Acquire Customers dated June 20, 2019, and the income entitlement rights from April 1, 2019, for a consideration of approximately $59 million. This amount is payable in four equal installments (25% each) on or before July 31, 2020 (or at a mutually agreeable date upon the ending of the COVID-19 lockdown restrictions), March 31, 2021, March 31, 2022, and March 31, 2023, respectively. Further revision was made to the payment terms and, pending review of subscribers data, the Company has agreed to complete its payment obligations upon submission of third party review report. The payable to Reachnet for customers is not traditional debt or loan it is merely long term payable and hence it is not considered as debt. As of the date of this prospectus, the Company has not decided to offset the balances payable.

The below table elucidates the reconciliation for increase in Trade Receivables for the period ended March 31, 2021.

Receivables from Reachnet for the period up to March 31, 2020, and March 31, 2021 was recognized under “Note 7 — Other Receivables”, aligning itself with the nature of revenue recognized as “Other Income” up to March 31, 2020 and up to March 31, 2021, respectively.

Our net cash position as of March 31, 2020, and March 31, 2021 was impacted by the lockdown imposed on account of the COVID-19 pandemic.

We expect to utilize free cash flow, cash on hand, and availability under our credit facilities, as well as future refinancing transactions to further extend the maturities of our obligations. 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 Lytus’ access to the capital markets to fund our projected cash needs.

We continue to evaluate the deployment of our cash on hand and anticipated future free cash flow including to invest in our business growth and other strategic opportunities, including mergers and acquisitions as well as stock repurchases and dividends.

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.

Intangible Assets and Goodwill

During the period ended March 31, 2020, Lytus has acquired a subscriber base of more than 8 million (i.e. 1.84 million household connections) for a consideration of $59,216,654, consisting of the consideration of acquiring each customer at a price of approximately $27 and indirect tax (GST) additionally charged at a rate of 18%. Having regard with the timing of the consummation (also discussed in the Revenue note above), the legally enforceable right for subscriber acquisition was effective from March 26, 2020. Accordingly, the amortization expense on the customer acquisition costs is $204,086 for the period ended March 31, 2020, and $11,931,668 for the year ended March 31, 2021.

The acquisition of customers was valued on an arms-length basis by valuation expert and the valuations were conducted as per the discounted free cash flow method (see Schedule 1 of the Valuation Report attached hereto as Exhibit 99.3). We have also carried out valuation using the Subscriber’s Multiple method (see Schedule 2 of the Valuation Report). The result was further validated using the independent comparable method.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

As discussed above, the Company has acquired customers from Reachnet pursuant to an Agreement to Acquire Customers dated June 20, 2019, and the income entitlement rights for a consideration of approximately $59 million. This amount is payable in four equal installments (25% each) on or before July 31, 2020 (or at a mutually agreeable date upon the ending of the COVID-19 lockdown restrictions), March 31, 2021, March 31, 2022, and March 31, 2023, respectively. Further revision was made to the payment terms and, pending review of subscribers data, the Company has agreed to complete its payment obligations upon submission of the third party review report. As of the date of this prospectus, the Company has not decided to offset the balances payable.

The Company has also acquired 100% equity interest of Lytus India and 51% equity interest of DDC. For the acquisition of DDC, the Company currently has an outstanding obligation of $265,410 as of March 31, 2021 and 2020.

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, and

•        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.

Quantitative and Qualitative Disclosures about Market Risk

Substantially all of our operations are within India and the United States, and we are exposed to market risks in the ordinary course of our business, including the effects of foreign currency fluctuations, interest rate changes and inflation. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Foreign Currency Exchange Rate Risk

As a result of our international operations, primarily in India and the United States, we are exposed to currency translation impacts. Our reporting currency is the U.S. dollar. The functional currency of the Company is the U.S. dollar and the functional currency of Lytus India and DDC, 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 foreign currency translation reserves of subsidiaries, net of tax of ($754,959) for the year ended March 31, 2021 and ($306,910) for the period ended March 31, 2020.

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.

Consolidated Financial Statements and Supplementary Data

The consolidated financial statements begin on page F-1.

OUR BUSINESS

Overview

We are a growing platform services company and currently have 8 million active users located all across India.6 Our business model comprises of primarily (a) distribution of linear content streaming/telecasting services and (b) development of technology products, namely, telemedicine. On the basis of approximately 1.8 million subscriber connections, we have subscriber strength of more than 8 million active customers. As per the Michael Bauer Research7, updated as of December 31, 2019, the average households’ size in India is 4.6 people per household.

Our strength is in our capability to leverage our technology platform for a competitive advantage and to be engaged in developing customer-inspired products and on-demand content, which significantly alters the way that consumers and businesses operate in the MedTech and Wellness industry. Our objective is to reinvent the customer experience and be engaged in disruptive innovation in online content management.

Lytus platform provides our customers with a one-stop site with the access to all of the services provided by us. We believe our strong customer service, access to an extensive fiber optic network infrastructure, and significant market presence position us as a service provider of choice and provide us with momentum in offering our online products. Our business model is based on shared core competencies and capabilities, with our subscriber base as our biggest asset. We intend to benefit from India’s e-commerce boom and the recent tele-medicine regulation through the acquisition of Global Health Sciences, Inc. (“GHSI”). The management of GHSI has many years of pioneering experience of the management in tele-medicine in USA, which we believe will help us create a profitable and sustainable business model with rapid growth prospects. We believe our deep outstanding 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 markets in which we operate, which we consider to be a key component of our success.

Corporate History

Lytus Technologies Holdings PTV. Ltd. (“we”, “Lytus”, “Lytus Group”, the “Group”, or the “Company”) is a holding company incorporated under the laws of British Virgin Islands (“BVI”) on March 16, 2020.

On March 19, 2020, the Company, Lytus Technologies Private Limited (“Lytus India”), Mr. Nimish Pandya, our CEO’s brother, and Mr. Girish Podar, the shareholders of Lytus India, entered into a share purchase agreement, pursuant to which the Company acquired 15,000 shares, representing all of the equity share capital of Lytus India for a purchase price of Rs.150,000 (approximately $2,000).

On February 21, 2020, Lituus Technologies Limited (“LTL”), a BVI company, DDC CATV Network Private Limited (“DDC”), and all of the shareholders of DDC (the “DDC Shareholders”) entered into a share purchase agreement, pursuant to which LTL acquired 4,900 shares, representing 49% of the outstanding equity share capital of DDC for an aggregated purchase price of Rs.19,208,000 (approximately $255,000).

On February 21, 2020, LTL, DDC and DDC Shareholders entered into a share subscription agreement, pursuant to which LTL has option to subscribe 900,000 shares fully convertible preference shares, representing 100% of the fully convertible preference shares of DDC for an aggregated purchase price of Rs. 90,000,000 (approximately $1,200,000). On February 26, 2020, DDC and DDC Shareholders entered into another share purchase agreement with Mr. Jagjit Singh Kohli, who was appointed as a director of the Company on April 1, 2020, pursuant to which Mr. Kohli acquired 200 shares, representing 2% of the equity share capital of DDC for an aggregated purchase price of Rs.784,000 (approximately $10,400).

On March 20, 2020, LTL and Mr. Kohli respectively entered into an assignment of contract with the Company and transferred all of their respective equity interest in DDC to the Company for no consideration. Such transfer was completed on March 31, 2020, resulting in the Company’s owning of 51% of the equity interest in DDC. The Company has the option to purchase 900,000 fully convertible preference shares of DDC for Rs. 90,000,000, subject to the increase of the authorized share capital of DDC, the approval of the Reserve Bank of India and other Indian company law requirements.

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6        Calculation based upon approximately 1.8 million paid home subscribers which based on industry standards translates to more than 8 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: https://population.un.org/Household/index.html#/countries/356

7        https://www.arcgis.com/home/item.html?id=6cf22970ea8c4b338a196879397a76e4

The acquisition of Lytus India was from a related party, Nimish Pandya, the brother of our CEO, Dharmesh Pandya. In addition, the acquisition of the majority of DDC’s equity involved our CEO, Dharmesh Pandya, who was then also the CEO of LTL, and Jagjit Singh Kohli, who was appointed as our director on April 1, 2020.

On October 30, 2020, the Company entered into a share purchase agreement with Global Health Sciences, Inc. (“GHSI”) and the shareholder of GHSI, pursuant to which the Company acquired 75% of the equity interest in GHSI. GHSI was formed in 2020 and had no business operations prior to our acquisition. The Company will conduct its telemedicine business in the U.S. through GHSI.

The following diagram illustrates our current corporate structure:

While Lytus Group was restructured in 2020, DDC has been operation for five years. We have established a strong customer base and obtained significant market share through our acquisition of the customers of Reachnet, a long-standing cable services company in India. Reachnet is a licensed Multi System Operator (MSO) in the business of telecasting/streaming of broadcast channels (both owned as well as redistributed) to subscribers for a subscription charge depending upon the services and content chosen by the subscriber. Reachnet also owns and operates fiber optic cable networks with offices across the country in various major cities. These networks are used by Reachnet to offer its services to Lytus India’s subscribers. Reachnet also offers its cable network along with management personnel and subscriber management services to third party service providers for a fee. It has an extensive infrastructure and logistic set-up in various cities for provision of telecasting/streaming services to their erstwhile subscribers. We have acquired all of the customers of Reachnet, who are primarily located in the following metros in India: Mumbai, Hyderabad, Calcutta, New Delhi and Allahabad. We are not bound to have service agreement with Reachnet for exclusive provision of streaming service and can always enter with an independent service provider for the provision for streaming services to our subscribers.

Under the terms of the customer acquisition agreement (the “Customer Acquisition Agreement”) between Reachnet and Lytus Technologies Private Limited (“Lytus India”) dated June 20, 2019, these approximately 1.8 million customers legally belong to Lytus India. These customers are not and will not be Reachnet’s customers for internet access as well as services other than telecast/streaming provided by the Company to its customers. Reachnet has no ownership rights over these customers and all telecast services provided by Reachnet on behalf of the Company, are in the capacity of a third party independent service provider. The arrangement between Lytus India and Reachnet mandates Reachnet, as a third-party service provider, to maintain the infrastructure required to continue telecast services to the customers for which it is paid 61% revenue collected only from the provision of telecast services. All the services (including the internet service) are, as a matter of fact and in law, provided by the Company to its subscribers.

Revenue generated upon launch of the telemedicine, OTT and other services in India will belong 100% to the Company.

Lytus’ customers will be able to access the OTT services at an additional cost in the following ways:

1.      Through an app installed on the Set Top Box in the customer’s home which also provide telecast services.

2.      Through a web portal using either a computer or tablet.

3.      Through apps downloaded from the iOS and or Android store.

The Company has acquired all subscribers of Reachnet for a lumpsum consideration and with the condition that the Company will have control and unconditional entitlement rights over the revenues generated from or related to these subscribers.

In light of the above, the Company has 100% control of and 100% entitlement rights over the revenues accruing and arising to the Company from its subscribers. Reachnet has no control, ownership or entitlement rights over revenue generated from the Company’s subscribers.

The service agreement entered into with Reachnet, obligates Reachnet to retain its infrastructure to provide streaming/telecast services and provide such services to the Company’s subscribers on an on-going basis without disruption or interruption, under the Company’s control, management and supervision. The service charge for providing these services is determined at arm’s length. According to local industry practice, the average industry EBITDA for cable service companies in India is approximately 57% of total streaming revenues. Since the Company intends to work with Reachnet as a strategic partner over the next several years, the Company has agreed to pay Reachnet a service fee at a variable percentage of 61% of the Company’s total streaming/telecast revenue.

In addition, we have scaled and intend to continue to scale our platform through the pursuit of selective acquisitions. We believe our acquisitions of Lytus India and DDC have expanded our distribution capabilities and broadened our service offerings. We have aggregated customers from several service providers and other businesses by bring them on to the Lytus platform. We provide services to our customers through access to a network of 25,000 kilometers of deployed fiber and broadband infrastructure in accordance with our service agreement with our partner. Since our inception we have consistently expanded our network capabilities and offerings while growing our customer base.

Lytus India provides technology enabled customer services, which includes streaming and content services. The present device is being further upgraded to support the unified and integrated platform through which it shall provide multi-dimensional services such as MedTech IOT (IOT refers to the Internet of Things), etc.

DDC is a licensed Multi System Operator (MSO) in the business of telecasting/streaming of broadcast channels (both owned channels as well as redistribution) to subscribers for a subscription charge depending upon the services and content chosen by the subscriber. In India the regulation does not differentiate between telecasting and streaming as long as the streaming is done in IPTV format. Lytus has the expertise and has plans to offer additional value added services such as MedTech IOT, by upgrading the existing cable networks. The upgrade primarily consists of deploying FTTH GPON and changing the existing STB/CPE.

Lytus India provides streaming services to the customers we acquired from Reachnet. DDC has been providing streaming services to its customers in New Delhi region for over three years and will continue to do so independently of Lytus India and Reachnet

Along with a strong India focus, we expect to grow our international presence in regions such as Africa, Indonesia, UK, and the USA.

GHSI was formed in 2020 and had no business operations prior to our acquisition. On October 30, 2020, the Company entered into a share purchase agreement and acquired 75% of the equity interest in GHSI. After the completion of acquisition, GHSI brought into the key management team and acquired important contracts. GHSI’s telemedicine service aims to provide management and technology solutions to hospital networks, university medical schools, physician networks and individual practices in the U.S. Its proprietary delivery platform uses digital communication technologies using medical monitoring devices, video capabilities and data capture methodologies. The platform also uses AI Ecosystem Assets including Conversational Computing, Intelligent Robotic Process Automation (iRPA), and Machine Learning (ML). This platform is currently rolled out in New Jersey, Illinois, Florida and Texas with approximately 125 medical physicians using our system for approximately 3000 users via hospital and clinic networks.

GHSI’s business is focused on remote patient monitoring devices. These devices installed at the homes of the patients of participating physicians practices are sourced from various HIPAA and FDA compliant vendors. These devices have the monitoring and reporting software pre-installed in them. GHSI currently has not developed any proprietary software that is deployed with patients in the USA. While the revenue generated by these devices are currently not significant from and organizational perspective, GHSI expects to roll out these devices to additional patients in the near future. We expect that the additional rollout of devices will generate significant revenue for the Company.

In India, Lytus’ telemedicine business, through Lytus India, has commenced repurposing its existing Local Cable Operator Network infrastructure to set up Local Health Centers/diagnostic centers (LHC). There is scheduled to be one dedicated LHC for every 5000 customers and this LHC will be staffed with trained healthcare professionals. LHCs will support customers with additional patient services that cannot be remotely provided through device strategy. Typical services provided at the LHCs will include ECGs, blood and urine testing, ultrasound scans etc. The LHC network will act as an important link between patients, doctors and supporting hospital partners for better integration. The Company also intends to leverage the LHC network for pharmaceutical delivery.

The telemedicine service in India operates under a different model. The technology platform used to book doctor appointments and video conference with doctors collects data and then connects the patient to a captive team of physicians which provide the medical consulting service. The technology platform used by the India telemedicine team is proprietary and developed by Lytus India.

The Company does not itself obtain or contract for the content it uses currently. The content provided to our customers is through the license agreement that DDC currently has with broadcasters such as ESPN, SonyTV, ZEE TV and BBC2.

Our Integrated Service Matrix

Our objective is to expand the business by offering additional online services to our captive users so that we can become a one-stop shop for all of our customers’ online requirements. We believe that the current poor internet penetration in the Indian market presents a tremendous opportunity for the Company to provide online services to the many underserved geographic areas in India.

Strategic Roadmap

Technology continues to be a strong driver of change for our industry. We realized that our future growth strategy was pivoted around how we leverage technology to enhance consumer experience, with limited infrastructure. We invested in deep-rooted technologies to develop greater scale and speed in our approaches to content production and distribution, centralization, automation, and portfolio rationalization.

In addition, we believe that through additional customer acquisitions, our business will expand rapidly over the next three years. Our objective is to grow profitably by building on our current strategic position to become a dominant global platform services company.

The key elements of our strategy include:

•        expanding the service and product portfolio to enhance cross-selling opportunities;

•        enhancing the service platform by investing in technology;

•        expanding into new geographic markets; and

•        pursuing selective strategic partnerships and acquisitions.

We have six principles for our growth:

Operating model:    simplify and align with our customers’ needs and end markets.

Enhance customer experience:    introduce customer-centric programs and services leveraging the latest technologies such as artificial intelligence (AI) and machine learning (ML) to improve our customers’ experiences and continue to earn their business.

Service portfolio management:    adopt a more proactive approach, be agile in introducing new offerings while continuously scrutinizing the potential for returns.

Build scale:    to grow and build scale in a broad range of international markets and industry verticals within the online service platform and e-healthcare segment.

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2        “The Company has two Indian subsidiaries: Lytus India and DDC. DDC is an active cable company and has agreements with broadcasters for content delivery and distribution. For revenues, it has entered into customer contracts for cable services. The broadcaster/subscription fees reflected on page F-25 relate to operating activities of DDC only.”

Strategic relationships:    focus on building and maintaining long-term strategic business relationships with other established players in the market to better utilize the network capabilities, reduce cost burden and generate supplementary revenue streams.

Acquisition strategy:    develop a more targeted and disciplined approach; focus on acquisitions that augment our existing online streaming portfolio.

Current and Potential Markets

Television Industry

We currently have operations in Maharashtra, including Mumbai, New Delhi, parts of West Bengal including Kolkata, parts of Madhya Pradesh including Indore & Bhopal, parts of Uttar Pradesh, and Bangalore. Of all media and entertainment options open to Indians, television remains the most penetrated medium in the country, catering to over 200 million households and counting.

Cable Television subscription revenues have significantly increased in last few years due to introduction of streaming services in the Indian market. Streaming media is currently sharing the market space with cable and satellite television but it starts receiving more and more attention. There are currently about 40 providers of Over–The–Top media services (OTT) in India, which distribute streaming media over the Internet. In 2018, the OTT market in India was worth Rs.2,150 crore ($290 million), and its value grew to Rs.3,500 crores ($473 million) in 2019. According to a KPMG report, the average time spent by Indian subscribers on various OTT platforms is 20–50 minutes9 per day. Internet has now become mainstream media for entertainment for most people. With growing Internet penetration, internet users in India are expected to increase from 445.96 million in 2017 to 829 million by 2021. Based on the data from www.statista.com, as of May 2020, there were 1.2 billion mobile subscriptions and 565 million internet subscriptions in India, making it the second-largest mobile consumer base and internet subscriber base in the world, behind only China according to a report on Digital India by McKinsey Global Institute released in March 2019.

The Indian media and entertainment industry is expected to reach around Rs.307,000 core ($ 43.93 billion) by 2024. Media and entertainment industry is set to grow at a compound annual growth rate (CAGR) of 13.5 percent from 2019 to 2024. In FY 2019, major segments were television, print and films with a market size of Rs.713 billion ($10.22 billion), Rs.333 billion ($4.76 billion) and Rs.185 billion ($2.62 billion), respectively. They are projected to reach Rs.1025 billion ($14.67 billion), Rs.375 billion ($4.76 billion) and Rs.228 billion ($3.26 billion), respectively in FY 2022. Indian television market has an opportunity of catering to over 50 million homes as 197 million homes out of the total 240 million households have TV sets as of 201810.

The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 percent of India’s gross domestic product.11

Digital media & entertainment platforms in India grew 13.3 percent in FY2019 and reached Rs.163,100 crore ($23.34 billion), contributing the most to the growth of media & entertainment sector in the country. India’s advertising revenue is projected to reach Rs.1,367 billion ($19.56 billion) in FY2024 from Rs.693 billion ($10 billion) in FY2019. India’s advertisement spending increased to Rs.67,603 crore ($9.67 billion), growing at 11 percent year over year in 2019.

Telemedicine Industry

The COVID-19 crisis has resulted in a profound shift of healthcare delivery from the traditional healthcare model with its abundant resources to the healthcare model where patients are mandated to remain at home and cope with a profound lack of resources. The Covid-19 pandemic has caused severe shortages and threatens to overwhelm health care infrastructure. Thus, we believe telehealth services and mobile care (such as advanced physician house calls, VNS, home PT, nutritional optimization), with an efficiently managed and cost-effective delivery model, will support patients’ medical needs and alleviate the shortages of the available healthcare resources. Healthcare systems have scrambled to adopt applications marketed as ‘telemedicine’ solutions but are very little more than 2-way video conferencing with

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8          https://www.statista.com/topics/4852/television-market-in-india/

9          Video OTT revenue in India expected to reach Rs.13,800 crore by FY 2023, Exchange4media. Indian Advertising Media & Marketing News — exchange4media

10         https://www.ibef.org/industry/media-entertainment-india.aspx

11         https://www.ibef.org/industry/media-entertainment-india.aspx

text messaging. Despite the availability of ultra-high-speed wireless connectivity, computationally intense smartphones, commoditized high resolutions cameras, and other existing solutions have not improved significantly over the past decade in design, user interface, integration, data visualization, nor utilization of AI Ecosystem Assets.

Moreover, the increased demand on mobile healthcare delivery to the home has not been met with a corresponding increase in platform sophistication required to perform anything other than a base level physical exam and rudimentary delivery of services. This demand will require omni-channel, multi-modal, multi-lingual communication across highly secure and private high-speed wireless networks. Multipoint video conferencing will be required as well as deep integrations into enterprise PBX, CRM, EMR platforms and other systems of record.

The Internet of Things (IoT) revolution has resulted in a plethora of intelligent devices capable of capturing and transmitting a diverse set of data domains including healthcare, environment, logistics, education, energy, and many others relevant to the efficient and effective delivery of care. Remote patient monitoring via patient worn active and passive sensors as well as next generation room-based sensors utilizing ultra-wideband impulse radar, hyperspectral imaging, will revolutionize home based care via remote patient monitoring.

The traditional health monitoring data concerning heart rate, respiratory rate, blood pressure, temperature, will be expanded to include body composition, sleeping patterns, nutrient ingestion, cognitive and behavioral status, wound assessment, range of motion monitoring, and many others.

As we have seen an increasing need to adopt any form of Telemedicine programs to combat the COVID-19 pandemic, we believe that the business technologies that Lytus is advancing are very unique.

Our Streaming Services

We offer our customers subscription-based video services and Internet services to residential customers, with prices and related charges based on the types of service selected, whether the services are sold as a “bundle” or on an individual basis, and based on the equipment necessary to receive our services. Our video customers receive a package of programming which generally includes a device that provides an interactive electronic programming guide with parental controls, access to pay-per-view services, including video on demand (“VOD”). Customers have the option to purchase additional tiers of services including premium channels which provide original programming, commercial-free movies, sports, and other special event entertainment programming. Substantially all of our video programming is available in high definition.

In order to establish our customer base, the Company has acquired all of the customers of Reachnet Cable Services Private Limited, through an Agreement to Acquire Customers dated June 20, 2019, and the income entitlement rights from April 1, 2019. Reachnet is also a licensed service provider and have, accordingly, agreed to provide streaming services to these customers. These customers are primarily located in the following metros in India: Mumbai, Hyderabad, Calcutta, New Delhi and Allahabad.

Our revenues are principally derived from the monthly fees customers pay for the services we provide. We typically charge a one-time installation fee which is sometimes waived or discounted in certain sales channels during certain promotional periods. We believe that offering a wide variety of video programming choices influences a customer’s decision to subscribe and retain our streaming services. We obtain basic and premium programming, usually pursuant to written contracts from a number of suppliers. Media corporation consolidation has, however, resulted in fewer suppliers and additional selling power on the part of programming suppliers. We have recently entered into an agreement with a Hollywood studio to co-produce or exclusively license original content which give us the right to provide our customers with certain exclusive content for a period of time.

Programming is usually made available to us for a license fee, which is generally paid based on the number of customers to whom we make that programming available. Programming license fees may include “volume” discounts and financial incentives to support the launch of a channel and/or ongoing marketing support, as well as discounts for channel placement or service penetration. We also offer VOD and pay-per-view channels of movies and events that are subject to a revenue split with the content provider.

Our programming contracts are generally for a fixed period of time, usually for multiple years, and are subject to negotiated renewal. The contracts set to expire in any particular year vary. We will seek to renew these agreements on terms that we believe are favorable. There can be no assurance, however, that these agreements will be renewed on favorable or comparable terms. To the extent that we are unable to reach agreements with certain programmers on terms that we believe are reasonable, we have been, and may in the future be, forced to remove such programming channels from our line-up, which may result in a loss of customers.

Our advertising sales division offers local, regional and national businesses the opportunity to advertise in individual and multiple service areas on streaming networks and digital outlets. We receive revenues from the sale of local advertising across various platforms and networks. Our large national footprint provides opportunities for advertising customers to address broader regional audiences from a single provider and thus reach more customers with a single transaction. Our size also provides scale to invest in new technology to create more targeted and addressable advertising capabilities.

The Company through its partners has access to the content of more than 450 linear channels, allowing us to provide these channels to all our subscribers’ predominantly through RF medium using DVB-C technology as well as through IPTV / Online Streaming.

Lytus Group through its constituents delivers over 450 linear channels from various content providers such as Star TV (Disney), Zee TV, Sony, IndiaCast, Times Broadcasting, Discovery, Sun, Jaya TV, Eenadu Television, Turner International, Travel XP, BBC etc. The Company has also executed agreements with various content providers having national and regional movie and music libraries viz., such as ADB Shemaroo, Super Cassettes (T-Series), Surya Media Vision (Eros & Sonata) and Cine Prime.

Lytus has also started telecasting a few educational channels tailor-made for local educational boards catering to various school grades and has plans to focus on this segment going forward.

Our streaming solution is from a U.S. based vendor called “Secure TV”. Our mobile application (JPR Channel) is available on the Playstore and can be currently used by our home subscribers only. We are currently streaming all Free to Air (including home channels) and some select Pay Channels from various broadcasters through our OTT platform.

Lytus is working closely with various vendors globally for furthering the reach of their streaming network / platform and also building state of the art FTTH (Fiber to the home)/ G-PON network for connecting its existing and future subscribers. For this purpose, Lytus Group sources devices and other equipment such as RF/Hybrid/ IPTV/OTT Set Top Boxes, ONUs, OLTs, Headend and NoC equipment and finally passive components from vendors including Cisco, Harmonics, Arris (Now CommScope — USA), Gospell, ZTE, & Antik.

Our Telemedicine Services

On October 30, 2020, the Company entered into a share purchase agreement and acquired 75% of the equity interest in GHSI to add varieties to the manners in which healthcare services are provided to customers in the U.S. and in India. We believe GHSI’s strong management team, which has several decades of telemedicine experience in the U.S. and in India, will develop customized solutions and platforms to help Lytus grow its telemedicine offerings globally.

Our telehealth segment of business will focus on providing telemedicine solutions for the unmet medical needs of a large part of population in India. Our vision is to provide cost-efficient telemedicine services, as well as serve as an extension of the traditional healthcare system.

We believe this extension of traditional healthcare services is vital because:

•        68% of Indians live in rural villages.

•        India has one doctor for every 1,445 people.

•        More than 75% of Indian doctors are based in cities or urban areas.

•        Approximately 89% of rural Indian patients have to travel about 8 kilometers to access basic medical treatment.12

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12        World Health Day Amid Covid Crisis by Pramod N Sulikeri, Available: https://myarogya.in/general/world-health-day-amid-covid-crisis/ & Telemedicine Force Multiplier for Healthcare Delivery by Major General Ashok Kumar Singh (retd), Available: https://innohealthmagazine.com/2020/guest-column/telemedicine-healthcare-delivery/

With rising internet penetration in India, increasing proliferation of fiber optic cables, expanding bandwidth, and owing to advancements in technology, doctors from urban India will have the ability to treat patients in rural areas remotely through video-call consultations.

Building on the Company’s strong fiber-optic network and customer base, we will strive to use technology-based innovation to address the most significant unmet needs of patients and societies across rural India.

In the first phase of our journey, we intend to develop and deliver telehealth services in the nature of preventive healthcare using technologies such as Internet of Medical Things (IoMT) and Artificial Intelligence (AI). Our initial focus is aimed at offering basic health monitoring and digital stethoscope services with the help of our own smart devices and software systems and also last mile medicine delivery services. Further, we intend to utilize clinical informatics for the collation of information for effective data analysis and for sharing the information with doctors/relatives/other stakeholders to help in better decision making.

With our streaming services and our devices, we intend to make it possible for the people to undertake self-health monitoring and combine the same with remote diagnosis with secure patient-doctor consultation. Thereby not only reducing the number of trips to the hospital but also build an ecosystem that may turn out to be an affordable, as well as a fast, way to bridge the rural-urban health divide.

Our healthcare service aims to provide telemedicine solutions for the unmet medical needs of a larger part of the population. Our vision is to provide cost-efficient telemedicine services and to serve as an extension of the traditional healthcare system prevalent in the country.

With the rising internet penetration in India, increasing proliferation of fiber-optic cables, expanding bandwidths and advancements in technology, doctors from urban India will have the ability to treat patients in rural areas remotely through video-call consultations. In an industry where the cost of error is high, operational consistency and network dependability are critical. Information has to be accurate, and readily available. We believe that our operations will benefit from centralized decision-making and a uniform technology platform, coupled with a coordinated local presence. Our unified, scalable technology platform is being further developed and/or enhanced by our technology team, which is located in India. This technology platform covers all relevant aspects of our operations, from data management, business intelligence, traffic optimization and consumer engagement to infrastructure, logistics and payments. Data is constantly collected and analyzed to help optimize operations, make the consumer experience more personal and relevant, and enable us, selected sellers and logistics partners to make informed, real-time decisions.

In addition, our approach is to collaborate with global chain of health insurance companies, pharmaceutical companies, hospitals and diagnostic clinics, and medical research universities. We intend to develop an ecosystem of medical expertise and healthcare at home. India is regulating medical devices13 and has opened up many opportunities from the perspective of preventive healthcare and at-home on-demand online content.

Self-monitoring for diagnosis would require an infrastructure for an effective and efficient communication equipment and distribution network. We believe that our streaming and telecast services customer base and access to a significant fiber infrastructure, ideally positions us to telemedicine services to over approximately 1.8 million households. The aggregated customer base of over 8 million individuals will be offered telemedicine services as well as telemedicine devices and products to enhance the quality of healthcare services offered.

Netflix in India

American streaming service Netflix entered India in January 2016. In April 2017, it was registered as a limited liability partnership (LLP) and started commissioning content. It earned a net profit of Rs.2.02 million for fiscal year 2017. In fiscal year 2018, Netflix earned revenues of Rs.580 million. According to Morgan Stanley Research, Netflix had the highest average watch time of more than 120 minutes but viewer counts of around 20 million in July 2018. As of 2018, Netflix has six million subscribers, of which 5–6% are paid members.14

Olly Plus

Olly Plus was launched in 2020 by Sk Line Production. Olly Plus is Odisha’s new online Odia OTT platform where you can enjoy unlimited Odia Videos, Albums, Movies, Comedy Videos, Short Films, Audio Stories and other videos on the go.

Since Telemedicine is a relatively new offering in India, Lytus does not face significant competition in this segment locally in India. Start-ups that have commenced with telemedicine business in India are — DocOnline, Clinikk Healthcare, Practo and MedLife. However, all of these companies run online health clinics that provide online doctor consultations, online pharmacies, and health insurance. Our telemedicine business is designed to not be in direct competition with these companies. We have significant competitive advantage in telemedicine service through remote health monitoring device and unified Lytus platform for content management.

Competitive Advantage

We believe that the following competitive strengths distinguish us from our competitors:

Innovation

World-class networks:    enhancing our access to fiber-optic network, we intend to elevate the customer experience, enhance reliability and sustain future growth. Building on this capability and leveraging modern technology, we are diversifying into new growth areas to expand our business horizon.

Strengthen innovation:    we have long been a technological innovation leader within our industry space. We are taking steps designed to ensure we maintain and consolidate our market share. We continue to maintain our investments in different technological upgrades at a level that is consistent with changing industry dynamics. Today, we are amongst the few players in India who have transformed the traditional set-top box into an android box, thereby giving access to a host of new facilities under one platform.

Value

Profitable growth:    driving continued profitable revenue and customer growth in our core consumer and business markets, while continuously looking for opportunities to widen the business horizon. From a traditional contact management service provider, we have evolved into a significant online content management service provider, with sustained profits.

Disciplined capital allocation: we continue to invest in long-term growth opportunities, while simultaneously building on our core capabilities and engaging in strategic partnerships to widen our geographical presence and offerings.

Growth

Putting customers first:    focusing on customer service excellence and technological leadership to further strengthen our differentiated competitive position and enhance the customer experience with an integrated digital platform covering areas such as education, entertainment, financial technology, and healthcare. We strive to continue exceeding our customers’ expectations by enhancing our network capacity and coverage while broadening service offerings.

Proven growth strategy:    delivering industry-leading performance by continuing to execute on our long-term growth strategy focused on data and our fiber-optic network capabilities.

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14      “Video OTT revenue in India expected to reach Rs 13,800 crore by FY 2023 — Exchange4media”. Indian Advertising Media & Marketing News — exchange4media. Available: https://www.exchange4media.com/digital-news/video-ott-revenue-in-india-expected-to-reach-rs-13-800-crore-by-fy-2023-92262.html

The Cable Television Networks (Regulation) Act, 1995 (“Cable Television Act”)

The Cable Television Act regulates the operation of cable television networks in India. The Cable Television Act requires any cable operator who is desirous of operating a cable television network to be registered with the head postmaster of the area concerned. Where the Central Government is satisfied that it is necessary in public interest to do so may make it obligatory for every cable operator to transmit or re-transmit programs of any channel in an encrypted form through a DAS.

The Ministry of Information and Broadcasting issued a notification dated November 11, 2011 (“DAS Notification”) under the Cable Television Act, making it mandatory for every cable operator to transmit or retransmit programs of any channel in an encrypted form through a digital addressable system in four phases in such cities and with effect from such dates as specified in the DAS Notification. Phase I included the cities of Mumbai, Delhi, Kolkata and Chennai where digitization had to be completed by June 30, 2012. The said deadline of June 30, 2012 was extended until October 31, 2012. Phase II which included 38 cities, was required to be completed by March 31, 2013. Further, phases III and IV are required to be completed by December 2015 and December 2016 respectively.

The Cable Television Network Rules, 1994 (“Cable Television Rules”)

The Cable Television Rules stipulate that registration as a cable operator needs to be renewed every 12 months. The Cable Television Rules further stipulate that an MSO shall apply for registration in order to provide DAS services.

The Indian Telegraph Act, 1885 (“Telegraph Act”)

The Telegraph Act governs all forms of the usage of ‘telegraph’ which expression has been defined to mean any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature, by wire, visual or other electro-magnetic emissions, radio waves or hertzian waves, galvanic, electric or magnetic means. Using appliance or apparatus for the purposes of dissemination of television signals and video transmissions therefore comes within the definition of a ‘telegraph’.

The Indian Wireless Telegraphy Act, 1933 (“Wireless Telegraphy Act”)

In addition to a telegraph license under section 4 of the Telegraph Act, land-based wireless providers and users also require an additional license under the Wireless Telegraphy Act. Section 3 of the Wireless Telegraphy Act forbids any person from possessing a wireless telegraphy apparatus without a license. Under section 5 of the Wireless Telegraphy Act, the license to possess the wireless and radio equipment and to use it for wireless services is issued by the telegraph authority designated under the Telegraph Act, that is, the Director-General of Posts and Telegraphs.

The Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (“Mandatory Signal Sharing Act”)

The Mandatory Signal Sharing Act provides for access to the largest number of listeners and viewers, on a free to air basis, of sporting events of national importance through mandatory sharing of sports broadcasting signals with Prasar Bharati. Under this enactment, no content rights owner or holder and no television or radio broadcasting service provider can carry a live television broadcast on any cable or DTH network or radio commentary broadcast in India of “sporting events of national importance”, unless it simultaneously shares the live broadcasting signal, without advertisements, with Prasar Bharati, to enable Prasar Bharati to re-transmit the signal on its terrestrial networks and DTH networks.

The Telecom Regulatory Authority of India Act, 1997 (“TRAI Act”)

The Telecom Regulatory Authority of India (“TRAI”) was established in 1997 by the TRAI Act, as amended, to regulate telecommunication services in India, including broadcasting and cable services. The TRAI is vested with major recommendatory, regulatory and tariff setting functions, including (a) making recommendations on the need and timing for introduction of new service providers, (b) on the terms and conditions of license to a service provider, (c) ensuring compliance of terms and conditions of license, (d) effective management of telecom, (e) laying down the standards for quality of service, (f) conducting a periodical survey of such service provided by the service providers so as to protect interest of consumers, and (g) notifying the rates at which telecommunication services within India and outside India shall be provided under the TRAI Act. In addition, the TRAI Act contains penalty provisions for offences committed by a company under the TRAI Act.

The following regulations have been notified by TRAI: A. Regulations applicable to DAS Notified areas:

The Standards of Quality of Service (Digital Addressable Cable TV Systems) Regulations, 2012 (“DAS Regulations”)

The DAS Regulations require every MSO or its linked Local Cable Operator (“LCO”), offering digital addressable cable TV services in entire DAS Notified areas to devise formats of application for seeking connection, disconnection, reconnection and for obtaining and returning of set top boxes. Any person seeking connection, disconnection or reconnection or shifting of cable service connection or intending to obtain or return set top box at a place located within the area of operation of an MSO or its linked LCO is required to make an application to such MSO/ LCO, as the case may be. Every MSO/ LCO shall provide the cable services to every person making request for the same. No MSO/ LCO shall disconnect the cable services to the subscriber or take any channel off the air without giving prior notice of at least 15 days to such subscriber indicating the reasons for such disconnection and no charge for the services other than the rent for set top box shall be levied on the subscriber for the period during which the services were discontinued. In the event of a complaint received from a subscriber, the MSO/ LCO shall respond to the complaint within eight hours and at least 90% of all ‘no signal’ complaints received shall be redressed and signal restored within twenty four hours of receipt of such complaint. Further, the quality of the set top box should conform to the Indian standard set by the Bureau of Indian Standards.

The Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012 (“Interconnection DAS Regulations”)

The Interconnection DAS Regulations provide that no broadcaster of television channels shall engage in any practice or activity or enter into any understanding or arrangement, including exclusive contract with any MSO for distribution of its channel which may prevent any other MSO from obtaining such TV channels for distribution. Further, every broadcaster shall provide signals of its television channels on non-discriminatory basis to every MSO having the prescribed channel capacity and registered. Every broadcaster shall provide the signals of television channels to a MSO, in accordance with its Reference Interconnect Offer (RIO) or as may be mutually agreed, within 60 days from the date of receipt of the request. Every MSO while seeking interconnection with the broadcaster, shall ensure that its DAS installed for the distribution of television channels meets the DAS requirements specified in these regulations. An MSO operating in the Municipal boundary of Greater Mumbai, National Capital Territory of Delhi, Kolkata and Chennai shall have a capacity to carry a minimum of 500 channels as of January 1, 2013 and provided that all MSOs operating in the above areas and having subscriber base of less than 25,000 shall have the capacity to carry a minimum of 500 channels by April 1, 2013. In the event of a complaint received from a subscriber, the MSO/ LCO shall respond to the complaint within eight hours and at least 90% of all ‘no signal’ complaints received shall be redressed and signal restored within twenty four hours of receipt of such complaint.

The Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010 (“Tariff Order”)

TRAI has imposed a ceiling on tariffs of channels and bouquets of channels payable by (i) broadcasters to distributors, (ii) LCOs to MSOs, and (iii) subscribers to MSOs/LCOs. The Tariff Order provides that every MSO shall offer all channels to its subscribers on an a-la-carte basis and shall specify the maximum retail price for each channel, as payable by the subscribers. The a-la-carte rates for free to air channels shall be uniform. Further, in the event an MSO is offering channels as part of a bouquet, the sum of the a-la-carte rates of the channels forming part of such a bouquet shall in no case exceed one and half times of the rate of that bouquet of which such channels are a part. Additionally, the a-la-carte rate of each channel forming part of such a bouquet shall in no case exceed three times the average rate of channel of that bouquet of which such channel is a part. Every MSO shall report to TRAI, the a-la-carte rates for its pay channels and the bouquet rates.

The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as amended (“Interconnection Regulations”)

The Interconnection Regulations apply to all arrangements among service providers, including MSOs, for interconnection and revenue sharing for all telecommunication services, including cable services in India. The Interconnection Regulations provides that broadcasters are required to provide signals on non-discriminatory terms to all distributors of television channels. Similarly, Head End In The Sky (“HITS”) operators and MSOs are required to re-transmit signals received from a broadcaster on a non-discriminatory basis to LCOs. MSOs are not allowed to

engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts with any distributor of TV channels that prevents any other distributor from obtaining such TV channels. Further, No Broadcaster/ MSO/ HITS operator shall disconnect the TV channel signals to a distributor of TV channels without giving three weeks prior written notice indicating the brief reasons for the proposed action.

Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004, as amended

TRAI has imposed a ceiling on tariffs on channels and bouquets of channels, payable by (i) MSOs to broadcasters, (ii) LCOs to MSOs, and (iii) subscribers to MSOs/LCOs. The charges, excluding taxes shall not exceed 4% of the charges prevailing as of December 1, 2007, with respect to free to air, pay channels, bouquet of channels and standalone channels not part of a bouquet, offered by MSOs to LCOs and by MSOs/ LCOs to subscribers. Further, every MSO/LCO is required to give to every subscriber a bill for the charges payables by that subscriber.

The Standards of Quality of Service (Broadcasting and Cable Services) (Cable Television — Non CAS Areas) Regulation, 2009

The regulations provide for provisions relating to connection/disconnection or shifting of cable services as well as provisions for the billing procedure and billing related complaints. Further, the regulations detail the mechanism for the handling of complaints and the provisions regarding additional standards of quality of service relating to digital decoders and set top boxes for digital cable service in non-CAS areas.

The Policy Guidelines for Uplinking of Television Channels from India, 2011 (“Uplinking Guidelines”)

The Uplinking Guidelines came into effect in December 5, 2011, and regulate the gathering, uplinking and broadcasting of television-based content in India. The Uplinking Guidelines provide for, inter alia, permission for: (i) setting up of uplinking hub/teleports; (ii) uplinking of non-news and current affairs television channels (that is, channels which do not include elements of news and current affairs in their program content); (iii) uplinking of news and current affairs television channels; and (iv) uplinking by Indian news agency; (v) use of SNG/DSNG equipment in C Band and Ku Band; and (vi) temporary uplinking. Setting up uplinking hub/teleports, uplinking of a non-news and current affairs television channels, or uplinking news and current affairs television channels requires a specific permission from the MIB, and the permission granted by the MIB is valid for a period of ten years.

Guidelines and General Information for Grant of License for Operating Internet Services, 2007 (“ISP License Guidelines”)

The DoT issued ISP License Guidelines or grant of license of internet services on non-exclusive basis. The licensee company is required to provide service within 24 months from the date of signing the license agreement. The license is valid for a period of 15 years and access to internet through an authorized cable operator is permitted to ISPs without additional licensing subject to the provisions of Cable Television Act. In addition, the license is governed by the provisions of the Telegraph Act and the TRAI Act.

A service provider is required to obtain a license and enter into a standard agreement (“ISP License Agreement”) with the DoT before starting operations as an ISP. In addition to the conditions required to be followed by a licensee company under the ISP License Guidelines, the ISP License Agreement provides for further requirements to be adhered to by the licensee company.

The Telecommunication Tariff Order, 1999 (“Tariff Order 1999”)

The Tariff Order issued by TRAI, provides the terms and conditions at which telecommunication services within India and outside India may be provided, including rates and related conditions at which messages shall be transmitted to any country outside India, deposits, installation fees, rentals, free calls, usage charges and any other related fees or service charge.

The United States

We plan to expand our streaming business to the United States. Like many OTT companies, our operations are subject to routine regulation by governmental agencies. Companies conducting business on the internet are subject to a number of U.S. domestic laws and regulations. In addition, laws and regulations relating to user privacy,

freedom of expression, content, advertising, information security and intellectual property rights are being debated and considered for adoption by many countries throughout the world. Online businesses face risks from some of the proposed legislation that could be passed in the future.

In the United States, laws relating to the liability of providers of online services for activities of their users and other third parties sometimes get tested by a number of claims, which include actions for libel, slander, invasion of privacy and other tort claims, unlawful activity, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the ads posted, or the content generated by users. Any court ruling that imposes liability on providers of online services for activities of their users and other third parties could harm our businesses.

A range of other laws and new interpretations of existing laws could have an impact on our businesses as well. For example, the Digital Millennium Copyright Act of 1998 has provisions that limit, but do not necessarily eliminate, liability for listing, linking or hosting third-party content that includes materials that infringe copyrights. Various United States and international laws restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In the area of data protection, many states have passed laws requiring notification to users when there is a security breach for personal data, such as California’s Information Practices Act. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. Further, any failure to comply with these laws may subject us to significant liabilities.

We also face risks due to government failure to preserve the internet’s basic neutrality as to the services and sites that users can access through their broadband service providers. Such a failure to enforce network neutrality could limit the internet’s pace of innovation and the ability of large competitors, small businesses and entrepreneurs to develop and deliver new products, features and services, which could harm our business.

Companies conducting online businesses are also subject to federal, state and foreign laws regarding privacy and protection of user data. Any failure by us to comply with our privacy policies or privacy related laws and regulations could result in proceedings against us by governmental authorities or others, which could potentially harm our business. Further, any failure to protect our users’ privacy and data could result in a loss of user confidence in our services and ultimately in a loss of users, which could adversely affect our business.

Regulations in connection with our proposed tele-medicine service

India

The Indian Government has published Telemedicine Practice Guidelines (“Telemedicine Guidelines”) on March 25, 2020. These guidelines finally clarify India’s position on the legality of teleconsultation. It is now legal to provide teleconsultation by registered medical practitioners (M.B.B.S and above) in line with the requirements of the Telemedicine Guidelines. Telehealth is defined as “The delivery and facilitation of health and health-related services including medical care, provider and patient education, health information services, and self-care via telecommunications and digital communication technologies”. It is aimed to achieve timely access to appropriate interventions including faster access, real-time access and access to services that may not otherwise be available, and includes all channels of communication with the patient that leverages Information Technology platforms, including Voice, Audio, Text & Digital Data exchange.

Under the Telemedicine Guidelines, doctor can choose the medium of teleconsultation: A doctor may use any medium for patient consultation, e.g. telephone, mobile or landline phones, chat platforms like WhatsApp, Facebook Messenger etc., other mobile apps or internet-based digital platforms for telemedicine or data transmission systems like Skype/ email/ fax etc. However, before proceeding with the teleconsultation, the doctor should exercise professional judgement to decide whether the teleconsultation is, in fact, appropriate and in the interest of the patient. If the answer is yes, then the doctor should evaluate which medium would be preferred for the teleconsultation. For example, a complaint of appendicitis may require a physical examination and teleconsultation may not be preferred. On the other hand, some common complaints may not require physical examination or even consultation in real-time. For example, a complaint of headache or fever may not always require the doctor to examine the patient physically or audio-visually through a mobile or computer application. However, in certain cases, for example, on presentation of allergy or inflammation (e.g. Conjunctivitis), the doctor may choose to examine the patient in-person or through an audio-visual teleconsultation. Thus, the decision to examine the patient physically or remotely i.e. through teleconsultation, and the medium of teleconsultation, is to be taken by the doctor himself or herself on case to case basis. However, the Doctor on teleconsultation is required to maintain confidentiality of patient data, unless prior written consent has been obtained.

Doctor has to maintain the same standard of care during teleconsultation as during in-person consultation: The Telemedicine Guidelines require doctors to maintain the same standard of care towards a patient during a teleconsultation as they would during an in-person consultation. In other words, the fact that the teleconsultation took place over a mobile app or email or telephone cannot be taken as a defense by a doctor against an allegation of medical negligence. Every doctor is expected to know the limitation of teleconsultation and advise or prescribe accordingly.

Patient is responsible for the accuracy of information: During the course of teleconsultation, if the doctor inquires for relevant information from the patient, then the patient is supposed to disclose the right information. The Telemedicine Guidelines have clarified that is the patient who will be responsible for accuracy for the information shared with the doctor, and not the doctor. However, since the standard of care is as high in the case of teleconsultation as in-person consultation, the doctor must make all efforts to gather sufficient medical information about the patient’s condition before deciding on a diagnosis or a treatment. If a patient provides any contradictory information, or if the doctor is not convinced with the information at hand to make a professional decision, he may ask patient to provide such documents or undertake such tests as he/she may feel proper in his/her professional judgement without fear of liability. Patient identification is mandatory during the first consultation.

Caregiver is deemed to be authorized on behalf of minor or incapacitated patients: If the age of the patient is 16 years or less, or if the patient is incapacitated (due to mental conditions like dementia or physical disability due to an accident), then the caregiver is deemed to be authorized to consult on behalf of the patient. The Telemedicine Guidelines clarify that in such cases, the teleconsultation can take place with the caregiver without the presence of the patient.

There is no fixed format for issuing a prescription in a teleconsultation. The Telemedicine Guidelines has recommended a format, but following it is not mandatory. However, the doctor must provide photo/scan /digital copy of a signed prescription or e-Prescription to the patient via email or any messaging platform. The limitation on prescribing medicines (such as habit-forming drugs or narcotic or psychotropic drug, etc.) to patients should be adhered to. Please note that a doctor can transfer the prescription to a pharmacy only if he/ she has the explicit consent of the patient.

The United States

The healthcare industry and the practice of medicine are extensively regulated at both the state and federal levels. Our ability to operate profitably in the future will depend in part upon our ability, and that of our affiliated providers, to maintain all necessary licenses and to operate in compliance with applicable laws and rules. Those laws and rules continue to evolve, and we therefore devote significant resources to monitoring developments in healthcare and medical practice regulation. As the applicable laws and rules change, we are likely to make conforming modifications in our business processes from time to time. We cannot assure you that a review of our business by courts or regulatory authorities in the future will not result in determinations that could adversely affect our operations or that the healthcare regulatory environment will not change in a way that restricts our operations.

Provider Licensing, Medical Practice, Certification and Related Laws and Guidelines

The practice of medicine, including the provision of behavioral health services, is subject to various federal, state and local certification and licensing laws, regulations and approvals, relating to, among other things, the adequacy of medical care, the practice of medicine (including the provision of remote care and cross-coverage practice), equipment, personnel, operating policies and procedures and the prerequisites for the prescription of medication. The application of some of these laws to telehealth is unclear and subject to differing interpretation.

Physicians and behavioral health professionals who provide professional medical or behavioral health services to a patient via telehealth must, in most instances, hold a valid license to practice medicine or to provide behavioral health treatment in the state in which the patient is located. In addition, certain states require a physician providing telehealth to be physically located in the same state as the patient. Failure to comply with these laws and regulations could result in our services being found to be non-reimbursable or prior payments being subject to recoupments and can give rise to civil or criminal penalties.

Corporate Practice of Medicine; Fee-Splitting

We may contract with physicians or physician-owned professional associations and professional corporations to deliver our services to their patients. We may also enter into management services contracts with these physicians and physician-owned professional associations and professional corporations pursuant to which we may provide them with