City Online Services Q1 Loss at ₹18.73 Lakhs; Explores Divestment

Disclosure Context

Disclosure of outcomes from the Board of Directors meeting of City Online Services Limited (Scrip Code: 538674) held on Friday, August 14, 2026, at its registered office, pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Financial Results for Quarter Ended June 30, 2026

Nature of Disclosure: Un-audited standalone financial results for Q1 FY27.

Key Quantitative Figures (Rs. in Lakhs):

• Total Income: ₹209.83
• Revenue from Operations: ₹204.31
• Other Income: ₹5.52
• Total Expenses: ₹228.82
• Operating Expenses: ₹136.80
• Employee Benefit Expenses: ₹53.62
• Finance Cost: ₹0.47
• Depreciation and Amortization: ₹4.98
• Other Expenses: ₹32.96
• Loss Before Tax: ₹(19.00)
• Total Tax Expense: ₹(0.26) (Deferred Tax Credit)
• Net Loss for the Period: ₹(18.73)
• Total Comprehensive Income: ₹(18.73)
• Paid-up Share Capital: ₹516.47 (Face value ₹10 per share)
• Earnings Per Share (EPS):
• Basic: ₹(0.36)
• Diluted: ₹(0.36)
• Net Worth: Negative ₹73.46 Lakhs (as of June 30, 2026)

Comparative Figures:

• Net Loss for the previous quarter (Q4 FY26 ended March 31, 2026): ₹(14.65) Lakhs
• Net Loss for the corresponding quarter last year (Q1 FY26 ended June 30, 2025): ₹(3.68) Lakhs
• Net Loss for the full year FY26 ended March 31, 2026: ₹(47.21) Lakhs

Other Board Meeting Approvals

The Board also noted/approved the following items:

1. Limited Review Report for the quarter ended June 30, 2026.

2. Directors' Report and Management Discussion & Analysis Report for FY ended March 31, 2026.

3. Notice of the 27th Annual General Meeting (AGM) scheduled for Wednesday, September 30, 2026, at 10:30 A.M. at the registered office (701, 7th Floor, Aditya Trade Center, Ameerpet, Hyderabad - 500038).

4. Appointment of Vivek Surana & Associates, Practicing Company Secretaries, as Scrutinizer for the AGM e-voting process.

5. The remote e-voting period for shareholders as of the cut-off date (Wednesday, September 23, 2026) will commence on Sunday, September 27, 2026 (9:00 AM) and end on Tuesday, September 29, 2026 (5:00 PM).

Strategic Proposal: Business Divestment

The Board of Directors considered and approved, in principle, the proposal to explore strategic options for the sale/divestment of the business/undertaking of the Company.

Key Conditions & Process:

• The proposal is subject to the approval of the shareholders of the Company and any other requisite approvals under applicable laws and regulations.
• The Board is authorized to undertake the process of identifying and evaluating suitable prospective buyers.
• The Board may engage appropriate advisors/consultants and initiate discussions with potential buyers.
• Any future sale/divestment would be subject to satisfactory due diligence, negotiation, execution of definitive agreements, and approvals from the Board, shareholders, lenders, regulatory/statutory authorities, and other stakeholders.

Current Status:

• No definitive agreement or binding commitment has been entered into with any prospective buyer at this stage.
• The Company states there is no assurance that the proposed transaction will be consummated.
• Further disclosures will be made to the stock exchanges upon any material development, in accordance with applicable laws.

Independent Auditor's Review Report (Qualified)

Auditor Firm: Komandoor & Co LLP

Report Date: August 14, 2026

The auditors issued a qualified conclusion on the reviewed financial results. Their review was conducted in accordance with Standard on Review Engagements (SRE) 2410.

Basis for Qualification:

1. Going Concern Uncertainty: The company's net worth is completely eroded (negative ₹73.46 Lakhs), and current liabilities exceed current assets. This indicates a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not adequately disclose this matter, and the auditors could not corroborate management's going concern assumption.

2. Expected Credit Loss (ECL): The Company has not recognized ECL on financial assets as required by Ind AS 109. Management has not performed an impairment assessment using the ECL model.

3. Property, Plant & Equipment (PPE): Deficiencies were noted in fixed asset records. The company is reconciling expired and fully depreciated assets. The auditor was unable to obtain sufficient evidence regarding the accuracy, completeness, existence, and valuation of PPE. The impact on depreciation, retained earnings, and carrying value remains undetermined.

4. Outstanding Statutory Liabilities: Amounting to ₹5.12 Lakhs were outstanding for the quarter. This includes ₹2.74 Lakhs in Professional Tax and ₹2.38 Lakhs in TDS deducted but not remitted to income tax authorities.

5. Revenue Recognition (Ind AS 115): Unbilled Revenue and Deferred Income pertaining to Q1 FY27 were not recognized in the books, contrary to the standard which requires recognition based on the satisfaction of performance obligations.

6. Employee Benefits (Ind AS 19): A liability for accumulated non-vesting leave encashment entitlements has not been recognized in the financial statements.

Impact Quantification: The impact of the qualifications related to unbilled revenue/deferred income and leave encashment liability could not be quantified by the auditor or management due to the non-availability of sufficient supporting data and information from the Management.

Management's View: Noted the qualifications and stated they will take necessary steps to resolve them.