DUUO Duo World Inc (CE)

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Duo World, Inc. and Subsidiaries

Consolidated Financial Statements

December 31, 2016

(Unaudited)

CONTENTS

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Note 1 - Organization and Nature of Operations

Duo World Inc. (hereinafter referred to as “Successor” or “Duo”) a private company, was organized under the laws of the state of Nevada on September 19, 2014. Duo Software (Pvt.) Limited (hereinafter referred to as “DSSL” or “Predecessor”), a Sri Lanka based company, was incorporated on 22nd September 2004, in the Democratic Socialist Republic of Sri Lanka, as a limited liability company. Duo Software (Pte.) Limited (hereinafter referred to as “DSS” or “Predecessor”), a Singapore based company, was incorporated on 5th June 2007 in the Republic of Singapore as a limited liability company. DSS also includes its wholly owned subsidiary, Duo Software India (Private) Limited (India) which was incorporated on 30th August 2007, under the laws of India.

On December 3, 2014, Duo Software (Pvt.) Limited (DSSL) and Duo Software Pte. Limited (DSS) executed a reverse recapitalization with Duo World Inc. (Duo). Duo (Successor) is a holding company that conducts operations through its wholly owned subsidiaries DSSL and DSS (Predecessors) in Sri Lanka, Singapore and India. The consolidated entity is referred to as "the Company". The Company, having its development center in Colombo, has been in the space of developing products and services for the subscription-based industry. The Company’s application (“Duo Subscribe”, “Duo Contact”, “Digin”, “Facetone” CloudCharge and SmoothFlow) provide solutions in the space of Data Analytics, Customer Life Cycle Management, Subscriber Billing and Work Flow .

Note 2 - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for a comprehensive presentation of consolidated financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair consolidated financial statements presentation.

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report, which contains the audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended March 31, 2016. The interim results for the period ended December 31, 2016 are not necessarily indicative of results for the full fiscal year.

Note 3 - Summary of Significant Accounting Policies

Basis of Consolidation

Duo World Inc. is the parent company of its 100% subsidiaries Duo Software (Pvt.) Limited (DSSL) and Duo Software Pte Limited (DSS). Duo Software Pte. Limited is the parent company of its 100% subsidiary Duo Software India (Private) Limited (India). All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-confirming events. Accordingly, the actual results could differ from those estimates. The most significant estimates relate to the timing and amounts of revenue recognition, the recognition and disclosure of contingent liabilities and the collectability of accounts receivable.

Risks and Uncertainties

The Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. Product revenues are concentrated in the application software industry, which is highly competitive and rapidly changing. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies, could adversely affect operating results

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with various high quality financial institutions and we monitor the credit ratings of those institutions. The Company’s sales are primarily to the companies located in Sri Lanka, Singapore, Indonesia and India. The Company performs ongoing credit evaluations of our customers, and the risk with respect to trade receivables is further mitigated by the diversity, both by geography and by industry, of the customer base. Accounts receivable are due principally from the companies under stated contract terms.

Provisions

A provision is recognized when the Company has present obligations as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and reliable estimate can be made of amount of the obligation. Provisions are not discounted at their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Accounts Receivable and Provision for Doubtful Accounts

The Company recognizes accounts receivable in connection with the products sold and services provided and have strong policies and procedures for the collection of receivables from its clients. However, there are inevitably occasions when the receivables due to the Company cannot be collected and, therefore, have to be written off as bad debts. While the debt collection process is being pursued, an assessment is made of the likelihood of the receivable being collectable. A provision is, therefore, made against the outstanding receivable to reflect that component that may not become collectable. The Company is in the practice of provisioning for doubtful debts based on the period outstanding as per the following:

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2016 and March 31, 2016, there were no cash equivalents.

Foreign Currency Translation

The functional currencies of the Company’s foreign subsidiaries are their local currencies. For financial reporting purposes, these currencies have been translated into United States Dollars ($) and/or USD as the reporting currency. All assets and liabilities denominated in foreign functional currencies are translated into U.S. dollars at the closing exchange rate on the balance sheet date and equity balances are translated at historical rates. Revenues, costs and expenses in foreign functional currencies are translated at the average rate of exchange during the period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of shareholders’ deficit as “accumulated other comprehensive income (loss)”. Gains and losses resulting from foreign currency transactions are included in the statement of operations and comprehensive income / (loss) as other income (expense).

Fixed assets

Fixed assets (including leasehold improvements) are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed utilizing the straight-line method over the estimated useful lives of the related assets. The estimated salvage value is considered as NIL. Amortization of leasehold improvements is computed utilizing the straight-line method over the estimated benefit period of the related assets, which may not exceed 15 years, or the lease term, if shorter. Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred. In case of sale or disposal of an asset, the cost and related accumulated depreciation are removed from the consolidated financial statements.

Useful lives of the fixed assets are as follows:

For the financial year ending March 31, 2016, the useful life of Computer Equipment and Website development were assumed to be 5 years.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, such as property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs related to the sale, and are no longer depreciated. The assets and liabilities of a group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Fair Value Measurements and Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Revenue Recognition, Deferred& Accrued Revenue

The Company recognizes revenue from the sale of software licenses and related services in accordance with ASC Topic 605, Revenue Recognition. ASC Topic 605 sets forth guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria are met:

The Company typically licenses its products on a per server, per user basis with the price per customer varying based on the selection of the products licensed, the number of site installations and the number of authorized users. Currently, Duo is offering three products from which it generates its revenue; they are “Duo Contact”, “Duo Subscribe” and “Facetone”. In the case of “Duo Contact”, Duo offers license to use software to its clients under an agreement. Invoices are raised monthly over the term of agreement, and it recognizes revenue monthly over the term of the underlying arrangement. In the case of “Duo Subscribe” and “Facetone”, Duo sells its software license along with software implementation and annual maintenance services under an agreement with various clients. The Company raises invoices on a key milestone basis, as defined in the agreement. Revenue recognition is based on stage of completion basis. Revenues from consulting and training services are typically recognized as the services are performed.

The Company offers annual maintenance programs on its licenses that provide for technical support and updates to the Company’s software products. Maintenance fees are bundled with license fees in the initial licensing period and charged separately for renewals of annual maintenance in subsequent years. Fair value for maintenance is based upon either renewal rates stated in the contracts or separate sales of renewals to customers. Revenue is recognized ratably, or daily, over the term of the maintenance period, which is typically one year.

For the nine months ended December 31, 2016 and 2015, the Company received only cash as consideration for sale of licenses and related services rendered.

For the nine months ended December 31, 2016 and December 31, 2015, the Company had following concentrations of revenue with customers:

Deferred Revenue - Deferred revenue represents advance payments for software licenses, services, and maintenance billed in advance of the time revenue is recognized. As at December 31, 2016 and March 31, 2016, deferred revenue was $23,312 and $9,954 respectively.

Accrued Revenue/Unbilled Accounts Receivable - Accrued revenue/Unbilled accounts receivable primarily occur due to the timing of the respective billings, which occur subsequent to the end of each reporting period. As at December 31, 2016 and March 31, 2016, unbilled/accrued revenues were $20,681 and $31,154 respectively.

Cost of Revenue

Cost of revenue mainly includes purchases, product implementation costs, amortization of product development, developer support and implementation, and consultancy fees related to the products offered by Duo. The aggregate cost related to the software implementations, including support and consulting services pertaining to the revenue recognized during the reporting period, is recognized as Cost of Revenue.

Product research and development

Product research and development expenses consist primarily of salary and benefits for the Company’s development and technical support staff, contractors’ fees and other costs associated with the enhancements of existing products and services and development of new products and services. Costs incurred for software development prior to technological feasibility are expensed as product research and development costs in the period incurred. Once the point of technological feasibility is reached, which is generally upon the completion of a working prototype that has no critical bugs and is a release candidate development costs are capitalized until the product is ready for general release and are classified within "Intangibles assets" in the accompanying consolidated balance sheets. The Company amortizes capitalized software development costs using the greater of the ratio of the products’ current gross revenues to the total of current gross revenues and expected gross revenues or on a straight-line basis over the estimated economic life of the related product, which is typically four years.

During the nine months ending on December 31, 2016 and 2015, product research and development cost of $294,507 and $189,174 respectively, were capitalized as “Intangible assets”.

Advertising Costs

The Company expenses advertising costs as incurred. No advertising expenses were incurred during the nine months ended December 31, 2016. The amount expensed during the nine months ended December 31, 2015 was $781and is included in selling and distribution expense in the accompanying consolidated statements of operations.

Comprehensive Income

The Comprehensive Income Topic of the FASB Accounting Standards Codification establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income from April 1, 2013 through December 31, 2016, includes only foreign currency translation gains (losses), and is presented in the Company’s consolidated statements of comprehensive income.

Changes in Accumulated Other Comprehensive Income (Loss) by Component during the periods ending on December 31, 2016 and March 31, 2016 were as follows:

Recent Accounting Pronouncements

The Company has reviewed accounting pronouncements that were issued as of December 31, 2016 and believes that these pronouncements are not applicable to the Company, or that they will not have a material impact on the Company’s financial position or results of operations.

At December 31, 2016 and March 31, 2016, the Company had following concentrations of accounts receivable with customers:

Depreciation and amortization expense for the nine months ended December 31, 2016 and 2015 was $57,813 and $26,830 respectively.

Note 7 – Intangible Assets

Intangible assets comprise of capitalization of certain costs pertaining to product development, which meet the criteria as set forth above under Note 3. Following table illustrates the movement in intangible assets as at December 31, 2016 and March 31, 2016:

Bank overdraft facility, obtained from Pan Asia Banking Corporation PLC, contains an interest rate of 9.61% per annum up to $ 101,846 and 11.35% per annum up to $ 207,383.

Note 9 – Due to Related Parties

Due to Related Parties – Short term

From time to time, the Company receives advances from related parties such as officers, directors or principal shareholders in the normal course of business. Loans and advances received from related parties are unsecured and non-interest bearing. Balances outstanding to these persons for less than 12 months are presented under current liabilities in the accompanying consolidated financial statements. As of December 31, 2016 and March 31, 2016, the Company owed directors $329,626 and $163,738 respectively.

Due to Related Parties – Long term

Balances outstanding to related parties for more than 12 months are presented under long-term liabilities in the accompanying consolidated financial statements. Related party loan in the Balance Sheet of Duo Software Pte. Ltd was recognized at cost as of December 31, 2016, and at amortized cost as of March 31, 2016. As of December 31, 2016 and March 31, 2016, the Company owed directors $1,162,325 and $1,194,668 respectively.

Note 15 - Equity

As at December 31, 2016, the Company had 90,000,000 authorized shares of common stock having a par value of $0.001. The shares of Common Stock are designated with the following rights:

During the nine months ended December 31, 2016, the Company issued following common shares:

As at December 31, 2016, the Company had 10,000,000 authorized series “A” preferred shares having a par value of $0.001 per share. The preferred shares are designated with the following conversion rights:

During the nine months ended December 31, 2016, the Company has not issued any new preferred shares.

Note 16 - Commitments and Contingencies

The Company consults with legal counsel on matters related to litigation and other experts both within and outside the Company with respect to matters in the ordinary course of business. The Company does not have any contingent liabilities in respect of legal claims arising in the ordinary course of business.

Duo entered into a lease commitment for its Sri Lanka office amounting to $121,753 with Happy Building Management Company for a period of 3 years in 2016. Duo entered into another lease commitment for its Indian office amounting to $1,199 on April 1, 2016 with Regus Office Center Services Pvt. Limited for a period of 1 year.

Guarantee provided by the company existed on the balance sheet date are as follows:

The company has not provided any guarantees other than those mentioned above.

Note 17 - General

Figures have been rounded off to the nearest dollar and the comparative figures have been re-arranged / reclassified, wherever necessary, to facilitate comparison.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Forward - Looking Statement

The following discussion and analysis of the results of operations and financial condition of Duo World, Inc. should be read in conjunction with the unaudited financial statements, and the related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

Our MD&A is comprised of the following sections:

A. Business Overview

B. Critical Accounting Policies

C. Results of operations for the three months ended December 31, 2016 and December 31, 2015

D. Results of operations for the nine months ended December 31, 2016 and December 31, 2015

E. Financial condition as at December 31, 2016 and March 31, 2016

F. Liquidity and capital reserves

G. Milestones for next twelve months

Duo World Inc. (hereinafter referred to as “Successor” or “Duo”) a private company, was organized under the laws of the state of Nevada on September 19, 2014. Duo Software (Pvt.) Limited (hereinafter referred to as “DSSL” or “Predecessor”), a Sri Lanka based company, was incorporated on September 22, 2004, in the Democratic Socialist Republic of Sri Lanka, as a limited liability company. Duo Software (Pte.) Limited (hereinafter referred to as “DSS” or “Predecessor”), a Singapore based company, was incorporated on June 5, 2007 in the Republic of Singapore as a limited liability company. DSS also includes its wholly-owned subsidiary, Duo Software India (Private) Limited (India) which was incorporated on August 30, 2007, under the laws of India.

Effective December 3, 2014, DSSL and DSS executed a reverse recapitalization with Duo. Duo (Successor) is a holding company that conducts operations through its wholly owned subsidiaries DSSL and DSS (Predecessors) in Sri Lanka, Singapore and India. The consolidated entity is referred to as “the Company”. The Company, having its development center in Colombo, Sri Lanka, has been in the business of developing products and services for the subscription based industry. The Company’s applications (“DuoSubscribe” & “DuoCLM”) run on its core platform “Duo World” and is a provider of solutions for its customers for Customer Life Cycle Management, Subscriber Management, Customer Care, Billing and Contact Center Management.

Our authorized capital consists of 100,000,000 shares of common stock, $0.001 par value, of which 10,000,000 shares of preferred stock, $0.001 par value.

We prepare our consolidated financial statements in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of the matters that are inherently uncertain.

Revenue Recognition

The Company recognizes revenue from the sale of software licenses and related services in accordance with ASC Topic 605, Revenue Recognition. ASC Topic 605 sets forth guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria are met:

The Company typically licenses its products on a per server, per user basis with the price per customer varying based on the selection of the products licensed, the number of site installations and the number of authorized users. Currently, Duo is offering three products from which it generates its revenue; they are “Duo Contact”, “Duo Subscribe” and “FaceTone”. In the case of “DuoContact”, Duo offers license to use software to its clients under an agreement. Invoices are raised monthly over the term of agreement, and it recognizes revenue monthly over the term of the underlying arrangement. In the case of “Duo Subscribe” and “FaceTone”, Duo sells its software license along with software implementation and annual maintenance services under an agreement with various clients. The Company raises invoice on key milestone basis as defined in the agreement. Revenue recognition is based on stage of completion basis. Revenues from consulting and training services are typically recognized as the services are performed.

The Company offers annual maintenance programs on its licenses that provide for technical support and updates to the Company’s software products. Maintenance fees are bundled with license fees in the initial licensing period and charged separately for renewals of annual maintenance in subsequent years. Fair value for maintenance is based upon either renewal rates stated in the contracts or separate sales of renewals to customers. Revenue is recognized ratably, or daily, over the term of the maintenance period, which is typically one year.

Provisions

A provision is recognized when the company has present obligations as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and reliable estimate can be made of amount of the obligation. Provisions are not discounted at their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to financial market risks, primarily changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices.

Foreign Currency Exchange Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. All of our revenues are normally generated in U.S. dollars or Sri Lankan rupees. Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in Asia and to a lesser extent in the U.S. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not engaged in any foreign currency hedging strategies. As our international operations grow, we plan to generate revenues in foreign currencies and we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates.

Inflation

We do not believe that inflation had a material effect on our business, financial condition or results of operations in the last three fiscal years. 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.

The Company had revenues amounting to $282,385 and $351,183, respectively, for three months ended December 31, 2016 and December 31, 2015. Following is a breakdown of revenues for both periods:

Total revenue for the three months ended December 31, 2016 decreased by 20% when compared to December 31, 2015. The decrease is mainly due to the drop in revenue generated by the product DuoCLM (91%) and DuoSubscribe (5%) in the three months ended December 31, 2016 when compared to the same period in 2015.

The company is no longer marketing DuoCLM and DuoSubscribe actively, as the newer products are being introduced to the market. FaceTone is an advanced version of DuoCLM, and it is generating a lot of interest in the market, because of its superior features and flexibility.

Fully owned subsidiary of Duo World Inc., Duo Software won a ‘Merit Award’ at the Asia Pacific ICT Alliance (APICTA) Awards, held in December 2016 in Taipei, just months after winning ‘Gold’ and ‘Merit’ Awards at the National Best Quality Software Awards (NBQSA) for the new products.

For the three months ended December 31, 2016 and December 31, 2015, the Company had the following concentrations of revenues with customers:

The total cost of sales amounted to $84,575 and $141,355 for the three months ended December 31, 2016 and December 31, 2015, respectively. The following table sets forth the Company’s cost of sales breakdown for both periods:

Cost of sales as a percentage to revenue declined from 40% in the three months ended December 31, 2015 to a 30% in the three months ended December 31, 2016. Reduction in purchases (outsourced components) and external services were the main contributors to the decrease in cost of sales.

The gross income for the three months ended December 31, 2016 and December 31, 2015 amounted to $197,810 and $209,827, respectively.

The total operating expenditures amounted to $324,718 and $274,809 for the three months ended December 31, 2016 and December 31 2015, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

Following are the main reasons for the variances in operating expenses of the Company:

Research and Development

Research and development expenses nominally increased by $3,594 during the three months ended December 31, 2016 when compared with three months ended December 31, 2015.

General and Administrative Cost

During the three months ended December 31, 2016, general and administrative cost declined by 7% when compared to the same period in 2015. The main reason for the decline was non-payment of bonus in the three months ended 2016. During the three months ended December 31, 2015, the Bonus expenditure amounted to 15% of the total general and administrative cost.

Salaries and benefits

Salaries and benefits increased by 29% during the three months ended December 31, 2016 when compared with the same period in 2015. The company increased its salaries and benefits paid to staff in the months of August and October 2016, in order to remain competitive and attract the right resources.

Selling and distribution

There is a decrease of 56% on account of expenditure incurred for selling and distribution activities in the three months ended December 31, 2016 when compared to the three months ended December 31, 2015. The company curtailed all marketing activities related to DuoCLM and DuoSubscribe, during the three months ended December 31, 2016, and focused on completing the testing the new products.

Allowance for bad debts

During the three months ended December 31, 2016, the company provided an allowance for bad debts on a quarterly basis, whereas it was only provided at the financial year end during the previous period.

The loss from operations for the three months ended December 31, 2016 and December 31, 2015 amounted to $126,908 and $64,982, respectively.

The Company’s other income and (expenses) for the three months ended December 31, 2016 and December 31, 2015 amounted to $6,643 and $5,447, respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

Other income has marginally increased from $ 5,447 in the three months ended December 31, 2015 to $6,643 in the three months ended December 31, 2016. The main reason for this increase was the favorable fluctuations in exchange rates.

The loss before provision for income taxes for the three months ended December 31, 2016 and December 31, 2015 amounted to $120,265 and $59,535, respectively.

The net loss for the three months ended December 31, 2016 and December 31, 2015 amounted to $120,265 and $60,067, respectively.

The Company’s comprehensive loss for the three months ended December 31, 2016 and December 31, 2015 amounted to $78,031 and $66,314, respectively.

At December 31, 2016 and March 31, 2016, the Company had 38,567,467 and 38,060,000 common shares issued and outstanding, respectively. The weighted average number of shares for the three months ended December 31, 2016 and December 31, 2015 was 38,567,467 and 38,060,000, respectively. The loss per share for both periods was $(0.00) per share and $(0.00) per share, respectively.

The Company had revenues amounting to $923,501 and $1,019,314, respectively, for nine months ended December 31, 2016 and December 31, 2015. Following is a breakdown of revenues for both periods:

Total revenue for the nine months ended December 31, 2016 has marginally decreased by 9% when compared to nine months ended December 31, 2015. The decrease was mainly due to the decrease in revenue generated by the product DuoCLM (29%) and DuoSubscribe (5%) in the nine months ended December 2016 when compared to the nine months ended December 31, 2015. The company has also scaled down all marketing and selling activities for DuoCLM and DuoSubscribe

For the nine months ended December 31, 2016 and December 31, 2015, the Company had the following concentrations of revenues with customers:

The total cost of sales amounted to $226,897 and $310,866 for the nine months ended December 31, 2016 and December 31, 2015, respectively. The following table sets forth the Company’s cost of sales breakdown for both periods:

Cost of sales as a percentage to revenue declined from 30% in the nine months ended December 31, 2015, to 25% in the same period in 2016. Reduction in purchases, services received from external parties and decrease in product development cost write off, were the main contributors to the decrease in cost of sales during the nine months ended December 31, 2016.

The gross income for the nine months ended December 31, 2016 and December 31, 2015 amounted to $696,604 and $708,448, respectively.

The total operating expenditures amounted to $1,168,530 and $1,190,769 for the nine months ended December 31, 2016 and December 31, 2015, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

Following are the main reasons for the variances in operating expenses of the Company:

Research and Development

Research and development expenses decreased by 42% during the nine months ended December 31, 2016 when compared with the nine months ended December 31, 2015, as most products have completed research and development phase and moved on to product development phase.

General and Administrative Cost

During the nine months ended December 31, 2016, general and administrative cost declined by 18% when compared to the same period in 2015. The main reason for the decrease is due to the reduction in the professional fees paid to consultants and auditors in preparation and filing of S1 registration statement. This cost amounted to $252,809 and $369,910 respectively in the nine months ended December 31, 2016, and December 31, 2015. Resulting in a reduction of 32% in the nine months ended December 31, 2016

Salaries and benefits

Salaries and benefits increased by 17% during the nine months ended December 31, 2016 when compared with the same period in 2015. The company Increased salaries and benefits paid to staff in order to remain competitive and attract resources.

Selling and distribution

There is a decrease of 56% on account of expenditure incurred for selling and distribution activities in the nine months ended December 31, 2016 when compared to the nine months ended in December 31, 2015.

The company curtailed all marketing activities on its existing products DuoCLM and DuoSubscribe, during the nine months ended December 31, 2016, in order to focus on its new products,

Allowance for bad debts

During the nine months ended December, 2016, the company provided an allowance for bad debts on a quarterly basis, whereas it was provided at the end of financial year during the previous period.

The loss from operations for the nine months ended December 31, 2016 and December 31, 2015 amounted to $471,926 and $482,321, respectively.

The Company’s other income and (expenses) for the nine months ended December 31, 2016 and December 31, 2015 amounted to $3,344 and $8,189, respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

Other income has decreased from $8,189 in the nine months ended December 31, 2015 to $3,344 in the nine months ended December 31, 2016. This decrease is mainly due to the gain recorded on debt extinguishment during the nine months ended December 31, 2015.

The loss before provision for income taxes for the nine months ended December 31, 2016 and December 31, 2015 amounted to $468,582 and $474,131, respectively.

The net loss for the nine months ended December 31, 2016 and December 31, 2015 amounted to $468,582 and $475,776, respectively.

The Company’s comprehensive loss for the nine months ended December 31, 2016 and December 31, 2015 amounted to $416,921 and $456,807, respectively.

At December 31, 2016 and March 31, 2016, the Company had 38,567,467 and 38,060,000 common shares issued and outstanding, respectively. The weighted average number of shares for the nine months ended December 31, 2016 and December 31, 2015 was 38,521,304 and 37,707,709, respectively. The loss per share for both periods was $(0.01) per share and $(0.01) per share, respectively.

Assets:

The Company reported total assets of $1,627,103 and $1,390,902 as on December 31, 2016 and March 31, 2016, respectively. 44% of these total assets include net accounts receivables and 34% of total assets comprise intangible assets of the Company. Our property and equipment include office equipment, computer equipment (Data Processing Equipment), furniture and fittings, web site developments and improvement to lease- hold assets having a total net book value of $54,034 and $105,790 as at December 31, 2016 and March 31, 2016, respectively. We also had a deferred tax asset of $18,070 as at March 31, 2016 which now totals to $17,634 as at December 31, 2016. Furthermore, our current assets at March 31, 2016 totaled $884,690 and at December 31, 2016, these current assets amounted to $1,005,775 comprised of cash of $30,379, accounts receivable of $708,843, prepaid and other current assets of $245,872 and accrued revenue of $20,681.

Liabilities:

The Company had total liabilities of $2,701,887 and $2,402,890 as at December 31, 2016 and March 31, 2016 respectively. Long term liabilities include balances owed to related parties which are outstanding for more than 12 months. Our current liabilities at March 31, 2016 totaled $1,208,022. We have seen a 27% increase in current liabilities amounting to $331,340, making total current liabilities of $1,539,562 as at December 31, 2016. These mainly include short term third party debt, payroll liabilities, payable to related parties, deferred revenue, taxes payable, accrued liabilities and our day to day operational creditors.

Stockholder’s Deficit:

At March 31, 2016, the Company had stockholders´ deficit of $1,011,988. At December 31, 2016, the Company had stockholders´ deficit of $1,074,784, which represents an increase of 6%.

The Company had 38,567,467 and 38,060,000 shares issued and outstanding at December 31, 2016 and March 31, 2016, respectively.

The Company had loss from operations of $126,908 and $471,926 for the three and nine months ended December 31, 2016, respectively; a total other income amounting to $6,643 and $3,344 for the three and nine months ended December 31, 2016, respectively; and a net loss of $120,265 and $468,582 for the three and nine months ended December 31, 2016, respectively.

In summary, our cash flows for the nine months ended December 31, 2016 and December 31, 2015 were as follows:

Since inception, we have financed our operations primarily through internally generated funds and the use of our lines of credit with several financial institutions. We had $30,379 in cash; net cash provided by operations of $118,678 for the nine months ended December 31, 2016; working capital deficit of $533,787 and stockholders´ deficit of $1,074,784 as of December 31, 2016.

Our specific plan of operations and milestones through January 2018 are as follows: