Notes
to the Consolidated Financial Statements
September
30, 2018
(Unaudited)
Note
1 - Organization and Nature of Operations
Duo
World Inc. (hereinafter referred to as “Successor” or “Duo”) a reporting company since September 26, 2016,
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 company based in Sri Lanka, 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.
On
December 3, 2014, Duo Software (Pvt.) Limited (DSSL) and Duo Software Pte. Limited (DSS) executed a reverse recapitalization with
Duo World Inc. (Duo).
See Note 4
. 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 customer
service experience and life cycle management industry. The Company’s applications (“Duo Subscribe,” “Facetone,”
and “Smoothflow”) provide solutions in the space of Subscriber management and billing, Customer Life Cycle Management,
and Work Flow & Customer Service.
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, 2018. The interim results for the period ended September 30, 2018 are not necessarily indicative
of results for the full fiscal year.
Going
Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not
include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
As
reflected in the accompanying consolidated financial statements, the Company had a net loss of $206,588 and $916,370 for the three
and six months ended September 30, 2018 respectively, net cash provided by operations of $(104,704) and $147,845 in six
months ended September 30, 2018 and 2017 respectively, a working capital deficit of $2,242,701 and $1,428,411 as of September
30, 2018 and March 31, 2018 respectively, outstanding statutory dues towards employee provident fund and employee trust fund of
$407,535 and $388,630 as of September 30, 2018 and March 31, 2018 respectively and a stockholders´ deficit of $2,934,151
and $2,164,333 as of September 30, 2018 and March 31.2018 respectively.
Furthermore,
the Company has entered into significant contracts with the clients for the products launched, and the management is confident
that these projects shall generate sufficient revenues to offset the operating losses in the recent future.
Note
3 - Summary of Significant Accounting Policies
Basis
of Consolidation
The
accompanying consolidated Financial Statements include the accounts and transactions of DSSL and DSS (Predecessors) and Duo (Successor).
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 and Assumptions
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 and assumptions 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 and assumptions. 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 understated contract terms.
Provisions
A
provision is recognized when the company has present obligations because 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.
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 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:
Trade
receivables outstanding:
|
|
Provision
|
Over
24 months
|
|
100%
|
Over
18 months
|
|
50%
|
Over
15 months
|
|
25%
|
Over
12 months
|
|
10%
|
Over
9 months
|
|
5%
|
Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of
September 30, 2018 and March 31, 2018, 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).
Property
and Equipment
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:
Furniture
& Fittings
|
5
years
|
Improvements
to lease hold assets
|
Lease
term
|
Office
equipment
|
5
years
|
Computer
equipment (Data Processing Equipment)
|
3
years
|
Website
development
|
4
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 to sell, 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.
Post
Retirement Benefit Plan
The
company has gratuity as it post-employment plan for all the eligible employees. The recognition for the gratuity plan is
as below:-
The
expected postretirement benefit obligation (EPBO) is the actuarial present value (APV) as of a specific date of the benefits expected
to be paid to the employee, beneficiaries, and covered dependents.
Measurement
of the EPBO is based on the following:
1.
Expected amount and timing of future benefits
2.
Expected future costs
3.
Extent of cost sharing
The
EPBO includes an assumed salary progression for a pay-related plan. Future compensation levels represent the best estimate after
considering the individual employees involved, general price levels, seniority, productivity, promotions, indirect effects, and
the like.
The
APBO is the APV as of a specific date of all future benefits attributable to service by an employee to that date. It represents
the portion of the EPBO earned to date. After full eligibility is attained, the APBO equals the EPBO. The APBO also includes an
assumed salary progression for a pay-related plan.
Revenue
Recognition, Deferred & Accrued Revenue
The
Company recognizes revenue from the sale of software licenses and related services. The Company revenue recognition policy follows
guidance from Accounting Standards Codification(ASC) 606, Revenue from contract with customers. Revenue is recognized when the
Company transferred promised goods and services to the customer and in the amount that reflect the consideration to which the
company expected to be entitled in exchange for those goods and services.
Following
five steps are followed in recognizing revenue from contracts:
●
|
Identify
the Contract(s), with a customer;
|
|
|
●
|
Identify
the performance obligation of the contract;
|
|
|
●
|
Determine
the transaction price;
|
|
|
●
|
Allocate
the transaction price to the performance obligations in the contract and;
|
|
|
●
|
Recognize
revenue when or as the company satisfies a performance obligation.
|
One
of the revenue models adopted by the Company is that, it 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. The products offered on this basis are “Duo Subscribe” and “Facetone-enterprise.” 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 and recognizes revenue after satisfying the performance
obligations. 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. Initial Annual Maintenance fees are bundled with license fees in the initial licensing period and recognized
when the performance obligation of license fee is met. However, subsequent renewals of annual maintenance are charged separately
for renewals. 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.
During
2018, Duo also commenced distribution of its software product ‘Facetone-hosted version” with third part telecommunication
companies. It’s a revenue model where the Tele-communication provider hosts Duo’s software applications and
makes them available to its customers over the Internet for a monthly subscription fee.
For
the three months ended September 30, 2018 and 2017, the Company received only cash as consideration for sale of licenses and related
services and not in kind.
For
the six months ended September 30, 2018 and 2017, the Company had the following concentrations of revenues with customers:
Customer
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
A
|
|
|
58.92
|
%
|
|
|
50.03
|
%
|
B
|
|
|
20.36
|
%
|
|
|
0.00
|
%
|
C
|
|
|
6.86
|
%
|
|
|
3.30
|
%
|
D
|
|
|
3.81
|
%
|
|
|
3.20
|
%
|
E
|
|
|
0.53
|
%
|
|
|
14.29
|
%
|
F
|
|
|
2.71
|
%
|
|
|
8.28
|
%
|
G
|
|
|
0.00
|
%
|
|
|
7.98
|
%
|
H
|
|
|
0.55
|
%
|
|
|
4.70
|
%
|
I
|
|
|
1.80
|
%
|
|
|
2.18
|
%
|
Other misc. customers
|
|
|
4.46
|
%
|
|
|
6.04
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
For
the six months ended September 30, 2018 and 2017, the company had following sales by products:
Product
|
|
30-Sep-18
|
|
|
30-Sep-17
|
|
|
|
|
|
|
|
|
DuoSubscribe
|
|
$
|
224,583
|
|
|
$
|
254,325
|
|
Facetone
|
|
|
92,596
|
|
|
|
89,668
|
|
Software hosting and reselling
|
|
|
11,558
|
|
|
|
6,730
|
|
Development services
|
|
|
144
|
|
|
|
30,415
|
|
|
|
$
|
328,881
|
|
|
$
|
381,138
|
|
Significant
Judgments
The
company’s contract with customers includes multiple Software products and services to deliver and in the most of the contract
the price of the separately identifiable features are stated separately. In the event the price of the multiple product and services
are not mentioned in the agreement company allocate transaction price estimating the standalone selling price of the promised
Products and the services. The determination of standalone selling price for each performance obligation requires judgments. Company
determines standalone selling price for performance obligations based on overall pricing strategies, which consider market in
which the company operates, historical data analysis, number of users of the product or services, size of the customer and the
market price of the hardware used.
Contract
Balances
When
the timing of revenue recognition differs from the timing of invoicing for contract with customers deferred revenue and
accrued revenue/ unbilled accounts receivables recognized by the Company. Revenue under Software Implementation contracts are
invoices on stages of completion as stipulates in the agreement and the revenue recognized when the performance obligations are
met and customer sign the user acceptance test (UAT). Company invoice software license fee and royalty fee at the end of the period
according to the customer agreement and accrued revenue/ Unbilled revenue is recognized for the relevant period.
The maintenance fee is invoiced beginning of the period and company recognize as Deferred revenue in the financial statements.
For the six months ended September 30,
2018 Company recognized $75,602 revenue from a contract with customer as the performance obligations
are completed, and has a contract balance of $101,881 from the same customer as at September 30, 2018. Company is waiting for
the customer confirmation to deliver the balance product and services.
Refer
Note- 5 for “Accounts receivables and Provision for doubtful debts”
Segment
Information
The
Company has determined that its Chief Executive Officer is its Chief Operating Decision Maker. The Company’s executive reviews
financial information presented on a consolidated basis for the purposes of assessing the performance and making decisions on
how to allocate resources. Accordingly, the Company has determined that it operates in a single reportable segment.
Deferred Revenue -
Deferred
revenue represents advance payments for software licenses, services, and maintenance billed in advance of the time revenue is
recognized. As at March 31, 2018, there were no deferred revenue recognized and as at September 30, 2018, deferred
revenue recognized was $9,715.
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 September 30, 2018 and March 31,
2018 unbilled/accrued revenues were $98,189 and $148,714 respectively.
Company
has no contract liabilities and asset recognized for cost to fulfill a requirement of a customer as at September 30, 2018.
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 six months ended September 30, 2018 and 2017, product research and development cost of $113,945 and $139,020, respectively,
were capitalized as “Intangible assets”.
Advertising
Costs
The
Company expenses advertising costs as incurred. No advertising expenses were incurred during the six months ended September 30,
2018 and 2017.
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.
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, 2015 through
September 30, 2018, 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 September 30, 2018 and March 31, 2018
were as follows:
Foreign Currency Translation gains (losses)
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
$
|
69,981
|
|
Translation rate gain (loss)
|
|
|
38,779
|
|
Balance, June 30, 2018
|
|
$
|
108,760
|
|
Translation rate gain (loss)
|
|
|
116,293
|
|
Balance, September 30, 2018
|
|
$
|
225,053
|
|
Recent
Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to
the initial guidance in August 2015, March 2016, April 2016, May 2016, September 2017 and November 2017 within ASU 2015-04, ASU
2016-08, ASU 2016-10 and ASU 2016-12, ASU 2017-13 and ASU 2017-14, respectively (collectively, Topic 606). Topic 606 requires
an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services
to customers and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. Topic 606 defines
a five-step process to achieve this core principle and, in doing so, more judgment and estimates will be required within the revenue
recognition process than are required under current GAAP (Accounting Standards Codification 605). Topic 606 is effective for the
Company’s annual and interim reporting periods beginning January 1, 2018 (“effective date”).
The
guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method),
or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application
(modified retrospective method). The Company adopted the new standard effective January 1, 2018 using the modified retrospective
method.
The Company has adopted implementation of
ASC 606 with effect from April 1, 2018 as a result of it $0.21 million impact which was provided as at March 31,
2018 has been reversed.
Note
4 – Reverse Recapitalization
Duo
(Successor) merged with DSSL (Predecessors) on December 3, 2014, and merged with DSS (Predecessors) on December 3, 2014 (Predecessors),
and DSSL and DSS became the surviving corporations, in a transaction treated as a reverse recapitalization. Duo did not have any
material operations and majority-voting control was transferred to DSSL.
In
the recapitalization, Duo issued 28,000,000 shares of common stock, 5,000,000 series “A” preferred shares and $310,000
in cash in exchange for all of DSSL’s 5,000,000 issued and outstanding shares of common stock. Duo also issued 2,000,000
shares of common stock in exchange for all of DSS’s 10,000 issued and outstanding shares of common stock. The transaction
resulted in DSSL’s shareholder and DSS’s shareholder acquiring approximately 100% control.
The
transaction also required a recapitalization of DSSL and DSS. Since DSSL and DSS acquired a controlling voting interest, they
were deemed the accounting acquirer, while Duo was deemed the legal acquirer. The historical financial statements of the Company
are those of combined financial statements of DSSL and DSS and of the consolidated entities from the date of recapitalization
and subsequent.
Since
the transaction is considered a reverse recapitalization, the presentation of pro-forma financial information was not required.
All share and per share amounts have been retroactively restated to the earliest periods presented to reflect the transaction.
Note
4 – Accounts Receivable
Following
is a summary of accounts receivable as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
Accounts receivable – Trade
|
|
$
|
657,142
|
|
|
$
|
576,775
|
|
Less: Provision for doubtful debts
|
|
|
(361,831
|
)
|
|
|
(207,543
|
)
|
|
|
$
|
295,311
|
|
|
$
|
369,232
|
|
At
September 30, 2018 and March 31, 2018, the Company had following concentrations of accounts receivable with customers:
Customer
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
A
|
|
|
20.19
|
%
|
|
|
56.37
|
%
|
B
|
|
|
20.91
|
%
|
|
|
14.83
|
%
|
C
|
|
|
8.58
|
%
|
|
|
7.85
|
%
|
D
|
|
|
22.30
|
%
|
|
|
0.00
|
%
|
E
|
|
|
4.51
|
%
|
|
|
1.86
|
%
|
F
|
|
|
11.95
|
%
|
|
|
5.04
|
%
|
G
|
|
|
5.03
|
%
|
|
|
4.61
|
%
|
H
|
|
|
3.21
|
%
|
|
|
3.39
|
%
|
Other receivables
|
|
|
3.32
|
%
|
|
|
6.05
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
Note
5 – Prepaid Expenses and Other Current Assets
Following
is a summary of prepaid expenses and other current assets as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
Security deposits
|
|
$
|
50,913
|
|
|
$
|
67,348
|
|
ESC receivable
|
|
|
8,799
|
|
|
|
5,688
|
|
OTCQB Annual Fee
|
|
|
6,000
|
|
|
|
-
|
|
Prepayments
|
|
|
3,962
|
|
|
|
1,370
|
|
Supplier advance
|
|
|
126
|
|
|
|
136
|
|
Prepayment for other professional services
|
|
|
-
|
|
|
|
438,598
|
|
Insurance prepayment
|
|
|
-
|
|
|
|
1,160
|
|
Other receivables
|
|
|
8,093
|
|
|
|
8,700
|
|
|
|
$
|
77,893
|
|
|
$
|
523,000
|
|
Note
6 – Property and Equipment
Following
table illustrates net book value of property and equipment as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
Office equipment
|
|
$
|
1,890
|
|
|
$
|
2,054
|
|
Furniture & fittings
|
|
|
127,732
|
|
|
|
138,752
|
|
Computer equipment (Data Processing Equipment)
|
|
|
97,468
|
|
|
|
122,443
|
|
Improvements to lease hold assets
|
|
|
19,535
|
|
|
|
21,221
|
|
Website Development
|
|
|
13,626
|
|
|
|
14,678
|
|
|
|
|
260,251
|
|
|
|
299,148
|
|
Accumulated depreciation and amortization
|
|
|
(227,939
|
)
|
|
|
(255,654
|
)
|
Net fixed assets
|
|
$
|
32,312
|
|
|
$
|
43,494
|
|
Depreciation and amortization expense for
the six months ended September 30, 2018 and 2017 was $13,316 and $14,143 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 September 30, 2018 and March 31, 2018:
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
Opening Balance
|
|
$
|
732,939
|
|
|
$
|
580,899
|
|
Add: Costs capitalized during the year
|
|
|
113,945
|
|
|
|
277,812
|
|
Less: Amount Written-off
|
|
|
(41,080
|
)
|
|
|
(113,363
|
)
|
Translational gain/ (loss)
|
|
|
(59,792
|
)
|
|
|
(12,409
|
)
|
Net Intangible Assets
|
|
$
|
746,012
|
|
|
$
|
732,939
|
|
Note
8 – Short Term Borrowings
Following
is a summary of short-term borrowings as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
PAN Asia Bank – Short term overdraft
|
|
$
|
409,445
|
|
|
$
|
440,609
|
|
PAN Asia Bank – Loan
|
|
|
87,721
|
|
|
|
162,636
|
|
Commercial bank
|
|
|
42,454
|
|
|
|
53,571
|
|
Senkadagala Finance
|
|
|
28,626
|
|
|
|
33,323
|
|
Beanstalk Investments
|
|
|
22,459
|
|
|
|
-
|
|
|
|
$
|
590,705
|
|
|
$
|
690,139
|
|
Bank
overdraft facility, obtained from Pan Asia Banking Corporation PLC, contains an average interest rate of 15.55% per annum.
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 September 30, 2018 and March 31, 2018, the Company owed directors $643,460 and $524,955 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. As of September 30, 2018 and March 31, 2018, the Company owed directors $1,346,337 and $1,348,193 respectively.
Note
10 – Taxes Payable
The
taxes payable comprise of items listed below as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31, 2018
|
|
PAYE
|
|
$
|
129,727
|
|
|
$
|
117,805
|
|
Stamp Duty Payable
|
|
|
23
|
|
|
|
34
|
|
Tax payable
|
|
|
5,396
|
|
|
|
8,877
|
|
|
|
$
|
135,146
|
|
|
$
|
126,716
|
|
Note
11 – Accruals and Other Payables
Following
is a summary of accruals and other payables as at September 30, 2018 and March 31, 2018;
|
|
September 30, 2018
|
|
|
March 31,2018
|
|
Audit fee payable
|
|
$
|
19,106
|
|
|
$
|
22,260
|
|
Accruals
|
|
|
24,969
|
|
|
|
29,128
|
|
Other payables
|
|
|
112,680
|
|
|
|
78,745
|
|
Accrued interest
|
|
|
4,795
|
|
|
|
1,417
|
|
|
|
$
|
161,550
|
|
|
$
|
131,550
|
|
Note
12 – Cost of Revenue
Following
is the summary of cost of revenue for the six months ending September 30, 2018 and 2017;
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
Purchases
|
|
$
|
15,855
|
|
|
$
|
23,178
|
|
Implementation cost
|
|
|
23,590
|
|
|
|
15,575
|
|
Product development cost written off
|
|
|
40,028
|
|
|
|
56,114
|
|
Consultancy, contract basis employee cost
|
|
|
-
|
|
|
|
7,468
|
|
Support services
|
|
|
42,492
|
|
|
|
34,723
|
|
Development services
|
|
|
2,532
|
|
|
|
21,361
|
|
Other external services
|
|
|
2,945
|
|
|
|
3,250
|
|
|
|
$
|
127,442
|
|
|
$
|
161,669
|
|
Note
13 – General and Administrative Expenses
Following
is the summary of general and administrative expenses for the six months ending September 30, 2018 and 2017;
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
Directors remuneration
|
|
$
|
73,049
|
|
|
$
|
75,952
|
|
EPF
|
|
|
5,134
|
|
|
|
5,338
|
|
ETF
|
|
|
1,283
|
|
|
|
1,334
|
|
Vehicle allowance
|
|
|
16,619
|
|
|
|
18,842
|
|
Office rent
|
|
|
26,809
|
|
|
|
35,684
|
|
Irrecoverable tax
|
|
|
20,331
|
|
|
|
20,041
|
|
Legal fees
|
|
|
10,376
|
|
|
|
4,500
|
|
Other professional services
|
|
|
7,902
|
|
|
|
5,145
|
|
Internet charges
|
|
|
6,032
|
|
|
|
6,530
|
|
Uplisting
fee
|
|
|
6,000
|
|
|
|
-
|
|
Electricity charges
|
|
|
5,919
|
|
|
|
7,822
|
|
Office maintenance
|
|
|
5,930
|
|
|
|
6,057
|
|
Software rentals
|
|
|
5,596
|
|
|
|
12,952
|
|
Telephone charges
|
|
|
4,231
|
|
|
|
5,232
|
|
Staff welfare
|
|
|
3,710
|
|
|
|
6,578
|
|
Professional fees
|
|
|
3,820
|
|
|
|
10,015
|
|
Audit fee
|
|
|
2,643
|
|
|
|
5,138
|
|
Computer maintenance
|
|
|
1,599
|
|
|
|
2,699
|
|
Security charges
|
|
|
1,034
|
|
|
|
1,854
|
|
Penalties / late payment charges
|
|
|
1,643
|
|
|
|
817
|
|
Filling fee and subscription
|
|
|
1,460
|
|
|
|
3,933
|
|
Travelling expense
|
|
|
560
|
|
|
|
1,633
|
|
Printing and stationery
|
|
|
323
|
|
|
|
420
|
|
Office expenses
|
|
|
358
|
|
|
|
986
|
|
Courier and postage
|
|
|
420
|
|
|
|
396
|
|
Insurance expense
|
|
|
-
|
|
|
|
1,046
|
|
Gratuity
|
|
|
-
|
|
|
|
3,640
|
|
Secretarial fees
|
|
|
334
|
|
|
|
351
|
|
Consulting fee
|
|
|
-
|
|
|
|
51,300
|
|
Transfer agent fees
|
|
|
150
|
|
|
|
865
|
|
Stamp duty expenses
|
|
|
6
|
|
|
|
852
|
|
Investor relations
|
|
|
398
|
|
|
|
4,395
|
|
Other expenses
|
|
|
250
|
|
|
|
1,495
|
|
|
|
$
|
213,919
|
|
|
$
|
303,842
|
|
Note
14 – Selling and Distribution Expenses
Following
is the summary of selling and distribution expenses for the six months ending on September 30, 2018 and 2017;
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
Vehicle hire charges
|
|
$
|
2,989
|
|
|
$
|
3,108
|
|
Vehicle running Expense
|
|
|
2,579
|
|
|
|
2,331
|
|
Marketing expenses
|
|
|
-
|
|
|
|
444
|
|
|
|
$
|
5,568
|
|
|
$
|
5,883
|
|
Note
15 – Equity
As
at September 30, 2018, the Company has 400,000,000 authorized common shares having a par value of $0. 001. The ordinary shares
have been designated with the following rights:
●
|
Voting
rights:
Common shareholders can attend at annual general meeting to cast vote or use a proxy.
|
|
|
●
|
Right
to elect board of directors:
Common shareholders control the Company through their right to elect the company’s
board of directors.
|
|
|
●
|
Right
to share income and assets:
Common shareholders have the right to share company’s earnings equally on a per-share
basis in the form of dividend. Similarly, in the event of liquidation, shareholders have claim on assets that remain after
meeting the obligation to accrued taxes, accrued salary and wages, creditors including bondholders (if any) and preferred
shareholders. Thus, common shareholders are residual claimants of the company’s income and assets.
|
During
the six months ended September 30, 2018, the Company issued following common shares:
Date
|
|
|
Type
|
|
No. of Shares
|
|
|
Valuation
|
|
|
06/01/2018
|
|
|
Stock issued as a Dividend payment
|
|
|
13,147,666
|
|
|
$
|
5,784,973
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,784,973
|
|
As
at September 30, 2018, the Company has 10,000,000 authorized Series “A” preferred shares having a par
value of $0.001 per share.
The
preferred shares have been designated with the following conversion rights:
●
|
One
preferred share will convert into ten (10) common shares no earlier than 24 months and 1 day after the issuance.
|
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 $39,526 with Ms. Praveena Sujeevan on November 1, 2018 for
a period of 2 years. Duo entered in to another lease commitment for its Indian office amounting to $1,187 on April 1, 2018 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:
Date
|
|
Description
|
|
Amount
|
|
9/23/2011
|
|
Performance bond for BOC Tender
|
|
$
|
8,995
|
|
5/15/2013
|
|
Guarantee for Lanka Clear
|
|
|
1,890
|
|
7/31/2014
|
|
Guarantee for SLT
|
|
|
509
|
|
8/10/2015
|
|
Guarantee for LOLC
|
|
|
1,437
|
|
5/23/2018
|
|
Rent deposit for Delhi apartment
|
|
|
1,389
|
|
7/17/2018
|
|
Security deposit- Senkadagala Finance
|
|
|
29,944
|
|
7/18/2018
|
|
Guarantee for Amana bank
|
|
|
571
|
|
9/10/2018
|
|
Guarantee for ICTA
|
|
|
1,796
|
|
|
|
|
|
$
|
46,531
|
|
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.