BUSINESS
DEVELOPMENT
BACKGROUND
Duo
World, Inc. (“we,” the “Company” or “Duo World”) is an information technology and software
solutions company, focused on bringing value to its clients through customer interactions.
Duo
World has its registered office in Nevada, United States, and its development center in Colombo, Sri Lanka. Duo World specializes
in communication and collaboration platforms for customers who require any form of engagement with their clients, including, but
not limited to, customer life cycle management, customer care, and contact center management. The Company also provides cloud-based
subscription management and billing systems and a business intelligence and data visualization tool. Duo World has served its
customers in many ways, including improved efficiency, cost reduction, revenue optimization and value added product and service
offerings.
Duo
World’s communications and collaboration platform is used by some of the largest banks, retail chains, Pay-TV operators,
financial conglomerates in Sri Lanka. India’s largest digital cable TV operator and Indonesia’s growing direct-to-home
(“DTH”) operators’ benefit by implementing Duo World’s Subscriber Management and Billing System for their
operations.
Duo
World, Inc. was formed as a Nevada corporation in 2014 for the purpose of acquiring three operating entities: (i) Duo Software
(Pvt.) Limited, a Sri Lankan company (“Duo Software Sri Lanka”), from Mr. Muhunthan Canagasooryam, Duo World’s
President and founder, in exchange for 28,000,000 shares of our common stock and 5,000,000 shares of our Series A Preferred Stock;
(ii) Duo Software (Pte.) Limited, a Singaporean company (“Duo Software Singapore”), from Ms. Koshala Nishaharan, in
exchange for 2,000,000 shares of our common stock; and (iii) Duo Software India (Private) Limited, an India company (“Duo
Software India”). Duo Software India is a wholly-owned subsidiary of Duo Software Singapore. These acquisitions were accomplished
as of December 3, 2014.
Duo
Software Sri Lanka was incorporated on September 22, 2004 in the Democratic Socialist Republic of Sri Lanka, as a limited liability
company under the Sri Lanka Companies Act No. 17 of 1982, and was subsequently reregistered under the Sri Lanka Companies Act
No. 7 of 2007, in compliance with the New Companies Act, which came into effect in 2007.
Duo
Software Singapore was incorporated on June 5, 2007 in the Republic of Singapore under the Companies Act (Cap 50. 1994 Rev. Ed).
Duo
Software India was incorporated on August 30, 2007, under the Companies Act of 1956 in the Republic of India and became a wholly-owned
subsidiary of Duo Software Singapore.
Duo
World maintains an internet website at www.duoworld.com. Information about us is available on the website, free of charge. We
are a publicly held company and are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange
Act”). We have available on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, which will be posted or linked on our website as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange Commission (“SEC”). The Company’s website and the
information contained therein are not considered as being incorporated into this Annual Report.
Duo
World has a Code of Business Conduct and Ethics that applies to all employees, as well as our Board of Directors and officers.
The Code of Business Conduct and Ethics is posted on our website at www.duoworld.com. We will post on our website any amendments
to, or waivers of, the Code of Business Conduct and Ethics.
Overview
We
have recently transformed our business model from on premise/enterprise solutions to developing new products and enhancing our
current products for the cloud-based, SaaS market. Duo World now provides a complete cloud system to deliver great customer service
experience.
As
we have now moved our business toward cloud-based, SaaS, product deployments, we plan to employ a strategic market approach focused
on creating and distributing valuable, relevant and consistent online content to attract new customers through content marketing.
The
enterprise version of each of our new SaaS products is launched first in Sri Lanka and the region as a test bed prior to being
launched in other countries. We expect that our SaaS solutions will reduce implementation and change request costs, while improving
product profitability. We believe the transition to cloud-based SaaS product will allow us to focus more on product innovation
than on deploying our resources and efforts to solve customer-specific issues.
Rather
than catering our products to limited industries in a particular region or country, our new SaaS products will allow us to serve
a global customer base that can be reached through our cloud presence, accessed by any user via the internet regardless of where
they are located. We believe that our transformation from on-premise/enterprise solutions to cloud-based, SaaS solutions has commenced
exposing us to a greater number of potential customers and reduce our reliance on a few large enterprise customers.
Our
Products
The
following is a summary of our primary product offerings, which are fully developed and expected to launch to a broader customer
base as outlined in more detail below.
DuoSubscribe
DuoSubscribe
is a solution for Subscriber Management and Billing. With over a decade of experience in developing applications for these sectors
and having vast amount of domain knowledge on how these sectors operate, Duo Subscribe is eminently capable of meeting
the complex and rigorous demands of businesses around the world.
During
fiscal 2018 and fiscal 2019, we have recognized $487,356 and $512,082 in revenue, respectively, from DuoSubscribe.
Facetone
In
the past, we offered DuoCLM as an enterprise or on premise solution to large organizations that have dedicated customer support
call centers to maintain their customer relationships. It was designed to manage the entire customer life cycle from the initial
contact point with a customer to ongoing support.
We
launched Facetone in October 2016. Facetone is a communication and collaboration platform that provides the capability of efficiently
operating on-premise or cloud-based PABX, IVR or call center. A PABX is a private automatic branch exchange and automatic telephone
switching system. An IVR is an interactive voice response system that interacts with callers, gathers information and routes calls
to the appropriate recipients.
Facetone
for PABX provides advanced features such as call conferencing, call parking, call forwarding, voicemail and more. Facetone for
call centers provides the capability to run a fully functional contact center with added features such as call routing and chat-based
collaboration like Facebook, Viber and Skype. Facetone also uses artificial intelligence to facilitate automated customer communication.
The
on premise and Partner versions of Facetone were launched in 2016. The Partner solution is a hosted solution that operates similarly
to a SaaS product from the client’s perspective. Under the Partner solution, we partner with leading telecom operators who
host our Facetone solution in their data center and offer the solution to their enterprise customers as a value added subscription
service, with sales and support then provided by the telecom partner on an ongoing basis.
During
fiscal year 2018 and fiscal 2019, we have recognized $203,739 and $103,359 in revenue respectively from Facetone.
We
expect to launch the separate SaaS version of Facetone by the second quarter of fiscal year 2020.
Smoothflow
Smoothflow
is a tool that allows businesses to develop and deploy conversational automation to be conducted by machines without human intervention.
Its Studio interface allows users to drag and drop activities to build conversation. To further enhance the conversation to be
more like humans, Smoothflow has inbuilt artificial intelligence (“AI”) and Natural Language Processing (“NLP”).
Smoothflow
uses the power of artificial intelligence to keep improving the conversational flow and user experience. Organizations can deliver
great customer service by automating the multi-channel communication
Businesses
will learn more about their customers than ever before and the Bots can be easily trained to answer questions that most people
would find it difficult to answer themselves.
Smoothflow
is integrated with WebChats, Social Media and messaging platforms such as Messenger by Facebook, Skype and Slack to enhance the
Omni-channel customer user experience.
Smoothflow
went live in January 2019 and acquired the first customer in March 2019.
Major
Customers
The
Company does business with a few major customers. Major customers are defined as those customers whose annual revenue contributions
to the Company are greater or equal to 10% of the Company’s annual revenue. Net sales for the fiscal years ended March 31,
2019, 2018 and 2017 include sales to the following major customers:
Sales
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Year Ended March 31,
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Customer
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2019
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%
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2018
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|
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%
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|
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2017
|
|
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%
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Customer A
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$
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455,220
|
|
|
|
71
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|
|
$
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368,099
|
|
|
|
46
|
|
|
$
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376626
|
|
|
|
34
|
|
Customer B
|
|
$
|
74,224
|
|
|
|
12
|
|
|
$
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78,795
|
|
|
|
10
|
|
|
$
|
-
|
|
|
|
-
|
|
Customer C
|
|
$
|
9,535
|
|
|
|
2
|
|
|
$
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50,133
|
|
|
|
6
|
|
|
$
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80,757
|
|
|
|
7
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Customer D
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|
$
|
-
|
|
|
|
-
|
|
|
$
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81,339
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|
|
|
10
|
|
|
$
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9,975
|
|
|
|
1
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Customer E
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$
|
-
|
|
|
|
-
|
|
|
$
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63,851
|
|
|
|
8
|
|
|
$
|
-
|
|
|
|
-
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Customer F
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|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
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398,783
|
|
|
|
36
|
|
Customer G
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
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83,138
|
|
|
|
7
|
|
Total Sales to
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers A-G
|
|
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538,979
|
|
|
|
85
|
|
|
$
|
642,217
|
|
|
|
80
|
|
|
$
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949,279
|
|
|
|
85
|
|
Duo
World recently added two key client accounts with Commercial Bank of Ceylon PLC (“Commercial Bank”), the leading private
financial service organization in Sri Lanka, and LOLC Group (“LOLC”), the largest non-banking financial institution
and one of the most diversified conglomerates in Sri Lanka. Both Commercial Bank and LOLC have entered into contracts with the
Company to implement the Facetone application to improve customer interactions across an Omni-channel platform.
Our
Intellectual Property
We
have no patents. Our trademarks are registered in Sri Lanka and will be registered in the United States shortly. Our trade secrets,
copyrights and our other intellectual property rights are important assets for us. We enter into confidentiality agreements with
our employees and consultants and we generally control access to and distribution of proprietary information. These agreements
generally provide that any confidential information developed by us or on our behalf be kept confidential. Further, we require
all employees to execute written agreements assigning to us all rights in all inventions, developments, technologies and other
intellectual property created by our employees.
There
are events that are outside of our control that pose a threat to our intellectual property rights. For example, effective intellectual
property protection may not be available in every country in which our services are made available through the Internet. Also,
the efforts we have taken to protect our propriety rights may not be sufficient or effective. Any significant impairment of our
intellectual property rights could harm our business or our ability to compete. Also, protecting our intellectual property rights
could be expensive and time consuming.
Employees
The
Company currently has approximately forty (40) employees. We have employment agreements with our employees, and our officers.
We do not anticipate any of our employees being union members.
An
investment in our Common Stock involves a high degree of risk. Prospective investors should carefully consider the following risk
factors and the other information in this Annual Report and in our other filings with the SEC before investing in our Common Stock.
Our business and results of operations could be seriously harmed by any of the following risks. You should carefully consider
the risks described below, the other information in this Annual Report and the documents incorporated by reference herein when
evaluating our Company and our business. If any of the following risks actually occurs, our business could be harmed. In such
case, the trading price of our Common Stock could decline and investors could lose all or a part of the money paid for our Common
Stock.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.
Risks
Related to our Business and Industry
The
markets in which we operate include a large number of service providers and are highly competitive.
We
face intense competition on all aspects of our business. The nature of the IT industry creates a competitive landscape that is
constantly evolving as firms emerge, expand or are acquired, as technology evolves and as delivery models change. Many of our
competitors are expanding the services they offer in an attempt to gain additional business. In addition, new competitors, alliances
among competitors or competitors’ mergers could result in significant market share gain by such competitors. Some of our
competitors may have or develop a lower cost structure, adopt more aggressive pricing policies or provide services that gain greater
market acceptance than the services that we offer or develop. Large and well-capitalized competitors may be able to better respond
to the need for technological changes faster, price their services more aggressively, compete for skilled professionals, finance
acquisitions, fund internal growth and compete for market share. We could lose customers if our competitors introduce new competitive
products, add new functionality, acquire competitive products, reduce prices, better execute on their sales and marketing strategies
or form strategic alliances with other companies.
We
may need to change our pricing models to compete successfully.
The
intense competition we face in the sales of our products and services and general economic and business conditions can put pressure
on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the
marketplace considers more valuable, we may need to lower prices or offer other favorable terms in order to compete successfully.
Any such changes may reduce margins and could adversely affect operating results. Our clients routinely negotiate for better pricing,
and in order to respond to increased competition and pricing pressure, we may be required to lower our pricing structure, which
would have an adverse effect on our revenues and profit margin.
Our
ability to achieve significant revenue will depend on our ability to establish effective sales and marketing capabilities.
Our
success is dependent upon our ability to effectively and profitably market and sell our services. If we fail to establish sufficient
marketing and sales forces, our ability to enter new or existing markets will be impaired. Our inability to effectively enter
these markets would materially and adversely affect our ability to generate significant revenues.
We
may not receive significant revenues from our current research and development efforts for several years, if at all.
Developing
cloud and software offerings is expensive and the investment in the development of these offerings often involves a long return
on investment cycle. An important element of our corporate strategy is to continue to make significant investments in research
and development and related product and service opportunities both through internal investments and the acquisition of intellectual
property from companies that we have acquired. Accelerated product and service introductions and short software life cycles require
high levels of expenditures for research and development that could adversely affect our operating results if not offset by revenue
increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts
to maintain our competitive position. However, we may not receive significant revenues from these investments for several years,
if at all.
If
we are unable to hire or retain qualified personnel in certain areas of our business, then our ability to execute our business
plans in those areas could be impaired and revenues could decrease.
We
employ approximately 40 permanent employees worldwide, and outsource all of the non-core activities and tasks to third party or
contract employees. At times, we have experienced difficulties in hiring personnel with the desired levels of training and experience.
In the technology industry, there is substantial and continuous competition for highly skilled business, product development,
technical and other personnel. Since wages in India and Sri Lanka continue to increase at a faster rate than in the United States,
we may also experience increased compensation costs that are not offset by either improved productivity or higher sales. We may
not be successful in recruiting new personnel and in retaining and motivating existing personnel. We have been outsourcing certain
non-core activities to third party suppliers. Additionally, quality service depends on our ability to retain employees and control
personnel turnover. Any increase in the employee turnover rate could increase recruiting and training costs and could decrease
operating effectiveness and productivity. We may not be able to continue to hire, train and retain a significant number of qualified
personnel to adequately staff new client projects or expand existing ones.
We
depend heavily on our management team and the loss of any of our executive officers could significantly weaken our management
expertise and our ability to run our business.
Our
business strategy and success is dependent on the skills and knowledge of our management team and consultants. As of the date
of this Memorandum, Muhunthan Canagasooryam is our President and Chief Executive Officer, Suzannah Jennifer Samuel Perera is our
Chief Financial Officer and Riad Ameen is our Legal Director. The loss of services of Muhunthan Canagasooryam, Suzannah Jennifer
Samuel Perera, Riad Ameen or any member of our management team, including Anjana Chandrathilaka, Ajeewan Arumugam, Rangika Perera,
and Sudarshini Rajaratnam could weaken significantly our management expertise and our ability to efficiently run our business.
We do not maintain key man life insurance policies on any of our officers.
A
large portion of our revenue is generated from a limited number of clients, and the loss of significant work from one or more
of our clients could adversely affect our business.
Our
four largest clients, Den Networks, LOLC and MAC, collectively represented 90% of our revenues for the year ended March 31, 2019
and our four largest clients Den Networks, LOLC, Development Services and Commercial Bank represented 74% of our
revenues for the fiscal year ended March 31, 2018. While we typically have multiple work orders and/or contracts with our largest
customers, which would not all terminate at the same time, the loss of one or more of the larger work orders or contracts with
one of our largest customers could adversely affect our business, results of operations and financial condition, if the lost revenues
were not replaced with profitable revenues from that client or other clients.
We
process, transmit and store personally identifiable information and unauthorized access to, or the unintended release of, this
information could result in a claim for damages or loss of business and create unfavorable publicity.
We
process, transmit and store personally identifiable information, both in our role as a service provider and as an employer. This
information may include social security numbers or other foreign tax identification numbers, financial and health information,
as well as personal information. As a result, we are subject to certain contractual terms, as well as federal, state and foreign
laws and regulations designed to protect personally identifiable information. While we take measures to protect the security and
privacy of this information and to prevent unauthorized access, it is possible that our security controls over personal data and
other practices we follow may not prevent the improper access to or disclosure of personally identifiable information. If any
person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect
to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines and/or criminal
prosecution.
We
could suffer significant damage to our brand and reputation if:
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a
cyber-attack or other security incident were to allow unauthorized access to or modification of our customers’ or other
external data, our employee’s data or our own data and IT systems;
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the
services we provide to our customers were disrupted; or
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our
products or services are perceived as having security vulnerabilities.
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Customers
could lose confidence in the security and reliability of our products and services, including our cloud offerings, and perceive
them to not be secure. This could lead to fewer customers using our products and services and result in reduced revenue and earnings.
The costs we would incur to address and fix these security incidents would increase our expenses. These types of security incidents
could also lead to lawsuits, regulatory investigations and claims and increased legal liability, including, in some cases contractual
costs related to customer notification and fraud monitoring.
Interruption
of our data centers and contact centers could have a materially adverse effect on our business.
In
the event that we experience a temporary or permanent interruption at one or more of our data centers, contact centers or to cloud
storage where we also store data and codes, through natural disaster, casualty, operating malfunction, cyber-attack, sabotage
or other causes, we may be unable to provide the data services we are contractually obligated to deliver. This could result in
us being required to pay contractual damages to some clients or to allow some clients to terminate or renegotiate their contracts.
Notwithstanding disaster recovery and business continuity plans and precautions instituted to protect our clients and us from
events that could interrupt delivery of services (including property and business interruption insurance that we may maintain
or procure in the future), there is no guarantee that such interruptions would not result in a prolonged interruption in our ability
to provide support services to our clients or that such precautions would adequately compensate us for any losses we may incur
as a result of such interruptions.
Our
ability to deliver our services is at risk if the technology and network equipment we rely upon is not maintained or upgraded
on a timely basis.
Technology
is a critical foundation in our service delivery. We utilize and deploy internally developed and third party software solutions
across various hardware environments. We operate an extensive internal voice and data network that links our global sites together
in a multi-hub model that enables the rerouting of traffic. Also, we rely on multiple public communication channels for connectivity
to our clients. Our clients are highly dependent upon the high availability and uncompromised security of our systems. These systems
are subject to risk of an extended interruption or outage due to many factors, such as system failures, acts of nature and intentional
unauthorized attacks from third parties. Accordingly, maintenance of, and investment in, these foundational components are critical
to our success. If the reliability of our technology or network operations falls below required service levels, or a systemic
fault affects the organization broadly, we may be obligated to pay performance penalties to our clients, and our business from
existing and potential clients may be jeopardized and cause our revenue and cash flow to decrease.
Our
business performance and growth plans may be negatively affected if we are unable to effectively anticipate and respond to developments
in the application and use of our technology.
The
use of technology in our industry has and will continue to rapidly increase. Our future success depends, in part, upon our ability
to develop and implement technology solutions that anticipate and keep pace with continuing changes in technology, industry standards
and client preferences. We may not be successful in anticipating or responding to these developments on a timely and cost-effective
basis, and our ideas may not be accepted in the marketplace. Additionally, the effort to gain technological expertise and develop
new technologies in our business requires us to incur significant expenses. If we cannot offer new technologies as quickly as
our competitors or if our competitors develop more cost-effective technologies, it could have a material adverse effect on our
ability to obtain and complete customer engagements. Also, if customer preferences for technology disproportionately outpace other
interaction preferences, it could have a material adverse impact on our revenue profile and growth plans.
Our
success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our
existing products and services.
Rapid
technological advances, changing delivery models and evolving standards in computer software development and communications infrastructure,
changing and increasingly sophisticated customer needs and frequent new product introductions and enhancements characterize the
industries in which we compete. If we are unable to develop new or sufficiently differentiated products and services, enhance
and improve our product offerings and support services in a timely manner or position and price our products and services to meet
demand, customers may not purchase or subscribe to our software or cloud offerings or renew software support or cloud subscriptions
contracts. Renewals of these contracts are important to the growth of our business. In addition, we cannot provide any assurance
that the standards on which we choose to develop new products will allow us to compete effectively for business opportunities
in emerging areas.
We
have continued to refresh and release new offerings of software products and services, including Facetone and Smooth Flow. Our
business may be adversely affected if:
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we
do not continue to develop and release these or other new or enhanced products and services within the anticipated time frames;
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there
is a delay in market acceptance of new, enhanced or acquired product lines or services;
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there
are changes in information technology (“IT”) trends that we do not adequately anticipate or address with our product
development efforts;
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we
do not timely optimize complementary product lines and services; or
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we
fail to adequately integrate, support or enhance acquired product lines or services.
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Our
success depends upon our ability to sell products and services in new, international markets.
We
derive the majority of our sales from customers based within Sri Lanka and the surrounding region. A material portion of our planned,
future growth is dependent on our ability to sell products and services to customers based outside the geographical area of our
existing sales. We have limited experience selling in many or all of the international markets we have targeted as part of our
business plan. If we fail to sell in new, international markets there can be no assurance of our ability to continue as a going
concern.
Defects
or errors with our software could adversely affect our business.
Design
defects or software errors may delay software introductions or reduce the satisfaction level of clients and may have a materially
adverse effect on our business and results of operations. Our software is highly complex and may, from time to time, contain design
defects or software errors that may be difficult, time consuming and costly to detect and/or correct. Because both our clients
and we use our software to perform critical business functions, design defects, software errors or other potential problems within
or outside of our control may arise from the use of our software. It may also result in financial or other damages to our clients,
for which we may be held responsible. Although our license and other agreements with our clients may often contain provisions
designed to limit our exposure to potential claims and liabilities arising from client problems, these provisions may not effectively
protect us against such claims in all cases and in all jurisdictions. Claims and liabilities arising from client problems could
result in monetary damages to us and could cause damage to our reputation, adversely affecting our business, results of operations
and financial condition.
If
we do not effectively manage our contact center capacity, our results of operations could be adversely affected.
Our
ability to profit from the global trend toward outsourcing depends largely on how effectively we manage our contact center capacity.
In order to create the additional capacity necessary to accommodate new or expanded outsourcing projects, we may need to open
new contact centers. The opening or expansion of a contact center may result, at least in the short-term, in idle capacity until
we fully implement the new or expanded program. We may also experience short-term and/or long-term fluctuations in client demand
for services performed in one or more of our contact centers. Short-term downward fluctuations may result in less than optimal
site utilization for a period of time. Longer-term downward fluctuations may result in site closures. As a result, we may not
achieve or maintain targeted site utilization levels, or site utilization levels may decrease over certain periods and our revenues
and profitability may suffer.
We
do not have an independent audit or compensation committee, the absence of which could lead to conflicts of interest of our officers
and directors and work as a detriment to our shareholders.
We
do not have an independent audit or compensation committee. The absence of an independent audit and compensation committee could
lead to conflicts of interest of our officers and directors, which could work as a detriment to our shareholders.
If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or
prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which could harm
our business and the trading price of our Common Stock.
Effective
internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide
reliable financial reports or prevent fraud, our brand and operating results could be harmed. We will strive to adopt and implement
effective internal controls and maintain the effectiveness of our internal controls in the future; however, we cannot guarantee
that our internal controls will be effective. As a result, current and potential shareholders could lose confidence in our financial
reporting, which could harm our business and the trading price of our Common Stock.
Our
compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation,
financial condition and operating results.
Our
ability to comply with applicable complex and changing laws and rules, including anti-corruption laws, is largely dependent on
our establishment and maintenance of compliance, surveillance, audit and reporting systems, as well as our ability to attract
and retain qualified compliance and other risk management personnel. While we have policies and procedures to identify, monitor
and manage our risks, we cannot assure that our policies and procedures will always be effective or that we will always be successful
in monitoring or evaluating the risks to which we are or may be exposed or detecting if our employees and agents are engaging
in misconduct, fraud or other errors. In addition, some of our risk management methods depend upon evaluation of information regarding
markets, customers or other matters that are publicly available or otherwise accessible by us. That information may not in all
cases be accurate, complete, up-to-date or properly evaluated. In case of non-compliance or alleged non-compliance with applicable
laws or regulations by us or our employees or agents, we could be subject to investigations and proceedings that may be very expensive
to defend and may result in substantial penalties or civil lawsuits, including by customers, for damages which can be significant.
Any of these outcomes would adversely affect our reputation, financial condition and operating results. Further, the implementation
of new legislation or regulations, or changes in or unfavorable interpretations of existing regulations by courts or regulatory
bodies, could require us to incur significant compliance costs and impede our ability to operate, expand and enhance our products
and services as necessary to remain competitive and grow our business, which could materially and adversely affect our business,
financial condition and results of operations.
We
may not be able to predict our future tax liabilities. If we become subject to increased levels of taxation or if tax contingencies
are resolved adversely, our results of operations and financial condition could be adversely affected.
Due
to the international nature of our operations, we are subject to the complex and varying tax laws and rules of several foreign
jurisdictions. We may not be able to predict the amount of future tax liabilities to which we may become subject due to some of
these complexities if our positions are challenged by local tax authorities. Any increase in the amount of taxation incurred as
a result of challenges to our tax filing positions or due to legislative or regulatory changes could result in a material adverse
effect on our business, results of operations and financial condition. We are subject to tax audits, including issues related
to transfer pricing, in the United States and other jurisdictions. We have material tax-related contingent liabilities that are
difficult to predict or quantify. While we believe that our current tax provisions are reasonable and appropriate, we assure you
that these items will be settled for the amounts accrued or that additional exposures will not be identified in the future or
that additional tax reserves will not be provided for any such exposure.
Our
intellectual property rights are valuable and any inability to protect them could reduce the value of our brand and our business.
Our
trade secrets, copyrights and our other intellectual property rights are important assets for us. We rely on copyright, trademark,
patent and trade secret laws, confidentiality procedures, controls and contractual commitments to protect our intellectual property
rights. Despite our efforts, these protections may be limited and could be expensive and time consuming to enforce. Unauthorized
third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property.
Any patents owned by us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether
or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. In addition, the laws of
some countries, including India and Sri Lanka, do not provide the same level of protection of our intellectual property rights
as do the laws and courts of the United States. If we cannot protect our intellectual property rights against unauthorized copying
or use, or other misappropriation, we may not remain competitive. Any significant impairment of our intellectual property rights
could harm our business or our ability to compete.
Third
parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which
would be uncertain and could have a material adverse effect on the success of our business.
We
may have lawsuits filed against us by others claiming infringement or other misuse of their intellectual property rights and/or
breach of our agreements with them. These third parties include entities that do not have the capabilities to design, manufacture,
or distribute products or services or that acquire intellectual property like patents for the sole purpose of monetizing their
acquired intellectual property through asserting claims of infringement and misuse. Responding to any such claim, regardless of
its validity, could:
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be
time consuming, costly and result in litigation;
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divert
management’s time and attention from developing our business;
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require
us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;
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require
us to stop selling or to redesign certain of our products;
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require
us to release source code to third parties, possibly under open source license terms;
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require
us to satisfy indemnification obligations to our customers; or
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otherwise
adversely affect our business, results of operations, financial condition or cash flows.
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In
addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments
and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the
price of our Common Stock
Our
shareholders may be diluted significantly through our efforts to obtain financing, fund our operations and satisfy our obligations
through issuance of additional shares of our Common Stock.
We
have no committed source of financing. We will likely have to issue additional shares of our Common Stock to fund our operations
and to implement our plan of operation. Wherever possible, our board of directors will attempt to use non-cash consideration to
satisfy obligations. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of
our authorized, but unissued, shares of our Common Stock. Future issuances of shares of our Common Stock will result in dilution
of the ownership interests of existing shareholders, may further dilute Common Stock book value and that dilution may be material.
The
marketability and profitability of our services is subject to unknown economic, political and market conditions, which could adversely
impact our business, financial condition, the marketability of our services and our profitability.
Our
business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.
These include:
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general
economic and business conditions;
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overall
demand for enterprise cloud or software products and services;
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governmental
budgetary constraints or shifts in government spending priorities; and
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general
political developments.
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Any
general weakening of, and related declining corporate confidence in, the global economy or the curtailment of government or corporate
spending could cause current or potential customers to reduce or eliminate their IT budgets and spending, which could cause customers
to delay, decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for
previously purchased products and services.
In
addition, political unrest and the related potential impact on global stability, terrorist attacks and the potential for other
hostilities in various parts of the world, potential public health crises and natural disasters continue to contribute to a climate
of economic and political uncertainty that could adversely affect our results of operations and financial condition, including
our revenue growth and profitability.
Our
international sales and operations subject us to additional risks that can adversely affect our operating results.
We
derive a substantial portion of our revenues from, and have significant operations, outside of the United States. Compliance with
international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in
foreign jurisdictions. These laws and regulations include U.S. laws and local laws which include data privacy requirements, labor
relations laws, tax laws, anti-competition regulations, anti-corruption laws, prohibitions on payments to governmental officials,
import and trade restrictions and export requirements. Violations of these laws and regulations could result in fines, criminal
sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could
result in prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential
acquisitions and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract
and retain employees, and our business and our operating results. Compliance with these laws requires a significant amount of
management attention and effort, which may divert management’s attention from running our business operations and could
harm our ability to grow our business, or may increase our expenses as we engage specialized or other additional resources to
assist us with our compliance efforts. Our success depends, in part, on our ability to anticipate these risks and manage these
difficulties. We monitor our operations and investigate allegations of improprieties relating to transactions and the way in which
such transactions are recorded. Where circumstances warrant, we provide information and report our findings to government authorities,
but no assurance can be given that action will not be taken by such authorities.
We
are also subject to a variety of other risks and challenges in managing an organization operating in various countries, including
those related to:
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general
economic conditions in each country or region;
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fluctuations
in currency exchange rates and related impacts to customer demand and our operating results;
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regulatory
changes, including government austerity measures in certain countries that we may not be able to sufficiently plan for or
avoid that may unexpectedly impair bank deposits or other cash assets that we hold in these countries or that impose additional
taxes that we may be required to pay in these countries;
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political
unrest, corruption, terrorism and the potential for other hostilities;
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common
local business behaviors that are in direct conflict with our business ethics, practices and conduct policies;
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natural
disasters, including earthquakes, tsunamis, hurricanes and flooding;
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longer
payment cycles and difficulties in collecting accounts receivable;
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overlapping
tax regimes;
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our
ability to repatriate funds held by our foreign subsidiaries to the United States at favorable tax rates;
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public
health risks, particularly in areas in which we have significant operations; and
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reduced
protection for intellectual property rights in some countries.
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Among
other things, the variety of risks and challenges listed above could also disrupt or otherwise negatively impact the sales of
our products and services in affected countries or regions.
Regional
conflicts or terrorist attacks and other acts of violence or war in the United States, India, Sri Lanka, or other regions could
adversely affect financial markets, resulting in loss of client confidence and our ability to serve our clients which, in turn,
could adversely affect our business, results of operations and financial condition.
The
Asian region has from time to time experienced instances of civil unrest and hostilities among neighboring countries. Civil or
political unrest and military hostilities in Sri Lanka and other acts of violence or war, including those involving India, Sri
Lanka, the United States, or other countries, may adversely affect U.S. and worldwide financial markets. Prospective clients may
wish to visit our facilities, including our development centers in Sri Lanka, prior to reaching a decision on vendor selection.
Terrorist threats, attacks and international conflicts could make travel more difficult and cause potential clients to delay,
postpone or cancel decisions to use our services.
In
addition, such attacks may have an adverse impact on our ability to operate effectively and may interrupt lines of communication
and restrict our offshore resources from traveling onsite to client locations, effectively curtailing our ability to deliver our
services to our clients. These obstacles may increase our expenses and negatively affect our operating results. In addition, military
activity, terrorist attacks, political tensions between India and Pakistan and, historically, conflicts within Sri Lanka, despite
the current cessation of hostilities, could create a greater perception that the acquisition of services from companies with significant
Indian or Sri Lankan operations involves a higher degree of risk that could adversely affect client confidence in India or Sri
Lanka as a software development center, each of which would have a material adverse effect on our business.
Fluctuations
in currency exchange rates could materially adversely affect our financial condition and results of operations.
Our
operations are primarily international and we earn our revenues and incur our expenses in multiple currencies. Doing business
in different foreign currencies exposes us to foreign currency risks, including risks related to revenues and receivables, compensation
of personnel, purchases and capital expenditures. The majority of our revenues are in U.S. dollars and Sri Lankan rupees. However,
some of our expenses are denominated in Singapore dollars, Indian rupees and other local currencies. To the extent that we increase
our business and revenues which are denominated in currencies other than U.S. dollars and Sri Lankan rupees, we will also increase
our receivables denominated in those other currencies and, therefore, also increase our exposure to fluctuations in their exchange
rates against the U.S. dollar (our reporting currency) or the Sri Lankan rupee. Similarly, any capital expenditures, such as for
computer equipment, which are payable in the local currencies of the countries in which we operate, but are imported to such countries,
and any deposits we hold in local currencies, can be materially affected by depreciation of the local currencies against the U.S.
dollar or Sri Lankan rupee, and the effect of such depreciation on the local economy. Certain foreign currency exposures, to some
extent, are naturally offset on a consolidated basis. However, if our international operations continue to grow, fluctuations
in foreign currency exchange rates could materially impact our results of operations and financial condition.
Because
our officers and directors reside outside of the United States, it may be difficult for an investor to enforce any right based
on U.S. federal or state securities laws against the Company and/or any of our officers or directors, or to enforce a judgment
rendered by a court in the United States against the Company or any of our officers or directors.
None
of our officers or directors is a resident of the United States. Therefore, it may be difficult for our U.S. shareholders to (i)
enforce any right or claim based on U.S. federal or state securities laws against the Company and/or any of our officers or directors,
(ii) effect service of process on any of our officers or directors in the United States or in foreign countries in which we maintain
assets and/or in which any of our officers or directors reside or may be found, (iii) enforce any judgment rendered by a court
in the United States against the Company or any of our officers or directors; or (iv) bring an original action in foreign courts
such as India, Singapore and Sri Lanka, where our assets, officers and directors are located, to enforce liabilities based on
U.S. federal or state securities laws against the Company or any of our officers or directors. As a result, it may be difficult
or impossible for an investor to bring an action against our officers or directors in the event that an investor believes that
such investor’s rights have been infringed upon under the federal or state securities laws of the United States or otherwise.
Even if an investor is successful in bringing an action of this kind, the courts of other countries may rule that the investor
is unable to enforce a judgment against the assets of the Company located outside the territorial limits of the United States
or the assets of the officers or directors located outside the territorial limits of the United States. As a result, our shareholders
may have more difficulty in protecting their interests and investments in the Company through actions against our management,
directors or officers, compared to shareholders of a corporation doing business in, and a corporation and its officers and directors
maintaining assets in, and residing in the United States.
Any
U.S. or foreign judgment that may be obtained against us may be difficult or impossible to enforce in the United States, India,
Singapore or Sri Lanka.
Although
we are a Nevada corporation, subject to suit in the United States and other courts in the United States, most of our assets are
located in India, Singapore and Sri Lanka and our officers and directors and their assets are located outside the United States.
Judgments obtained in the United States or in other foreign courts, including those with respect to U.S. federal or state securities
laws claims, may not be enforceable in India, Singapore, Sri Lanka or any other country in which we or our officers or directors
maintain assets. Therefore, it may be difficult or impossible to enforce any U.S. or other foreign judgment obtained against us
or our officers or directors or any of our operating subsidiaries in India, Singapore, Sri Lanka or any other country in which
we maintain assets.
We
are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies could make our
Common Stock less attractive to investors.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act. Pursuant to that law, emerging
growth companies can delay adopting new or revised financial accounting standards until such time as those standards apply to
private companies. However, we have irrevocably elected not to avail ourselves of this extended transition period and, therefore,
we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
For
as long as we continue to be an emerging growth company, we may also take advantage of other exemptions from certain reporting
requirements that are applicable to other public companies, including not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act, exemption from any rules that may be adopted by the Public Company Accounting
Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved, and reduced financial reporting requirements. Investors may find our Common Stock less attractive
if we rely on these exemptions, which could result in a less active market for our Common Stock, increased price fluctuations
and a decrease in the trading price of our Common Stock.
Risks
Related to an Investment in our Securities
Because
one of our shareholders owns a majority of the shares of our Common Stock and 5,000,000 shares of our Series “A” Preferred
Stock, he will be able to exert significant influence over our corporate decisions that may be disadvantageous to our minority
shareholders.
Our
President and Chief Executive Officer, Muhunthan Canagasooryam, currently owns a majority of the shares of our Common Stock and
5,000,000 shares of our Series “A” Preferred Stock, which allows him to cast controlling votes on any and all matters
submitted to our shareholders for a vote. As a result of his ownership position, Mr. Canagasooryam will be able to elect all of
our directors and control the vote on any matter brought before a meeting of our shareholders. The interests of Mr. Canagasooryam
may differ from the interests of our minority shareholders. Such control by Mr. Canagasooryam could be disadvantageous to our
minority shareholders, who would have little say in the election of our directors, any amendment of our certificate of incorporation
or by-laws, any acquisition or merger transaction in which we may become involved, and any other matter submitted to our shareholders
for vote.
Our
compliance with changing laws and rules regarding corporate governance and public disclosure may result in additional expenses
to us which, in turn, may have an adverse effect on our operations.
Keeping
abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002, new SEC regulations and the rules of the OTCQB or any other automated quotation system
or stock exchange upon which our shares of Common Stock are listed will require an increased amount of management attention and
external resources. We intend to continue to invest all reasonably necessary resources to comply with evolving standards, which
may result in increased general and administrative expenses estimated to be between $60,000 and $75,000 per year and a diversion
of management time and attention from revenue-generating activities to compliance and disclosure activities. This could have an
adverse impact on our operations.
Trading
in our securities could be subject to extreme price fluctuations that could adversely affect your investment.
Historically
speaking, the market prices for securities of small publicly traded companies have been highly volatile. Publicized events and
announcements may have a significant impact on the market price of our Common Stock.
In
addition, the stock market from time to time experiences extreme price and volume fluctuations that particularly affect the market
prices for small publicly traded companies and which are often unrelated to the operating performance of the affected companies.
Since
we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends
for the foreseeable future, and capital appreciation, if any, will be the source of gain for our shareholders.
We
have never declared or paid any cash dividends on our capital stock. We currently intend to retain our future earnings, if any,
to support our operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our Common
Stock in the foreseeable future. As a result, capital appreciation, if any, of our Common Stock will be the sole source of gain
for our shareholders for the foreseeable future.
We
may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required, beginning with our second Annual Report on Form 10-K to
include in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end
of such fiscal years.
In
addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented
or amended from time to time, we may not be able to insure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls,
particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important
to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating
results could be harmed, investors could lose confidence in our reported financial information and the trading price of our Common
Stock could drop significantly.
Our
amended articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability,
which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended
for the benefits of officers and/or directors.
Our
articles of incorporation and applicable Nevada laws provide for the indemnification of our directors, officers, employees and
agents under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which
they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation
for any of our directors, officers, employees or agents, upon such person’s written promise to repay us, therefore, even
if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy
could result in substantial expenditures by us that we may be unable to recoup.
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against
public policy and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal
securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with
the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent)
submit to a court of appropriate jurisdiction, the question of whether indemnification by us is against public policy as expressed
by the SEC and will be governed by the final adjudication of such issue. The legal process relating to this matter, if it were
to occur, is likely to be very costly and may result is us receiving negative publicity, either of which factors is likely to
materially reduce the market price for our shares.
There
currently is a limited public trading market for our securities, and we cannot predict the future prices or the amount of liquidity
of our Common Stock.
Currently,
there is a limited public market for our Common Stock. Our Common Stock is quoted on the OTCQB, operated by the OTC Markets Group,
Inc. under the symbol “DUUO.” The OTCQB is not a liquid market in contrast to the major stock exchanges. The quotation
of our Common Stock on the OTCQB does not guarantee that a meaningful, consistent and liquid trading market exist or will develop.
If
an active market for our Common Stock does not develop, the fair market value of our Common Stock could be materially adversely
affected. We cannot predict the future prices of our Common Stock. Further, there can be no assurance that we will ever consummate
a public offering of any of our securities, list or trade our securities on a national exchange, or have sufficient funds available
to redeem our securities if desired. Accordingly, investors must bear the economic risk of an investment in the securities for
an indefinite period of time. Even if an active market develops for our securities, Rule 144 promulgated under the Securities
Act, which provides for an exemption from the registration requirements under the Securities Act under certain conditions, requires,
among other conditions, for resales of securities acquired in a non-public offering without having to satisfy such registration
requirements, a six-month holding period following acquisition of and payment in full for such securities assuming the issuer
of such securities has filed periodic reports with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), for a period of 90 days prior to the proposed sale. If the issuer of such securities has not made such filings, such
securities will be subject to a one year holding period before they can be resold under Rule 144. There can be no assurance that
we will fulfill any reporting requirements in the future under the Exchange Act or disseminate to the public any current financial
or other information concerning us, as is required by Rule 144 as part of the conditions of its availability.
Our
Common Stock may be subject to the penny stock rules which may make it more difficult to sell our Common Stock.
The
SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price,
as defined, less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities
may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors, such as institutions with assets in excess of $5,000,000 or an individual
with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions
covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s
written agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell
our securities and also affect the ability of our shareholders to sell their shares in the secondary market.
FINRA
sales practice requirements may also limit a shareholder’s ability to buy and sell our Common Stock.
In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative, low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there
is a high probability that speculative, low-priced securities will not be suitable for at least some customers. The FINRA requirements
may make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability
to buy and sell our Common Stock and have an adverse effect on the market for our shares of Common Stock.
There
are risks associated with forward-looking statements
This
Annual Report contains certain forward-looking statements regarding management’s plans and objectives for future operations
including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking
statements and associated risks set forth in this Annual Report include or relate to, among other things, (a) our projected sales
and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our ability to obtain and retain sufficient
capital for future operations and (e) our anticipated needs for working capital. These statements may be found under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” in
this Annual Report, as well as in this Annual Report, generally. Actual events or results may differ materially from those discussed
in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk
Factors” and matters described in this Annual Report, generally. In light of these risks and uncertainties, there can be
no assurance that the forward-looking statements contained in this Annual Report will, in fact, occur.
For
all of the foregoing reasons and other reasons set forth herein, an investment in our securities in any market that may develop
in the future will involve a high degree of risk.
CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains forward-looking statements. These statements relate to future events or future financial performance and
involve known and unknown risks, uncertainties and other factors that may cause Duo World’s or our industry’s actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by the forward-looking statements.
In
some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or the negative of these terms or other comparable terminology. These statements are only predictions.
Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update
any of the forward-looking statements after the date of this Annual Report to confirm our prior statements to actual results.
Further,
this Annual Report contains forward-looking statements that involve substantial risks and uncertainties. Such statements include,
without limitation, all statements as to expectation or belief and statements as to our future results of operations, the progress
of any product development, the need for, and timing of, additional capital and capital expenditures, partnering prospects, the
protection of and the need for additional intellectual property rights, effects of regulations, the need for additional facilities
and potential market opportunities.