Notes
to the Consolidated Financial Statements
September
30, 2019
(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 Sri Lanka based company, was incorporated on September 22, 2004, in the
Democratic Socialist Republic of Sri Lanka, as a limited liability company. Duo Software (Pte.) Limited (hereinafter referred
to as “DSS” or “Predecessor”), a Singapore based company, was incorporated on June 5, 2007 in the Republic
of Singapore as a limited liability company. DSS also includes its wholly-owned subsidiary, Duo Software India (Private) Limited
(India) which was incorporated on August 30, 2007, under the laws of India.
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 the subscription-based
industry. The Company’s applications (“DuoSubscribe”, “Facetone”, and “SmoothFlow”)
provide solutions in the space of Customer Life Cycle Management, Subscriber Billing and Work Flow.
Note
2 - Basis of Presentation
The
Company has prepared the accompanying consolidated financial statements and accompanying notes in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). All amounts in the consolidated financial statements
are stated in U.S. dollars.
We
have recast certain prior period amounts to conform to the current period presentation, with no impact on consolidated net income
or cash flows.
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 $198,622 and $916,370 for the six months ended September 30, 2019 and 2018,
respectively; net cash provided by operations of $(11,796) and $(104,704) for the six months ended September 30, 2019 and
2018, respectively; working capital deficit of $ 2,703,219 and $2,602,035 as of September 30, 2019 and March 31, 2019,
respectively; outstanding statutory dues towards employee provident fund and employee trust fund of $426,176 and $423,354
as of September 30, 2019 and March 31, 2019, respectively; and a stockholders´ deficit of $3,396,669 and $3,283,032 as of
September 30, 2019 and March 31, 2019, respectively.
The
revenue for the six months ended September 30, 2019 has increased by 17% when compared to the six months ended September 30, 2018
and 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 and when 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 has 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, 2019 and March 31, 2019, 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 converted into United States Dollars ($) and/or USD as the reporting currency. All assets and liabilities
denominated in foreign functional currencies are converted into U.S. dollars at the closing exchange rate on the balance sheet
date and equity balances are converted at historical rates. Revenues, costs and expenses in foreign functional currencies are
converted at the average rate of exchange during the period. Conversion 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 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
accumulated postretirement benefit obligation (“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.
The
following five steps are followed in recognizing revenue from contracts:
|
●
|
Identify
the Contract(s) with the 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.
|
The
consideration for the transaction [performance obligation(s)] is determined as per the agreement, contract or invoice for the
services and products.
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, DuoSubscribe is eminently capable of meeting the complex
and rigorous demands of businesses around the world.
Facetone
‘Facetone’
is a communication and collaboration platform, which provides users the capability of operating and running a high performance
contact center operation efficiently while saving cost and maximizing revenue opportunities. In-built Facetone CRM feature provides
the opportunity for contact centers to deliver a superior customer experience and build a better relationship by linking customers
and data in real time.
Smoothflow
Smoothflow
automates customer engagements, including building ChatBots, VoiceBots and IoTBots to deliver an Omni channel customer service
experience. The product uses the power of artificial intelligence to keep improving the conversational flow and user experience.
Revenue
is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration
we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations
of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.
Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to
governmental authorities.
Nature
of Products and Services
Licenses
for on premise software– The Company sells a perpetual nonexclusive license to the customer and enables the customer
to install and use the software and its documentation. Price per customer varies 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.” The Company charges an Implementation fee on key milestone basis for on premise customers
upon completion of performance obligation.
Enterprise
software solutions– The Company distributes its software product ‘Facetone- hosted version” with third party
telecommunication companies. It is a revenue model where the telecommunication provider hosts the Company’s software applications
and makes them available to its customers over the Internet for a monthly subscription fee. The Company charges telecommunication
providers a monthly license fee calculated according to number of licenses sold.
Cloud
services- The Company sells its product Smoothflow as a “SaaS” product (Software-as-a-Service) and services are
provided on a monthly subscription model.
AMC
Services- 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. Revenue is recognized ratably, or daily, over the
term of the maintenance period, which is typically one year.
For
the six months ended September 30, 2019 and 2018, the Company received only cash as consideration for sale of licenses and related
services rendered.
For
the six months ended September 30, 2019 and 2018, the Company had the following concentrations of revenues with customers:
Customer
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
A
|
|
|
74.45
|
%
|
|
|
58.92
|
%
|
B
|
|
|
10.31
|
%
|
|
|
20.36
|
%
|
C
|
|
|
4.26
|
%
|
|
|
6.86
|
%
|
D
|
|
|
3.18
|
%
|
|
|
1.41
|
%
|
E
|
|
|
2.41
|
%
|
|
|
2.54
|
%
|
F
|
|
|
1.54
|
%
|
|
|
1.80
|
%
|
Other misc. customers
|
|
|
3.84
|
%
|
|
|
8.11
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
For
the six months ended September 30, 2019 and 2018, the Company had the following sales by products:
Product
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
DuoSubscribe
|
|
$
|
310,425
|
|
|
$
|
224,583
|
|
Facetone
|
|
|
60,832
|
|
|
|
92,596
|
|
Software hosting and reselling
|
|
|
11,106
|
|
|
|
11,558
|
|
Smoothflow
|
|
|
1,734
|
|
|
|
-
|
|
Development services
|
|
|
-
|
|
|
|
144
|
|
|
|
$
|
384,097
|
|
|
$
|
328,881
|
|
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 the 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. The
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, differed revenue and accrued
revenue/ unbilled accounts receivables are recognized by the Company. Revenue under Software Implementation contracts are invoiced
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). The Company invoices 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 the Company recognizes as deferred revenue in the financial statements and is ratably
recognized over the period of service.
The
Company recognized $39,603 revenue as at September 30, 2019 from the contract with LOLC as the performance obligations are completed
in this year, and has a contract balance of $67,406 from the same customer as at September 30, 2019. The Company is waiting for
the customer confirmation to deliver the balance of product and services.
The
allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We
determine the allowance based on known troubled accounts, historical experience, and other currently available evidence.
Refer
to 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 September 30, 2019 and March 31, 2019 the Company recognized deferred revenue $59,631
and $6,995, respectively.
Accrued
Revenue/Unbilled Accounts Receivable - Accrued revenue/Unbilled accounts receivable primarily occur due to the timing
of the respective billings, which occur subsequent to the end of each reporting period. As at September 30, 2019 and March 31,
2019, unbilled /accrued revenues were $68,409 and $102,851, respectively.
The
Company had no contract liabilities and assets recognized for cost to fulfill a requirement of a customer as at September 30,
2019.
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 the Company. 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, 2019 and 2018, product research and development cost of $42,163 and $113,945, 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,
2019 and 2018.
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. Deferred tax assets and liabilities are not
recognized in the current financials due to recurring tax losses and the uncertainty of the realization of the tax allowances.
Withholding taxes deducted from the source of income from foreign operations are debited to profit and loss account due to non-refundable
status.
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, 2019, includes only foreign currency conversion 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, 2019 and March 31, 2019
were as follows:
Foreign Currency Translation Gains (losses)
|
|
|
|
|
|
|
|
Balance, March 31, 2019
|
|
$
|
266,235
|
|
Translation rate gain (loss)
|
|
|
2,626
|
|
Balance, June 30, 2019
|
|
$
|
268,861
|
|
Translation rate gain (loss)
|
|
|
82,361
|
|
Balance, September 30, 2019
|
|
$
|
351,222
|
|
Recent
Accounting Pronouncements
The
Company has reviewed the recent accounting pronouncements and believes that they will not have material impact on the Company’s
financial position and results of operations.
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 & 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
5 – Accounts Receivable
Following
is a summary of accounts receivable as At September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Accounts receivable – trade
|
|
$
|
251,759
|
|
|
$
|
148,933
|
|
Less: Provision for doubtful debts
|
|
|
(42,634
|
)
|
|
|
(23,899
|
)
|
|
|
$
|
209,125
|
|
|
$
|
125,044
|
|
As
At September 30, 2019 and March 31, 2019, the Company had following concentrations of accounts receivables with customers:
Customer
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
A
|
|
|
49.42
|
%
|
|
|
27.98
|
%
|
B
|
|
|
11.15
|
%
|
|
|
25.80
|
%
|
C
|
|
|
28.25
|
%
|
|
|
16.83
|
%
|
D
|
|
|
0.00
|
%
|
|
|
10.23
|
%
|
E
|
|
|
1.83
|
%
|
|
|
6.32
|
%
|
F
|
|
|
5.01
|
%
|
|
|
6.43
|
%
|
Other receivables
|
|
|
4.34
|
%
|
|
|
6.41
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
Note
6 – Prepaid Expenses and Other Current Assets
Following
is a summary of prepaid expenses and other current assets as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Security deposits
|
|
$
|
44,708
|
|
|
$
|
56,878
|
|
Prepayments
|
|
|
17,674
|
|
|
|
577
|
|
Supplier advance
|
|
|
12,196
|
|
|
|
8,108
|
|
ESC receivable
|
|
|
4,860
|
|
|
|
11,126
|
|
Travel advance
|
|
|
34
|
|
|
|
28
|
|
Other receivables
|
|
|
13,904
|
|
|
|
5,565
|
|
|
|
$
|
93,376
|
|
|
$
|
82,282
|
|
Note
7– Property and Equipment
Following
table illustrates net book value of property and equipment as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Office equipment
|
|
$
|
1,755
|
|
|
$
|
1,812
|
|
Furniture & fittings
|
|
|
119,227
|
|
|
|
123,678
|
|
Computer equipment (data processing equipment)
|
|
|
89,807
|
|
|
|
91,814
|
|
Improvements to lease hold assets
|
|
|
18,133
|
|
|
|
18,729
|
|
Website development
|
|
|
13,951
|
|
|
|
14,362
|
|
|
|
|
242,873
|
|
|
|
250,395
|
|
Accumulated depreciation and amortization
|
|
|
(229,082
|
)
|
|
|
(226,882
|
)
|
Net fixed assets
|
|
$
|
13,791
|
|
|
$
|
23,513
|
|
Depreciation
and amortization expense for the six months ended September 30, 2019 and 2018 was $9,927 and $13,316, respectively.
Note
8 – Intangible assets
Intangible
assets comprise of capitalization of certain costs pertaining to products development which meets the criteria as set forth above
under Note 3. Following table illustrates the movement in intangible assets as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Opening balance
|
|
$
|
746,158
|
|
|
$
|
732,939
|
|
Add: Costs capitalized during the period
|
|
|
42,163
|
|
|
|
171,416
|
|
Less: Amount written-off
|
|
|
(52,313
|
)
|
|
|
(74,024
|
)
|
Translational gain/ (loss)
|
|
|
(23,767
|
)
|
|
|
(84,173
|
)
|
Net Intangible Assets
|
|
$
|
712,241
|
|
|
$
|
746,158
|
|
Note
9 – Short-term borrowings
Following
is a summary of short-term borrowings as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
PAN Asia Bank – short term overdraft
|
|
$
|
406,644
|
|
|
$
|
471,350
|
|
PAN Asia Bank – loan
|
|
|
84,110
|
|
|
|
-
|
|
Commercial Bank
|
|
|
31,068
|
|
|
|
45,950
|
|
Senkadagala Finance
|
|
|
4,572
|
|
|
|
14,375
|
|
|
|
$
|
526,394
|
|
|
$
|
531,675
|
|
Bank
overdraft facility, obtained from Pan Asia Banking Corporation PLC, contains an interest rate of 15.75% per annum for $180,666,
16.25% per annum for $116,738 and 16.39% per annum for $105,620.
Note
10 – Due to Related Parties
Due
to Related Parties – Short term
From
time to time, the Company receives advances from related parties such as management, 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, 2019 and March 31, 2019, the Company owed directors $844,261 and $824,991, 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, 2019 and March 31, 2019, the Company owed directors $1,344,208 and $1,345,968, respectively.
Note
11 – Taxes Payables
Taxes
payable comprised of items listed below as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
PAYE
|
|
$
|
155,633
|
|
|
$
|
143,766
|
|
WHT payable
|
|
|
2,946
|
|
|
|
2,127
|
|
Vat payable
|
|
|
37
|
|
|
|
-
|
|
Stamp duty payable
|
|
|
14
|
|
|
|
17
|
|
Tax payable
|
|
|
-
|
|
|
|
11,261
|
|
|
|
$
|
158,630
|
|
|
$
|
157,171
|
|
Note
12 – Accruals and Other Payables
Following
is a summary of accruals and other payables as at September 30, 2019 and March 31, 2019:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Share application money
|
|
$
|
99,940
|
|
|
$
|
-
|
|
Audit fee payable
|
|
|
14,788
|
|
|
|
1,770
|
|
Accruals
|
|
|
14,065
|
|
|
|
49,114
|
|
Accrued interest
|
|
|
3,792
|
|
|
|
3,090
|
|
Other payables
|
|
|
128
|
|
|
|
17,700
|
|
|
|
$
|
132,713
|
|
|
$
|
71,675
|
|
Note
13 – Cost of Revenue
Following
is the summary of cost of revenue for the six months ending September 30, 2019 and 2018:
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
Product development cost written off
|
|
$
|
52,313
|
|
|
$
|
40,028
|
|
Support services
|
|
|
50,786
|
|
|
|
42,492
|
|
Implementation cost
|
|
|
33,407
|
|
|
|
23,590
|
|
Purchases/ hosted servers
|
|
|
8,095
|
|
|
|
15,855
|
|
Consultancy and contract basis employees
|
|
|
2,720
|
|
|
|
-
|
|
Development services
|
|
|
-
|
|
|
|
2,532
|
|
Other external services
|
|
|
770
|
|
|
|
2,945
|
|
|
|
$
|
148,091
|
|
|
$
|
127,442
|
|
Note
14 – General and Administrative Expenses
Following
is the summary of general and administrative expenses for the six months ending September 30, 2019 and 2018:
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
Directors remuneration
|
|
$
|
65,786
|
|
|
$
|
73,049
|
|
EPF
|
|
|
7,706
|
|
|
|
5,134
|
|
ETF
|
|
|
1,156
|
|
|
|
1,283
|
|
Vehicle allowance
|
|
|
9,801
|
|
|
|
16,619
|
|
Investor relations
|
|
|
10,652
|
|
|
|
398
|
|
Office rent
|
|
|
10,187
|
|
|
|
26,809
|
|
Consulting fee
|
|
|
10,027
|
|
|
|
-
|
|
Legal fees
|
|
|
9,173
|
|
|
|
10,376
|
|
Penalties / late payment charges
|
|
|
6,275
|
|
|
|
1,643
|
|
Professional fees
|
|
|
6,148
|
|
|
|
3,820
|
|
Other professional services
|
|
|
4,007
|
|
|
|
7,902
|
|
Internet charges
|
|
|
4,244
|
|
|
|
6,032
|
|
OTC market fee
|
|
|
5,416
|
|
|
|
6,000
|
|
Gratuity
|
|
|
4,025
|
|
|
|
-
|
|
Audit fee
|
|
|
3,933
|
|
|
|
2,643
|
|
Electricity charges
|
|
|
3,445
|
|
|
|
5,919
|
|
Expenses write-off
|
|
|
3,602
|
|
|
|
-
|
|
Office maintenance
|
|
|
1,943
|
|
|
|
5,930
|
|
Telephone charges
|
|
|
2,847
|
|
|
|
4,231
|
|
Staff welfare
|
|
|
1,933
|
|
|
|
3,710
|
|
Irrecoverable tax
|
|
|
1,862
|
|
|
|
20,331
|
|
Filling fee and subscription
|
|
|
1,521
|
|
|
|
1,460
|
|
Transfer agent fees
|
|
|
1,050
|
|
|
|
150
|
|
Software rentals
|
|
|
643
|
|
|
|
5,596
|
|
Computer maintenance
|
|
|
727
|
|
|
|
1,599
|
|
Security charges
|
|
|
-
|
|
|
|
1,034
|
|
Travelling expense
|
|
|
-
|
|
|
|
560
|
|
Printing and stationery
|
|
|
276
|
|
|
|
323
|
|
Office expenses
|
|
|
-
|
|
|
|
358
|
|
Courier and postage
|
|
|
443
|
|
|
|
420
|
|
Insurance expense
|
|
|
91
|
|
|
|
-
|
|
Secretarial fees
|
|
|
328
|
|
|
|
334
|
|
Stamp duty expenses
|
|
|
2
|
|
|
|
6
|
|
Other expenses
|
|
|
639
|
|
|
|
250
|
|
|
|
$
|
179,888
|
|
|
$
|
213,919
|
|
Note
15 – Selling and Distribution Expenses
Following
is the summery of selling and distribution expenses for the six months ending September 30, 2019 and 2018:
|
|
September
30, 2019
|
|
|
September
30, 2018
|
|
Vehicle
hire charges
|
|
$
|
2,692
|
|
|
$
|
2,989
|
|
Vehicle
running expense
|
|
|
686
|
|
|
|
2,579
|
|
Marketing
expenses
|
|
|
4,033
|
|
|
|
-
|
|
Travel
expenses
|
|
|
363
|
|
|
|
-
|
|
|
|
$
|
7,774
|
|
|
$
|
5,568
|
|
Note
16 - Equity
(A)
Common Stock
As
at September 30, 2019, the Company had 400,000,000 authorized common shares having a par value of $0. 001. The common 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; however, the holder of our preferred stock has super-majority voting rights and has power to elect all
of 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, 2019, the Company has not issued common shares:
(B)
Preferred Stock
As
at September 30, 2019, the Company had 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
17 - 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.
The
Company entered into a lease commitment for its Sri Lanka office amounting to $36,689 with Ms. Praveena Sujeevan on November 1,
2018 for a period of 2 years.
Guarantees
and security deposits provided by the company existed on the balance sheet date are as follows:
Date
|
|
Description
|
|
Amount
|
|
7/31/2014
|
|
Guarantee
for SLT
|
|
|
472
|
|
8/10/2015
|
|
Guarantee
for LOLC
|
|
|
1,334
|
|
5/23/2018
|
|
Rent
deposit for Delhi apartment
|
|
|
1,289
|
|
7/17/2018
|
|
Security
deposit- Senkadagala Finance
|
|
|
27,795
|
|
7/18/2018
|
|
Guarantee
for Amana bank
|
|
|
530
|
|
9/10/2018
|
|
Guarantee
for ICTA
|
|
|
1,668
|
|
10/9/2018
|
|
Rent
deposit for office space
|
|
|
9,172
|
|
10/14/2019
|
|
Security
deposit for CEB
|
|
|
834
|
|
10/21/2019
|
|
Security
deposit for CEB
|
|
|
333
|
|
|
|
|
|
$
|
43,427
|
|
Note
18 - General
Figures
have been rounded off to the nearest dollar and the comparative figures have been re-arranged / reclassified, wherever necessary,
to facilitate comparison.