Notes
to the Consolidated Financial Statements
June
30, 2018
(Unaudited)
Note
1 - Organization and Nature of Operations
Duo
World Inc. (hereinafter referred to as “Successor” or “Duo”) a reporting company since September 26, 2016,
was organized under the laws of the state of Nevada on September 19, 2014. Duo Software (Pvt.) Limited (hereinafter referred to
as “DSSL” or “Predecessor”), a 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 (“Duo Subscribe,”
“Duo Contact,” “Digin,” “Facetone,” “CloudCharge” and “SmoothFlow”)
provide solutions in the space of Data Analytics, Customer Life Cycle Management, Subscriber Billing and Work Flow.
Note
2 - Basis of Presentation
The
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 $708,549 and $161,872 for the three
months ended June 30, 2018 and 2017, respectively; net cash provided by operations of $4,507 and $86,244 for the three
months ended June 30, 2018 and 2017, respectively; working capital deficit of $2,150,846 and $1,428,411 as of June
30, 2018 and March 31, 2018, respectively; outstanding statutory dues towards employee provident fund and employee trust
fund of $410,089 and $388,630 as of June 30, 2018 and March 31, 2018, respectively; and a stockholders’ deficit of $2,842,610
and $2,164,332 as of June 30, 2018 and March 31, 2018, respectively.
Operating
losses during the three months ended June 30, 2018 were mainly due to a one-time expenditure incurred for general financial advisory
and investment banking services, on account of the agreement signed with Maxim Group LLC on July 3, 2017.
Furthermore,
the Company has entered into contracts with the clients for the products launched during the fiscal year 2017-18 and our
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 under stated contract terms.
Provisions
A
provision is recognized when the Company has present obligations because of past events. It is probable that
an outflow of resources embodying economic benefits will be required to settle the obligations and reliable estimates can
be made of amount of the obligation. Provisions are not discounted at their present value and are determined based on the best
estimates 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 of receivables from its clients. However, there are inevitably occasions when the receivables
due to the Company cannot be collected and, therefore, have to be written off as bad debts. While the debt collection process
is being pursued, an assessment is made of the likelihood of the receivable being collectable. A provision is, therefore,
made against the outstanding receivable to reflect that component that may not become collectable. The Company is in the practice
of provisioning for doubtful debts based on the period outstanding as per the following:
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
June 30, 2018 and March 31, 2018, there were no cash equivalents.
Foreign
Currency Translation
The
functional currencies of the Company’s foreign subsidiaries are their local currencies. For financial reporting purposes,
these currencies have been translated into United States Dollars ($) and/or USD as the reporting currency. All assets and liabilities
denominated in foreign functional currencies are translated into U.S. dollars at the closing exchange rate on the balance sheet
date and equity balances are translated at historical rates. Revenues, costs and expenses in foreign functional currencies are
translated at the average rate of exchange during the period. Translation adjustments arising from the use of different exchange
rates from period to period are included as a component of shareholders’ deficit as “accumulated other comprehensive
income (loss).” Gains and losses resulting from foreign currency transactions are included in the statement of operations
and comprehensive income /(loss) as other income (expense).
Property
and Equipment
Fixed
assets (including leasehold improvements) are stated at cost, net of accumulated depreciation and amortization. Depreciation is
computed utilizing the straight-line method over the estimated useful lives of the related assets. The estimated salvage value
is considered as NIL. Amortization of leasehold improvements is computed utilizing the straight-line method over the estimated
benefit period of the related assets, which may not exceed 15 years, or the lease term, if shorter. Repairs and maintenance expenditures,
which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.
In case of sale or disposal of an asset, the cost and related accumulated depreciation are removed from the consolidated financial
statements.
Useful
lives of the fixed assets are as follows:
Furniture
& Fittings
|
|
5
years
|
Improvements
to lease hold assets
|
|
Lease
term
|
Office
equipment
|
|
5
years
|
Computer
equipment (Data Processing Equipment)
|
|
3
years
|
Website
development
|
|
4
years
|
Impairment
of Long-Lived Assets
The
Company reviews long-lived assets, such as property, plant, and equipment for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount
by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale would be separately
presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a group classified as held for sale would be presented separately in the appropriate
asset and liability sections of the balance sheet.
Fair
Value Measurements and Fair Value of Financial Instruments
The
Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance
on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability.
The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost bases, which approximates their fair values because of the short-term
nature of these instruments.
Post
Retirement Benefit Plan
The
Company has gratuity as it post-employment plan for all the eligible employees. The recognition for the gratuity plan is
as below:
The
expected post-retirement 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 post-retirement 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’s revenue recognition
policy follows guidance from Accounting Standards Codification(“ASC”) 606, Revenue from contracts
with customers. Revenue is recognized when the Company transfers promised goods and services to the customer and in
the amount that reflects the consideration to which the Company expected to be entitled in exchange for those goods
and services.
The
following five steps are applied in recognizing revenue
from contracts:
|
●
|
Identify the contract,
or contract 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
Company typically licenses its products on a per server, per user basis with the price per customer varying based on the selection
of the products licensed, the number of site installations and the number of authorized users. Currently, Duo is offering two
products from which it generates its revenue they are “Duo Subscribe” and “Facetone.” Duo sells
its software license along with software implementation and annual maintenance services under an agreement with various clients.
The Company raises invoice on key milestone basis, as defined in the agreement and recognizes revenue after satisfying the performance
obligations. Revenues from consulting and training services are typically recognized as the services are performed.
The
Company offers annual maintenance programs on its licenses that provide for technical support and updates to the Company’s
software products. Initial Annual Maintenance fees are bundled with license fees in the initial licensing period and recognized
when the performance obligation of license fee is met. However, subsequent renewals of annual maintenance are charged separately
for renewals. Fair value for maintenance is based upon either renewal rates stated in the contracts or separate sales of renewals
to customers. Revenue is recognized ratably, or daily, over the term of the maintenance period, which is typically one year.
For
the three months ended June 30, 2018 and 2017, the Company received only cash as consideration for sale of licenses and related
services rendered.
For
the three months ended June 30, 2018 and 2017, the Company had the following concentrations of revenues with customers:
Customer
|
|
June
30, 2018
|
|
|
June
30, 2017
|
|
|
|
|
|
|
|
|
DEN
Networks
|
|
|
51.33
|
%
|
|
|
51.88
|
%
|
LOLC
|
|
|
26.17
|
%
|
|
|
0.00
|
%
|
Mediatama
|
|
|
8.37
|
%
|
|
|
1.58
|
%
|
Meghbela
|
|
|
3.74
|
%
|
|
|
2.90
|
%
|
Topas
TV
|
|
|
2.58
|
%
|
|
|
7.52
|
%
|
Sri
Lanka Telecom
|
|
|
2.29
|
%
|
|
|
1.29
|
%
|
Commercial
Bank
|
|
|
1.04
|
%
|
|
|
12.21
|
%
|
Bank
of Ceylon
|
|
|
1.07
|
%
|
|
|
8.49
|
%
|
Development
services
|
|
|
0.00
|
%
|
|
|
7.26
|
%
|
Other
misc. customers
|
|
|
3.41
|
%
|
|
|
6.87
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
For
the years ended June 30, 2018 and 2017, the Company had the following sales by products:
Product
|
|
June
30, 2018
|
|
|
June
30, 2017
|
|
|
|
|
|
|
|
|
Duo
Subscriber
|
|
$
|
82,480
|
|
|
$
|
138,342
|
|
Facetone
|
|
|
60,648
|
|
|
|
54,445
|
|
Software
hosting and reselling
|
|
|
6,075
|
|
|
|
2,719
|
|
Development
Services
|
|
|
-
|
|
|
|
15,306
|
|
|
|
$
|
149,203
|
|
|
$
|
210,812
|
|
Significant
Judgments
The
Company’s contract with customers includes multiple software products and services to deliver and in most
of the contracts, 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 allocates 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 the 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 contracts with customers deferred revenue
and accrued revenue/ unbilled accounts receivables recognized by the Company. Revenue under Software Implementation contracts
are invoiced on stages of completion as stipulated in the agreement and the revenue recognized when the performance
obligations are met and the customer signs the user acceptance test (UAT). The Company invoices software
license fees and royalty fees at the end of the period according to the customer agreement and accrued revenue/unbilled
revenue 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.
The
Company recognized $46,324 in revenue as at June 30,
2018 from the contract with LOLC as the performance obligations are completed in this year, and has a contract balance of $133,061
from the same customer as at June 30, 2018. The Company is waiting for the customer confirmation to deliver the balance
of product and services.
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 Chief Executive
Officer reviews financial information presented on a consolidated basis for the purposes of assessing the performance and
making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single reportable
segment.
Deferred
Revenue -
Deferred revenue represents advance payments for software licenses, services, and maintenance billed in advance
of the time revenue is recognized. As at March 31, 2018, there were no deferred revenue recognized and as at June 30, 2018,
deferred revenue recognized was $14,074.
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 June 30, 2018 and March 31, 2018
unbilled/accrued revenues were $122,561 and $148,714, respectively.
The
Company had no contract liabilities and asset recognized
for cost to fulfill a requirement of a customer as at June 30, 2018.
Cost
of Revenue
Cost
of Revenue mainly includes purchases, product implementation costs, amortization of product development, developer support
and implementation, and consultancy fees related to the products offered by Duo. The aggregate cost related to the software implementations,
including support and consulting services pertaining to the revenue recognized during the reporting period, is recognized as Cost
of Revenue.
Product
research and development
Product
research and development expenses consist primarily of salary and benefits for the Company’s development and technical support
staff, contractors’ fees and other costs associated with the enhancements of existing products and services and development
of new products and services. Costs incurred for software development prior to technological feasibility are expensed as product
research and development costs in the period incurred. Once the point of technological feasibility is reached, which is generally
upon the completion of a working prototype that has no critical bugs and is a release candidate, development costs are
capitalized until the product is ready for general release and are classified within “Intangibles assets” in the accompanying
consolidated balance sheets. The Company amortizes capitalized software development costs using the greater of the ratio of the
products’ current gross revenues to the total of current gross revenues and expected gross revenues or on a straight-line
basis over the estimated economic life of the related product, which is typically four years.
During
the three months ended June 30, 2018 and 2017, product research and development cost of $67,102 and $$65,426, respectively, were
capitalized as “Intangible assets.”
Advertising
Costs
The
Company expenses advertising costs as incurred. No advertising expenses were incurred during the three months ended June 30, 2018
and 2017.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date.
Comprehensive
Income
The
Comprehensive Income Topic of the FASB Accounting Standards Codification establishes standards for reporting and presentation
of comprehensive income and its components in a full set of financial statements. Comprehensive income from April 1, 2015 through
March 31, 2018, includes only foreign currency translation gains (losses), and is presented in the Company’s consolidated
statements of comprehensive income.
Changes
in Accumulated Other Comprehensive Income (Loss) by Component during the periods ending on June 30, 2018 and March 31, 2018,
were as follows:
Foreign
Currency Translation gains (losses)
|
|
|
|
|
|
|
|
Balance,
March 31, 2017
|
|
$
|
112,761
|
|
Translation
rate gain (loss)
|
|
|
(42,780
|
)
|
Balance,
March 31, 2018
|
|
$
|
69,981
|
|
Translation
rate gain (loss)
|
|
|
38,779
|
|
Balance,
June 30, 2018
|
|
$
|
108,760
|
|
Recent
Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to
the initial guidance in August 2015, March 2016, April 2016, May 2016, September 2017 and November 2017 within ASU 2015-04, ASU
2016-08, ASU 2016-10 and ASU 2016-12, ASU 2017-13 and ASU 2017-14, respectively (collectively, Topic 606). Topic 606 requires
an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services
to customers and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. Topic 606 defines
a five-step process to achieve this core principle and, in doing so, more judgment and estimates will be required within the revenue
recognition process than are required under current GAAP (Accounting Standards Codification 605). Topic 606 is effective for the
Company’s annual and interim reporting periods beginning January 1, 2018 (“effective date”).
The
guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method),
or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application
(modified retrospective method). The Company adopted the new standard effective January 1, 2018 using the modified retrospective
method.
The
Company has adopted implementation of ASC 606 with effect from April 1, 2018 as a result of it $0.21 million impact which
was provided as at March 31, 2018 has been reversed.
Note
4 – Reverse Recapitalization
Duo
(Successor) merged with DSSL (Predecessors) on December 3, 2014, and merged with DSS (Predecessors) on December 3, 2014 (Predecessors),
and DSSL and DSS became the surviving corporations, in a transaction treated as a reverse recapitalization. Duo did not have any
material operations and majority-voting control was transferred to DSSL.
In
the recapitalization, Duo issued 28,000,000 shares of common stock, 5,000,000 series “A” preferred shares and $310,000
in cash in exchange for all of DSSL’s 5,000,000 issued and outstanding shares of common stock. Duo also issued 2,000,000
shares of common stock in exchange for all of DSS’s 10,000 issued and outstanding shares of common stock. The transaction
resulted in DSSL’s shareholder and DSS’s shareholder acquiring approximately 100% control.
The
transaction also required a recapitalization of DSSL and DSS. Since DSSL and DSS acquired a controlling voting interest, they
were deemed the accounting acquirer, while Duo was deemed the legal acquirer. The historical financial statements of the Company
are those of combined financial statements of DSSL & 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
The
following
is a summary of accounts receivable as at
June 30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Accounts
receivable – Trade
|
|
$
|
606,818
|
|
|
$
|
576,775
|
|
Less:
Provision for doubtful debts
|
|
|
(305,148
|
)
|
|
|
(207,543
|
)
|
|
|
$
|
301,670
|
|
|
$
|
369,232
|
|
As
at June 30, 2018 and March 31, 2018, the Company had the following concentrations of accounts receivables with customers:
Customer
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Megamedia
|
|
|
39.47
|
%
|
|
|
56.37
|
%
|
Topas
|
|
|
17.73
|
%
|
|
|
14.83
|
%
|
Commercial
Bank
|
|
|
8.95
|
%
|
|
|
7.85
|
%
|
LOLC
|
|
|
7.75
|
%
|
|
|
0.00
|
%
|
DEN
Networks
|
|
|
5.81
|
%
|
|
|
1.86
|
%
|
Development
Services
|
|
|
5.52
|
%
|
|
|
5.04
|
%
|
Bank of Ceylon
|
|
|
5.24
|
%
|
|
|
4.61
|
%
|
Meghbela
|
|
|
3.88
|
%
|
|
|
2.05
|
%
|
Other
receivables
|
|
|
5.63
|
%
|
|
|
7.39
|
%
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
Note
6 – Prepaid Expenses and Other Current Assets
The
following
is a summary of prepaid expenses and other current
assets as at June 30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Security
deposits
|
|
$
|
67,441
|
|
|
$
|
67,348
|
|
ESC
receivable
|
|
|
9,378
|
|
|
|
5,688
|
|
OTCQB
Annual Fee
|
|
|
9,000
|
|
|
|
-
|
|
Prepayments
|
|
|
490
|
|
|
|
1,370
|
|
Supplier
advance
|
|
|
134
|
|
|
|
136
|
|
Prepayment
for other professional services
|
|
|
-
|
|
|
|
438,598
|
|
Insurance
prepayment
|
|
|
-
|
|
|
|
1,160
|
|
Other
receivables
|
|
|
7,888
|
|
|
|
8,700
|
|
|
|
$
|
94,331
|
|
|
$
|
523,000
|
|
During
the year ended March 31, 2018, the Company has written off WHT receivables of $189,121 as the recoverability of the WHT
asset is uncertain.
Note
7– Property and Equipment
The
f
ollowing table illustrates net book value of property and
equipment as at June 30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Office
equipment
|
|
$
|
2,015
|
|
|
$
|
2,054
|
|
Furniture
& fittings
|
|
|
136,136
|
|
|
|
138,752
|
|
Computer
equipment (Data Processing Equipment)
|
|
|
119,595
|
|
|
|
122,443
|
|
Improvements
to lease hold assets
|
|
|
20,821
|
|
|
|
21,221
|
|
Website
Development
|
|
|
14,427
|
|
|
|
14,678
|
|
|
|
|
292,994
|
|
|
|
299,148
|
|
Accumulated
depreciation and amortization
|
|
|
(
252,383
|
)
|
|
|
(
255,654
|
)
|
Net
fixed assets
|
|
$
|
40,611
|
|
|
$
|
43,494
|
|
Depreciation
and amortization expense for the three months ended June 30, 2018 and 2017 was $7,383 and $7,472, respectively.
Note
8 – Intangible assets
Intangible
assets are comprised of capitalization of certain costs pertaining to product development, which meets the
criteria as set forth above under Note 3. The following table illustrates the movement in intangible assets as at June
30, 2018 and March 31, 2018:
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Opening
Balance
|
|
$
|
732,939
|
|
|
$
|
580,899
|
|
Add:
Costs capitalized during the year
|
|
|
67,102
|
|
|
|
277,812
|
|
Less:
Amount Written-off
|
|
|
(19,536
|
)
|
|
|
(113,363
|
)
|
Translational
gain
|
|
|
(14,014
|
)
|
|
|
(12,409
|
)
|
Net
Intangible Assets
|
|
$
|
766,491
|
|
|
$
|
732,939
|
|
Note
9 – Short-term borrowings
The
f
ollowing is a summary of short-term borrowings as at June
30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
PAN
Asia Bank – Short term overdraft
|
|
$
|
441,623
|
|
|
$
|
440,609
|
|
PAN
Asia Bank – Loan
|
|
|
134,914
|
|
|
|
162,636
|
|
Commercial
bank
|
|
|
62,202
|
|
|
|
53,571
|
|
Senkadagala
Finance
|
|
|
24,822
|
|
|
|
33,323
|
|
|
|
$
|
663,561
|
|
|
$
|
690,139
|
|
Bank
overdraft facility, obtained from Pan Asia Banking Corporation PLC, contains an interest rate of 15.25% per annum up to $ 235,244
and 15.86% per annum up to $425,821.
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 June 30, 2018 and March 31, 2018, the Company owed directors $563,219 and $524,955, respectively.
Due
to Related Parties – Long term
Balances
outstanding to related parties for more than 12 months are presented under long-term liabilities in the accompanying consolidated
financial statements. As of June 30, 2018 and March 31, 2018, the Company owed directors $1,344,464 and $1,348,193, respectively.
Note
11 – Taxes Payable
The
taxes payable is comprised of items listed below as at June 30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
PAYE
|
|
$
|
127,295
|
|
|
$
|
117,805
|
|
Stamp
Duty Payable
|
|
|
29
|
|
|
|
34
|
|
Tax
payable
|
|
|
4,774
|
|
|
|
8,877
|
|
|
|
$
|
132,098
|
|
|
$
|
126,716
|
|
Note
12 – Accruals and Other Payables
The
f
ollowing is a summary of accruals and other payables as at
June 30, 2018 and March 31, 2018;
|
|
June
30, 2018
|
|
|
March
31, 2018
|
|
Audit
fee payable
|
|
$
|
17,005
|
|
|
$
|
22,260
|
|
Accruals
|
|
|
17,215
|
|
|
|
29,128
|
|
Other
payables
|
|
|
117,224
|
|
|
|
78,745
|
|
Accrued
interest
|
|
|
4,762
|
|
|
|
1,417
|
|
|
|
$
|
156,206
|
|
|
$
|
131,550
|
|
Note
13 – Cost of Revenue
The
f
ollowing is the summary of cost of revenue for the three
months ending June 30, 2018 and 2017;
|
|
June
30, 2018
|
|
|
June
30, 2017
|
|
Purchases
|
|
$
|
9,613
|
|
|
$
|
11,252
|
|
Implementation
cost
|
|
|
9,986
|
|
|
|
9,202
|
|
Product
development cost written off
|
|
|
19,536
|
|
|
|
27,384
|
|
Consultancy,
contract basis employee cost
|
|
|
-
|
|
|
|
6,825
|
|
Support
services
|
|
|
20,519
|
|
|
|
17,206
|
|
Other
external Services
|
|
|
25
|
|
|
|
3,250
|
|
Cost
of development services
|
|
|
2,141
|
|
|
|
11,631
|
|
|
|
$
|
61,820
|
|
|
$
|
86,750
|
|
Note
14 – General and Administrative Expenses
The
f
ollowing is the summary of general and administrative expenses
for the three months ending June 30, 2018 and 2017;
|
|
June
30, 2018
|
|
|
June
30, 2017
|
|
Directors
remuneration
|
|
$
|
37,067
|
|
|
$
|
38,123
|
|
EPF
|
|
|
8,902
|
|
|
|
11,078
|
|
ETF
|
|
|
2,226
|
|
|
|
2,769
|
|
Vehicle
allowance
|
|
|
9,196
|
|
|
|
9,457
|
|
Office
rent
|
|
|
14,256
|
|
|
|
18,701
|
|
Electricity
charges
|
|
|
3,201
|
|
|
|
3,796
|
|
Office
maintenance
|
|
|
3,032
|
|
|
|
2,987
|
|
Telephone
charges
|
|
|
2,347
|
|
|
|
2,573
|
|
Audit
fees
|
|
|
2,643
|
|
|
|
3,178
|
|
Staff
welfare
|
|
|
1,955
|
|
|
|
3,907
|
|
Computer
maintenance
|
|
|
1,446
|
|
|
|
1,726
|
|
Professional
fees
|
|
|
1,290
|
|
|
|
5,010
|
|
Legal
Fee
|
|
|
4,500
|
|
|
|
1,500
|
|
Internet
charges
|
|
|
2,989
|
|
|
|
3,309
|
|
Irrecoverable
tax
|
|
|
8,678
|
|
|
|
10,087
|
|
Software
Rentals
|
|
|
4,469
|
|
|
|
7,526
|
|
Other
professional services
|
|
|
2,373
|
|
|
|
2,244
|
|
OTC
market Fees
|
|
|
3,000
|
|
|
|
-
|
|
Transfer
agent fees
|
|
|
2,175
|
|
|
|
450
|
|
Gratuity
|
|
|
-
|
|
|
|
3,640
|
|
Printing
and stationery
|
|
|
154
|
|
|
|
266
|
|
Office
expenses
|
|
|
358
|
|
|
|
551
|
|
Courier
and postage
|
|
|
238
|
|
|
|
84
|
|
Security
charges
|
|
|
500
|
|
|
|
1,005
|
|
Insurance
expense
|
|
|
-
|
|
|
|
525
|
|
Travelling
expense
|
|
|
560
|
|
|
|
776
|
|
Secretarial
fees
|
|
|
169
|
|
|
|
186
|
|
Consulting
Fee
|
|
|
-
|
|
|
|
8,550
|
|
Penalties
/ Late payment charges
|
|
|
814
|
|
|
|
-
|
|
Filling
fee and subscription
|
|
|
395
|
|
|
|
2,860
|
|
Stamp
duty expenses
|
|
|
6
|
|
|
|
493
|
|
Other
expenses
|
|
|
173
|
|
|
|
1,212
|
|
|
|
$
|
119,112
|
|
|
$
|
148,569
|
|
Note
15 – Selling and Distribution Expenses
The
f
ollowing is the summery of selling and distribution expenses
for the three months ending June 30, 2018 and 2017;
|
|
June
30, 2018
|
|
|
June
30, 2017
|
|
Vehicle
hire charges
|
|
$
|
1,517
|
|
|
$
|
1,560
|
|
Vehicle
running expense
|
|
|
1,138
|
|
|
|
1,170
|
|
Travel
expenses
|
|
|
29
|
|
|
|
-
|
|
Marketing
expenses
|
|
|
-
|
|
|
|
325
|
|
|
|
$
|
2,684
|
|
|
$
|
3,055
|
|
Note
17 - Equity
As
at June 30, 2018, the Company had 400,000,000 authorized common shares having a par value of $0. 001. The ordinary shares
have been designated with the following rights:
|
●
|
Voting
rights:
Common shareholders can attend at annual general meeting to cast vote or use a proxy.
|
|
|
|
|
●
|
Right
to elect board of directors:
Common shareholders control the Company through their right to elect the company’s
board of directors.
|
|
|
|
|
●
|
Right
to share income and assets:
Common shareholders have the right to share company’s earnings equally on a per-share
basis in the form of dividend. Similarly, in the event of liquidation, shareholders have claim on assets that remain after
meeting the obligation to accrued taxes, accrued salary and wages, creditors including bondholders (if any) and preferred
shareholders. Thus, common shareholders are residual claimants of the company’s income and assets.
|
During
the three months ended June 30, 2018, the Company issued following common shares:
Date
|
|
Type
|
|
No.
of Shares
|
|
|
Valuation
|
|
06/30/2017
|
|
Stock
issued as a Dividend payment
|
|
|
13,147,666
|
|
|
$
|
5,784,973
|
|
|
|
|
|
|
|
|
|
$
|
5,784,973
|
|
As
at June 30, 2018, 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
18 - Commitments and Contingencies
The
Company consults with legal counsel on matters related to litigation and other experts both within and outside the Company with
respect to matters in the ordinary course of business. The Company does not have any contingent liabilities in respect of legal
claims arising in the ordinary course of business.
Duo
entered into a lease commitment for its Sri Lanka office amounting to $114,890 with Happy Building Management Company for a period
of 3 years. Duo entered in to another lease commitment for its Indian office amounting to $1,189 on April 1, 2018 with Regus Office
Center Services Pvt Limited for a period of 1 year.
Guarantees
provided by the company existed on the balance sheet date are as follows:
Date
|
|
Description
|
|
Amount
|
|
9/23/2011
|
|
Performance
Bond for BOC Tender
|
|
$
|
9,587
|
|
5/15/2013
|
|
Guarantee
for Lanka Clear
|
|
|
2,014
|
|
7/31/2014
|
|
Guarantee
for SLT
|
|
|
543
|
|
8/10/2015
|
|
Guarantee
for LOLC
|
|
|
1,532
|
|
1/25/2018
|
|
Security
deposit- Senkadagala Finance
|
|
|
47,871
|
|
5/23/2018
|
|
Rent
deposit for Delhi apartment
|
|
|
1,480
|
|
|
|
|
|
$
|
63,027
|
|
Note
19 - Subsequent Events
On
July 27, 2018, Duo World, Inc. filed an Amendment to its Certificate of Designation of its Series A Preferred Stock with the Secretary
of State of Nevada. This amendment reduced the number of shares of Series A Preferred Stock from 10,000,000 to 5,000,000 and returned
5,000,000 treasury shares of Series A Preferred Stock to the status of authorized, but unissued, Preferred Stock, par value $0.001
per share.
Note
20 - General
Figures
have been rounded off to the nearest dollar and the comparative figures have been re-arranged / reclassified, wherever necessary,
to facilitate comparison.