DUUO Duo World Inc (CE)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

or

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 0-55698

 

DUO WORLD, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		35-2517572
(State or other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

 

c/o Duo Software (Pvt.) Ltd. No. 6, Charles Terrace, Off Alfred Place Colombo 00300, Sri Lanka		00300
(Address of principal executive offices)		(Zip code)

 

Registrant’s telephone number: (870) 505-6540

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class		Trading Symbol(s)		Name of exchange on which registered

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of December 11, 2023, there were 88,375,838 outstanding shares of the Registrant’s Common Stock, $.001 par value.

 

 

 

INDEX

 

	Page
PART I – FINANCIAL INFORMATION	F-1
Item 1. Financial Statements.	F-1
Notes to Financial Statements (Unaudited)	F-7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3. Quantitative and Qualitative Disclosures about Market Risk	15
Item 4. Controls and Procedures	15
PART II – OTHER INFORMATION	15
Item 1. Legal Proceedings.	15
Item 1A. Risk Factors	15
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	16
Item 3. Defaults Upon Senior Securities	16
Item 4. Mine Safety Disclosure	16
Item 5. Other Information.	16
Item 6. Exhibits	16
SIGNATURES	17

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Duo World, Inc. and Subsidiaries

Consolidated Financial Statements

September 30, 2023

 

 

CONTENTS

 

	Page(s)
Consolidated Balance Sheets - September 30, 2023 (unaudited) and March 31, 2023	F-3
Consolidated Statements of Operations and Comprehensive Income / (Loss) for the three and six months ended September 30, 2023 and September 30, 2022 (unaudited)	F-4
Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and September 30, 2022 (unaudited)	F-5
Consolidated Statements of Changes in Equity- September 30, 2023 (unaudited) and March 31, 2023	F-6
Notes to the Consolidated Financial Statements (unaudited)	F-7 – F-21

 

 

Duo World, Inc. and Subsidiaries

Consolidated Balance Sheets

 

			(Un- audited)				(Un- audited)
		Sept. 30, 2023				March 31, 2023
			(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	11,984			$	18,712
Accounts receivable - trade			16,219				1,683
Prepaid expenses and other current assets			76,241				73,904
Accrued revenue			4,624				774
Total Current Assets			109,068				95,073
Non Current Assets
Property and equipment, net of accumulated depreciation of $141,919 and $139,483 respectively			8,672				10,545
Intangible assets, net			236,643				242,627
Lease - Right to use Asset			10,139				14,194
Goodwill			104,420				104,420
Total Non Current Assets			359,874				371,786
Total Assets		$	468,942			$	466,859
LIABILITIES and SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable		$	431,876			$	415,766
Payroll, employee benefits, severance			318,967				309,097
Due to related parties			627,072				600,711
Payable for acquisition			185,762				185,762
Taxes payable			105,632				106,085
Accruals and other payables			115,616				106,855
Deferred revenue			7,642				1,343
Total Current liabilities			1,792,567				1,725,619
Long Term Liabilities
Due to related parties			534,579				534,552
Employee benefit obligation			17,409				14,290
Lease liability			12,097				15,061
Total Long Term liabilities			564,085				563,903
Total liabilities		$	2,356,652			$	2,289,522
Commitments and contingencies (Note 18)			-				-
Shareholders’ Deficit
Ordinary shares: $0.001 par value per share; 400,000,000 shares authorized; 88,375,838 and 88,375,838 shares issued and outstanding, respectively		$	88,376			$	88,376
Convertible series “A” preferred shares: $0.001 par value per share; 10,000,000 shares authorized; 5,000,000 and 5,000,000 shares issued and outstanding, respectively			5,000				5,000
Additional paid in capital			12,293,480				12,293,480
Accumulated deficit			(15,768,960	)			(15,708,227	)
Accumulated other comprehensive income			1,389,229				1,393,540
Non controlling interest			105,165				105,168
Total shareholders’ deficit			(1,887,710	)			(1,822,663	)
Total Liabilities and Shareholders´ Deficit		$	468,942			$	466,859

 

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

 

 

Duo World, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

 

		Sep 30, 2023				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
		For the three months ended,								For the six months ended,
		Sept. 30, 2023				Sept. 30, 2022				Sept. 30, 2023				Sept. 30, 2022
Revenue		$	30,235			$	12,702			$	49,565			$	24,955
Cost of revenue (exclusive of depreciation presented below)			(8,249	)			(9,386	)			(10,502	)			(18,988	)
Gross Income			21,986				3,316				39,063				5,967
Operating Expenses
General and administrative			32,951				31,994				67,692				65,346
Salaries and casual wages			16,381				7,054				32,600				13,301
Selling and distribution			1,438				24				2,851				131
Depreciation			2,620				441				5,315				723
Amortization of web site development			725				384				1,458				763
Write off product development cost			-				39,947				-				39,947
Allowance for bad debts			-				27				-				27
Total operating expenses			54,115				79,871				109,916				120,238
Loss from operations		$	(32,129	)		$	(76,555	)		$	(70,853	)		$	(114,271	)
Other income (expenses):
Interest expense		$	(628	)		$	(27,978	)		$	(1,326	)		$	(27,977	)
Other income			(7	)			1,342				9,125				53,020
Gain / (Loss) on disposals			-				-				81				1,939
Bank charges			(59	)			(44	)			(118	)			(83	)
Exchange (loss) / gain			2,356				(7	)			2,354				(24,657	)
Write off liabilities			-				1,756,440				-				1,756,440
Write off assets			-				(887,319	)			-				(887,319	)
Total other income (expenses)			1,662				842,434				10,116				871,363
Profit/loss before provision for income taxes:		$	(30,467	)		$	765,879			$	(60,737	)		$	757,092
Tax Expense :
Provision for income taxes			-				-				-				-
Foreign taxes – withheld			-				-				-				-
Profit/(loss)		$	(30,467	)		$	765,879			$	(60,737	)		$	757,092
Profit/(loss) attributable to non controlling interest			133				(97	)			(4	)			(97	)
Net Profit/(loss)		$	(30,600	)		$	765,976			$	(60,733	)		$	757,189
Basic and Diluted Loss per Share		$	(0.00	)		$	0.01			$	(0.00	)		$	0.01
Basic and Diluted Weighted Average Number of Shares Outstanding			138,375,838				125,171,581				138,375,838				124,928,015
Comprehensive Income (Loss):
Unrealized foreign currency translation (loss) gain		$	87,073			$	22,327			$	(4,311	)		$	338,076
Profit/(loss)			(30,600	)			765,976				(60,733	)			757,189
Comprehensive Income/ (Loss)		$	56,473			$	788,303			$	(65,044	)		$	1,095,265

 

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

 

 

Duo World, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

		Sep 30, 2023				Sep 30, 2022
		For the Period ended,
		Sept. 30, 2023				Sept. 30, 2022
Operating activities:
Profit/(loss) before provision for income taxes		$	(60,733	)		$	757,189
Adjustments to reconcile loss before provision for income taxes to cash provided by operating activities:
Depreciation and amortization			8,860				1,486
Bad debts							27
Amortization of product Development cost			-				15,801
Product development cost written off			-				39,947
Changes in assets and liabilities:
Fixed deposits			-				(25,059	)
Accounts receivable - trade			(14,536	)			(11,042	)
Prepayments			(6,187	)			16,097
Lease - Right to use Asset			1,968				-
Related party receivables			-				(6,974	)
Accounts Payable			16,111				(68,648	)
Payroll, employee benefits, severance			9,869				(68,893	)
Short term overdraft			-				(33	)
Due to related parties			26,388				(1,258,478	)
Taxes payable			(453	)			(22,261	)
Retirement Benefit			3,120				(4,421	)
Lease liability			(2,964	)			-
Accruals and other payables			15,060				31,938
Net cash provided by operating activities		$	(3,497	)		$	(603,324	)
Investing activities:
Acquisition of property and equipment			(798	)			-
Sale proceeds of disposal of Property and Equipment			81				-
Intangible assets			-				(200,000	)
Development cost transferred			-				114,436
Goodwill			-				(104,420	)
Non controlling interest			(3	)			111,298
Net cash used in investing activities		$	(720	)		$	(78,686	)
Financing activities:
Proceeds from issuance of common Stock			-				2,919
Additional paid in capital			-				22,081
Net cash provided by financing activities		$	-			$	25,000
Effect of exchange rate changes on cash			(2,511	)			646,359
Net decrease in cash		$	(6,728	)		$	(10,651	)
Cash, beginning of period			18,712				23,613
Cash, end of period		$	11,984			$	12,962
Supplemental disclosure of cash flow information:
Cash paid for interest		$	628			$	27,977
Cash paid for income taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Common shares issued for services		$	-			$	-
Amortization of Operating Lease		$	2,087			$	-

 

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

 

 

Duo World, Inc. and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Deficit

 

		Shares				Amount				Shares				Amount				Capital				Deficit				Income				Interest				Deficit
		Common Share Capital								Preferred Share Capital								Additional Paid-in				Accumulated				Other Comprehensive				Non Controlling				Total Shareholder’s
		Shares				Amount				Shares				Amount				Capital				Deficit				Income				Interest				Deficit
March 31, 2022			74,109,896				74,110				5,000,000				5,000				12,190,746				(16,375,232	)			1,245,916				-				(2,859,460	)
Stock issued			14,265,942				14,266				-				-				102,734				-				-				-				117,000
Net profit			-				-				-				-				-				667,005				-				-				667,005
Other comprehensive income			-				-				-				-				-				-				147,624				-				147,624
Non controlling interest			-				-				-				-				-				-				-				105,168				105,168
March 31, 2023			88,375,838				88,376				5,000,000				5,000				12,293,480				(15,708,227	)			1,393,540				105,168				(1,822,663	)
Net profit			-				-				-				-				-				(30,133	)			-				-				(30,133	)
Other comprehensive income			-				-				-				-				-				-				(91,384	)			-				(91,384	)
Non controlling interest			-				-				-				-				-				-				-				(136	)			(136	)
June 30, 2023			88,375,838				88,376				5,000,000				5,000				12,293,480				(15,738,360	)			1,302,156				105,032				(1,944,317	)
Balance			88,375,838				88,376				5,000,000				5,000				12,293,480				(15,738,360	)			1,302,156				105,032				(1,944,317	)
Net profit			-				-				-				-				-				(30,600	)			-				-				(30,600	)
Other comprehensive income			-				-				-				-				-				-				87,073				-				87,073
Non controlling interest			-				-				-				-				-				-				-				133				133
September 30, 2023			88,375,838				88,376				5,000,000				5,000				12,293,480				(15,768,960	)			1,389,229				105,165				(1,887,710	)
Balance			88,375,838				88,376				5,000,000				5,000				12,293,480				(15,768,960	)			1,389,229				105,165				(1,887,710	)

 

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

 

 

Duo World Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2023 and 2022

 

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 05, 2007 in the Republic of Singapore as a limited liability company. Dial Desk (Pte) Limited (hereinafter referred to as “DDPL” or “Predecessor”), a Singapore based company, was incorporated on September 22, 2022 in the Republic of Singapore as a limited liability company.

 

On December 03, 2014, Duo Software (Pvt.) Limited (DSSL) and Duo Software Pte. Limited (DSS) executed a reverse recapitalization with Duo World Inc. (Duo). See Note 4, and on September 30, 2022 Duo acquired its 80% own subsidiary Dial Desk (Pte) Limited. Duo (Successor) is a holding company that conducts operations through its wholly owned subsidiaries DSSL and DSS (Predecessors) and 80% own subsidiary DDPL in Sri Lanka and Singapore. 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 (“Facetone”, Dial Desk and “SmoothFlow”) provide solutions in the space of Customer Life Cycle Management 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 profit/ (loss) of $(60,733) and $757,189 for the six months ended September 30, 2023 and 2022, respectively; net cash provided by operations of $(3,497) and $(603,324) for the six months ended September 30, 2023 and 2022, respectively; working capital deficit of $1,683,499 and $1,630,547 as of September 30, 2023 and March 31, 2023, respectively; outstanding statutory dues towards employee provident fund and employee trust fund of $223,325 and $220,790, as of September 30, 2023 and March 31, 2023, respectively; and a stockholders´ deficit of $1,887,710 and $1,822,663 as of September 30, 2023 and March 31, 2023, respectively.

 

The Company has launched its new cloud-based product Dial Desk and expecting revenue from the new product. Further, the Company was able to reduce its Cost of Sales and operating cost in the current quarter. Considering these trends, the management is confident that the Company shall generate sufficient profits to offset the operating losses in the recent future.

 

F-7

 

 

Note 3 - Summary of Significant Accounting Policies

 

Basis of Consolidation

 

The accompanying consolidated Financial Statements include the accounts and transactions of DSSL, DSS and Duo (Successor). Duo World Inc. is the parent company of its 100% subsidiaries Duo Software (Pvt.) Limited (DSSL), Duo Software Pte. Limited (DSS) and 80% subsidiary of Dial Desk Pte. Limited. 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:

 

F-8

 

 Schedule of Provision for Doubtful Debts Based on Period Outstanding

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, 2023, and March 31, 2023, 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:

 Schedule of Estimated Useful Lives of Fixed Assets

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.

 

F-9

 

 

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.

 

F-10

 

 

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, 2023 and 2022, the Company received only cash as consideration for sale of licenses and related services rendered.

 

For the six months ended September 30, 2023 and 2022, the Company had following concentrations of revenues with customers:

 Schedule of Concentrations of Risk

Customer		September 30, 2023				September 30, 2022
A			10.26	%			27.70	%
B			14.26	%			23.70	%
C			20.01	%			24.30	%
D			7.64	%			14.35	%
E			0.00	%			6.29	%
F			41.06	%			0.00	%
Other misc. customers			6.77	%			3.66	%
			100.00	%			100.00	%

 

F-11

 

 

For the six months ended September 30, 2023 and 2022, the company had following sales by products:

 Schedule of Sales by Products

Product		September 30, 2023				September 30, 2022
Facetone		$	43,220			$	19,805
Software hosting and reselling			6,345				5,150
		$	49,565			$	24,955

 

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 a period of service.

 

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 Note- 6 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, 2023 and March 31, 2023 the Company recognized deferred revenue $7,642 and $1,343, 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, 2023 and March 31, 2023, unbilled /accrued revenues were $4,624 and $774, respectively.

 

The Company had no contract liabilities and assets recognized for cost to fulfill a requirement of a customer as at September 30, 2023.

 

F-12

 

 

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, 2023, no product research and development cost was 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, 2023 and 2022.

 

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, 2023, includes only foreign currency conversion gains (losses), and is presented in the Company’s consolidated statements of comprehensive income.

 

F-13

 

 

Changes in Accumulated Other Comprehensive Income (Loss) by Component during the periods ending on September 30, 2023 and March 31, 2023 were as follows:

 Schedule of Accumulated Other Comprehensive Income (Loss)

Foreign Currency Translation gains (losses)
Balance, March 31, 2023		$	1,393,540
Translation rate gain (loss)			(91,384	)
Balance, June 30, 2023		$	1,302,156
Translation rate gain (loss)			87,073
Balance, September 30, 2023		$	1,389,229

 

Leases

 

Lessor

 

There are no significant changes in recognizing the Lessor under ASC 842 compared to the previous model. Changes were made to the accounting guidance of lessor and lessee, and the key aspects of the introduced model is to align the recognition criteria with new revenue recognition standard ASC 606. Under the new guidance, contract consideration is allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, non-lease components of the contract will be accounted under ASC Topic 606, Revenue from Contracts with Customers, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component. The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component. To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease. If these criteria’s are met, the single component can be accounted either ASC 842 or ASC 606, depending on the predominant component(s). The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

 

As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor’s practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases.

 

For the leases that are accounted as operating leases, income is recognized on a straight-line basis over the term of the lease contract. Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company has to stops recognizing leasing income on that date. Payments received from leases in nonaccrual status generally reduce the lease receivable. Leases on nonaccrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full.

 

Lessee

 

The Company adopted ASU 2016-02 effective April 1, 2019 using the modified retrospective approach. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In connection with the adoption, the Company will elect to utilize the modified retrospective presentation whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, the Company will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, the Company will adopt a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets.

 

F-14

 

 

The Company categorizes leases at their inception as either operating or capital leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without considering the deferred payment terms, such as rent holidays, that defer the commencement date of required payments.

 

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 – Acquisition of Dial Desk (Pte) Limited

 

Duo (Successor) acquired DDPL (Predecessors) on September 30, 2022, and the Company owns 80% of control over DDPL, 55% directly under the share purchase agreement signed on September 30, 2022 and 25% through Muhunthan Canagasooryam, Director and shareholder of Duo.

 

Purchase consideration of 20 % was paid – off by transferring the product cost CRM knowledge of ‘Facetone’, staff effort and knowledge transfer valued for USD Two Hundred Thousand ($ 200,000/), and the balance 35% will be paid by Duo to DDPL upon completion of the following milestones as agreed by both parties.

 

	1.	$65,000 Within 3 months of marketing visibility.
	2.	$75,000 Within 3 months of reaching 75 paid user licenses.
	3.	$85,000 Within 3 months of reaching 150 paid user licenses.
	4.	$125,000 Within 45 days of break-even.

 

F-15

 

 

Note 6 – Accounts Receivable

 

Following is a summary of accounts receivable as at September 30, 2023 and March 31, 2023:

 Schedule of Accounts Receivables

		September 30, 2023				March 31, 2023
Accounts receivable – Trade		$	34,895			$	29,224
Less: Provision for doubtful debts			(18,676	)			(27,541	)
Accounts receivable net		$	16,219			$	1,683

 

As at September 30, 2023 and March 31, 2023, the Company had following concentrations of accounts receivables with customers:

 Schedule of Concentrations of Risk

Customer		September 30, 2023				March 31, 2023
A			3.53	%			39.51	%
B			25.67	%			43.51	%
C			19.76	%			0.00	%
D			0.00	%			16.98	%
E			2.61	%			0.00	%
F			48.43	%			0.00	%
Concentration of risk percentage			100.00	%			100.00	%

 

Note 7– Prepaid Expenses and Other Current Assets

 

Following is a summary of prepaid expenses and other current assets as at September 30, 2023 and March 31, 2023:

 Schedule of Prepaid Expenses and Other Current Assets

		September 30, 2023				March 31, 2023
Dial Desk (Pvt) Ltd		$	58,282			$	57,475
Security deposits			9,221				9,361
David E. Wise IOLTA account			2,781				4,780
Prepayments			5,880				1,865
Other receivables			77				423
Prepaid Expenses and Other Current Assets		$	76,241			$	73,904

 

F-16

 

 

Note 8– Property and Equipment

 

Following table illustrates net book value of property and equipment as at September 30, 2023 and March 31, 2023:

 Schedule of Property and Equipment

		September 30, 2023				March 31, 2023
Office equipment		$	992			$	992
Furniture & fittings			66,550				66,547
Computer equipment (data processing equipment)			57,702				57,143
Improvements to lease hold assets			5,254				5,254
Website development			20,093				20,092
Gross fixed assets			150,591				150,028
Accumulated depreciation and amortization			(141,919	)			(139,483	)
Net fixed assets		$	8,672			$	10,545

 

Depreciation and amortization expense for the six months ended September 30, 2023 and 2022 was $6,773 and $1,486, respectively.

 

Note 9 – 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, 2023 and March 31, 2023:

Schedule of Intangible Assets 

		September 30, 2023				March 31, 2023
Opening balance		$	242,627			$	251,439
Add: Costs capitalized during the period			-				200,000
Less: Amortization							(23,843	)
Cost transferred			-				(114,436	)
Cost Written off			-				(39,803	)
Translational gain/ (loss)			(5,984	)			(30,730	)
Net Intangible Assets		$	236,643			$	242,627

 

Note 10 – Accounts Payable

 

Following is a summary of accounts payable as at September 30, 2023 and March 31, 2023:

Schedule of Accounts Payable 

		September 30, 2023				March 31, 2023
Accounts payable- employees		$	244,767			$	219,346
Supplier payable			78,390				87,369
Canagey Capital (Pvt) Ltd			40,399				40,397
Other supplier payable			38,104				38,101
EPSI Computers (Pvt) Ltd			18,375				18,374
Due to Guha Takurta			11,841				12,179
Accounts payable		$	431,876			$	415,766

 

F-17

 

 

Note 11 – 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, 2023, and March 31, 2023, the Company owed directors $627,072 and $600,711, 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, 2023, and March 31, 2023, the Company owed directors $534,579 and $534,552, respectively.

 

Note 12 – Taxes Payables

 

Taxes payable comprised of items listed below as at September 31, 2023 and March 31, 2023:

Schedule of Taxes Payables 

		September 30, 2023				March 31, 2023
PAYE		$	97,920			$	98,967
ESC Payable			4,927				4,927
WHT payable			2,782				2,188
Stamp duty payable			3				3
Taxes payable		$	105,632			$	106,085

 

Note 13 – Accruals and Other Payables

 

Following is a summary of accruals and other payables as at September 30, 2023 and March 31, 2023:

Schedule of Accruals and Others Payables 

		September 30, 2023				March 31, 2023
Accruals		$	81,497			$	76,331
Other payables			17,000				17,000
Accrued interest			9,910				9,910
Audit fee payable			7,209				3,614
Accruals and other payables		$	115,616			$	106,855

 

F-18

 

 

Note 14 – Cost of Revenue

 

Following is the summary of cost of revenue for the six months ending September 30, 2023 and 2022:

Summary of Cost of Revenue 

		September 30, 2023				September 30, 2022
Purchases/ hosted servers		$	5,555			$	361
Support services			4,223				2,754
Software QA Services			310				-
Product development cost written off			-				15,801
Other external services			414				72
Cost of revenue		$	10,502			$	18,988

 

Note 15 – General and Administrative Expenses

 

Following is the summary of general and administrative expenses for the six months ending September 30, 2023 and 2022:

Summary of General and Administrative Expenses 

		September 30, 2023				September 30, 2022
Consulting fee		$	22,396			$	31,438
Other professional services			9,550				5,771
Legal fees			9,000				9,000
Audit fee			5,855				5,147
Gratuity			3,171				467
OTC market fee			3,000				3,000
Project management services			2,790				-
Transfer agent fees			1,850				900
Software rentals			1,562				470
Electricity charges			1,364				387
Office maintenance			1,313				573
Internet charges			1,288				873
Secretarial fees			1,193				549
Office rent			810				3,119
Telephone charges			771				768
Staff welfare			597				487
Professional fees			409				396
Computer maintenance			261				220
Printing and stationery			70				424
Stamp duty expenses			56				36
Filling fee and subscription			44				974
Penalties/ late payment charges			-				15
Other expenses			342				332
General and administrative expense		$	67,692			$	65,346

 

F-19

 

 

Note 16 – Selling and Distribution Expenses

 

The selling and distribution expenses for the six months ending September 30, 2023 and 2022 were $2,851 and $131, respectively.

 

Note 17 - Equity

 

(A) Common Stock

 

As at September 30, 2023, 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.