| Summary of Significant Accounting Policies | Note 3 - Summary of Significant
Accounting Policies Basis of Consolidation The accompanying consolidated Financial
Statements include the accounts and transactions of DSSL and DSS (Predecessors) and Duo (Successor). Duo World Inc. is the parent
company of its 100% subsidiaries Duo Software (Pvt.) Limited (DSSL) and Duo Software Pte. Limited (DSS). Duo Software Pte. Limited
is the parent company of its 100% subsidiary Duo Software India (Private) Limited (India). All significant inter-company accounts
and transactions have been eliminated in consolidation. Use of Estimates and Assumptions
The preparation of consolidated financial
statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period. Making estimates and assumptions
requires management to exercise significant judgment. It is least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate could change in the near term due to one or more future non-confirming events. Accordingly, the actual results could
differ from those estimates and assumptions. The most significant estimates relate to the timing and amounts of revenue recognition,
the recognition and disclosure of contingent liabilities and the collectability of accounts receivable. Risks and Uncertainties The Company’s operations are subject
to significant risk and uncertainties including financial, operational, competition and potential risk of business failure. Product
revenues are concentrated in the application software industry, which is highly competitive and rapidly changing. Significant technological
changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies
could adversely affect operating results. Concentrations of Credit Risk Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts
receivable. The Company maintains cash and cash equivalents with various high quality financial institutions and we monitor the
credit ratings of those institutions. The Company’s sales are primarily to the companies located in Sri Lanka, Singapore
Indonesia and India. The Company performs ongoing credit evaluations of our customers, and the risk with respect to trade receivables
is further mitigated by the diversity, both by geography and by industry, of the customer base. Accounts receivable are due principally
from the companies understated contract terms. Provisions A provision is recognized when the company
has present obligations because of past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligations and reliable estimate can be made of amount of the obligation. Provisions are not discounted
at their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These
estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Accounts Receivable and Provision
for Doubtful Accounts The Company recognizes accounts receivable
in connection with the products sold and services provided and have strong policies and procedures for the collection receivables
from its clients. However, there are inevitably occasions when the receivables due to the Company cannot be collected and, therefore,
have to be written off as bad debts. While the debt collection process is being pursued, an assessment is made of the likelihood
of the receivable being collectable. A provision is therefore, made against the outstanding receivable to reflect that component
that may not become collectable. The Company is in the practice of provisioning for doubtful debts based on the period outstanding
as per the following:
Trade receivables outstanding: Provision
Over 24 months 100 %
Over 18 months 50 %
Over 15 months 25 %
Over 12 months 10 %
Over 9 months 5 % Cash
Equivalents The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2017 and 2016, 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 For the financial
year ending March 31, 2016, the useful life of Computer Equipment and Website development were assumed to be 5 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. Revenue Recognition, Deferred
& Accrued Revenue The Company recognizes revenue from
the sale of software licenses and related services in accordance with ASC Topic 605, Revenue Recognition. ASC Topic 605 sets forth
guidance as to when revenue is realized or realizable and earned, which is generally, when all of the following criteria are met:
● Persuasive evidence of an arrangement exists. Evidence of an arrangement generally consists of a contract or purchase order signed by the customer.
● Delivery has occurred or services have been performed. Services are considered delivered as the work is performed or, in the case of maintenance, over the contractual service period. The Company uses written evidence of customer acceptance to verify delivery or completion of any performance terms.
● The seller’s price to the buyer is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.
● Collectability is reasonably assured. The Company assesses collectability primarily based on the creditworthiness of the customer as determined by credit checks and related analysis, as well as the Customer’s payment history, economic conditions in the customer’s industry and geographic location and general economic conditions. If we do not consider collection of a fee to be probable, we defer the revenue until the fees are collected, provided all other conditions for revenue recognition have been met. 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 three products from which it generates its
revenue they are “Duo Contact”, “Duo Subscribe” and “Facetone”. In the case of “Duo Contact”,
Duo offers license to use software to its clients under an agreement. Invoices are raised monthly over the term of agreement. Then
it recognizes revenue monthly over the term of the underlying arrangement. In the case of “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. Then it recognizes revenue on the basis
of stage of completion basis. 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. Maintenance fees
are bundled with license fees in the initial licensing period and charged separately for renewals of annual maintenance in subsequent
years. 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 years ended March 31, 2017 and
2016, the Company received only cash as consideration for sale of licenses and related services rendered. For the years ended March 31, 2017 and
2016, the Company had following concentrations of revenues with customers:
Customer March 31, 2017 March 31, 2016
Megamedia 35.72 % 32.96 %
DEN Networks 33.74 % 27.12 %
Hutchison 7.45 % 14.36 %
Topas TV 7.23 % 2.08 %
Mediatama 2.95 % 5.83 %
Sri Lanka Telecom 1.50 % 0.55 %
Dish Media 0.60 % 6.24 %
HelloCorp 2.22 % 3.63 %
Bank of Ceylon 1.64 % 0.00 %
Other Misc. customers 6.95 % 7.23 %
100.00 % 100.00 % For the years ended March 31, 2017 and
2016, the company had following sales by products:
Product 31-Mar-17 31-Mar-16
Duo Subscriber $ 928,905 $ 1,122,959
Duo Contact 159,393 260,573
Software hosting and reselling 16,771 10,640
Facetone 11,255 -
$ 1,116,324 $ 1,394,172 Deferred Revenue - Accrued Revenue/Unbilled Accounts
Receivable - 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 years ending on March 31,
2017 and 2016, product research and development cost of $365,216 and $276,197, respectively, were capitalized as “Intangible
assets”. Advertising Costs The Company expenses advertising costs
as incurred. No advertising expenses were incurred during the years ended March 31, 2017 and 2016. 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, 2017, 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 years ending on March 31, 2017 and 2016 were as follows:
Foreign Currency Translation gains (losses)
Balance, March 31, 2015 $ 84,309
Translation rate gain (loss) (7,480 )
Balance, March 31, 2016 76,829
Translation rate gain (loss) 35,932
Balance, March 31, 2017 $ 112,761 Recent Accounting Pronouncements The Company has reviewed accounting
pronouncements that were issued as of March 31, 2017 and believes that these pronouncements are not applicable to the Company,
or that they will not have a material impact on the Company’s financial position or results of operations. |
