An
investment in our Common Stock involves a high degree of risk. Prospective investors should carefully consider the following risk factors
and the other information in this Annual Report and in our other filings with the SEC before investing in our Common Stock. Our business
and results of operations could be seriously harmed by any of the following risks. You should carefully consider the risks described
below, the other information in this Annual Report and the documents incorporated by reference herein when evaluating our Company and
our business. If any of the following risks actually occurs, our business could be harmed. In such case, the trading price of our Common
Stock could decline and investors could lose all or a part of the money paid for our Common Stock.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL CONDITION
AND RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.
Risks
Related to our Business and Industry
The
markets in which we operate include a large number of service providers and are highly competitive.
We
face intense competition on all aspects of our business. The nature of the IT industry creates a competitive landscape that is constantly
evolving as firms emerge, expand or are acquired, as technology evolves and as delivery models change. Many of our competitors are expanding
the services they offer in an attempt to gain additional business. In addition, new competitors, alliances among competitors or competitors’
mergers could result in significant market share gain by such competitors. Some of our competitors may have or develop a lower cost structure,
adopt more aggressive pricing policies or provide services that gain greater market acceptance than the services that we offer or develop.
Large and well-capitalized competitors may be able to better respond to the need for technological changes faster, price their services
more aggressively, compete for skilled professionals, finance acquisitions, fund internal growth and compete for market share. We could
lose customers if our competitors introduce new competitive products, add new functionality, acquire competitive products, reduce prices,
better execute on their sales and marketing strategies or form strategic alliances with other companies.
We
may need to change our pricing models to compete successfully.
The
intense competition we face in the sales of our products and services and general economic and business conditions can put pressure on
us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace
considers more valuable, we may need to lower prices or offer other favorable terms in order to compete successfully. Any such changes
may reduce margins and could adversely affect operating results. Our clients routinely negotiate for better pricing, and in order to
respond to increased competition and pricing pressure, we may be required to lower our pricing structure, which would have an adverse
effect on our revenues and profit margin.
Our
ability to achieve significant revenue will depend on our ability to establish effective sales and marketing capabilities.
Our
success is dependent upon our ability to effectively and profitably market and sell our services. If we fail to establish sufficient
marketing and sales forces, our ability to enter new or existing markets will be impaired. Our inability to effectively enter these markets
would materially and adversely affect our ability to generate significant revenues.
We
may not receive significant revenues from our current research and development efforts for several years, if at all.
Developing
cloud and software offerings is expensive and the investment in the development of these offerings often involves a long return on investment
cycle. An important element of our corporate strategy is to continue to make significant investments in research and development and
related product and service opportunities both through internal investments and the acquisition of intellectual property from companies
that we have acquired. Accelerated product and service introductions and short software life cycles require high levels of expenditures
for research and development that could adversely affect our operating results if not offset by revenue increases. We believe that we
must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position.
However, we may not receive significant revenues from these investments for several years, if at all.
If
we are unable to hire or retain qualified personnel in certain areas of our business, then our ability to execute our business plans
in those areas could be impaired and revenues could decrease.
We
employ approximately 20 permanent employees worldwide, and outsource all of the non-core activities and tasks to third party or contract
employees. At times, we have experienced difficulties in hiring personnel with the desired levels of training and experience. In the
technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and
other personnel. Since wages in India and Sri Lanka continue to increase at a faster rate than in the United States, we may also experience
increased compensation costs that are not offset by either improved productivity or higher sales. We may not be successful in recruiting
new personnel and in retaining and motivating existing personnel. We have been outsourcing certain non-core activities to third party
suppliers. Additionally, quality service depends on our ability to retain employees and control personnel turnover. Any increase in the
employee turnover rate could increase recruiting and training costs and could decrease operating effectiveness and productivity. We may
not be able to continue to hire, train and retain a significant number of qualified personnel to adequately staff new client projects
or expand existing ones.
We
depend heavily on our management team and the loss of any of our executive officers or key members of our management team could significantly
weaken our management expertise and our ability to run our business.
Our
business strategy and success is dependent on the skills and knowledge of our management team and consultants. As of the date of this
Memorandum, Muhunthan Canagasooryam is our President and Chief Executive Officer, Suzannah Jennifer Samuel Perera is our Chief Financial
Officer and Riad Ameen is our Legal Director. The loss of services of Muhunthan Canagasooryam, Suzannah Jennifer Samuel Perera, Riad
Ameen or any member of our management team, including Anjana Chandrathilaka, Ajeewan Arumugam and Sudarshini Rajaratnam could weaken
significantly our management expertise and our ability to efficiently run our business. We do not maintain key man life insurance policies
on any of our officers.
A
large portion of our revenue is generated from a limited number of clients, and the loss of significant work from one or more of our
clients could adversely affect our business.
Our three largest clients, Den
Networks, LOLC and DFCC, collectively represented 85% of our revenues for the year ended March 31, 2021 and our three largest
clients, Den Networks, LOLC, and DFCC represented 92% of our revenues for the fiscal year ended March 31, 2020.
While we typically have multiple work orders and/or contracts with our largest customers, which would not all terminate at the same time,
the loss of one or more of the larger work orders or contracts with one of our largest customers could adversely affect our business,
results of operations and financial condition, if the lost revenues were not replaced with profitable revenues from that client or other
clients.
We
process, transmit and store personally identifiable information and unauthorized access to, or the unintended release of, this information
could result in a claim for damages or loss of business and create unfavorable publicity.
We
process, transmit and store personally identifiable information, both in our role as a service provider and as an employer. This information
may include social security numbers or other foreign tax identification numbers, financial and health information, as well as personal
information. As a result, we are subject to certain contractual terms, as well as federal, state and foreign laws and regulations designed
to protect personally identifiable information. While we take measures to protect the security and privacy of this information and to
prevent unauthorized access, it is possible that our security controls over personal data and other practices we follow may not prevent
the improper access to or disclosure of personally identifiable information. If any person, including any of our employees, negligently
disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that
data, we could be subject to monetary damages, fines and/or criminal prosecution.
We
could suffer significant damage to our brand and reputation if:
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a
cyber-attack or other security incident were to allow unauthorized access to or modification of our customers’ or other external
data, our employees’ data or our own data and IT systems;
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the
services we provide to our customers were disrupted; or
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our
products or services were perceived as having security vulnerabilities.
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Customers
could lose confidence in the security and reliability of our products and services, including our cloud offerings, and perceive them
to not be secure. This could lead to fewer customers using our products and services and result in reduced revenue and earnings. The
costs we would incur to address and fix these security incidents would increase our expenses. These types of security incidents could
also lead to lawsuits, regulatory investigations and claims and increased legal liability, including, in some cases contractual costs
related to customer notification and fraud monitoring.
Interruption
of our data centers and contact centers could have a materially adverse effect on our business.
In
the event that we experience a temporary or permanent interruption at one or more of our data centers, contact centers or to cloud storage
where we also store data and codes, through natural disaster, casualty, operating malfunction, cyber-attack, sabotage or other causes,
we may be unable to provide the data services we are contractually obligated to deliver. This could result in us being required to pay
contractual damages to some clients or to allow some clients to terminate or renegotiate their contracts. Notwithstanding disaster recovery
and business continuity plans and precautions instituted to protect our clients and us from events that could interrupt delivery of services
(including property and business interruption insurance that we may maintain or procure in the future), there is no guarantee that such
interruptions would not result in a prolonged interruption in our ability to provide support services to our clients or that such precautions
would adequately compensate us for any losses we may incur as a result of such interruptions.
Our
ability to deliver our services is at risk if the technology and network equipment we rely upon is not maintained or upgraded on a timely
basis.
Technology
is a critical foundation in our service delivery. We utilize and deploy internally developed and third party software solutions across
various hardware environments. We operate an extensive internal voice and data network that links our global sites together in a multi-hub
model that enables the rerouting of traffic. Also, we rely on multiple public communication channels for connectivity to our clients.
Our clients are highly dependent upon the high availability and uncompromised security of our systems. These systems are subject to risk
of an extended interruption or outage due to many factors, such as system failures, acts of nature and intentional unauthorized attacks
from third parties. Accordingly, maintenance of, and investment in, these foundational components are critical to our success. If the
reliability of our technology or network operations falls below required service levels, or a systemic fault affects the organization
broadly, we may be obligated to pay performance penalties to our clients, and our business from existing and potential clients may be
jeopardized and cause our revenue and cash flow to decrease.
Our
business performance and growth plans may be negatively affected if we are unable to effectively anticipate and respond to developments
in the application and use of our technology.
The
use of technology in our industry has and will continue to rapidly increase. Our future success depends, in part, upon our ability to
develop and implement technology solutions that anticipate and keep pace with continuing changes in technology, industry standards and
client preferences. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis,
and our ideas may not be accepted in the marketplace. Additionally, the effort to gain technological expertise and develop new technologies
in our business requires us to incur significant expenses. If we cannot offer new technologies as quickly as our competitors or if our
competitors develop more cost-effective technologies, it could have a material adverse effect on our ability to obtain and complete customer
engagements. Also, if customer preferences for technology disproportionately outpace other interaction preferences, it could have a material
adverse impact on our revenue profile and growth plans.
Our
success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing
products and services.
Rapid
technological advances, changing delivery models and evolving standards in computer software development and communications infrastructure,
changing and increasingly sophisticated customer needs and frequent new product introductions and enhancements characterize the industries
in which we compete. If we are unable to develop new or sufficiently differentiated products and services, enhance and improve our product
offerings and support services in a timely manner or position and price our products and services to meet demand, customers may not purchase
or subscribe to our software or cloud offerings or renew software support or cloud subscriptions contracts. Renewals of these contracts
are important to the growth of our business. In addition, we cannot provide any assurance that the standards on which we choose to develop
new products will allow us to compete effectively for business opportunities in emerging areas.
We
have continued to refresh and release new offerings of software products and services, including Facetone and Smooth Flow. Our business
may be adversely affected if:
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we
do not continue to develop and release these or other new or enhanced products and services within the anticipated time frames;
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there
is a delay in market acceptance of new, enhanced or acquired product lines or services;
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there
are changes in information technology (“IT”) trends that we do not adequately anticipate or address with our product
development efforts;
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we
do not timely optimize complementary product lines and services; or
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we
fail to adequately integrate, support or enhance acquired product lines or services.
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Our
success depends upon our ability to sell products and services in new, international markets.
We
derive the majority of our sales from customers based within Sri Lanka and the surrounding region. A material portion of our planned,
future growth is dependent on our ability to sell products and services to customers based outside the geographical area of our existing
sales. We have limited experience selling in many or all of the international markets we have targeted as part of our business plan.
If we fail to sell in new, international markets there can be no assurance of our ability to continue as a going concern.
Defects
or errors with our software could adversely affect our business.
Design
defects or software errors may delay software introductions or reduce the satisfaction level of clients and may have a materially adverse
effect on our business and results of operations. Our software is highly complex and may, from time to time, contain design defects or
software errors that may be difficult, time consuming and costly to detect and/or correct. Because both our clients and we use our software
to perform critical business functions, design defects, software errors or other potential problems within or outside of our control
may arise from the use of our software. It may also result in financial or other damages to our clients, for which we may be held responsible.
Although our license and other agreements with our clients may often contain provisions designed to limit our exposure to potential claims
and liabilities arising from client problems, these provisions may not effectively protect us against such claims in all cases and in
all jurisdictions. Claims and liabilities arising from client problems could result in monetary damages to us and could cause damage
to our reputation, adversely affecting our business, results of operations and financial condition.
If
we do not effectively manage our contact center capacity, our results of operations could be adversely affected.
Our
ability to profit from the global trend toward outsourcing depends largely on how effectively we manage our contact center capacity.
In order to create the additional capacity necessary to accommodate new or expanded outsourcing projects, we may need to open new contact
centers. The opening or expansion of a contact center may result, at least in the short-term, in idle capacity until we fully implement
the new or expanded program. We may also experience short-term and/or long-term fluctuations in client demand for services performed
in one or more of our contact centers. Short-term downward fluctuations may result in less than optimal site utilization for a period
of time. Longer-term downward fluctuations may result in site closures. As a result, we may not achieve or maintain targeted site utilization
levels, or site utilization levels may decrease over certain periods and our revenues and profitability may suffer.
We
do not have an independent audit or compensation committee, the absence of which could lead to conflicts of interest of our officers
and directors and work as a detriment to our shareholders.
We
do not have an independent audit or compensation committee. The absence of an independent audit and compensation committee could lead
to conflicts of interest of our officers and directors, which could work as a detriment to our shareholders.
If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which could harm our business
and the trading price of our Common Stock.
Effective
internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable
financial reports or prevent fraud, our brand and operating results could be harmed. We will strive to adopt and implement effective
internal controls and maintain the effectiveness of our internal controls in the future; however, we cannot guarantee that our internal
controls will be effective. As a result, current and potential shareholders could lose confidence in our financial reporting, which could
harm our business and the trading price of our Common Stock.
Our
compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation,
financial condition and operating results.
Our
ability to comply with applicable complex and changing laws and rules, including anti-corruption laws, is largely dependent on our establishment
and maintenance of compliance, surveillance, audit and reporting systems, as well as our ability to attract and retain qualified compliance
and other risk management personnel. While we have policies and procedures to identify, monitor and manage our risks, we cannot assure
that our policies and procedures will always be effective or that we will always be successful in monitoring or evaluating the risks
to which we are or may be exposed or detecting if our employees and agents are engaging in misconduct, fraud or other errors. In addition,
some of our risk management methods depend upon evaluation of information regarding markets, customers or other matters that are publicly
available or otherwise accessible by us. That information may not in all cases be accurate, complete, up-to-date or properly evaluated.
In case of non-compliance or alleged non-compliance with applicable laws or regulations by us or our employees or agents, we could be
subject to investigations and proceedings that may be very expensive to defend and may result in substantial penalties or civil lawsuits,
including by customers, for damages which can be significant. Any of these outcomes would adversely affect our reputation, financial
condition and operating results. Further, the implementation of new legislation or regulations, or changes in or unfavorable interpretations
of existing regulations by courts or regulatory bodies, could require us to incur significant compliance costs and impede our ability
to operate, expand and enhance our products and services as necessary to remain competitive and grow our business, which could materially
and adversely affect our business, financial condition and results of operations.
We
may not be able to predict our future tax liabilities. If we become subject to increased levels of taxation or if tax contingencies are
resolved adversely, our results of operations and financial condition could be adversely affected.
Due
to the international nature of our operations, we are subject to the complex and varying tax laws and rules of several foreign jurisdictions.
We may not be able to predict the amount of future tax liabilities to which we may become subject due to some of these complexities if
our positions are challenged by local tax authorities. Any increase in the amount of taxation incurred as a result of challenges to our
tax filing positions or due to legislative or regulatory changes could result in a material adverse effect on our business, results of
operations and financial condition. We are subject to tax audits, including issues related to transfer pricing, in the United States
and other jurisdictions. We have material tax-related contingent liabilities that are difficult to predict or quantify. While we believe
that our current tax provisions are reasonable and appropriate, we assure you that these items will be settled for the amounts accrued
or that additional exposures will not be identified in the future or that additional tax reserves will not be provided for any such exposure.
Our
intellectual property rights are valuable and any inability to protect them could reduce the value of our brand and our business.
Our
trade secrets, copyrights and our other intellectual property rights are important assets for us. We rely on copyright, trademark, patent
and trade secret laws, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights.
Despite our efforts, these protections may be limited and could be expensive and time consuming to enforce. Unauthorized third parties
may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any patents owned
by us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently
challenged, may not be issued with the scope of the claims we seek, if at all. In addition, the laws of some countries, including India
and Sri Lanka, do not provide the same level of protection of our intellectual property rights as do the laws and courts of the United
States. If we cannot protect our intellectual property rights against unauthorized copying or use, or other misappropriation, we may
not remain competitive. Any significant impairment of our intellectual property rights could harm our business or our ability to compete.
Third
parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would
be uncertain and could have a material adverse effect on the success of our business.
We
may have lawsuits filed against us by others claiming infringement or other misuse of their intellectual property rights and/or breach
of our agreements with them. These third parties include entities that do not have the capabilities to design, manufacture, or distribute
products or services or that acquire intellectual property like patents for the sole purpose of monetizing their acquired intellectual
property through asserting claims of infringement and misuse. Responding to any such claim, regardless of its validity, could:
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be
time consuming, costly and result in litigation;
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divert
management’s time and attention from developing our business;
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require
us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;
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require
us to stop selling or to redesign certain of our products;
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require
us to release source code to third parties, possibly under open source license terms;
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require
us to satisfy indemnification obligations to our customers; or
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otherwise
adversely affect our business, results of operations, financial condition or cash flows.
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In
addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if
securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our
Common Stock
Our
shareholders may be diluted significantly through our efforts to obtain financing, fund our operations and satisfy our obligations through
issuance of additional shares of our Common Stock.
We
have no committed source of financing. We will likely have to issue additional shares of our Common Stock to fund our operations and
to implement our plan of operation. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations.
Our board of directors has authority, without action or vote of the shareholders, to issue all or part of our authorized, but unissued,
shares of our Common Stock. Future issuances of shares of our Common Stock will result in dilution of the ownership interests of existing
shareholders, may further dilute Common Stock book value and that dilution may be material.
The
marketability and profitability of our services is subject to unknown economic, political and market conditions, which could adversely
impact our business, financial condition, the marketability of our services and our profitability.
Our
business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. These
include:
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general
economic and business conditions;
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overall
demand for enterprise cloud or software products and services;
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governmental
budgetary constraints or shifts in government spending priorities; and
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general
political developments.
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Any
general weakening of, and related declining corporate confidence in, the global economy or the curtailment of government or corporate
spending could cause current or potential customers to reduce or eliminate their IT budgets and spending, which could cause customers
to delay, decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for previously
purchased products and services.
In
addition, political unrest and the related potential impact on global stability, terrorist attacks and the potential for other hostilities
in various parts of the world, potential public health crises and natural disasters continue to contribute to a climate of economic and
political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and
profitability.
Our
international sales and operations subject us to additional risks that can adversely affect our operating results.
We
derive a substantial portion of our revenues from, and have significant operations, outside of the United States. Compliance with international
and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions.
These laws and regulations include U.S. laws and local laws which include data privacy requirements, labor relations laws, tax laws,
anti-competition regulations, anti-corruption laws, prohibitions on payments to governmental officials, import and trade restrictions
and export requirements. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers
or our employees, and prohibitions on the conduct of our business. Any such violations could result in prohibitions on our ability to
offer our products and services in one or more countries, could delay or prevent potential acquisitions and could also materially damage
our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business and our
operating results. Compliance with these laws requires a significant amount of management attention and effort, which may divert management’s
attention from running our business operations and could harm our ability to grow our business, or may increase our expenses as we engage
specialized or other additional resources to assist us with our compliance efforts. Our success depends, in part, on our ability to anticipate
these risks and manage these difficulties. We monitor our operations and investigate allegations of improprieties relating to transactions
and the way in which such transactions are recorded. Where circumstances warrant, we provide information and report our findings to government
authorities, but no assurance can be given that action will not be taken by such authorities.
We
are also subject to a variety of other risks and challenges in managing an organization operating in various countries, including those
related to:
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general
economic conditions in each country or region;
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fluctuations
in currency exchange rates and related impacts to customer demand and our operating results;
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regulatory
changes, including government austerity measures in certain countries that we may not be able to sufficiently plan for or avoid that
may unexpectedly impair bank deposits or other cash assets that we hold in these countries or that impose additional taxes that we
may be required to pay in these countries;
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political
unrest, corruption, terrorism and the potential for other hostilities;
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common
local business behaviors that are in direct conflict with our business ethics, practices and conduct policies;
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natural
disasters, including earthquakes, tsunamis, hurricanes and flooding;
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longer
payment cycles and difficulties in collecting accounts receivable;
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overlapping
tax regimes;
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our
ability to repatriate funds held by our foreign subsidiaries to the United States at favorable tax rates;
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public
health risks, particularly in areas in which we have significant operations;
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reduced
protection for intellectual property rights in some countries; and
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the
impact of the COVID-19 Coronavirus Global Pandemic on our business and customers.
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Among
other things, the variety of risks and challenges listed above could also disrupt or otherwise negatively impact the sales of our products
and services in affected countries or regions.
Regional
conflicts or terrorist attacks and other acts of violence or war in the United States, India, Sri Lanka, or other regions could adversely
affect financial markets, resulting in loss of client confidence and our ability to serve our clients which, in turn, could adversely
affect our business, results of operations and financial condition.
The
Asian region has from time to time experienced instances of civil unrest and hostilities among neighboring countries. Civil or political
unrest and military hostilities in Sri Lanka and other acts of violence or war, including those involving India, Sri Lanka, the United
States, or other countries, may adversely affect U.S. and worldwide financial markets. Prospective clients may wish to visit our facilities,
including our development centers in Sri Lanka, prior to reaching a decision on vendor selection. Terrorist threats, attacks and international
conflicts could make travel more difficult and cause potential clients to delay, postpone or cancel decisions to use our services.
In
addition, such attacks may have an adverse impact on our ability to operate effectively and may interrupt lines of communication and
restrict our offshore resources from traveling onsite to client locations, effectively curtailing our ability to deliver our services
to our clients. These obstacles may increase our expenses and negatively affect our operating results. In addition, military activity,
terrorist attacks, political tensions between India and Pakistan, political and military tensions between India and China, and, historically,
conflicts within Sri Lanka, despite the current cessation of hostilities, could create a greater perception that the acquisition of services
from companies with significant Indian or Sri Lankan operations involves a higher degree of risk that could adversely affect client confidence
in India or Sri Lanka as a software development center, each of which would have a material adverse effect on our business.
Fluctuations
in currency exchange rates could materially adversely affect our financial condition and results of operations.
Our
operations are primarily international and we earn our revenues and incur our expenses in multiple currencies. Doing business in different
foreign currencies exposes us to foreign currency risks, including risks related to revenues and receivables, compensation of personnel,
purchases and capital expenditures. The majority of our revenues are in U.S. dollars and Sri Lankan rupees. However, some of our expenses
are denominated in Singapore dollars, Indian rupees and other local currencies. To the extent that we increase our business and revenues
which are denominated in currencies other than U.S. dollars and Sri Lankan rupees, we will also increase our receivables denominated
in those other currencies and, therefore, also increase our exposure to fluctuations in their exchange rates against the U.S. dollar
(our reporting currency) or the Sri Lankan rupee. Similarly, any capital expenditures, such as for computer equipment, which are payable
in the local currencies of the countries in which we operate, but are imported to such countries, and any deposits we hold in local currencies,
can be materially affected by depreciation of the local currencies against the U.S. dollar or Sri Lankan rupee, and the effect of such
depreciation on the local economy. Certain foreign currency exposures, to some extent, are naturally offset on a consolidated basis.
However, if our international operations continue to grow, fluctuations in foreign currency exchange rates could materially impact our
results of operations and financial condition.
Because
our officers and directors reside outside of the United States, it may be difficult for an investor to enforce any right based on U.S.
federal or state securities laws against the Company and/or any of our officers or directors, or to enforce a judgment rendered by a
court in the United States against the Company or any of our officers or directors.
None
of our officers or directors is a resident of the United States. Therefore, it may be difficult for our U.S. shareholders to (i) enforce
any right or claim based on U.S. federal or state securities laws against the Company and/or any of our officers or directors, (ii) effect
service of process on any of our officers or directors in the United States or in foreign countries in which we maintain assets and/or
in which any of our officers or directors reside or may be found, (iii) enforce any judgment rendered by a court in the United States
against the Company or any of our officers or directors; or (iv) bring an original action in foreign courts such as India, Singapore
and Sri Lanka, where our assets, officers and directors are located, to enforce liabilities based on U.S. federal or state securities
laws against the Company or any of our officers or directors. As a result, it may be difficult or impossible for an investor to bring
an action against our officers or directors in the event that an investor believes that such investor’s rights have been infringed
upon under the federal or state securities laws of the United States or otherwise. Even if an investor is successful in bringing an action
of this kind, the courts of other countries may rule that the investor is unable to enforce a judgment against the assets of the Company
located outside the territorial limits of the United States or the assets of the officers or directors located outside the territorial
limits of the United States. As a result, our shareholders may have more difficulty in protecting their interests and investments in
the Company through actions against our management, directors or officers, compared to shareholders of a corporation doing business in,
and a corporation and its officers and directors maintaining assets in, and residing in the United States.
Any
U.S. or foreign judgment that may be obtained against us may be difficult or impossible to enforce in the United States, India, Singapore
or Sri Lanka.
Although
we are a Nevada corporation, subject to suit in the United States and other courts in the United States, most of our assets are located
in India, Singapore and Sri Lanka and our officers and directors and their assets are located outside the United States. Judgments obtained
in the United States or in other foreign courts, including those with respect to U.S. federal or state securities laws claims, may not
be enforceable in India, Singapore, Sri Lanka or any other country in which we or our officers or directors maintain assets. Therefore,
it may be difficult or impossible to enforce any U.S. or other foreign judgment obtained against us or our officers or directors or any
of our operating subsidiaries in India, Singapore, Sri Lanka or any other country in which we maintain assets.
We
are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies could make our Common
Stock less attractive to investors.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act. Pursuant to that law, emerging growth
companies can delay adopting new or revised financial accounting standards until such time as those standards apply to private companies.
However, we have irrevocably elected not to avail ourselves of this extended transition period and, therefore, we will be subject to
the same new or revised accounting standards as other public companies that are not emerging growth companies.
For
as long as we continue to be an emerging growth company, we may also take advantage of other exemptions from certain reporting requirements
that are applicable to other public companies, including not being required to comply with the auditor attestation requirements of Section
404(b) of the Sarbanes-Oxley Act, exemption from any rules that may be adopted by the Public Company Accounting Oversight Board requiring
mandatory audit firm rotations or a supplement to the auditor’s report on financial statements, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved, and reduced
financial reporting requirements. Investors may find our Common Stock less attractive if we rely on these exemptions, which could result
in a less active market for our Common Stock, increased price fluctuations and a decrease in the trading price of our Common Stock.
Risks
Related to an Investment in our Securities
Because
one of our shareholders owns a majority of the shares of our Common Stock and 5,000,000 shares of our Series “A” Preferred
Stock, he will be able to exert significant influence over our corporate decisions that may be disadvantageous to our minority shareholders.
Our
President and Chief Executive Officer, Muhunthan Canagasooryam, currently owns a majority of the shares of our Common Stock and 5,000,000
shares of our Series “A” Preferred Stock, which allows him to cast controlling votes on any and all matters submitted to
our shareholders for a vote. As a result of his ownership position, Mr. Canagasooryam will be able to elect all of our directors and
control the vote on any matter brought before a meeting of our shareholders. The interests of Mr. Canagasooryam may differ from the interests
of our minority shareholders. Such control by Mr. Canagasooryam could be disadvantageous to our minority shareholders, who would have
little say in the election of our directors, any amendment of our certificate of incorporation or by-laws, any acquisition or merger
transaction in which we may become involved, and any other matter submitted to our shareholders for vote.
Our
compliance with changing laws and rules regarding corporate governance and public disclosure may result in additional expenses to us
which, in turn, may have an adverse effect on our operations.
Keeping
abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002, new SEC regulations and the rules of the OTCQB or any other automated quotation system or stock
exchange upon which our shares of Common Stock are listed will require an increased amount of management attention and external resources.
We intend to continue to invest all reasonably necessary resources to comply with evolving standards, which may result in increased general
and administrative expenses estimated to be between $60,000 and $75,000 per year and a diversion of management time and attention from
revenue-generating activities to compliance and disclosure activities. This could have an adverse impact on our operations.
Trading
in our securities could be subject to extreme price fluctuations that could adversely affect your investment.
Historically
speaking, the market prices for securities of small publicly traded companies have been highly volatile. Publicized events and announcements
may have a significant impact on the market price of our Common Stock.
In
addition, the stock market from time to time experiences extreme price and volume fluctuations that particularly affect the market prices
for small publicly traded companies and which are often unrelated to the operating performance of the affected companies.
Since
we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends
for the foreseeable future, and capital appreciation, if any, will be the source of gain for our shareholders.
We
have never declared or paid any cash dividends on our capital stock. We currently intend to retain our future earnings, if any, to support
our operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our Common Stock in the foreseeable
future. As a result, capital appreciation, if any, of our Common Stock will be the sole source of gain for our shareholders for the foreseeable
future.
We
may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required, beginning with our second Annual Report on Form 10-K to include
in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end of such fiscal
years.
In
addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended
from time to time, we may not be able to insure that we can conclude on an ongoing basis that we have effective internal controls over
financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those
related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial
fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information and the trading price of our Common Stock could drop significantly.
Our
amended articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability, which
may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefits
of officers and/or directors.
Our
articles of incorporation and applicable Nevada laws provide for the indemnification of our directors, officers, employees and agents
under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become
a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of
our directors, officers, employees or agents, upon such person’s written promise to repay us, therefore, even if it is ultimately
determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial
expenditures by us that we may be unable to recoup.
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public
policy and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities
laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense
of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered,
we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate
jurisdiction, the question of whether indemnification by us is against public policy as expressed by the SEC and will be governed by
the final adjudication of such issue. The legal process relating to this matter, if it were to occur, is likely to be very costly and
may result is us receiving negative publicity, either of which factors is likely to materially reduce the market price for our shares.
There
currently is a limited public trading market for our securities, and we cannot predict the future prices or the amount of liquidity of
our Common Stock.
Currently, there is a limited
public market for our Common Stock. Our Common Stock is quoted on the OTCPink, operated by the OTC Markets Group, Inc. under the
symbol “DUUO.” The OTCPink is not a liquid market in contrast to the major stock exchanges. The quotation of our Common
Stock on the OTCPink does not guarantee that a meaningful, consistent and liquid trading market exist or will develop.
If
an active market for our Common Stock does not develop, the fair market value of our Common Stock could be materially adversely affected.
We cannot predict the future prices of our Common Stock. Further, there can be no assurance that we will ever consummate a public offering
of any of our securities, list or trade our securities on a national exchange, or have sufficient funds available to redeem our securities
if desired. Accordingly, investors must bear the economic risk of an investment in the securities for an indefinite period of time. Even
if an active market develops for our securities, Rule 144 promulgated under the Securities Act, which provides for an exemption from
the registration requirements under the Securities Act under certain conditions, requires, among other conditions, for resales of securities
acquired in a non-public offering without having to satisfy such registration requirements, a six-month holding period following acquisition
of and payment in full for such securities assuming the issuer of such securities has filed periodic reports with the SEC under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), for a period of 90 days prior to the proposed sale. If the issuer
of such securities has not made such filings, such securities will be subject to a one year holding period before they can be resold
under Rule 144. There can be no assurance that we will fulfill any reporting requirements in the future under the Exchange Act or disseminate
to the public any current financial or other information concerning us, as is required by Rule 144 as part of the conditions of its availability.
Our
Common Stock may be subject to the penny stock rules which may make it more difficult to sell our Common Stock.
The
SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price, as
defined, less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities may
be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other
than established customers and accredited investors, such as institutions with assets in excess of $5,000,000 or an individual with net
worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions covered
by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s written
agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities
and also affect the ability of our shareholders to sell their shares in the secondary market.
FINRA
sales practice requirements may also limit a shareholder’s ability to buy and sell our Common Stock.
In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”) has
adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing
that the investment is suitable for that customer. Prior to recommending speculative, low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status,
investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that
speculative, low-priced securities will not be suitable for at least some customers. The FINRA requirements may make it more difficult
for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell our Common Stock
and have an adverse effect on the market for our shares of Common Stock.
There
are risks associated with forward-looking statements
This
Annual Report contains certain forward-looking statements regarding management’s plans and objectives for future operations including
plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated
risks set forth in this Annual Report include or relate to, among other things, (a) our projected sales and profitability, (b) our growth
strategies, (c) anticipated trends in our industry, (d) our ability to obtain and retain sufficient capital for future operations and
I our anticipated needs for working capital. These statements may be found under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Description of Business,” in this Annual Report, as well as in
this Annual Report, generally. Actual events or results may differ materially from those discussed in forward-looking statements as a
result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in
this Annual Report, generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements
contained in this Annual Report will, in fact, occur.
For
all of the foregoing reasons and other reasons set forth herein, an investment in our securities in any market that may develop in the
future will involve a high degree of risk.
CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains forward-looking statements. These statements relate to future events or future financial performance and involve
known and unknown risks, uncertainties and other factors that may cause Duo World’s or our industry’s actual results, levels
of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by the forward-looking statements.
In
some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual
events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking
statements after the date of this Annual Report to confirm our prior statements to actual results.
Further,
this Annual Report contains forward-looking statements that involve substantial risks and uncertainties. Such statements include, without
limitation, all statements as to expectation or belief and statements as to our future results of operations, the progress of any product
development, the need for, and timing of, additional capital and capital expenditures, partnering prospects, the protection of and the
need for additional intellectual property rights, effects of regulations, the need for additional facilities and potential market opportunities.