This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to, and should be read in conjunction with, our audited Consolidated Financial Statements and the accompanying notes included in this 2022 Form 10-K. Unless differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in this MD&A on a consolidated basis. Terms not defined in this MD&A have the meanings ascribed to them in the Consolidated Financial Statements. All dollars are reported in thousands, except per share and per unit amounts.





Organization

The Company was incorporated under the laws of the State of Nevada on April 26, 2007 under the name "Contact Minerals Corp.", and later changed its name to Weconnect Tech International, Inc. In November, 2021 the Company filed Articles of Amendment with the State of Nevada whereby it changed its name to "Motos America Inc."





Overview

The Company considers itself as a lifestyle company. The Company develops new open points, buys and operates BMW Motorcycle, Triumph Motorcycle and Ducati Motorcycle dealerships. It is the belief of the Company that these brands are not sold as practical transportation; instead, they are luxury items that buyers consume as part of a more extensive and exclusive lifestyle choice. The Company has acquired four dealerships and plans to acquire more existing dealerships and develop new "open point" dealerships.

The Company's business office is located at 3131 W 2210 So, Suite C Salt Lake City, Utah 84119.

Motos's powersports business primarily offers motorcycles comprised of 3 main brands: BMW motorcycles, Triumph Motorcycles and Ducati motorcycles. To a much lesser extent a few other brands of motorcycles, motor scooters, and other vehicles are offered at select locations.

Key Operating Metrics

We regularly review several Key Operating Metrics as pertains to our business across our dealership network. We budget for and benchmark to the revenue profiles and gross profit margins of each segment of our business. In aggregate, these business segments can be thought of in two broad categories: Sales and After Sales. Sales is typically considered to be inclusive of the sales of new and used motorcycles in addition to the Finance and Insurance (F&I) products sold along with them. After Sales is typically considered to be inclusive of all Service and Parts.





Revenue

The Revenue of our business is synonymous with the sales generated.

Within the Sales and After Sales categories, we have the four income streams discussed above. The Sales segment is typically viewed in the context of unit volume, while After Sales is viewed as being more independent of that volume. Each of these categories has more granular components which we monitor regularly. We discuss more in depth in the Gross Profit segment below.

Gross Profit

The Gross Profit of our business is the sales generated for a given segment less the cost for those sales.









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The Gross Profit profile for our dealerships can be thought of in two broad categories: Sales and After Sales. In turn, each of these categories has their own sub-components that we budget for and track independently. For sales, the components are new front-end gross, used front-end gross, and F&I gross. The front-end gross on a motorcycle is the difference between the retail price to the customer and the invoice cost to the dealership. All of these sales components are viewed in conjunction with new and used unit volume. For After Sales, the components are labor gross, and PAA gross. Both of these metrics are considered to be somewhat independent of the sales process and are therefore tracked separately.





Unit Count

As mentioned, the Sales category is highly correlated with unit volume. We view many metrics as a ratio of unit count as detailed below. Additionally it is often useful to view unit count in conjunction with other metrics such as OEM unit count, new and used unit count, etc.

Gross Profit per Unit

As mentioned, we believe the sales category is best suited to tracking in conjunction with unit volume since the two are inherently tied. This Sales Gross Profit per unit encompasses both the front-end gross profit of selling a unit along with the finance and insurance gross along with that unit. Both are part of the Sales category. After Sales is viewed and tracked somewhat independently and not on a per unit basis. Although we do monitor our PAA Gross Profit per new unit retailed as a key metric, it is a subcomponent of the overall PAA Gross Profit profile.





Results of Operations

For the year ended July 31, 2021, the Company was a shell status. In September 2021, our former sole executive officer and director, Shiong Han Wee (collectively, the "Seller"), and our current chief executive officer, Vance Harrison (the "Buyer") entered into a Sale and Purchase Agreement. The Company commenced new business. The Company develops new open points, buys and operates BMW Motorcycle, Triumph Motorcycle and Ducati Motorcycle dealerships. It is the belief of the Company that these brands are not sold as practical transportation; instead, they are luxury items that buyers consume as part of a more extensive and exclusive lifestyle choice. The Company has acquired four dealerships and plans to acquire more existing dealerships and develop new "open point" dealerships.





Our results for operations for the year ended July 31, 2022 and 2021 are
summarized below:



Motos Total Company Metrics



                                       Year Ended
                                        July 31,
                                     2022         2021
Revenues:
Vehicle sales-new                $ 11,428,282     $   -
Vehicle sales -used                 3,444,212         -
Parts, service and accessories      4,387,262         -
Finance and insurance                 918,477         -
Total revenues                     20,178,233         -
Gross Profit :
Vehicle sales-new                   1,211,996         -
Vehicle sales-used                    563,848         -
Parts, service and accessories      1,775,635         -
Finance and insurance                 835,503         -
Total Gross Profit                  4,386,982         -
Operating expenses                  6,540,985         -
Operating loss                      2,154,003         -
Other income                           42,485         -
Net loss                         $  2,111,518     $   -








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                             Year Ended
                              July 31,
                           2022       2021
Vehicles Sold:
New                           576         -
Used                          282         -
Total vehicles sold           858         -

Revenue per Unit Sold:
Vehicles -new            $ 19,841     $   -
Vehicles -used           $ 12,214     $   -

Gross Profit per Unit:
Vehicles -new            $  2,104     $   -
Vehicles -used           $  1,999     $   -




Revenue

During the year ended July 31, 2022, the total vehicles revenue was $14,872,494 ($11,428,282 new vehicles and $3,444,212 used vehicles). On a unit basis, the Company sold 576 new and 282 used vehicles. During the year ended July 31, 2022, the Company earned $4,387,262 for sales of parts, services and accessories and $918,477 for financing and insurance.





Gross Profit

During the year ended July 31, 2022, the total gross profit for new and used vehicles were $1,211,996 and $563,848, respectively. The gross profit per unit for sold vehicles was 2,104 and 1,999 for new and used, respectively. During the year ended July 31, 2022, the total gross profit of parts, service and accessories was $1,775,635 and for financing and insurance was $835,503.





Other Income

For the year ended July 31, 2022, the other income consisted of $498,935 income mostly from manufacturer incentives and rebates, reduced by interest expenses of $280,628 and other miscellaneous expenses of $175,822.





Operating Expenses

For the year ended July 31, 2022, the operating expenses consisted of $2,885,534 selling, general and administrative expenses, $813,810 professional fees and $2,841,641 payroll expenses.

Selling and General Administrative Expense

Selling and general administrative expenses include costs and expenses for advertising and marketing, development and operating our product procurement and distribution system managing and logistics system and other overhead expenses. Selling and general administrative expenses will continue to increase in future periods as we execute and aggressively expand our business through increased marketing spending and the addition of management and support personnel to ensure we adequately develop and maintain operational, financial and management controls as well as our reporting systems and procedures, but we anticipate they will decline as a percentage of sales revenue. Selling and general administrative expenses consisted of $317,048 advertising and marketing, $27,608 warranty and customer goodwill, $407,613 sales and F&I compensation, $320,998 outsider services to customers, $698,463 rent expenses, $105,861 depreciation, $216,641 insurance, $184,516 travel and entertainment and $606,786 other general administrative expenses.









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Depreciation expenses of $105,861 was for the Company's vehicles, furniture, fixture and equipment and were amortized during useful life of 5-7 years.





Professional Fees

For the year ended July 31, 2022, the professional fess of $813,810 consisted of $73,727 accounting, $157,155 legal and $582,928 consulting and other professional fees. For a significant portion of the year ended in July of 2021, the Company employed minimal staff and relied upon Wilson Hand Pty for many of its day to day business operational activities. In August of 2022, the Company severed its relationship with Wilson Hand, and replaced their services entirely with Company staff personnel.





Payroll Expenses

For the year ended July 31, 2022, the payroll expenses of $2,841,641 was related to management and employee for wages, compensation, benefits and stock option expenses ($63,522).

Liquidity and Capital Resources

Our primary sources of liquidity are available cash, amounts available under our floor plan lines of credit, and monetization of our retail loan portfolio. During the year ended July 31, 2022, we completed a a private equity offering that provided net proceeds of $1,487,000 and we obtained $2,583,818 in borrowings from vehicle Floor Plan notes payable, $3,485,000 proceeds from convertible notes and $50,000 proceeds from exercise of warrants.

Our consolidated financial statements reflect estimates and assumptions made by management that affect the carrying values of the Company's assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. The judgments, assumptions and estimates used by management are based on historical experience, management's experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company's assets and liabilities and the results of operations. We will continue to evaluate the nature and extent of the impact to our business and our results of operations and financial condition as conditions evolve as a result of the COVID-19 pandemic and the resulting Demand/Supply Imbalances.

The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which assumes the continuity of operations, the realization of assets and the satisfaction of liabilities as they come due in the normal course of business. Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement date.

We had the following liquidity resources available as of July 31, 2022 and 2021:

Working capital (deficiency)





                              July 31, 2022       July 31, 2021
Current Assets               $     5,583,337     $           542
Current Liabilities          $     7,394,747     $     2,322,414
Working Capital Deficiency   $    (1,811,410 )   $    (2,321,872 )








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Committed liquidity resources available





                                          Year Ended
                                           July 31,
                                             2022
Cash                                      $ 1,088,837

Committed liquidity resources available $ -

As of July 31, 2022, the outstanding principal amount of indebtedness was $6,144,273, summarized in the table below:





                                             Year Ended
                                              July 31,
                                                2022
Asset-Based Financing:
Vehicle floor plan notes payable             $ 2,686,379
Total asset-based financing                    2,686,379

Convertible notes payable, net of discount     3,223,309
Working capital loan                             337,146
Total debt                                   $ 6,144,273

The following table sets forth a summary of our cash flows:





                                                               Year Ended
                                                                July 31,
                                                           2022           2021

Cash Flows provide by (used in) Operating Activities $ (1,767,497 ) $ 19,449 Cash Flows used in Investing Activities

                  (2,937,320 )           -
Cash Flows provided by Financing Activities               5,793,112             -
Effects on changes in foreign exchange rate                       -       (19,451 )
Net Change in Cash During Period                       $  1,088,295     $      (2 )




Operating Activities

Our primary sources of operating cash flows result from the sales of new and used vehicles and ancillary products. Our primary uses of cash from operating activities are purchases of inventory, parts and merchandise, cash used to acquire customers, technology development, and personnel-related expenses. For the year ended July 31, 2022, net cash used in operating activities was $1,767,497, related to our net loss of $2,111,518, reduced by a $105,86; stock-based compensation of $63,522, amortization of debt discount of $29,857, amortization of right-of-use assets of $347,156, impairment of inventories o $349,870 increased by an increase in inventory of $1,697,003, accounts receivable of $197,554, lease liabilities of $322,675 and reduced by a change in accounts payable of $407,390, accrued liabilities and other liabilities of $270,167 and borrowings from vehicle floor plan notes payable of $1,033,744.

For the year ended July 31, 2021, net cash provided by operating activities was $1,767,497, related to our net loss of $2,111,518, reduced by accounts receivable of $2,498, accrued liabilities and other liabilities of $33,877 and due to related party of $11,796.









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Investing Activities

Our primary use of cash for investing activities was for purchase of property and equipment and acquisitions to expand our operations. Cash used in investing activities for the year ended July 31, 2022 was $2,937,320 related to acquisition of dealerships of $2,784,073 and additional purchase of property and equipment of $153,247.

For the year ended July 31, 2021, the Company had no investing activities.





Financing Activities

Cash flows from financing activities primarily relate to our short and long-term debt activity and proceeds from equity issuances which have been used to provide working capital and for general corporate purposes, including paying down our short-term revolving facilities. Cash provided by financing activities for the year ended July 2022 was $5,793,112 related to proceeds of $1,487,000 from private placement, $50,000 from exercise of warrant, $3,485,000 from convertible notes, proceeds from related party and contribution to dealerships of $506,402 and repaid $1,029,896 to related party and $62,854 for working capital loan..

For the year ended July 31, 2021, the Company had no financing activities.

Off-Balance Sheet Arrangements

As of July 31, 2022, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or material capital resources.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.

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