MOTOS AMERICA INC. Unless otherwise noted, all currency figures quoted as "U.S. dollars", "dollars" or "US$" refer to the legal currency ofthe United States . References to "MYR" or "RM" are to the Malaysian Ringgit, the legal currency ofMalaysia . Throughout this report, assets and liabilities of the Company's subsidiaries are translated intoU.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders' equity. Overview We were an IT-solutions provider that provided a multi-dimensional e-commerce platform to facilitate shopping, business, trade and integrates online & office transactions in a single application. Prior toJune 2019 , we developed and operated a mobile platform designed to consolidate users' cash and connect merchants to consumers by offering a cashless form of transaction, in-app shopping and a user rewards system. OnJune 2019 , we ceased the operation of the platform but continue to maintain our IT solution business operations. During the fiscal years endedJuly 31, 2020 , and 2019, we generated comprehensive losses of 1,064,620 and$1,493,284 , respectively. Since we ceased operations of our platformJune 2019 , we unsuccessfully attempted to diversify into the energy, oil & gas sector to strengthen our financial position. Our current principal business is to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. Based on proposed business activities, we are a "blank check" company. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements. As of the date of this Annual Report, we have not entered into any binding agreement with any party regarding acquisition opportunities for us. We hope to continue to engage in discussions with other operating businesses affiliated with our executive officers regarding potential acquisition opportunities. There is no assurance that any nonbinding term sheet will result into a definitive purchase transaction nor can we assure you that we will be able to successfully acquire such company or any company in the near future.
Financial Condition; Going Concern
We have had limited operations and have been issued a "going concern" opinion by our auditor, based upon our reliance on the sale of our common stock and loans from a related party, as the sole source of funds for our future operations. We have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders. If we are unable to raise additional capital to maintain our operations in the future, we may be unable to carry out our full business plan or we may be forced to cease operations. Our financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As ofJuly 31, 2020 , the Company had working capital deficit of$(2,273,792) and has incurred losses since its inception resulting in an accumulated deficit of$(7,638,503) . Further losses are anticipated in the development of the business, raising substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from directors and/or private
placements of common stock. 6 Results of Operations
Comparison of the years ended
The following table sets forth certain operational data for the years endedJuly 31, 2020 , and 2019: For the Years Ended July 31, 2020 2019 Revenue$ 65,690 $ 111,045 Cost of revenue - 10,394 Gross Margin 65,690 100,651 Other Income 10,794 545 General and administrative expense (1,179,650 ) (1,587,572 ) Loss before tax (1,103,166 ) (1,486,376 ) Taxation - - Loss after tax (1,103,166 ) (1,486,376 ) Translation adjustment 38,546 (6,908 ) Net Loss$ (1,064,620 ) $ (1,493,284 ) Net Revenue. We generated revenues of$65,690 and$111,045 during the fiscal year endedJuly 31, 2020 and 2019, respectively. Our revenues are generally derived from the provision of IT service fees. The decrease in net revenues is primarily attributable to reduction of IT service contracts received and cessation of platform operation.
During the twelve months ended
Year ended July 31, 2020 July 31, 2020
Percentage Accounts
Revenues of revenues receivable
East Cloud Sdn Bhd $ 16,470 25% $ -Creative Property Management Sdn Bhd 6,390 10% - MIG Network & Consultancy Sdn Bhd 15,042
23% -
TOTAL $ 37,902 58% $ -
Year ended July 31, 2019 July 31, 2019
Percentage Accounts
Revenues of revenues receivable
North Cloud Sdn Bhd $ 44,622 40% $ 5,976
East Cloud Sdn Bhd 18,190 16% 5,982
MIG O2O Berhad 19,360 17% -MIG Network & Consultancy Sdn Bhd 16,053
14% -
TOTAL $ 222,014 92% $ -
7
Gross Loss. We generated a gross profit of$65,690 and$100,651 for the fiscal years endedJuly 31, 2020 , and 2019, respectively. The decrease in gross profit is primarily attributable to the decrease in net revenue generated from IT service fees. Operating Expenses. During the fiscal year endedJuly 31, 2020 , and 2019, we incurred operating and administrative expenses of$1,179,650 and$1,587,572 respectively. The decrease in operating and administrative expenses is attributable to the reduction in staff cost and operating expenses due to the shutdown of Axis Business Campus office inMay 2020 .
During the twelve months ended
Income Tax Expense. There is no income tax expense recorded for the fiscal year
ended
Net Loss. We recorded a net loss of$1,064,620 and$1,486,376 for the fiscal years endedJuly 31, 2020 , and 2019, respectively. The decrease in net loss is primarily due to decrease in operating and administrative expenses from the shutdown of Axis Business Campus office inMay 2020 .
Liquidity and Capital Resources
As ofJuly 31, 2020 , we had current assets of$544 and current liabilities of$2,274,336 . Our current assets consisted of$544 of cash and cash equivalent. Our current liabilities consisted$83,458 of trade payables,$933,410 of other payables and accruals,$1,236,274 of amount due to related parties and$21,194 of tax provision. As ofJuly 31, 2019 , we had current assets of$70,179 and current liabilities of$1,367,694 . Our current assets consisted of$11,957 of trade receivables,$54,050 of other receivables, deposits and prepayments,$829 of amount due from related parties and$3,343 of cash and cash equivalent. Our current liabilities consisted$75,777 of trade payables,$199,086 of other payables and accruals,$1,071,620 of amount due to related parties and$21,211 of tax provision.
Stockholders' equity decreased from a deficit of
Net cash used in operating activities was$(2,925) for the year endedJuly 31, 2020 , and consisted primarily of net loss of$1,103,166 , an increase in plant and equipment written off of$68,247 , an increase in foreign translation reserve of$7,092 , a decrease in trade receivables of$11,696 , a decrease in other receivables, deposits and prepayments, a decrease in amount due to directors of$52,869 , an increase in other payables and accrued liabilities of$734,308 , offset against a decrease in depreciation of plant and equipment of$16,687 , amount due to related parties of$200,110 and account payables of$9,258 . Net cash provided by operating activities was$12,171 for the year endedJuly 31, 2019 , and consisted primarily of net loss of$1,486,376 , a decrease in plant and equipment written off of$503 , a decrease in foreign translation reserve of$10 , an increase in trade receivables of$11,767 , an increase in other receivables, deposits and prepayments, a decrease in amount due to directors of$51,017 , a decrease in other payables and accrued liabilities of$37,648 , offset against an increase in depreciation of plant and equipment of$26,918 , impairment of$694,959 , inventory written off of$3,231 , amount due to related parties of$789,499 and account payables of$74,236 .
Net cash used in investing activities for the fiscal year ended
8
Net cash gain in investing activities for the fiscal year ended
Net Cash Generated From Financing Activities
There is no net cash generated from financing activities for the fiscal years
ended
We have never paid dividends on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.
The success of our business plan is dependent upon the availability of additional capital resources on terms satisfactory to management as we are not generating sufficient revenues from our business operations. Our sources of capital in the past have included the sale of equity securities, which include common stock sold in private transactions and public offerings, capital leases and long-term debt. There can be no assurance that we can raise such additional capital resources on satisfactory terms. We believe that our current cash and other sources of liquidity discussed above are adequate to support operations for at least the next 12 months. We anticipate continuing to rely on equity sales of our common shares and shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our plan of operations.
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted inthe United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. · Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. · Revenue recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. 9 · Fair value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritize the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy under ASC 820 are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities.
Level 2 - Inputs, other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active
markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that
are observable for the asset or liability (e.g. interest rates); and
inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and
unobservable.
The Company's cash and cash equivalents and short-term investments are
classified within Level 1 of the fair value hierarchy because they are valued
using quoted market prices. The carrying amounts of accounts payable, advances
payable and short-term loans approximate their fair value due to short term
maturities.
· Foreign currencies translation
Transactions denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates prevailing at the
dates of the transaction. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional
currency using the applicable exchange rates at the balance sheet dates. The
resulting exchange differences are recorded in the statement of operations.
The functional currency of the Company is the United States Dollars ("US$") and
the accompanying financial statements have been expressed in US$. In addition,
the subsidiary maintains its books and record in a local currency, Malaysian
Ringgit ("MYR" or "RM"), which is functional currency as being the primary
currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its
subsidiaries whose functional currency is not US$ are translated into US$, in
accordance with ASC Topic 830-30, "Translation of Financial Statement", using
the exchange rate on the balance sheet date. Revenues and expenses are
translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are
recorded as a separate component of other comprehensive income. The Company has
not to, the date of these financial statements, entered into derivative
instruments to offset the impact of foreign currency fluctuations.
Translation of amounts from the local currency of the Company into
For the Years Ended July 31,
2020 2019
Year-end MYR: US$1 exchange rate 4.2657 4.1275
Yearly average MYR:US$1 exchange rate 4.2197 4.1323 10 · Recent accounting pronouncements InFebruary 2016 , the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning afterDecember 15, 2018 and interim periods in fiscal years beginning afterDecember 15, 2018 , with early adoption permitted. The Company has adopted this accounting standard update. OnJune 20, 2018 , theFinancial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The guidance is effective for interim and annual periods beginning afterDecember 15, 2018 .
InNovember 2019 , the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance will be effective for annual reporting periods beginning afterDecember 15, 2019 , including interim periods within those annual reporting periods. While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to have a material effect on its financial statements. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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