NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended March 31, 2021 and 2020
(Expressed
in United States Dollars, except for number
of shares)
1. |
DESCRIPTION
OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
ECCO
Auto World Corporation was incorporated in Nevada on June 6, 2016 (the “Company”).
On
June 7, 2017, the Company acquired 100%
interest in ECCO Auto World Corporation, a company incorporated in Labuan (“ECCO Labuan”). On February 17, 2020, the
Company acquired 100% of Free Share X-Change Limited, an Anguilla corporation (“FSX”), and its wholly
owned subsidiary, Vtrade Technology Sdn. Bhd. (“Vtrade”) (collectively, “FSX Vtrade”). On January 2,
2021, the Company sold its interests in ECCO Labuan and FSX Vtrade (see Note 2).
Going
concern
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business.
As
reflected in the accompanying financial statements during the year ended March
31,2021, the Company incurred a loss from continuing operations of $ and used cash in operating activities - continuing
operations of $24,733, and at March 31, 2021, the Company had a stockholders’ deficit of $51,356
and an accumulated deficit of $684,659.
These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date
that the financial statements are issued. The financial statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the
Company not being able to continue as a going concern.
The
continuation of the Company as a going concern for one year from the date the financial statements are ready to be issued is dependent
upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders
or external financing will provide the additional cash to meet the Company’s obligations as they become due.
COVID-19
The
COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption
of financial markets. The Company monitors guidance from national and local public health authorities and has implemented health and
safety precautions and protocols in response to these guidelines. The extent of the impact of the COVID-19 pandemic has had and will
continue to have on the Company’s business is highly uncertain and difficult to predict and quantify at this time.
Basis
of presentation
The
accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United
States of America (“US GAAP”).
Consolidation
The
results of operations of ECCO Labuan and FSX Vtrade were included in the consolidated statements of operations up to the date they were
sold (see Note 2).
Intercompany
accounts and transactions have been eliminated in consolidation up to the subsidiaries were disposed on January 2, 2021.
The
accompanying financial statements for the year ended March 31, 2021 include the accounts of ECCO Auto World
Corporation.
Use
of estimates
Management
uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported
revenue and expenses during the periods reported. Significant accounting estimates include certain assumptions related to, among others,
the valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these
estimates.
Revenue
recognition
The Company recognizes revenue in accordance
with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606,
Revenue from Contracts with Customers. To determine revenue recognition under ASC 606, an entity performs the following five-steps (i)
identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction
price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the
entity satisfies a performance obligation. The Company only applies the five-steps to contracts when it is probable that the entity will
collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
Cash
and cash equivalents
The
Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be
cash equivalents.
Equipment
Equipment
consists of computer and peripherals and is stated
at cost less accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives
of 5 years. Expenditures for major additions and improvements are capitalized and minor repairs and maintenance are charged to expense
as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is included in the results of operations for the respective period.
Expenditures
for maintenance and repairs are expenses as incurred.
Management
assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset
and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to
write down the asset to its estimated fair value. For the years ended March 31, 2021 and 2020, the Company determined there were no indicators
of impairment of its property and equipment.
Income
taxes
The Company accounts for income taxes using an asset and liability approach which allows for the recognition and
measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability
approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets
if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain.
Net
income (loss) per share
Basic income (loss) per share is computed by
dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share
is computed like basic income (loss) per share except that the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
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 Consolidated Statements of Operations and Comprehensive Income or Loss.
The
reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressed
in US$. In addition, the Company’s former subsidiary in Malaysia maintained their books and records in their
local currency, Ringgits Malaysia (“RM”) which is functional currency as being the primary currency of the economic environment
in which the entity operates.
In
general, for consolidation purposes, assets, and liabilities of its subsidiaries whose functional currency is not US$ 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 accumulated other comprehensive
income within the statements of stockholders’ equity.
Translation
of amounts from RM into US$1 has been made at the following exchange rates for the respective periods:
SCHEDULE OF FOREIGN CURRENCY TRANSLATION, EXCHANGE RATE USED
|
|
As
of and for the years ended March 31 |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
Year-end
RM : US$1 exchange rate |
|
|
- |
|
|
|
4.31 |
|
Year-average
RM : US$1 exchange rate |
|
|
- |
|
|
|
4.16 |
|
Fair
value of financial instruments
The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”),
with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy
that prioritizes the inputs used in measuring fair value as follows:
|
Level
1: Observable inputs such as quoted prices in active markets; |
|
|
|
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
|
|
|
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
The carrying value of
the Company’s financial instruments: cash and cash equivalents, and accounts payable and accrued liabilities approximate their
fair values because of the short-term nature of these financial instruments.
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and it does not believe any of these pronouncements will have a material impact on the Company.
Concentrations
For
the year ended March 31, 2020, one customer accounted for 100% of the Company’s revenues.
2. |
DISCONTINUED
OPERATIONS |
On
January 2, 2021, the Company sold its interests in its wholly owned subsidiaries, ECCO Labuan and FSX Vtrade, to an unrelated party for
$115.
ECCO
Labuan and FSX Vtrade were deconsolidated effective January 2, 2021, and the Company does not have any continuing involvement in the
operations of the disposed subsidiaries. The disposal is accounted for as discontinued operations and, accordingly, all prior periods
presented in the accompanying consolidated balance sheets, statements of operations and statements of cash flows have been adjusted to
conform to this presentation; no adjustment has been made to the prior period consolidated balance sheet as a result of the disposal.
As of March 31, 2021, no subsidiaries were owned by the Company.
On
January 2, 2021, before the disposal, ECCO Labuan and FSX Vtrade had net assets of $43,799 and net liabilities of $163,612. Contemporaneous with the sale of FSX Vtrade, two unrelated parties forgave
liabilities due them by FSX Vtrade of $163,612. As a result,
the Company recorded a gain on sale of discontinued operations of $119,928:
SCHEDULE
OF DISPOSAL OF DISCONTINUED
OPERATIONS
| |
| | |
Carrying value of assets disposed | |
$ | (43,799 | ) |
Carrying value of liabilities disposed | |
| 163,612 | |
Carrying value of net liabilities disposed | |
| 119,813 | |
Sales proceeds | |
| 115 | |
Gain on sale of discontinued operations | |
$ | 119,928 | |
The
following table summarizes certain selected components of discontinued operations for the disposed subsidiaries for the period from April
1, 2020 through the effective disposal date of January 2, 2021, and for the year ended March 21, 2020:
SCHEDULE OF COMPONENTS OF DISCONTINUED OPERATIONS
| |
Period from
April 1, 2020 to | | |
Year ended | |
| |
January 2, 2021 | | |
March 31, 2020 | |
| |
| | |
| |
Revenues | |
$ | 44,700 | | |
$ | 91,751 | |
| |
| | | |
| | |
Income from discontinued operations | |
$ | 34,997 | | |
$ | 45,748 | |
| |
| | | |
| | |
Income per share from discontinued operations - Basic and Diluted | |
$ | 0.00 | | |
$ | 0.00 | |
| |
| | | |
| | |
Current assets | |
$ | - | | |
$ | 15,962 | |
Total assets | |
$ | - | | |
$ | 46,561 | |
Current and total liabilities | |
$ | - | | |
$ | 165,573 | |
SCHEDULE OF PLANT AND EQUIPMENT
| |
As
of | | |
As
of | |
| |
March
31, 2021 | | |
March
31, 2020 | |
| |
| | |
| |
Computer
and peripherals | |
$ | 3,412 | | |
$ | 3,412 | |
Accumulated
depreciation | |
| (2,010 | ) | |
| (1,462 | ) |
Effect
of translation | |
| - | | |
| - | |
Plant
and equipment, gross | |
$ | 1,402 | | |
$ | 1,950 | |
Less:
Disposal of computer and peripherals | |
| (1,402 | ) | |
| - | |
Equipment, net | |
$ | - | | |
$ | 1,950 | |
Depreciation
expense was $548 and
$731 for
the years ended March 31, 2021 and 2020, respectively.
On
January 1, 2021, the Company disposed the computer and peripherals with net book value of $1,402
and recorded a loss of disposal of $1,402
accordingly.
4. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
SCHEDULE OF OTHER PAYABLES AND ACCRUED LIABILITIES
| |
As
of March
31, 2021 | | |
As
of March
31, 2020 | |
| |
| | |
| |
Accrued
audit and review fees | |
$ | 45,171 | | |
$ | 18,000 | |
Accrued
professional fees | |
| 3,541 | | |
| - | |
Accrued
secretarial fee-related party | |
| 4,000 | | |
| 3,800 | |
Other payable | |
| 188 | | |
| 11,811 | |
Total
accounts payable and accrued liabilities | |
$ | 52,900 | | |
$ | 33,611 | |
As
of March 31, 2021 and 2020, the Company had 93,089,643 shares of its Common Stock par value, $.0001 issued and outstanding. There were
38 beneficial owners of its Common Stock.
Provision
for income taxes consisted of the following:
SCHEDULE OF PROVISION FOR INCOME TAXES
| |
| 2021 | | |
| 2020 | |
| |
| For
the years ended March 31, | |
| |
| 2021 | | |
| 2020 | |
| |
| | | |
| | |
Current: | |
| | | |
| | |
–
Local | |
$ | - | | |
$ | - | |
–
Foreign: | |
| - | | |
| - | |
| |
| | | |
| | |
Deferred: | |
| | | |
| | |
–
Local | |
| - | | |
| - | |
–
Foreign | |
| - | | |
| - | |
Income
tax expense | |
$ | - | | |
$ | - | |
A
summary of United States and foreign income (loss) before income taxes was comprised of the following:
SCHEDULE OF LOCAL AND FOREIGN COMPONENTS OF INCOME (LOSS) BEFORE INCOME TAX
| |
2021 | | |
2020 | |
| |
For
the years ended March 31, | |
| |
2021 | | |
2020 | |
Tax
jurisdictions from: | |
| | | |
| | |
–
United States | |
$ | 84,738 | | |
$ | (81,440 | ) |
–
Foreign, representing: | |
| | | |
| | |
Anguilla | |
| 7,078 | | |
| 6,935 | |
Labuan | |
| 12,222 | | |
| (2,889 | ) |
Malaysia | |
| 4,915 | | |
| 41,701 | |
Foreign | |
| | | |
| | |
Income
(Loss) before income taxes | |
$ | 108,953 | | |
$ | (35,693 | ) |
The
Company has not recorded a provision for U.S. federal income tax for the years ended March 31, 2021 and 2020 due to a net operating
loss carry forward in the United States of America. At March 31, 2021 and 2020, the Company had net operating loss carry forward
in the United States of America of approximately $683,000
and $791,000,
respectively, which begin to expire in 2036. The
deferred tax asset created by the net operating loss has been offset by a 100% valuation allowance at March 31, 2021 and 2020.
7. |
RELATED
PARTY TRANSACTIONS |
SUMMARY OF RELATED PARTY TRANSACTIONS
| |
For
the year ended March
31, 2021 | | |
For
the year ended March
31, 2020 | |
| |
| | |
| |
General
and administrative expenses | |
| | | |
| | |
Related
party A (1): | |
| | | |
| | |
-
Secretarial fee | |
$ | 9,380 | | |
$ | 10,100 | |
-
Company renewal fee | |
| - | | |
| 4,767 | |
Related
parties outstanding balance | |
$ | 9,380 | | |
$ | 14,867 | |
(1) |
Asia
UBS Global Limited, a subsidiary of Greenpro Capital Corp. (collectively “Greenpro”), owns approximately 4.3%
of the Company’s issued and outstanding shares. For the year ended March 31, 2021, the
Company incurred secretarial fee of $9,380
to Greenpro. For the year
ended March 31, 2020, the Company recorded secretarial fee of $10,100
and a company renewal
fee of $4,767
to Greenpro. |
|
|
|
As
of March 31, 2021 and 2020, the Company had fees payable to Greenpro of $4,000 and $3,800, respectively. The
amounts due to related parties are unsecured, non-interest bearing, and due on demand. |