RHNO 10-Q
Rhino Bitcoin Inc. (RHNO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OF THE SECURITIES EXCHANGE ACT OF 1934
For
The Quarterly Period Ended
or
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission
File Number
(Exact name of registrant issuer as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s
phone number, including area code +
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).
YES ☐ ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large
Accelerated Filer ☐ Accelerated Filer ☐
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The OTC Market – Pink Sheets |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has fled all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes
☐
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at October 31, 2022 | |
| Common Stock, $.0001 par value |
TABLE OF CONTENTS
| 2 |
PART I FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
PHOENIX PLUS CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
PHOENIX PLUS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2022 AND JULY 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | As of | |||||||
October 31, 2022 (Unaudited) | July 31, 2022 (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Trade receivables | $ | $ | ||||||
| Other receivables, prepayment and deposits | ||||||||
| Deferred cost | ||||||||
| Cash at banks | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Lease right-of-use asset | ||||||||
| Equity method investment | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Trade payables | $ | $ | ||||||
| Other payables and accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value, shares authorized; issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized shares issued and outstanding as of October 31, 2022 and July 31, 2022 respectively | $ | $ | ||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ FUND | ||||||||
See accompanying notes to condensed consolidated financial statements.
| F-2 |
PHOENIX PLUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSSES
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022 and 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Three months ended October 31, 2022 (Unaudited) | Three months ended October 31, 2021 (Unaudited) | |||||||
| REVENUE | $ | $ | ||||||
| COST OF REVENUE | ( | ) | ( | ) | ||||
| GROSS PROFIT | ||||||||
| OTHER INCOME | ||||||||
| EQUITY METHOD LOSS | ( | ) | ||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | ( | ) | ||||
| FINANCE COST | ( | ) | ( | ) | ||||
| LOSS BEFORE INCOME TAX | ( | ) | ( | ) | ||||
| INCOME TAXES PROVISION | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| - Foreign exchange adjustment loss | ( | ) | ||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| Net loss per share- Basic and diluted | ( | ) | ( | ) | ||||
| Weighted average number of common shares outstanding - Basic and diluted | ||||||||
See accompanying notes to condensed consolidated financial statements.
| F-3 |
PHOENIX PLUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022 and 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Three Months Ended October 31, 2022 (Unaudited) |
| COMMON SHARES | ADDITIONAL | ACCUMULATED OTHER | ||||||||||||||||||||||
| Number of Shares | Amount | PAID-IN CAPITAL | COMPREHENSIVE LOSS | ACCUMULATED DEFICIT | TOTAL EQUITY | |||||||||||||||||||
| Balance as of July 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of October 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
Three Months Ended October 31, 2021 (Unaudited) |
| COMMON SHARES | ADDITIONAL | ACCUMULATED OTHER | ||||||||||||||||||||||
| Number of Shares | Amount | PAID-IN CAPITAL | COMPREHENSIVE INCOME | ACCUMULATED DEFICIT | TOTAL EQUITY | |||||||||||||||||||
| Balance as of July 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of October 31, 2021 | ( | ) | ||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| F-4 |
PHOENIX PLUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022 and 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Three months ended October 31 | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Equity method investment loss | ||||||||
| Depreciation | ||||||||
| Operating lease expenses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | ( | ) | ||||||
| Other receivables, prepayment and deposits | ( | ) | ||||||
| Deferred cost | ( | ) | ||||||
| Trade payables | ( | ) | ||||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITY | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash used in investing activity | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITY: | ||||||||
| Net cash provided by financing activity | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | $ | ( | ) | |||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of year | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | |||||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
| F-5 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
Phoenix Plus Corp. was incorporated on November 5, 2018 under the laws of the state of Nevada.
The Company, through its subsidiaries, engaged in providing technical consultancy on solar power system and consultancy on green energy solution, and also focused on the commercialization of a targeted portfolio of solar products (amorphous thin film solar panels and ancillary products) and technologies for a wide range of applications including electrical power production.
On
March 18, 2019, the Company acquired
On July 25, 2019, Phoenix Plus Corp., a Malaysia Company, acquired Phoenix Plus International Limited (herein referred as the “Hong Kong Company”), a private limited company incorporated in Hong Kong.
On
May 17, 2022, the Company, through its Labuan incorporated subsidiary, Phoenix Plus Corp., subscribed
The Company, through its subsidiaries, mainly provides incubation and corporate development services to the clients. Details of the Company’s subsidiaries:
| Company name | Place and date of incorporation | Particulars of issued capital | Principal activities | ||||
| 1. | |||||||
| 2. | |||||||
| 3. |
| F-6 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The unaudited condensed financial statements for Phoenix Plus Corporation for the period ended October 31, 2022 are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial statement, instructions to Form 10-Q and Regulations S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended July 31, 2022. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended October 31, 2022 and 2021 presented are not necessarily indicative of the results to be expected for the full year. The Company has adopted July 31 as its fiscal year end.
Basis of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated upon consolidation.
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 sheets, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue recognition
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue. The Company derives its revenue from provision of technical consultancy on solar power system and consultancy on green energy solution.
Cost of revenue
Cost of revenue includes the cost of services and product in providing business mentoring, nurturing, incubating and corporate development advisory services
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
| Classification | Estimated useful life | |
| Leasehold improvement | ||
| Computer hardware and software | ||
| Tools and gauges |
Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the Consolidated Statements of Operations and Comprehensive Loss.
Investment under equity method
The
Company apply the equity method to account for investments it possesses the ability to exercise significant influence, but not control,
over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the investor
possesses more than
In applying the equity method, the Company records the investment at cost and subsequently increase or decrease the carrying amount of the investment by proportionate share of the net earnings or losses and other comprehensive income of the investee. The Company records dividends or other equity distributions as reductions in the carrying value of the investment.
| F-7 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a
Going concern
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the period
ended October 31, 2022, the Company suffered an accumulated deficit of $
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
| F-8 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Labuan and Hong Kong maintains its books and record in United States Dollars (“US$”) respectively, and Ringgits Malaysia (“MYR”) is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ 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 statement of stockholders’ equity.
Translation of amounts from MYR into US$1 and HK$ into US$1 has been made at the following exchange rates for the respective periods:
As of and for the period ended October 31, 2022 | As of and for the period ended October 31, 2021 | |||||||
| Period-end RM : US$1 exchange rate | ||||||||
| Period-average RM : US$1 exchange rate | ||||||||
| Period-end HK$: US$1 exchange rate | ||||||||
| Period-average HK$ : US$1 exchange rate | ||||||||
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| F-9 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Fair value of financial instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, prepayment, deposits, accounts payable and accrued liabilities and amount due to a director approximate at their fair values because of the short-term nature of these 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.
Leases
Prior to August 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective August 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have a significant impact on our liquidity. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. (see Note 14).
Recent accounting pronouncements
ASB issues various Accounting Standards Updates relating to the treatment and recording of certain accounting transactions. On June 10, 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915) Elimination of Certain Financial Reporting Requirements, including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity (DSE) entirely from current accounting guidance. The Company has elected adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception.
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning January 1, 2023 as the Company is qualified as a smaller reporting company. The Company is currently evaluating the impact ASU 2019-05 may have on its consolidated financial statements.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
| F-10 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
3. COMMON STOCK
As of October 31, 2022, the Company has an issued and outstanding common share of .
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of October 31, 2022 and July 31, 2022 are summarized below:
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Leasehold improvement | $ | $ | ||||||
| Computer hardware and software | ||||||||
| Tools and gauges | ||||||||
| Total | ||||||||
| Accumulated depreciation | ( | ) | $ | ( | ) | |||
| Effect of translation exchange | ( | ) | ||||||
| Property, plant and equipment, net | $ | $ | ||||||
These leasehold improvements include, but are not strictly limited to, preparing the interior of the office space for the Company’s use, improving functionality, and purchasing new office equipment. The leasehold improvement has completed on September 2019.
Depreciation
expense for the period ended October 31, 2022 and October 31, 2021 was $
5. EQUITY METHOD INVESTMENT
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Investment, at cost | $ | $ | ||||||
| Less: Equity method loss | ( | ) | ( | ) | ||||
| Less: Impairment loss on investment | ( | ) | ( | ) | ||||
| $ | $ | |||||||
The
Company holds investment in business that is accounted for pursuant to the equity method due to the Company’s ability to exert
significant influence over decisions relating to its operating and financial affairs. Revenue and expenses of this investment are not
consolidated into the Company’s financial statements; rather, the proportionate share of the earnings/losses is reflected as equity
method earnings/losses in statements of operations and comprehensive income/loss. As of October 31, 2022, the Company holds
During
the period ended October 31, 2022 and 2021, the Company accounted $
6. TRADE RECEIVABLES
Trade receivables consisted of the following at October 31, 2022 and July 31, 2022:
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Trade receivables | $ | $ | ||||||
| Total trade receivables | $ | $ | ||||||
7. OTHER RECEIVABLES, PREPAYMENT AND DEPOSITS
Other receivables, prepayments and deposits consisted of the following at October 31, 2022 and July 31, 2022:
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Other receivables | $ | $ | ||||||
| Deposits | ||||||||
| Prepayment | ||||||||
| Total other receivables, prepayments and deposits | $ | $ | ||||||
8. DEFERRED COST
For service contracts where the performance obligation is not completed, deferred costs are recorded for any costs incurred in advance of the performance obligation.
9. TRADE PAYABLE
Trade payable consisted of the following at October 31, 2022 and July 31, 2022:
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Trade payable | $ | $ | ||||||
| Total trade payable | $ | $ | ||||||
10. OTHER PAYABLES AND ACCRUED LIABILITIES
Other payables and accrued liabilities consisted of the following at October 31, 2022 and July 31, 2022:
As of October 31, 2022 | As of July 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accrued audit fees | $ | $ | ||||||
| Other payable and accrued liabilities | $ | $ | ||||||
| Total other payables and accrued liabilities | $ | $ | ||||||
| F-11 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
11. DEFERRED REVENUE
For service contracts where the performance obligation is not completed, deferred revenue is recorded for any payments received in advance of the performance obligation.
12. REVENUE
For the period ended October 31, 2022 and 2021, the Company has revenue arise from the following:
Three months period ended October 31, 2022 | Three months period ended October 31, 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Consultancy service provided | $ | $ | ||||||
| Installation service | ||||||||
| Total revenue | $ | $ | ||||||
13. INCOME TAXES
For the period ended October 31, 2022 and 2021, the local (United States) and foreign components of loss before income taxes were comprised of the following:
Three months ended October 31, 2022 | Three months ended October 31, 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Tax jurisdictions from: | ||||||||
| Local | $ | ( | ) | $ | ( | ) | ||
| Foreign, representing | ||||||||
| - Labuan | ( | ) | ||||||
| - Hong Kong | $ | ( | ) | $ | ( | ) | ||
| - Malaysia | ( | ) | ||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | ||
The provision for income taxes consisted of the following:
For the period ended October 31, 2022 | For the period ended October 31, 2021 | |||||||
| Current: | ||||||||
| - Local | ||||||||
| - Foreign | ||||||||
| Deferred: | ||||||||
| - Local | ||||||||
| - Foreign | ||||||||
| Income tax expense | $ | $ |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date.
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Labuan and Hong Kong that are subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
The
Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of October 31, 2022 the
operations in the United States of America incurred $
Labuan
Under
the current laws of the Labuan, Phoenix Plus Corp.is governed under the Labuan Business Activity Act, 1990. The tax charge for such company
is based on
Hong Kong
Phoenix
Plus International Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of
Malaysia
Phoenix
Green Energy Sdn. Bhd. is subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range from
| F-12 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
14. LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES
The Company officially adopted ASC 842 for the year on and after August 1, 2019 as permitted by ASU 2016-02. ASC 842 originally required all entities to use a “modified retrospective” transition approach that is intended to maximize comparability and be less complex than a full retrospective approach. On July 30, 2018, the FASB issued ASU 2018-11 to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02 of which permits entities may elect not to recast the comparative years presented when transitioning to ASC 842. As permitted by ASU 2018-11, the Company elect not to recast comparative years, thusly.
As
of July 1, 2021, the Company recognized approximately US$
As
of June 1, 2022, the Company recognized another approximately US$
A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.
The initial recognition of operating lease right and lease liability as follow:
As of October 31, 2022 (Unaudited) | As of July 31, 2022 (Audited) | |||||||
| Gross lease payable | $ | $ | ||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Recognition | $ | $ | ||||||
As of October 31, 2022 and July 31, 2022, operating lease right of use asset as follow:
As of October 31, 2022 (Unaudited) | As of July 31, 2022 (Audited) | |||||||
| Initial recognition as of August 1, 2019 | $ | $ | ||||||
| Additional portion from July 31, 2020 to June 30, 2021 | ||||||||
| Add: new lease addition from July 1, 2021 to June 30, 2023 | ||||||||
| Add: new lease addition from June 1, 2022 to May 31, 2023 | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Foreign exchange translation loss | ( | ) | ( | ) | ||||
| Balance | $ | $ | ||||||
As of October 31, 2022 and July 31, 2022, operating lease liability as follow:
As of October 31, 2022 (Unaudited) | As of July 31, 2022 (Audited) | |||||||
| Initial recognition as of August 1, 2019 | $ | $ | ||||||
| Add: additional portion (increase of leasing fee) | ||||||||
| Add: new lease addition from July 1, 2021 to June 30, 2023 | ||||||||
| Add: new lease addition from June 1, 2022 to May 31, 2023 | ||||||||
| Less: gross repayment | ( | ) | ( | ) | ||||
| Add: imputed interest | ||||||||
| Foreign exchange translation gain | ( | ) | ||||||
| Balance | ||||||||
| Less: lease liability current portion | ( | ) | ( | ) | ||||
| Lease liability non-current portion | $ | $ | ||||||
For
the period ended October 31, 2022 and 2021, the amortization of the operating lease right of use asset are $
Maturities of operating lease obligation as follow:
| Year ending | ||||
| June 30, 2023 (8 months) | $ | |||
| Total | $ | |||
Other information:
| Period ended October 31 | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flow from operating lease | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
| Remaining lease term for operating lease (years) | ||||||||
| Lease 1 | ||||||||
| Lease 2 | ||||||||
| Weighted average discount rate for operating lease | ||||||||
| Lease 1 | % | % | ||||||
| Lease 2 | % | |||||||
Lease
expenses were $
| F-13 |
PHOENIX PLUS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
15. CONCENTRATION OF RISK
The Company is exposed to the following concentrations of risk:
| (a) | Major customers |
For the period ended October 31, 2022 and 2021, the customers who accounted for 10% or more of the Company’s sales and its outstanding receivable balance at year-end are presented as follows:
| For the period ended October 31 | ||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Revenue | Percentage of Revenue | Trade Receivable | ||||||||||||||||||||||
| Customer A | $ | $ | % | % | $ | $ | ||||||||||||||||||
| Customer B | % | % | ||||||||||||||||||||||
| Customer C | % | % | ||||||||||||||||||||||
| $ | $ | % | % | $ | $ | |||||||||||||||||||
| (b) | Major vendors |
For the period ended October 31, 2022 and 2021, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balance at year-end are presented as follows:
| For the period ended October 31 | ||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Cost of Revenue | Percentage of Cost of Revenue | Trade Payable | ||||||||||||||||||||||
| Vendor A | $ | $ | % | % | $ | $ | ||||||||||||||||||
| Vendor B | % | % | ||||||||||||||||||||||
| Vendor C | % | % | ||||||||||||||||||||||
| $ | $ | % | % | $ | $ | |||||||||||||||||||
16. SEGMENT INFORMATION
ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.
The Company had no inter-segment sales for the periods presented. Summarized financial information concerning the Company’s reportable segments is shown as below:
By Geography:
| For the period ended October 31, 2022 | ||||||||||||||||
| United States | Malaysia | Hong Kong | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| For the period ended October 31, 2021 | ||||||||||||||||
| United States | Malaysia | Hong Kong | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Net (loss)/profit | ( | ) | ( | ) | ( | ) | ||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
17. SIGNIFICANT EVENTS
On October 20, 2022, Phoenix Plus Corp. (the “Company”) filed a winding up petition against Vettons City Angels Sdn. Bhd (hereinafter referred as “VCASB”), in which the Company holds 33.9% interest in VCASB. VCASB was served with the winding up petition on October 26, 2022.
As of November 25, 2022, the court has fixed the date for the case management of the winding up petition on December 7, 2022 and subsequently, the hearing for the petition on May 31, 2023.
| F-14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K, dated October 28, 2022, for the year ended July 31, 2022 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
Phoenix Plus Corp., a Nevada Corporation, is a company that operates through its wholly owned subsidiary, Phoenix Plus Corp., a Company organized in Labuan, Malaysia. It should be noted that our wholly owned subsidiary, Phoenix Plus Corp., owns 100% of Phoenix Plus International Limited, an operating Hong Kong Company and 100% of Phoenix Green Energy Sdn. Bhd., an operating Malaysia company, which are described below.
We have a physical office in Malaysia with address of 2-3 & 2-5 Bedford Business Park, Jalan 3/137B, Batu 5, Jalan Kelang Lama, 58200 Kuala Lumpur, Malaysia which completed renovation in September 2019. The office space is 12,000 square feet with the tenancy agreement set to expire on June 30, 2023. These renovations include, but are not strictly limited to, preparing the interior of the office space for the Company’s use, improving functionality, and purchasing new office equipment. Our office space is rented by Phoenix Plus International Limited for a 12-month period from July 1, 2019 to June 30, 2020, for an initial down payment of MYR 13,500 and additional bi-monthly payments in the amount of MYR 4,500 over the course of the lease. The Company had decided to renew the tenancy agreement for another 12 months’ period at a monthly rental of MYR 6,500 from July 1, 2020 to June 30, 2021 with the landlord. The Company has further renewed the tenancy agreement for another 24 months with bi-monthly payments in the amount of MYR 7,500 over the course of the lease from July 1, 2021 to June 30, 2023. The Company has an option to renew after the end of the agreement.
Phoenix Plus Corp., through its Hong Kong subsidiary, is engaged in providing technical consultancy on solar power systems and consultancy on green energy solutions, with an additional focus on the commercialization of a targeted portfolio of solar products (amorphous thin film solar panels and ancillary products) and technologies for a wide range of applications including electrical power production. Our mission is to harness the power of the sun to meet the growing resource demands of sustainable 21st century development.
Phoenix Green Energy Sdn. Bhd. is also engaged in providing renewable energy turnkey solutions, including Engineering, procurement, construction and commissioning (“EPCC”), as well as financing services to domestic users, small businesses, corporate and institutional organization. We also provide associated services and products to complement our core services in EPCC, and construction and installation services. This includes provision of solar photovoltaic (PV) consulting and engineering services, operation and maintenance services, as well as supply of related equipment and ancillary construction materials such as PV module mounting system and gutters. Solar PV consulting and engineering services include preparation and submission of documentations to government authorities, facility audit and site surveys, and providing seminars and training services.
| 3 |
Results of Operation
For the three months ended October 31, 2022 and 2021
Revenues
For the three months ended October 31, 2022 and 2021, the Company has generated revenue of $15,132 and $19,918 respectively. The revenue represented income from solar PV system installation services, consultancy services provided to our customers on engineering, equipment procurement and transportation, construction on solar plant.
Cost of Revenue and Gross Margin
For the three months ended October 31, 2022 and 2021, cost incurred in providing consultancy services and installation services are $13,782 and $16,328 respectively. The Company generated gross profit of $1,350 and $3,590 for the three months ended October 31, 2022 and 2021 respectively.
General and administrative expenses
For the three months ended October 31, 2022 and 2021, we had incurred general and administrative expenses in the amount of $147,330 and $69,354. These expenses are comprised of salary, consultancy fees for listing advisory, professional fee, compliance fee, office and outlet operation expenses and depreciation.
Other Income
The Company recorded an amount of $1 and $35,153 as other income for the three months ended October 31, 2022 and 2021. This income is derived from the interest income and foreign exchange gain.
Net Loss
Our net loss for three months ended October 31, 2022 and 2021 were $145,979 and $30,669. The net loss mainly derived from the general and administrative expenses incurred.
| 4 |
Liquidity and Capital Resources
As of October 31, 2022 and 2021, we had cash and cash equivalents of $1,349,303 and $1,878,176. We expect increased levels of operations going forward will result in more significant cash flow and in turn working.
Cash Used In Operating Activities
For the three months ended October 31, 2022 and 2021, net cash used in operating activities was $174,300 and $32,696 respectively. The increase in cash used in operating activities was mainly for payment of general and administrative expenses, and selling and marketing expenses.
Cash Provided By Financing Activities
For the three months ended October 31, 2022 and 2021, net cash provided by financing activities was $0 and $0. The financing cash flow performance primarily reflects sale of common stock and collection of subscription receivables.
Cash Used In Investing Activities
For the three months ended October 31, 2022 and 2021, the net cash used in investing activities was $1,375 and $0. The investing cash flow performance primarily reflects the purchase of property, plant and equipment.
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of October 31, 2022.
Recent Accounting Pronouncements
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.
| 5 |
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of October 31, 2022. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Investment Officer. Based upon that evaluation, our Chief Executive Officer and Chief Investment Officer concluded that, as of October 31, 2022, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of October 31, 2022, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended October 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 6 |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
On August 8, 2022, the Company being a member of Vettons City Angels Sdn. Bhd (hereinafter referred as “VCASB”) holding 33.9% of the issued share capital of VCASB, had requested to convene an Extraordinary General Meeting (“EGM”) of VCASB pursuant to Section 310(b) and Section 311 of the Companies Act 2016 within 14 days from the date thereof and to be held at Level 5, Tower 8, Avenue 5, Horizon 2, Bangsar South City, 59200 Kuala Lumpur to explain on VCASB company business status and other related issues, yet the Company received no response from the director to the shareholders of VCASB.
The EGM was held on September 20, 2022, during the EGM the Company seek to discuss the operational affairs of VCASB, however, the EGM could not proceed further without the presence of the director of VCASB.
Given there were no response from VCASB, the Company on October 20, 2022 filed a winding up petition against VCASB. VCASB were served with the winding up petition on October 26, 2022.
As of November 25, 2022, the court has fixed the date for the case management of the winding up petition on December 7, 2022 and subsequently, the hearing for the petition on May 31, 2023.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None
| 7 |
ITEM 6. Exhibits
| Exhibit No. | Description | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 32.1 | Section 1350 Certification of principal executive officer * | |
| 101.INS | Inline XBRL Instance Document* | |
| 101.SCH | Inline XBRL Schema Document* | |
| 101.CAL | Inline XBRL Calculation Linkbase Document* | |
| 101.DEF | Inline XBRL Definition Linkbase Document* | |
| 101.LAB | Inline XBRL Label Linkbase Document* | |
| 101.PRE | Inline XBRL Presentation Linkbase Document* | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
| 8 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Phoenix Plus Corp. | ||
| (Name of Registrant) | ||
| Date: December 14, 2022 | ||
| By: | /s/ FONG TECK KHEONG | |
| Title: | Chief Executive Officer, President, Director, Secretary and Treasurer | |
| 9 |