The following discussion of our financial condition and results of operations
should be read in conjunction with our audited consolidated financial statements
and the notes to those financial statements appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking statements. These
forward-looking statements include statements, which involve risks and
uncertainties, regarding, among other things, (a) our projected sales,
profitability, and cash flows, (b) our growth strategy, (c) anticipated trends
in our industry, (d) our future financing plans, and (e) our anticipated needs
for, and use of, working capital. They are generally identifiable by use of the
words "may," "will," "should," "anticipate," "estimate," "plan," "potential,"
"project," "continuing," "ongoing," "expects," "management believes," "we
believe," "we intend," or the negative of these words or other variations on
these words or comparable terminology. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this filing will in fact occur. You should not place undue reliance
on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statements are made or to reflect the
occurrence of unanticipated events.
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 and to date the Company has spent $114,263 towards ongoing renovations.
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.
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 from 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 PV consulting and
engineering services, O&M 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 authorities, facility audit and site surveys, and providing
seminars and training services.
Our business is to market and sell solar power products, systems and services.
Specifically, we intend to engage in the following:
? Provide end-to-end services from engineering design, planning and procurement,
construction and installation up to testing and commissioning;
? Construction and installation of solar PV facilities including residential,
commercial and industrial properties, and.
? Associated services and products to complement our core business in the
provision of EPCC, and construction and installation services, including the
provision of solar PV consulting and engineering, and operations and
maintenance services, as well as supply of solar PV equipment and ancillary
system such as gutter and mounting system.
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Results of Operations
Revenue
The Company generated revenue of $20,826 and $66,267 for the year ended July 31,
2022 and 2021. The revenue represented income from consultancy services provided
to our customers on engineering, equipment procurement and transportation,
construction on solar plant and solar PV system installation services.
Cost of Revenue and Gross Margin
For the year ended July 31, 2022 and 2021, cost incurred in providing
consultancy services and installation services is $16,987 and $53,787. The
Company generated gross profit of $3,839 and $12,480 for the year ended July 31,
2022 and 2021.
Selling and Marketing Expenses
Selling and distribution expenses for the year ended July 31, 2022 and 2021
amounted to $0 and $40,457 respectively. These expenses comprised expenses on
website and website maintenance, marketing and networking event, and travelling
expenses.
General and Administrative Expenses
General and administrative expenses for the year ended July 31, 2022 and 2021
amounted to $304,068 and $192,994 respectively. These expenses are comprised of
salary, consultancy fees for listing advisory, professional fee, compliance fee,
office and outlet operation expenses and depreciation.
Other operating expenses
Other operating expenses for the year ended July 31, 2022 and 2021 amounted to
$321,526 and $180,058 respectively. These expenses derived from lease interest,
depreciation, amortization and foreign exchange loss.
Other Income
The Company recorded an amount of $12,138 and $62,678 as other income for the
year ended July 31, 2022 and 2021 respectively. This income is derived from
foreign exchange gain and bank interest income.
Net Loss and Net Loss Margin
The net loss was $609,617 for the year ended July 31, 2022 as compared to
$338,351 for the year ended July 31, 2021. The increase in net loss of $271,266
was resulted from the increase in selling and distribution expenses and general
and administrative expenses incurred. Taking into the loss for the year ended
July 31, 2022, the accumulated loss for the Company has increased from
$1,150,796 to $1,760,413.
Liquidity and Capital Resources
As of July 31, 2022, we had cash and cash equivalents of $1,537,864 as compared
to $1,910,872 for the year ended July 31, 2021. We expect increased levels of
operations going forward will result in more significant cash flow and in turn
working.
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Cash Used In Operating Activities
For the year ended July 31, 2022 and 2021, net cash used in operating activities
was $367,820 and $279,176. The cash used in operating activities was mainly for
payment of general and administrative expenses.
Cash Provided By Financing Activities
For the financial year ended July 31, 2022 and 2021, the net cash provided in
financing activities was $0 and $782,000. The financing cash flow performance
primarily reflects the subscriptions receivables.
Cash Used In Investing Activities
For the financial year ended July 31, 2022 and 2021, the net cash used in
investing activities was $3,042 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.
Critical Accounting Policies and Estimates
Basis of presentation
The consolidated financial statements for Phoenix Plus Corp. and its
subsidiaries for the year ended July 31, 2022 is prepared in accordance with
accounting principles generally accepted in the United States of America ("US
GAAP") and include the accounts of Phoenix Plus Corp. and its wholly owned
subsidiaries, Phoenix Plus Corp. and Phoenix Plus International Limited.
Intercompany accounts and transactions have been eliminated on consolidation.
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 year reported. Actual results may differ from these
estimates.
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.
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 in providing business mentoring,
nurturing, incubating and corporate development advisory services
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 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.
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 greater than 50% likelihood of
being realized upon ultimate settlement with the tax authority assuming full
knowledge of the position and relevant facts.
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Net loss per share
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 year.
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$") respectively, while the Company's subsidiary in
Malaysia maintains its books and record in Ringgit Malaysia ("MYR"). Ringgit
Malaysia ("MYR") is functional currency as being the primary currency of the
economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary
whose functional currency is not the US$ 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 year. 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 year:
As of and for the year ended July 31,
2022 2021
Year-end MYR: US$1 exchange rate 4.45 4.22
Year-average MYR: US$1 exchange rate 4.25 4.12
Year-end HK$: US$1 exchange rate 7.85 7.77
Year-average HK$: US$1 exchange rate 7.81 7.76
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.
Fair value of financial instruments:
The carrying value of the Company's financial instruments: cash and cash
equivalents, 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
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," to increase
transparency and comparability among organizations by recognizing lease assets
and lease liabilities on the balance sheet and disclosing key information about
leasing arrangements. Most prominent among the amendments is the recognition of
assets and liabilities by lessees for those leases classified as operating
leases under current U.S. GAAP. ASU 2016-02 is effective for fiscal years
beginning after December 15, 2018, including interim periods within those fiscal
years. As required by the standard, the Company will adopt the provisions of the
new standard effective August 1, 2019, using the required modified retrospective
approach. We believe the adoption will not have a material impact on our
financial statements.
Recent accounting pronouncements
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.
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.
FASB 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.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements
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