UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
	or
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 333-209591

 

Phoenix Apps Inc.

(Exact name of registrant as specified in its charter)

 

Nevada		61-1779183
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
1258 – 720 King Street West, Suite 200, Toronto, Ontario, Canada		M5V 3S5
(Address of principal executive offices)		(Zip Code)

 

(239) 451-36016

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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. ¨ YES    x 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ YES    x NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x
			Emerging growth company	x

 

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    x NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨ YES    ¨ NO

 

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.

 

45,300,000 common shares issued and outstanding as of November 7, 2017.

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements		3
Item 2.	Management’s Discussion and Analysis of Financial Condition or Plan of Operation		10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		14
Item 4.	Controls and Procedures		14
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		15
Item 1A.	Risk Factors		15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		15
Item 3.	Defaults Upon Senior Securities		15
Item 4.	Mine Safety Disclosures		15
Item 5.	Other Information		15
Item 6.	Exhibits		16
SIGNATURES			17

 

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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PHOENIX APPS INC.

Condensed Balance Sheets

 

		June30, 2017				December 31, 2016
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	1,086			$	14,392
Total Current Assets			1,086				14,392
TOTAL ASSETS			1,086				14,392
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities		$	55,535			$	28,087
Accrued Interest			519				-
Total Current Liabilities			56,054				28,087
Note Payable			21,977				-
Total Liabilities			78,031				28,087
Stockholders’ Deficit
Preferred stock: 10,000,000 authorized; $0.002 par value no shares issued and outstanding
Common Stock: 190,000,000 authorized; $0.002 par value 45,300,000 shares issued and outstanding			90,600				90,600
Additional paid-in capital			107,500				107,500
Accumulated deficit			(275,045	)			(211,795	)
Total Stockholders’ Deficit			(76,945	)			(13,695	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	1,086			$	14,392

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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PHOENIX APPS INC.

Condensed Statements of Operations

(Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2017				2016				2017				2016
REVENUE, NET OF FEES		$	667			$	977			$	1,258			$	3,507
OPERATING EXPENSES
Professional fees			22,703				6,413				23,453				13,188
Software development			775				8,220				5,265				8,820
General and administrative			15,641				9,730				35,271				13,404
Total Operating Expenses			39,119				24,363				63,989				35,412
LOSS FROM OPERATIONS			(38,452	)			(23,386	)			(62,731	)			(31,905	)
OTHER EXPENSES
Interest expense			(278	)			-				(519	)			-
			(278	)			-				(519	)			-
LOSS BEFORE INCOME TAXES			(38,730	)			(23,386	)			(63,250	)			(31,905	)
Provision for income taxes			-				-				-				-
NET LOSS		$	(38,730	)		$	(23,386	)		$	(63,250	)		$	(31,905	)
Basic and Diluted Loss per Common Share		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Basic and Diluted Weighted Average Common Shares Outstanding			45,300,000				30,300,000				45,300,000				30,300,000

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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PHOENIX APPS INC.

Condensed Statements of Cash Flows

(Unaudited)

 

		Six  Months Ended
		June 30,
		2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(63,250	)		$	(31,905	)
Changes in operating assets and liabilities:
Accounts receivable			-				(1,082	)
Prepaid expenses			-				(3,294	)
Accounts payable and accrued liabilities			27,448				16,176
Accrued interest			519				-
Net cash used in operating activities			(35,283	)			(20,105	)
CASH FLOWS FROM FINANCING ACTIVITIES
Deferring offering costs			-				(25,000	)
Investor deposits			-				65,947
Advances from related party			-				33,714
Proceeds from promissory notes – related party			-				7,923
Repayment to advances and promissory notes – related party			-				(41,637	)
Proceeds from promissory note			21,977				-
Net cash provided by financing activities			21,977				40,947
Net increase (decrease) in cash and cash equivalents			(13,306	)			20,842
Cash and cash equivalents - beginning of period			14,392				-
Cash and cash equivalents - end of period		$	1,086			$	20,842
Supplemental Cash Flow Disclosures
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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PHOENIX APPS INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

(Unaudited)

 

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

 

Phoenix Apps Inc. (the “Company” or we), was incorporated in the State of Nevada on November 18, 2015 and commenced operations on November 30, 2015. The Company develops Android and Apple mobile applications. The Company’s fiscal year end is December 31.

 

On November 30, 2015, we acquired a portfolio of mobile software applications for smartphones and tablets (“Apps”) pursuant to an Asset Purchase Agreement (the “Agreement”), by and between the Company and third parties.

 

Under the terms of the Agreement the parties agreed to sell certain assets, properties and contractual rights to the Company for $60,000 (the “Acquisition”). The $60,000 was paid by a related party and subsequently the Company provided 30,000,000 shares of common stock to the related party for the $60,000 payment and for $12,500 payment for legal fees. Further under the terms of the Agreement, the Company will employee two managers for a minimum term of one year. In addition, the individuals will be entitled to 10% of the Company’s annual profits as defined by the Agreement. The Company allocated the $60,000 purchase price to intangible assets as the assets purchased were without physical substance, and were paid by the related party. The intangible asset value was recorded as the full purchase price, and subsequently impaired as at December 31, 2015. Further under the terms of the Agreement the employees were issued a total of 300,000 shares of common stock valued at par, $0.002 per share.

 

On May 13, 2016, the Company’s offering of 15,000,000 shares at $0.01 per share for total proceeds of $150,000 received a notice of effect from the Securities and Exchange Commission and the Company commenced raising capital to fully implement its business plan. The offering was closed, and proceeds of $150,000 were received in relation to the 15,000,000 shares being issued, of which $25,000 was recorded as additional paid-in capital resulting from direct legal costs to complete the offering.

 

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company’s year-end is December 31.

 

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

 

Revenue Recognition

The Company recognizes revenue from the sale of products and services in accordance with ASC 605,”Revenue Recognition.”

 

The Company recognizes revenue from services only when all of the following criteria have been met:

 

	i)	Persuasive evidence for an agreement exists;
	ii)	Service has been provided;
	iii)	The fee is fixed or determinable; and,
	iv)	Collection is reasonably assured.

 

Revenue related to multi-media downloads is fully recognized when the above criteria are met.

 

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Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

 

Fair Value of Financial Instruments

ASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

 

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

 

Research and Development Expenses

We follow ASC 730-10, “Research and Development,” and expense research and development costs when incurred. Accordingly, research and development costs for Software and Apps are expensed when the work has been performed or milestone results have been achieved. Research and development costs of $5,265 and $8,820 were incurred for the six months ended June 30, 2017 and 2016, respectively.

 

Basic and Diluted Income (Loss) Per Share

The Company computes income (loss) per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

 

No potentially dilutive debt or equity instruments were issued or outstanding during the six months ended June 30, 2017 and 2016.

 

Recent accounting pronouncements

In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-06, “Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting.” Among other things, the amendments require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments also remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments. The amendments require all plans to disclose: (a) their master trust’s other asset and liability balances; and (b) the dollar amount of the plan’s interest in each of those balances. Lastly, the amendments eliminate redundant investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets. Effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.

 

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In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. Effective at the same time as the amendments in Update 2014-09, Revenue from Contracts with Customers (Topic 606). Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. All other entities may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance. An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update 2014-09. The Company is currently evaluating the potential impact this standard may have on its financial position and results of operations.

 

In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.

 

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.

 

Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

 

NOTE 3 – GOING CONCERN

 

As of the six months ended June 30, 2017, the accumulated deficit of the Company is $275,045. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2017 based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of an increase in revenue and a decrease in certain operating expenses, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

 

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NOTE 4 – RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such a time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors.

 

NOTE 5 - NOTES PAYABLE

 

On January 11, 2017, the Company issued a Promissory Note for $21,977. The note bears interest at a rate of 5% per annum and the maturity date is December 31, 2019.

 

As of June 30, 2017, the accrued interest related to this promissory note was $519.

 

NOTE 6 – STOCKHOLDER’S EQUITY

 

Preferred Stock

The Company has authorized 10,000,000 preferred shares with a par value of $0.002 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. No shares of preferred stock have been issued.

 

Common Stock

The Company has authorized 190,000,000 common shares with a par value of $0.002 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

As of June 30, 2017 and December 31, 2016, the Company has 45,300,000 shares of common stock issued and outstanding.

 

During the year ended December 31, 2016, the Company received proceeds in the total amount of $150,000 from investors under the Company’s current offering at $0.01 per share, of which $25,000 was recorded as additional paid-in capital resulting from direct legal costs to complete the offering. A total of 15,000,000 common shares related to the offering were issued on October 10, 2016.

 

NOTE 7 – SUBSEQUENT EVENTS

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2017 to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our consolidated unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

 

As used in this quarterly report, the terms “we”, “us”, “our company”, mean Phoenix Apps Inc., a Nevada corporation, unless otherwise indicated.

 

Corporate Overview

 

We were originally organized as a corporation in the State of Nevada on November 18, 2015, and on November 30, 2015, we acquired a portfolio of mobile software applications for smartphones and tablets (“Apps”) pursuant to an Asset Purchase Agreement, entered into by and between the Company and the owners of the Apps, Corey Wadden and Saba Mirzaagha, both individuals residing in Ontario, Canada (“Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, we purchased the portfolio of Apps from Mr. Wadden and Mr. Mirzaagha for an aggregate purchase price of $60,000 and entered into an employment agreement with each of them. Pursuant to the employment agreements, which are effective January 6, 2016, each of Mr. Wadden and Mr. Mirzaagha are required to devote at least ten (10) hours per week to the Company’s business during their term of employment, which is for a minimum of one (1) year. After one (1) year, either party may terminate the agreement upon sixty (60) days notice to the other party.

 

Under each employment agreement, we agreed to provide to Mr. Wadden and Mr. Mirzaagha each: (a) five hundred dollars ($500.00) for the first three (3) months following the effective date of January 6, 2016; (b) one thousand dollars ($1,000.00) per month thereafter; (c) 150,000 restricted shares of the Company’s common stock effective November 30, 2015; and (d) an appointment to our Board of Directors. In addition, after the effective date of January 6, 2016, as an incentive payment, each of Mr. Wadden and Mr. Mirzaagha will be paid ten percent (10%) of the Company’s profits (with “profits” defined as the Company’s total revenue minus total expenses) on an annual basis while they are employed by the Company, pro-rated for partial years.

 

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We offer free Apps and paid Apps. Consumers download our Apps through the Apple App Store or the Amazon App Store. We believe that we have a unique strategy which we will utilize for our App development process. There are three essential steps which we will follow from inception to release.

 

Analyze - We study the market on a regular daily or weekly basis and study the top selling and popular new apps in order to discern what makes these apps popular and appealing.

 

Emulate – After studying the market, we screen top apps for ones that we feel we can improve on, cost effectively and efficiently. We take apps that have a proven demand in the marketplace, emulate the core concept and create what we believe to be a better product.

 

Development – The development is done both locally and overseas, depending on the complexity of the App, number of anticipated changes during development and price.

 

The markets for our Apps are characterized by rapid technological change, particularly in the technical capabilities of smartphones and tablets, and changing end-user preferences. Therefore, we will be required to continuously invest capital to innovate and publish new Apps and modify existing Apps. We cannot assure that we will have adequate capital to develop new Apps or modify existing Apps, or that we will be successful in creating new Apps.

 

Competition

 

We believe that the Apps have the following strengths and weaknesses, relative to the competition in the market:

 

Strengths and Opportunities

 

-

Unique and novel apps and reliable source codes. The market currently includes many apps which are copycat apps; our Apps however are original and novel in their category.

 

-

We believe that we can increase our revenue from the development of new apps and improving certain apps that already exist within our portfolio.

 

Weaknesses

 

-

Lack of marketing: Our most significant weakness is that we have never had sufficient capital to undertake any amount of marketing. If we are unable to generate sufficient revenue or financing, we will not have funds to be used in marketing to grow our business.

 

-

Android OS updates. So far the Apps have been updated to the latest available Android 6.0 Marshmallow version, but future updates could break some functionalities. With each Android update, some of our Apps’ functionalities become unusable and we must then update our Apps to cure such broken functionalities. Typically, users of Android devices download new operating systems a slow pace and therefore it is anticipated that it will take at least 2 years for the effects to be realized.

 

-

Workability. We cannot guarantee that we can make all of our Apps will work with all versions of Android devices. Therefore, we must predict how our customer base will adopt new Android operating system versions and modify our Apps to work with the highest percentage of its customers’ devices.

 

Target Market

 

Phoenix Apps is focused on operating through the Apple App Store and the Amazon App Store.

 

Marketing Strategy

 

On the majority of the Apps we will develop, we intend to offer a free basic version to advertise for a paid premium version of the same App. We believe that free Apps will create the most opportunities for downloads of our Apps.

 

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We will study analytics related to number of downloads of our Apps, daily rankings of our Apps in the Apple App Store and Amazon App Store, how often users use the Apps after purchasing, and sales of Apps. We will use the analytics to make changes to our Apps in an effort to increase sales of the Apps.

 

We also intend to utilize Facebook, Twitter, and YouTube in an effort to build a customer base for our Apps.

 

Results of Operations

 

The following table provides selected financial data about our company for the period ended June 30, 2017 and the year ended December 31, 2016.

 

		June 30, 2017				December 31, 2016				Change				%
Cash and cash equivalents		$	1,086			$	14,392			$	(13,306	)			(92	)
Total Assets		$	1,086			$	14,392			$	(13,306	)			(92	)
Total Liabilities		$	78,031			$	28,087			$	49,944				178
Stockholders’ Deficit		$	(76,945	)		$	(13,695	)		$	(63,250	)			462

 

The following summary of our results of operations, for the three and six months ended June 30, 2017, should be read in conjunction with our financial statements, as included in this Form 10-Q.

 

Three months ending June 30, 2017 compared to three months ending June 30, 2016:

 

		Three Months Ended
		June 30, 2017				June 30, 2016				Change				%
Revenue		$	667			$	977			$	(310	)			(32	)
Professional fees			22,703				6,413				16,290				254
Software development			775				8,220				(7,445	)			(91	)
General and administrative			15,641				9,730				5,911				61
Interest expense			278				-				278				-
Net loss		$	(38,730	)		$	(23,386	)		$	14,724				(63	)

 

For the three months ended June 30, 2017 we had revenue of $667 compared to revenue of $977 for the three months ended June 30, 2016.

 

For the three months ended June 30, 2017, we incurred $22,703 in professional fees, $775 in software development, $15,641 in general and administrative expenses and $278 in interest expense, resulting in net loss of $38,730. For the three months ended September 30, 2016, we incurred $6,413 in professional fees, $8,220 in software development and $9,730 in general and administrative expenses, resulting in net loss of $23,386. The increase in net loss for the three months ended June 30, 2017 compared to June 30, 2016 was primarily attributed to the increase in audit and legal fees related to the Company’s SEC filings.

 

Six months ending June 30, 2017 compared to Six months ending June 30, 2016:

 

		Six Months Ended
		June30, 2017				June 30, 2016				Change				%
Revenue		$	1,258			$	3,507			$	(2,249	)			(64	)
Professional fees			23,453				13,188				10,265				78
Software development			5,265				8,820				(3,555	)			(40	)
General and administrative			35,271				13,404				21,867				163
Interest expense			519				-				519				-
Net loss		$	(63,250	)		$	(31,905	)		$	26,847				(84	)

 

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For the six months ended June 30, 2017 we had revenue of $1,258 compared to revenue of $3,507 for the six months ended June 30, 2016.

 

For the six months ended June 30, 2017, we incurred $23,453 in professional fees, $5,265 in software development and $35,271 in general and administrative expenses and $519 in interest expense, resulting in net loss of $63,250. For the six months ended June 30, 2016, we incurred $13,188 in professional fees, $8,820 in software development and $13,404 in general and administrative expenses, resulting in net loss of $31,905. The increase in net loss for the six months ended June 30, 2017 compared to June 30, 2016 was primarily attributed to the increase in audit and legal fees related to the Company’s SEC filings and increase in transfer agent and filing fees.

 

Liquidity and Capital Resources

 

To date, we have funded our operations primarily with capital provided by our largest shareholder, proceeds from a promissory note, income from operations, and proceeds from our offering of common stock. We do not currently have commitments in regards to fixed costs.

 

As of June 30, 2017 the Company had $1,086 in cash on hand, compared to $14,392 of cash on hand as of December 31, 2016. Since the Company is unable to reasonably project its future revenue, it must presume that it will not generate revenue to sustain its operations during 2017 based on its current operating plan and condition. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

 

Working Capital

 

		June 30, 2017				December 31, 2016				Change				%
Current Assets		$	1,086			$	14,392			$	(13,306	)			(92	)
Current Liabilities		$	56,054			$	28,087			$	27,967				100
Working Capital (Deficit)		$	(54,968	)		$	(13,695	)		$	(41,273	)			301

 

Cash Flows

 

		June 30, 2017				June 30, 2016
Cash Flows used in Operating Activities		$	(35,283	)		$	(20,105	)
Cash Flows from Financing Activities			21,977				40,947
Net Decrease in Cash During Period		$	(13,306	)		$	20,842

 

As at June 30, 2017 our company’s cash balance was $1,086 and total assets were $1,086. As at December 31, 2016, our company’s cash balance was $14,392 and total assets were $14,392.

 

As at June 30, 2017, our company had total liabilities of $78,031, compared with total liabilities of $28,087 as at December 31, 2016.

 

As at June 30, 2017, our company had working capital deficit of $54,968 compared with working capital deficit of $13,695 as at December 31, 2016. The increase in working capital deficit was primarily attributed to the increase in operating expenses during the six months ended Jun 30, 2017 which increase the accounts payable and accrued liabilities and reduce the cash and cash equivalents.

 

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Cash Flow from Operating Activities

 

During the six months ended June 30, 2017, our company used $35,283 in cash from operating activities, compared to $20,105 cash used in operating activities during the six months ended June 30, 2016. The cash used from operating activities for the six months ended June 30, 2017 was attributed to net loss of $63,250 reduced by increase in accounts payable and accrued liabilities of $27,448 and increase in accrued interest of $519.

 

Cash Flow from Investing Activities

 

The company did not use any funds for investing activities in the six months ended June 30, 2017 or the six months ended June 30, 2016.

 

Cash Flow from Financing Activities

 

Net cash from financing activities was $21,977 for the six months ended June 30, 2017 compared to net cash from financing activities of $40,947 for the six months ended June 30, 2016. The net cash provided from financing activities for the six months ended June 30, 2017 was attributable to proceeds from promissory note of $21,977. The net cash provided from financing activities for the six months ended June 30, 2016 was attributable to $65,947 from investor deposits, $33,714 from related party advancement, $7,923 proceeds from related party promissory notes and were offset by $41,637 repayment to related party promissory notes and $25,000 deferred offering costs.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended June 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by 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.

 

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Item 6. Exhibits

 

The following exhibits are included as part of this report:

 

Exhibit Number		Description
(31)		Rule 13a-14(a)/15d-14(a) Certification
31.1		Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(32)		Section 1350 Certification
32.1		Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
101		Interactive Data Files
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

________

* XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	PHOENIX APPS INC.
	(Registrant)
Dated: November 14, 2017	/s/ Yi Xing Wang
	Yi Xing Wang
	President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
	(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

 

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