U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM SB-2/A REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMENDMENT 2
---------------------
ROYAL PHOENIX
---------------------------------------------
(Name of small business issuer in its charter)
Nevada 5400 88-0475757
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) Number)
organization)
4180 S. Sandhill Rd., Suite B-9
Las Vegas, NV 89121
(702) 866-5835
(Address and telephone number of principal executive offices)
---------------------
4180 S. Sandhill Rd., Suite B-9
Las Vegas, NV 89121
(Address of principal place of business or intended principal place of
business)
Joseph Scott Wilson, President
ROYAL PHOENIX
4180 S. Sandhill Rd., Suite B-9
Las Vegas, NV 89121
(702) 866-5835
(Name, address and telephone number of agent for service)
--------------------
Copies of Communications to:
Donald J. Stoecklein, Esq.
Stoecklein Law Group
Emerald Plaza
402 West Broadway, Suite 400
San Diego, CA 92101
(619) 595-4882
Approximate date of commencement of proposed sale to public:
As soon as practicable after the registration statement becomes effective
--------------------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
Calculation of Registration Fee
Proposed
Offering Proposed
Price Maximum
Amount to Per Aggregate Amount of
Title of Each Class of be Share Offering Registration
Securities to be Registered Registered (1) Price (1) Fee
Common Stock, $.001 par value 250,000 $0.10 $25,000 $6.25
-----------------------------------------
TOTAL 250,000 N/A $25,000 $6.25
=========================================
(1) The proposed maximum offering price is estimated solely for the purpose
of determining the registration fee and calculated pursuant to Rule 457(c).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Subject to Completion, dated _______ __, 2001
Initial Public Offering
PROSPECTUS
ROYAL PHOENIX
250,000 Shares of Common Stock
$0.10 per share
The Offering
Per share Total
Public Price. $0.10 $25,000
Commissions. $0 $0
Proceeds to ROYAL PHOENIX. $0.10 $25,000
We are offering to the public 250,000 shares of common stock on a "best
efforts" basis through our sole officer and director. If we do not sell all
250,000 shares within 180 days after commencement of this offering, the
offering will terminate and all money paid for shares will be promptly
returned to the purchasers, without interest and without deduction.
This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price of our
shares after the offering. There is no minimum purchase requirement and no
arrangement to place funds in an escrow, trust, or similar account.
________________________
An investment in our common stock involves a high degree of risk. You should
purchase our common stock only if you can afford a complete loss of your
purchase. See "Risk Factors" beginning on page 4 for a discussion of certain
matters that you should consider prior to purchasing any of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
________________________
The information contained in this prospectus is subject to completion or
amendment. We have filed a registration statement with the Securities and
Exchange Commission relating to the securities offered in this prospectus.
We may not sell these securities nor may we accept any offers to buy the
securities prior to the time the registration statement becomes effective.
This prospectus is not an offer to sell or a solicitation of an offer to buy
any securities. We shall not sell these securities in any state where such
offer, solicitation or sale would be unlawful before we register or qualify
the securities for sale in any such State.
THE DATE OF THIS PROSPECTUS IS _________________, 2001.
Table of Contents
Prospectus Summary 1
Summary Financial Information 2
Capitalization 2
Risk Factors 3
Special Not Regarding Forward-Looking Information 6
Use of Proceeds 7
Determination of Offering Price 8
Dilution 8
Plan of Distribution and Terms of the Offering 9
Litigation 10
Management 10
Principal Stockholders 11
Description of Securities 11
Legal Matters 13
Experts 13
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities 14
Our Business 15
Reports to Stockholders 20
Management's Discussion and Analysis of Financial
Condition and Results of Operations 20
Facilities 21
Market Price Of Common Stock 22
Dividends 22
Executive Compensation 22
Certain Relationships and Related Party Transactions 23
Shares Eligible for Future Sale 23
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 24
Index to Financial Statements 25
Report of Independent Certified Public Accountant F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6
Prospectus Summary
Royal Phoenix is a Development Stage Company, incorporated in the State of
Nevada in October of 2000. Royal Phoenix was initially a wholly owned
subsidiary of Desert Health Products, Inc. ("Desert Health Products");
however it was decided by Desert Health Products to separate out Royal
Phoenix from Desert Health Products. Under the terms and conditions of the
Separation and Distribution Agreement entered into between Royal Phoenix and
Desert Health Products on October 18, 2000, as amended June 22, 2001, Royal
Phoenix agreed to issue 10,000 shares of common stock of Royal Phoenix to
Desert Health Products. Royal Phoenix is a provider of herbal products via
internet sales. Under the terms and conditions of a "License, Manufacture and
Distribution Agreement," executed between Desert Health Products and Royal
Phoenix on October 18, 2000, Desert Health Products will continue to
manufacture, package, ship, and handle credit card processing of Royal
Phoenix products. This relationship will allow Royal Phoenix to concentrate
on the marketing of herbal products. In addition Royal Phoenix may pursue
and market other vitamin products which will be private labeled specifically
for Royal Phoenix by companies other than Desert Health Products.
ROYAL PHOENIX's address and phone number is:
ROYAL PHOENIX
4180 S. Sandhill Rd.
Suite 18-A
Las Vegas, Nevada 89121
(702) 866-5835
The Offering
Securities Offered. 250,000 shares of common stock
Price Per Share. $0.10
Minimum Purchase. NONE
Common Stock Outstanding
before Offering. 710,000 shares of common stock
Common Stock Outstanding
after Offering. 960,000 shares of common stock
Estimated Total Proceeds. $25,000
Net Proceeds After Offering Expenses. $19,000
Proposed OTCBB Symbol. RPHX
Use of Proceeds. The proceeds of the offering will be
used for website development, product
branding & analysis and general
working capital.
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary financial data derived from our
financial statements. The data should be read in conjunction with the
financial statements, related notes and other financial information included
in this prospectus.
Operating Statement Data: For the
Period
Nine Months October 17,
ending 2000
September 30, (Inception)
2001 to
(audited) September
30, 2001
(audited)
Income Statement Data:
Revenues: $ 0 $ 0
Expenses: 6,090 $18,393
---------------------------
Net (Loss) from Operations $ (6,090) $ (18,393)
===========================
Loss per share $ (0.01) $ (0.03)
===========================
Balance Sheet Data: At September
30, 2001
(audited)
Total Assets. $ 2,907
Liabilities. 0
-------------
Stockholders' Equity. $ 2,907
=============
CAPITALIZATION
The following table sets forth our capitalization at September 30, 2001,
after giving effect to and as adjusted to give effect to the sale of the
250,000 shares offered in this prospectus.
ACTUAL
At AS
September ADJUSTED
30, 2001
(audited)
Current Liabilities: $ 0 $ 0
Stockholders' Equity:
Common Stock, $0.001 par value; 20,000,000 shares
authorized;
710,000 shares issued and outstanding 710
960,000 shares issued and outstanding as adjusted
following 250,000 share offering 0 960
Preferred Stock, $0.001 par value; 5,000,000
shares authorized: no shares issued 0 0
Additional paid-in capital 20,590 45,340
Deficit accumulated during development stage (18,393) (24,393)
---------------------
Stockholders' Equity 2,907 21,907
---------------------
Total Capitalization $ 2,907 $ 21,907
=====================
Risk Factors
Investors in Royal Phoenix should be particularly aware of the inherent risks
associated with our business. As of the date of this filing our management is
aware of the following material risks.
We are a development stage company organized in October 2000 and have no
operating history, which makes an evaluation of us extremely difficult. At
this stage of our business operations, even with our good faith efforts,
potential investors have a high probability of losing their investment.
We were incorporated in October of 2000 as a wholly owned subsidiary of
Desert Health Products. Concurrent with formation it was determined to
separate out Royal Phoenix. As a result of our recent start up Royal Phoenix
has yet to generate revenues from operations and has been focused on
organizational, start-up, and market analysis activities since we
incorporated. Although we have product to market as a result of our license
with Desert Health Products, there is nothing at this time on which to base
an assumption that our business operations will prove to be successful or
that we will ever be able to operate profitably. Our future operating results
will depend on many factors, including our ability to raise adequate working
capital, demand for our products, the level of our competition and our
ability to attract and maintain key management and employees. You should not
invest in this offering unless you can afford to lose your entire investment.
We are significantly dependent on our sole officer and director, who has
limited experience. The loss or unavailability to Royal Phoenix of Mr.
Wilson's services would have an adverse effect on our business, operations
and prospects.
Our business plan is significantly dependent upon the abilities and continued
participation of Joseph Scott Wilson, our sole officer and director.
Although Mr. Wilson is not irreplaceable it would be difficult to replace Mr.
Wilson at such an early stage of development of Royal Phoenix. The loss by or
unavailability to Royal Phoenix of Mr. Wilson's services would have an
adverse effect on our business, operations and prospects. There can be no
assurance that we would be able to locate or employ personnel to replace Mr.
Wilson, should his services be discontinued. In the event that we are unable
to locate or employ personnel to replace Mr. Wilson, then, in that event we
would be required to cease pursuing our business opportunity, which could
result in a loss of your investment.
Mr. Wilson is involved with other businesses and there can be no assurance
that he will continue to provide services to us. Mr. Wilson's limited time
devotion to Royal Phoenix could have an adverse effect on our operations.
As compared to many other public companies, we do not have the depth of
managerial or technical personnel. Mr. Wilson is involved with other
businesses and there can be no assurance that he will continue to provide
services to us. Mr. Wilson will devote only a portion, less than 10 hours per
month, of his time to our activities. As our sole officer and director,
decisions are made at his sole discretion and not as a result of compromise
or vote by members of a board.
We are highly dependent on Desert Health Products for our product.
We have entered into a license, manufacture, and distribution agreement
with Desert Health Products that provides us with our product. If Desert
Health Products were to become insolvent or choose to discontinue the supply
of our products, it may have a material adverse effect on our business and
plan of operations. Without the manufacture and distribution of our products,
we would be forced to seek alternative production and shipping facilities.
We have located alternative production and distribution facilities for
production and shipping facilities of the same or similar products; however,
there is no assurance that the products and services would be available on
the same price margins or quantities as those products and services provided
by Desert Health Products.
We will require additional financing in order to implement our marketing
plan.
Due to our start-up nature, we will have to incur the costs of developing
professional marketing materials, hiring new employees and commencing
marketing activities for our herbal products. To fully implement our business
plan we will require substantial additional funding. This offering, if
successful, will only enable us to maintain minimum operations and working
capital requirements and will assist us in further developing our initial
business operations.
Following this offering we will need to raise additional funds to expand our
operations. We plan to raise additional funds through a private placement,
registered offering, debt financing or other sources to maintain and expand
our operations. Adequate funds for this purpose on terms favorable to us may
not be available, and if available, on terms significantly more adverse to us
than are manageable. Without new funding, we may be only partially successful
or completely unsuccessful in implementing our business plan, and our
stockholders may lose part or all of their investment.
We may never become profitable or sell any of our herbal products.
We have had no revenue since our incorporation in October 2000. We have yet
to undertake the sale of our herbal products or develop our website. Even
after we commence distribution of our product there is no guarantee that we
will become profitable. Our industry is highly competitive and there is no
guarantee that we will be able to secure the business of our target buyers.
As a result of the Cost and Availability of Raw Materials we may have a
substantial increase in the price of our Raw Materials which could result in
the loss of revenues.
Many of the ingredients contained in our products are not commodities, so
price risk cannot be hedged with traditional futures contracts. In addition,
some of these plants are picked in the wild, rather than farm cultivated,
resulting in a highly unstable supply. This uncertain supply, in combination
with the possibility of continued increases in demand, could result in
significant increases in the price of the raw materials used in our products.
In addition, if due to supply shortages Royal Phoenix is unable to meet the
demand of its customers, even if for a short time, the result could be a long-
term decrease in sales of our Products. Our ability to increase the price of
our licensed products to adjust for increases in raw material costs is
limited and there can be no assurance that an adequate supply of ingredients
will be available to us and on terms commercially viable to us in order for
it to meet its supply obligations to customers. There can be no assurance
that raw materials will continue to be available on terms commercially
reasonable to us.
Our auditor's report reflects the fact that without realization of additional
capital, it would be unlikely for us to continue as a going concern.
As a result of our deficiency in working capital at September 30, 2001 and
other factors, our auditors have included a paragraph in their report
regarding substantial doubt about our ability to continue as a going concern.
Our plans in this regard are to seek additional funding through this offering
and future equity private placements or debt facilities.
We may not compete successfully in our industry.
There are a number of companies that compete directly and indirectly with us.
Many of these companies have financial, technical, marketing, sales,
manufacturing, distribution, and other resources that are significantly
greater than ours. In addition, some of these companies have name
recognition, established positions in the market, and long-standing
relationships with customers who purchase vitamins and nutritional products.
Accordingly, there is no assurance that we will be able to compete
successfully or that our competitors or future competitors will not develop
products that render our products less marketable.
Investors may never see a return on their investments as management may not
pay dividends, and the stock may not go up in value.
The payment of dividends is subject to the discretion of our Board of
Directors and will depend, among other things, upon our earnings, our capital
requirements, our financial condition, and other relevant factors. As a
result of our inability or management's decision not to pay dividends, and
the failure of our stock to go up in value, investors may not see a return on
their investments.
There is no current public market for our common stock; therefore you may be
unable to sell your securities at any time, for any reason, and at any price.
As of the date of this prospectus, there is no public market for our common
stock. Although we plan to contact an authorized OTC Bulletin Board market
maker for sponsorship of our securities on the Over-the-Counter Bulletin
Board, there can be no assurance that our attempts to do so will be
successful. Furthermore, if our securities are not quoted on the OTC Bulletin
Board or elsewhere, there can be no assurance that a market will develop for
the common stock or that a market in the common stock will be maintained. As
a result of the foregoing, investors may be unable to liquidate their
investment for any reason.
About this Prospectus
You should only rely on the information contained in this prospectus. We
have not authorized anyone to provide information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales
are permitted.
Available Information
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our securities are registered under
the Securities Exchange Act of 1934, we will file reports and other
information with the Securities and Exchange Commission. We intend to
register our securities under Section 12(g) of the Exchange Act. Once our
registration statement becomes effective we shall file supplementary and
periodic information, documents and reports that are required under section
13 of the Securities Act of 1933, as amended.
All of our reports can be reviewed through the SEC's Electronic Data
Gathering Analysis and Retrieval System which is publicly available through
the SEC's web site (http://www.sec.gov).
We intend to furnish to our stockholders annual reports containing financial
statements audited by our independent certified public accountants and
quarterly reports containing reviewed unaudited interim financial statements
for the first three-quarters of each fiscal year.
We have filed with the Commission a registration statement on Form SB-2 under
the Securities Act of 1933, as amended with respect to the securities offered
in this prospectus. This prospectus does not contain all the information set
forth in the registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further information
with respect to us and the common stock offered in this prospectus, reference
is made to such registration statement, exhibits and schedules. Statements
contained in this prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement, each such statement being qualified in
all respects by such reference. A copy of the registration statement,
including the exhibits and schedules can be reviewed through EDGAR.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Our Business", and elsewhere in this prospectus constitute
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expects",
"plans", "anticipates", "believes", "estimated", "predicts", "potential", or
"continue" or the negative of such terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks,
uncertainties, and other factors that may cause our 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 such forward-looking statements. These factors include, among
other things, those listed under "Risk Factors" and elsewhere in this
prospectus. 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. We are under no
duty to update any of the forward-looking statements after the date of this
prospectus to conform forward-looking statements to actual results.
USE OF PROCEEDS
The amounts and timing of expenditures described in the table for each
purpose may vary significantly depending on numerous factors, including,
without limitation, the progress of our marketing, distribution and further
development of our product packaging, our ability to establish collaborative
arrangements, the initiation of commercialization activities, and the
availability of other financing. We anticipate, based on currently proposed
plans and assumptions relating to our operations, that our available cash,
the maximum proceeds of this offering and cash flow from operations, if any,
will be adequate to satisfy our capital needs for approximately 12 months
following consummation of this offering. As a result of our lack of
liabilities, our current cash position allows us to maintain a status quo
position for a period of approximately six months. However; this position
will not allow us to pursue any significant business opportunity.
The proceeds from the sale of the shares of common stock offered hereby are
estimated to be approximately $25,000. We intend to utilize the estimated
net proceeds following the offering for the following purposes:
Offering
Proceeds
Total Proceeds $25,000
Less: Offering Expenses
Legal $5,000
Copying, Printing & Advertising $500
Other expenses $500
-------
Net Proceeds from Offering $19,000
=======
Use of Net Proceeds
Website Development $6,000
Product Branding & Analysis (1) $9,000
Working Capital $4,000
--------
Total Use of Proceeds $25,000
========
(1) Product Branding and Analysis includes labels, printing of product sales
materials and design & production of product information material.
We intend to apply the balance of the proceeds of the offering to working
capital. Our management will have broad discretion with respect to the use of
proceeds retained as working capital. Such proceeds may be used to defray
overhead expenses, purchase capital equipment, fund expansion and negative
cash flow positions and for future opportunities and contingencies that may
arise.
DETERMINATION OF OFFERING PRICE
We have arbitrarily determined the initial public offering price of the
shares. We considered several factors in such determination. Including the
following:
* our start up status;
* prevailing market conditions, including the history and prospects for
the industry in which we compete;
* our future prospects; and
* our capital structure.
Therefore, the public offering price of the shares does not necessarily bear
any relationship to established valuation criteria and may not be indicative
of prices that may prevail at any time or from time to time in the public
market for the common stock. You cannot be sure that a public market for any
of our securities will develop and continue or that the securities will ever
trade at a price at or higher than the offering price in this offering.
DILUTION
The difference between our initial public offering price per share of
common stock and the pro forma net tangible book value per share of common
stock after this offering constitutes the dilution to investors in this
offering. Our net tangible book value per share is determined by dividing
our net tangible book value (total tangible assets less total liabilities) by
the number of outstanding shares of common stock.
At September 30, 2001 our common stock had a pro forma net tangible book
value of approximately $2,907 or $0.0041 per share. After giving effect to
the receipt of the net proceeds from this offering offered in this prospectus
at an assumed initial offering price of $0.10 per share, our pro forma net
tangible book value at September 30, 2001, would have been $21,907 or $0.02
per share, representing an immediate increase in net tangible book value of
$0.0187 per share to our present stockholders, and immediate dilution of
$0.08 per share to investors, or 77.18%. The following table illustrates
dilution to investors on a per share basis:
Offering price per share... $0.10
Net tangible book value per share before offering $0.0041
Increase per share attributable to investors $0.0187
Pro forma net tangible book value per share after offering $0.02
Dilution per share to investors $0.08
The following table summarizes, as of September 30, 2001, the difference
between the number of shares of common stock purchased from us, the total
cash consideration paid and the average price per share paid by existing
stockholders of common stock and by the new investors purchasing shares in
this offering. The table assumes the sale of the 250,000 shares offered in
this prospectus at an assumed initial public offering price of $0.10 per
share and before any deduction of estimated offering expenses.
Average
Price
Total Cash Per
Shares Purchased Consideration Share
Amount Percent Amount Percent
Original Stockholders 710,000 74% $21,300 46% $0.03
Public Stockholders 250,000 26% $25,000 54% $0.10
---------------------------------------------
Total 960,000 100% $46,300 100%
======================================
PLAN OF DISTRIBUTION AND TERMS OF THE OFFERING
This is a "direct public" offering. We will not receive any proceeds of the
offering unless we sell all of the 250,000 shares offered in this prospectus.
If all of the shares are not sold, subscribers will lose the use of their
funds for the offering period of up to 180 days; the funds invested by them
will be promptly returned to the subscribers at the end of the offering
without interest and without deduction.
We are offering Two hundred Fifty thousand (250,000) shares at ten cents
($0.10) per share. We can give no assurance that the shares will be sold.
If subscriptions are received for fewer than 250,000 shares, no shares will
be sold.
Funds received prior to reaching the 250,000 shares will be held in a non-
interest bearing impound account and will not be used until the offering is
completed. If we do not sell 250,000 shares within 180 days after
commencement of this offering, the offering will terminate and all money paid
for shares will be promptly returned to the purchasers, without interest and
without deduction. Our sole officer and director will have sole authority
over the funds raised, including the funds prior to completion of the
offering.
If we were to be unsuccessful in achieving the offering, funds will be
redistributed to all investors who have purchased the shares offered in this
prospectus. Upon achieving the offering and the acceptance of a subscription
for shares, our transfer agent will issue the shares to the purchasers. We
may continue to offer shares for a period of 180 days after commencement of
this offering or until we have sold all of the shares offered in this
prospectus. During the offering period, no subscriber will be entitled to any
refund of any subscription.
We will sell the shares on a "best efforts basis" through our sole officer
and director, Joseph Scott Wilson, who will not receive any compensation in
connection with the sale of shares, although we will reimburse him for
expenses incurred in connection with the offer and sale of the shares. Mr.
Wilson will be relying on Rule 3a4-1 of the Exchange Act as a "safe harbor"
from registration as a broker-dealer in connection with the offer and sales
of the shares. In order to rely on such "safe harbor" provisions provided
by Rule 3a4-1, he must be in compliance with all of the following:
* he must not be subject to a statutory disqualification;
* he must not be compensated in connection with such selling participation
by payment of commissions or other payments based either directly or
indirectly on such transactions;
* he must not be an associated person of a broker-dealer;
* he must restrict participation to transactions involving offers and
sale of the shares;
* he must perform substantial duties for the issuer after the close of the
offering not connected with transactions in securities, and not have been
associated with a broker or dealer for the preceding 12 months, and not
participate in selling an offering of securities for any issuer more than
once every 12 months; and
* he must restrict participation to written communications or responses to
inquiries of potential purchasers.
Mr. Wilson intends to comply with the guidelines enumerated in Rule 3a4-1.
Mr. Wilson has no current plans to purchase shares in the offering.
You may purchase shares by completing and manually executing a subscription
agreement and delivering it with your payment in full for all shares, which
you wish to purchase to our offices. Your subscription shall not become
effective until accepted by us and approved by our counsel.
LITIGATION
We may from time to time be involved in routine legal matters incidental to
our business; however, at this point in time we are currently not involved in
any litigation, nor are we aware of any threatened or impending litigation.
MANAGEMENT
The members of our Board of Directors serve until the next annual
meeting of stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors. At present, Joseph
Scott Wilson is our sole officer and director. Information as to the director
and executive officer is as follows:
Name Age Title
Joseph Scott Wilson 32 President, Secretary/Treasurer, Director
Duties, Responsibilities and Experience
Joseph Scott Wilson is the President, Secretary/Treasurer and Director of
Royal Phoenix. Mr. Wilson has been self employed in various building trades
in Las Vegas, Nevada since 1994. While working in the building trades Mr.
Wilson acquired a usefulness and education on herbal products. Mr. Wilson's
knowledge of the herbal products created his interest in developing a method
of marketing herbal products through the Internet and other retail channels.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date of this
prospectus, and as adjusted giving effect to the sale of 250,000 shares of
common stock in this offering, relating to the beneficial ownership of our
common stock by those persons known to us to beneficially own more than 5% of
our capital stock and Joseph Scott Wilson, our sole officer and director. The
address of each person is care of Royal Phoenix.
Percent Percent
Number Before After
Name of Beneficial Owner Of Shares Offering Offering
Joseph Scott Wilson 450,000 63% 46.87%
Shearson Barney Equity Fund 250,000 35% 26.04%
------------------------------
All Directors, Officers and Principle
Stockholders as a Group 700,000 98% 72.91%
(1) "Beneficial ownership" means the sole or shared power to vote or to
direct the voting of, a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose of or to direct the
disposition of, a security). In addition, for purposes of this table, a
person is deemed, as of any date, to have "beneficial ownership" of any
security that such person has the right to acquire within 60 days from the
date of this prospectus.
(2) Desert Health Products owns 10,000 shares of the Common Stock,
representing less than 5% of the stock both before and after the offering.
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation authorizes the issuance of 20,000,000
shares of common stock, $0.001 par value per share, of which 710,000 shares
were outstanding as of the date of this prospectus. Upon sale of the 250,000
shares, we will have outstanding 960,000 shares of common stock. Holders of
shares of common stock are entitled to one vote for each share on all matters
to be voted on by the stockholders. Holders of common stock have no
cumulative voting rights. Holders of shares of common stock are entitled to
share ratably in dividends, if any, as may be declared, from time to time by
the Board of Directors in its discretion, from funds legally available to be
distributed. In the event of a liquidation, dissolution or winding up of
Royal Phoenix, the holders of shares of common stock are entitled to share
pro rata all assets remaining after payment in full of all liabilities and
the prior payment to the preferred stockholders. Holders of common stock
have no preemptive rights to purchase our common stock. There are no
conversion rights or redemption or sinking fund provisions with respect to
the common stock. All of the outstanding shares of common stock are validly
issued, fully paid and non-assessable.
Preferred Stock
Our Articles of Incorporation authorizes the issuance of 5,000,000
shares of preferred stock, $.001 par value per share, of which no shares were
outstanding as of the date of this prospectus. The preferred stock may be
issued from time to time by the Board of Directors as shares of one or more
classes or series. Our board of directors, subject to the provisions of our
Articles of Incorporation and limitations imposed by law, is authorized to:
* adopt resolutions;
* to issue the shares;
* to fix the number of shares;
* to change the number of shares constituting any series; and
* to provide for or change the following:
* the voting powers;
* designations;
* preferences; and
* relative, participating, optional or other special rights,
qualifications, limitations or restrictions, including the following:
* dividend rights (including whether dividends are cumulative);
* dividend rates;
* terms of redemption (including sinking fund provisions);
* redemption prices;
* conversion rights; and
* liquidation preferences of the shares constituting any class or
series of the preferred stock.
In each of the listed cases, we will not need any further action or vote
by the stockholders.
One of the effects of undesignated preferred stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of us by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of our management. The
issuance of shares of preferred stock pursuant to the Board of Director's
authority described above may adversely affect the rights of holders of
common stock. For example, preferred stock issued by us may rank prior to the
common stock as to dividend rights, liquidation preference or both, may have
full or limited voting rights and may be convertible into shares of common
stock. Accordingly, the issuance of shares of preferred stock may discourage
bids for the common stock at a premium or may otherwise adversely affect the
market price of the common stock.
Nevada Laws
The Nevada Business Corporation Law contains a provision governing
"Acquisition of Controlling Interest." This law provides generally that any
person or entity that acquires 20% or more of the outstanding voting shares
of a publicly-held Nevada corporation in the secondary public or private
market may be denied voting rights with respect to the acquired shares,
unless a majority of the disinterested stockholders of the corporation elects
to restore such voting rights in whole or in part. The control share
acquisition act provides that a person or entity acquires "control shares"
whenever it acquires shares that, but for the operation of the control share
acquisition act, would bring its voting power within any of the following
three ranges:
* 20 to 33?%
* 33?% to 50%
* more than 50%.
A "control share acquisition" is generally defined as the direct or indirect
acquisition of either ownership or voting power associated with issued and
outstanding control shares. The stockholders or board of directors of a
corporation may elect to exempt the stock of the corporation from the
provisions of the control share acquisition act through adoption of a
provision to that effect in the articles of incorporation or bylaws of the
corporation. Our articles of incorporation and bylaws do not exempt our
common stock from the control share acquisition act.
The control share acquisition act is applicable only to shares of "Issuing
Corporations" as defined by the act. An Issuing Corporation is a Nevada
corporation, which;
* has 200 or more stockholders, with at least 100 of such stockholders
being both stockholders of record and residents of Nevada; and
* does business in Nevada directly or through an affiliated corporation.
At this time, we do not have 100 stockholders of record resident of Nevada.
Therefore, the provisions of the control share acquisition act do not apply
to acquisitions of our shares and will not until such time as these
requirements have been met. At such time as they may apply to us, the
provisions of the control share acquisition act may discourage companies or
persons interested in acquiring a significant interest in or control of Royal
Phoenix, regardless of whether such acquisition may be in the interest of our
stockholders.
The Nevada "Combination with Interested Stockholders Statute" may also have
an effect of delaying or making it more difficult to effect a change in
control of Royal Phoenix. This Statute prevents an "interested stockholder"
and a resident domestic Nevada corporation from entering into a
"combination," unless certain conditions are met. The Statute defines
"combination" to include any merger or consolidation with an "interested
stockholder," or any sale, lease, exchange, mortgage, pledge, transfer or
other disposition, in one transaction or a series of transactions with an
"interested stockholder" having;
* an aggregate market value equal to 5 percent or more of the aggregate
market value of the assets of the corporation;
* an aggregate market value equal to 5 percent or more of the aggregate
market value of all outstanding shares of the corporation; or
* representing 10 percent or more of the earning power or net income of
the corporation.
An "interested stockholder" means the beneficial owner of 10 percent or more
of the voting shares of a resident domestic corporation, or an affiliate or
associate thereof. A corporation affected by the statute may not engage in a
"combination" within three years after the interested stockholder acquires
its shares unless the combination or purchase is approved by the board of
directors before the interested stockholder acquired such shares. If approval
is not obtained, then after the expiration of the three-year period, the
business combination may be consummated with the approval of the board of
directors or a majority of the voting power held by disinterested
stockholders, or if the consideration to be paid by the interested
stockholder is at least equal to the highest of;
* the highest price per share paid by the interested stockholder within
the three years immediately preceding the date of the announcement of the
combination or in the transaction in which he became an interested
stockholder, whichever is higher;
* the market value per common share on the date of announcement of the
combination or the date the interested stockholder acquired the shares,
whichever is higher; or
* if higher for the holders of Preferred Stock, the highest liquidation
value of the Preferred Stock.
LEGAL MATTERS
The Stoecklein Law Group of 402 West Broadway, Suite 400, San Diego,
California 92101 has issued an opinion that the shares being issued pursuant
to this offering, upon issuance, will have been duly authorized and validly
issued, fully paid, and non-assessable.
EXPERTS
The financial statements of Royal Phoenix as of September 30, 2001 are
included in this prospectus and have been audited by Beckstead & Associates,
an independent auditor, as set forth in his report thereon appearing
elsewhere herein and are included in reliance upon such reports given upon
the authority of such individual as an expert in accounting and auditing.
DISCLOSURE OF COMMISSION'S
POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
No director of Royal Phoenix will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director for:
* any breach of the director's duty of loyalty to us or our stockholders
* acts or omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law
* or under applicable Sections of the Nevada Revised Statutes
* the payment of dividends in violation of Section 78.300 of the Nevada
Revised Statutes or,
* for any transaction from which the director derived an improper personal
benefit.
The Bylaws provide for indemnification of our directors, officers, and
employees in most cases for any liability suffered by them or arising out of
their activities as directors, officers, and employees if they were not
engaged in willful misfeasance or malfeasance in the performance of his or
her duties; provided that in the event of a settlement the indemnification
will apply only when the Board of Directors approves such settlement and
reimbursement as being for our best interests. The Bylaws, therefore, limit
the liability of directors to the maximum extent permitted by Nevada law
(Section 78.751).
Our officers and directors are accountable to us as fiduciaries, which means
they are required to exercise good faith and fairness in all dealings
affecting Royal Phoenix. In the event that a stockholder believes the
officers and/or directors have violated their fiduciary duties, the
stockholder may, subject to applicable rules of civil procedure, be able to
bring a class action or derivative suit to enforce the stockholder's rights,
including rights under certain federal and state securities laws and
regulations to recover damages from and require an accounting by management.
Stockholders who have suffered losses in connection with the purchase or sale
of their interest in Royal Phoenix in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from
us.
We undertake the following:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
OUR BUSINESS
Overview
Royal Phoenix is a Development Stage Company, incorporated in the State
of Nevada in October of 2000. Royal Phoenix was initially a wholly owned
subsidiary of Desert Health Products, Inc.; however its was determined in the
best interest of Desert Health Products to separate out Royal Phoenix from
Desert Health Products concurrent with the incorporation of Royal Phoenix in
October of 2000. As set forth in the amended Separation and Distribution
Agreement entered into between Royal Phoenix and Desert Health Products,
Desert Health Products retained 10,000 shares of Royal Phoenix stock in the
transaction. Royal Phoenix intends to provide herbal products via Internet
sales. Under the terms and conditions of a "License, Manufacture and
Distribution Agreement," executed between Desert Health Products and Royal
Phoenix, Desert Health Products will continue to manufacture, package, ship,
and handle credit card processing of Royal Phoenix products. This
relationship will allow Royal Phoenix to concentrate on the marketing of
herbal products. To date, our only activities have been organizational,
directed at acquiring our License, Manufacture and Distribution Agreement
with Desert Health Products, raising initial capital and developing our
business plan. We have not commenced any commercial or other operations. We
have no full time employees and own no real estate.
Acquisition of the License, Manufacture and Distribution Agreement
On October 18, 2000, we acquired an exclusive License, Manufacture and
Distribution Agreement from Desert Health Products. The License, Manufacture
and Distribution Agreement grants us an exclusive right to use the Royal
Phoenix herbal products developed by Desert Health Products and further
provides the manufacture, packaging, shipping, and handling of credit card
processing. The consideration for Desert Health Products providing the
license was Desert Health Products ability to sell more product through a
different distribution channel in addition to retaining 10,000 shares of
Royal Phoenix common stock.
The License
We have an exclusive non transferable license to make, have made, use,
market, import, have imported, lease, sell, distribute, offer for sale, or
otherwise dispose of the Royal Phoenix line of vitamins. Additionally, the
agreement with Desert Health Products provides that Desert Health Products
shall be responsible for the manufacture, shipment, distribution, labeling,
and collection of payments. The license shall continue until December 31,
2010 and does not contain any renewable option periods. The agreement with
Desert Health Products does not provide for any minimal shipment amounts. The
price we will pay Desert Health Products for products and shipping will
include the cost of production, including a reasonable allowance for
overhead, plus 30% of such cost and overhead. Nothing in the agreement
prevents Royal Phoenix from purchasing product from any other vendor or
development, marketing or producing other vitamin and herbal products.
Our Product
The following products are currently produced by Desert Health Products
under their own label. Desert Health Products, under the license between
Desert Health Products and Royal Phoenix will package and ship these products
under the brand name Royal Phoenix.
Vitamins
* Antioxidant
* Multi Vitamin Tablets
Minerals
* Multi Mineral Tablets
* Chromium Picolinate
* Selenium Plus
* Super Minerals w/Aloe Vera
Speciality Supplements
* Alcotrol
* AsthmaCalm
* Brain Boost
* Desert Boost
* Enhanced Performance II
* Enercoffee
* Euro Fiber
* Ginkgo Biloba
* Glucosamine Complex
* Liver p.s. Tablets
* Lyco/Men
* Migrasafe-N
* OsteoDense Plus
* Pain & Joint Support Cream
* Shark Cartilage
* Time-Released Melatonin
Cost and Availability of Raw Materials
Many of the ingredients contained in our products are not commodities, so
price risk cannot be hedged with traditional futures contracts. In addition,
some of these plants are picked in the wild, rather than farm cultivated,
resulting in a highly unstable supply. This uncertain supply, in combination
with the possibility of continued increases in demand, could result in
significant increases in the price of the raw materials used in our products.
In addition, if due to supply shortages Royal Phoenix is unable to meet the
demand of its customers, even if for a short time, the result could be a long-
term decrease in sales of our Products. Our ability to increase the price of
our licensed products to adjust for increases in raw material costs is
limited and there can be no assurance that an adequate supply of ingredients
will be available to us and on terms commercially viable to us in order for
it to meet its supply obligations to customers. There can be no assurance
that raw materials will continue to be available on terms commercially
reasonable to us.
Risk Management Insurance
We do not maintain a liability insurance program as we have not commenced the
distribution of products to the general public or others except by way of
sample products. Our proposed insurance program, once implemented, will
include property, casualty, comprehensive general liability and products
liability coverage. Management believes that the proposed insurance program
is adequate. The testing, marketing and sale of health care products entail
an inherent risk of product liability. There can be no assurance that product
liability claims, relating to dietary supplement products, will not be
asserted against us, Desert Health Products, its collaborators or its
licensees. There can be no assurance that we will be able to maintain such
product liability insurance in assignments from various manufacturers or
obtain additional insurance, during clinical trials or upon commercialization
of any product, on acceptable terms, if at all, or that such insurance will
provide adequate coverage against any potential dietary supplement claims. A
product liability claim or product recall, relating to dietary supplement
products, could and most likely would have a material adverse effect on our
business, financial condition or results of operations.
Industry Overview
The worldwide market for natural dietary supplements is substantial.
According to the Dietary Supplement Information Bureau, "Surveys find that
the majority of Americans rely on dietary supplements to maintain good
health. As a result, the dietary supplement industry generates billions of
dollars in sales annually, making it one of the most dynamic sectors of the
U.S. economy. "
Source and Availability of Raw Materials
The principal raw materials used by Desert Health Products in the
manufacturing process of the products distributed by Royal Phoenix are
natural ingredients purchased from distributors primarily in the United
States, with certain materials imported from other countries. Royal Phoenix
believes that at this time the materials purchased by Desert Health Products
from its suppliers are readily available from numerous sources and that the
loss of these suppliers would not adversely affect its operations.
Quality Control
Finished production capsules are purchased from manufacturing
operations, which include modern quality control laboratories and testing
facilities. When products are ready for bottling automated equipment counts
the tablets or capsules, inserts them into bottles, applies a cap, which
includes a tamper-resistant inner seal, affixes a label and adds a tamper-
resistant outer safety seal. All of this is done according to Good
Manufacturing Practice regulations (GMP) for dietary supplements.
Competition
The market for vitamins and other nutritional supplements is highly
competitive in all of our channels of potential distribution. The marketplace
for private label business is extremely price sensitive with service levels,
quality, innovative packaging, marketing and promotional programs and
uniqueness of products being the key factors influencing competitiveness.
We believe that there are also numerous companies competing for
nutritional product lines on the internet. As most companies are privately
held, we are unable to precisely assess the size of competitors. Since we
have recently established operations, most competitors are substantially
larger than us and have greater financial resources
Government Regulation
The processing, formulation, packaging, labeling and advertising of our
products are subject to regulation by one or more federal agencies, including
the FDA, the Federal Trade Commission, the Consumer Product Safety
Commission, the United States Department of Agriculture and the United States
Environmental Protection Agency. These activities are also regulated by
various agencies of the states, localities, and countries in which the
Company's products are sold. In addition, Desert Health Products manufactures
certain of the Royal Phoenix products in compliance with the guidelines
promulgated by the United States Pharmacopoeia Convention, Inc. ("USP") and
other voluntary standard organizations.
The Dietary Supplemental Health and Education Act ("DSHEA") recognizes the
importance of good nutrition and the availability of safe dietary supplements
in preventive health care. DSHEA amends the Federal Food, Drug and Cosmetic
Act by defining dietary supplements, which include vitamins, minerals,
nutritional supplements and herbs, as a new category of food, separate from
conventional food. Under DSHEA, the FDA is generally prohibited from
regulating such dietary supplements as food additives or drugs. It requires
the FDA to regulate dietary supplements so as to guarantee consumer access to
beneficial dietary supplements, allowing truthful and proven claims.
Generally, dietary ingredients that were on the market before October 15,
1994 may be sold without FDA pre-approval and without notifying the FDA.
However, new dietary ingredients (those not used in dietary supplements
marketed before October 15, 1994) require premarket submission to the FDA of
evidence of a history of their safe use, or other evidence establishing that
they are reasonably expected to be safe. There can be no assurance that the
FDA will accept the evidence of safety for any new dietary ingredient that we
may decide to use, and the FDA's refusal to accept such evidence could result
in regulation of such dietary ingredients as food additives, requiring the
FDA pre-approval based on newly conducted, costly safety testing. Also, while
DSHEA authorizes the use of statements of nutritional support in the labeling
of dietary supplements, the FDA is required to be notified of such
statements, and there can be no assurance that the FDA will not consider
particular labeling statements used by Royal Phoenix to be drug claims rather
than acceptable statements of nutritional support, necessitating approval of
a costly new drug application, or relabeling to delete such statements.
DSHEA also authorizes the FDA to promulgate good manufacturing practice
regulations ("GMP") for dietary supplements, which would require special
quality controls for the manufacture, packaging, storage and distribution of
supplements. We believe that the Desert Health Products facilities and those
of independent third party manufacturers have completed significant facility
renovations that should allow the Company to comply with the new regulations.
DSHEA further authorizes the FDA to promulgate regulations governing the
labeling of dietary supplements, including claims for supplements pursuant to
recommendations made by the Presidential Commission on Dietary Supplement
Labels. Such rules, which were issued on September 23, 1997, entail specific
requirements relative to the labeling of the Company's dietary supplements.
The rules also require additional record keeping and claim substantiation,
reformulation, or discontinuance of certain products, which could have a
material expense to us.
In addition, we cannot predict whether new legislation or regulations
governing the Royal Phoenix's activities will be enacted by legislative
bodies or promulgated by agencies regulating our activities, or what the
effect of any such legislation or regulations on our business would be.
Research and Development
Royal Phoenix, being a start up operation, does not conduct primary research
for the development of new ingredients. Instead, Royal Phoenix research
efforts are focused on relying on new products developed by Desert Health
Products, and will in the future develop new products and packaging in
response to market trends and consumer demands. We intend to continually
reformulate existing Royal Phoenix products in response to changes in
nationally advertised brand formulas in order to maintain product
comparability.
We believe that flexibility and innovation with respect to new products will
be crucial factors in competing for market share in the field of nutritional
supplements. By monitoring market trends and by avoiding short-lived "fad"
items, we believe we will be able to anticipate significant consumer demand
for certain types of products. Our plan is to monitor the industry by
analyzing reports such as the Dietary Supplement Barometer Survey, which
tracks American attitudes and beliefs about vitamins, minerals, herbs and
specialty supplements. Information gathered in the survey quizzed the
knowledge level of respondents about supplementation, finding that while
Americans regularly incorporate supplements into their health care regiments,
many could use more information about the benefits and responsible usage of
these products. By utilizing information provided in surveys similar to the
Dietary Supplement Barometer Survey, in addition to surveys which we conduct
independently in the future, we will be in a position to understand which
products have a tendency to be short lived "fads."
Employees
We are a development stage company and currently have no employees. We are
currently managed by Joseph Scott Wilson, our sole officer and director. We
look to Mr. Wilson for his entrepreneurial skills and talents. For a
discussion of Mr. Wilson's experience, please see "Directors and Executive
Officers." We plan to use consultants, attorneys and accountants as necessary
and do not plan to engage any full-time employees in the near future. We may
hire marketing employees based on the projected size of the market and the
compensation necessary to retain qualified sales employees. A portion of any
employee compensation likely would include the right to acquire our stock
which would dilute the ownership interest of holders of existing shares of
our common stock.
REPORTS TO STOCKHOLDERS
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our registration statement is
effective and our securities are registered under the exchange act, we will
file supplementary and periodic information, documents and reports that are
required under section 13 of the Securities Act of 1933, as amended, with the
Securities and Exchange Commission. We intend to register our securities
under Section 12(g) of the Exchange Act. Such reports, proxy statements and
other information will be available through the Commission's Electronic Data
Gathering Analysis and Retrieval System which is publicly available through
the Commission's web site (http://www.sec.gov).
We intend to furnish annual reports to stockholders, which will include
audited financial statements reported on by our Certified Public Accountants.
In addition, we will issue unaudited quarterly or other interim reports to
stockholders, as we deem appropriate.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with by the financial
statements section.
Overview
Royal Phoenix, which was incorporated in Nevada in October 2000, is a
Development Stage Company, engaged in the business of marketing and
distributing Royal Phoenix, a line of herbal products. The Royal Phoenix
herbal product line was developed by Desert Health Products several years
ago, however, the product line, after development, was not marketed.
We have a limited operating history and have not generated revenues from
the sale of any products. Our company and products are the result of an
agreement, which was entered into between Royal Phoenix and Desert Health
Products, which resulted in the separate out from Desert Health Products of
the Royal Phoenix line of herbal products developed by Desert Health
Products. Our activities have been limited to the negotiation of a license
agreement and preliminary market analysis. Consequently, we have incurred the
expenses of start-up. Future operating results will depend on many factors,
including our ability to raise adequate working capital, demand for our
products, the level of competition and our ability to deliver products while
maintaining quality and controlling costs. As a result of our lack of
liabilities, our current cash position allows us to maintain a status quo
position for a period of approximately six months. However; this position
will not allow us to pursue any significant business opportunity.
Plan of Operation
Since our incorporation on October 17, 2000, we have not been engaged in any
significant operations nor have we had any revenues, as we are in the
development stage. Our only recent activities through September 30, 2001
include organization of the Company, the negotiation and execution of the
license agreement, and research over the Internet to determine methods of
acquiring market share presence without significant start up expenses. Our
goal is to distribute our own product line of herbal products, primarily
through Internet generated sales, at the most cost efficient method.
During the next 12 months we plan to focus our efforts on the development of
our marketing program and establishing our website, royalphoenix.com, for
secure retail purchases.
Until an infusion of capital from this offering, we will not be able to
commence operations. We currently have insufficient capital to commence
operations and are dependent on the proceeds of this offering to begin such
operations. We have suffered start up losses and have a working capital
deficiency which raises substantial concern regarding our ability to continue
as a going concern. We believe that the proceeds of this offering will enable
us to maintain our operations and working capital requirements for at least
the next 12 months, without taking into account any internally generated
funds from operations. We will need to raise $25,000 to continue operations
for the next 12 months based on our capital expenditure requirements. Capital
will be raised pursuant to this offering.
After this offering, we will require additional funds to maintain and expand
our operations. These funds may be raised through equity financing, debt
financing, or other sources, which may result in further dilution in the
equity ownership of the shares being offered in this prospectus. There is
still no assurance that, even with the funds from this offering, we will be
able to maintain operations at a level sufficient for an investor to obtain a
return on their investment in our common stock. Further, we may continue to
be unprofitable.
Liquidity and Capital Resources
Cash will be increasing primarily due to the receipt of funds from this
offering to offset our near term cash equivalents. Since inception, we have
financed our cash flow requirements through issuance of common stock. As we
expand our activities, we may continue to experience net negative cash flows
from operations, pending receipt of sales revenues. Additionally we
anticipate obtaining additional financing to fund operations through common
stock offerings and bank borrowings, to the extent available, or to obtain
additional financing to the extent necessary to augment our working capital.
We anticipate that we will incur operating losses in the next twelve months.
Our lack of operating history makes predictions of future operating results
difficult to ascertain. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly
evolving markets. Such risks for us include, but are not limited to, an
evolving and unpredictable business model and the management of growth. To
address these risks, we must, among other things, obtain a customer base,
implement and successfully execute our business and marketing strategy,
continually develop and upgrade our product packaging, provide order
fulfillment through the Internet, respond to competitive developments, and
attract, retain and motivate qualified personnel. There can be no assurance
that we will be successful in addressing such risks, and the failure to do so
can have a material adverse effect on our business prospects, financial
condition and results of operations.
FACILITIES
We currently maintain a mailing address 4180 S. Sandhill Rd, Suite B-9, Las
Vegas, NV 89121. Rent is paid on a yearly basis at $180. Additionally, Mr.
Wilson, our sole officer and director, occasionally will utilize his home to
conduct business on our behalf. Mr. Wilson does not receive any remuneration
for the use of his home or time spent on behalf of us. We do not believe that
we will need to obtain additional office space at any time in the foreseeable
future until our business plan is more fully implemented.
As a result of our agreement with Desert Health Products we do not
require warehouse or shipping facilities. In the future we anticipate
requiring additional office space; however it is unknown at this time how
much space will be required.
MARKET PRICE OF COMMON STOCK
We may file for inclusion of our common stock on the Over-the-Counter
Bulletin Board; however, there can be no assurance that NASD will approve the
inclusion of the common stock. Prior to the effective date of this offering,
our common stock was not traded.
As of September 30, 2001 there were 3 stockholders of our common stock.
DIVIDENDS
The payment of dividends is subject to the discretion of our Board of
Directors and will depend, among other things, upon our earnings, our capital
requirements, our financial condition, and other relevant factors. We have
not paid or declared any dividends upon our common stock since our inception
and, by reason of our present financial status and our contemplated financial
requirements, do not anticipate paying any dividends upon our common stock in
the foreseeable future.
We have never declared or paid any cash dividends. We currently do not intend
to pay cash dividends in the foreseeable future on the shares of common
stock. We intend to reinvest any earnings in the development and expansion of
our business. Any cash dividends in the future to common stockholders will be
payable when, as and if declared by our Board of Directors, based upon the
Board's assessment of:
* our financial condition;
* earnings;
* need for funds;
* capital requirements;
* prior claims of preferred stock to the extent issued and outstanding;
and
* other factors, including any applicable laws.
Therefore, there can be no assurance that any dividends on the common stock
will ever be paid.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of our sole officer
and director, Joseph Scott Wilson from inception (October 17, 2000) to
September 30, 2001.
Summary Compensation Table
Long Term
Annual Compensation Compensation
Name and Principal Other Annual Restricted
Position YTD Salary Bonus Compensation Stock Options
Joseph Scott
Wilson, President,
Secretary Treasurer 2001 $3,556 -0- -0- -0- -0-
2000 $2,434 -0- -0- 250,000 -0-
Board Committees
We do not currently have any committees of the Board of Directors.
Additionally, due to the nature of our intended business, the Board of
Directors does not foresee a need for any committees in the foreseeable
future.
Transfer Agent
The transfer agent for the common stock will be Pacific Stock Transfer,
500 E. Warm Springs, Suite 240, Las Vegas, Nevada 89119.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Office services are provided without charge by the Company's director.
Such costs are immaterial to the financial statements and, accordingly, have
not been reflected therein. The estimated fair market value for such
facilities are estimated to be $600 per annum.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of common stock in the public
market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain restrictions on resale, sales
of substantial amounts of our common stock in the public market after the
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
960,000 shares of common stock, assuming all of the 250,000 shares are sold.
Of these shares, the 250,000 shares of common stock sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act, unless such shares are purchased by our "affiliates" as that
term is defined in Rule 144 under the Securities Act. The remaining 710,000
shares of common stock held by our existing stockholder are "restricted
securities" as that term is defined in Rule 144 under the Securities Act.
The shares making up the 710,000 were issued on the following dates: 250,000
were issued on October 17, 2000, 250,000 on October 19, 2000, 200,000 were
issued on December 6, 2000, and 10,000 were issued on June 22, 2001. All
restricted shares, except for the 10,000 shares are held by officers,
directors, or affiliates. Restricted shares may be sold in the public market
only if registered or if they qualify for an exemption from registration
under Rule 144. As a result of the provisions of Rules 144, additional shares
will be available for sale in the public market as follows:
* no restricted shares will be eligible for immediate sale on the date of
this prospectus; and
* the remainder of the restricted shares will be eligible for sale from
time to time thereafter upon expiration of their respective one-year
holding periods, subject to restrictions on such sales by affiliates.
In general, under Rule 144 as currently in effect, beginning 90 days after
the Effective Date, an affiliate of Royal Phoenix, or person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for
at least one year will be entitled to sell in any three-month period a number
of shares that does not exceed the greater of:
* one percent of the then outstanding shares of our common stock; or
* the average weekly trading volume of our common stock in the Over-the-
Counter Bulletin Board during the four calendar weeks immediately preceding
the date on which notice of the sale is filed with the SEC.
Sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice, and the availability of current public information
about us. A person (or persons whose shares are aggregated) who is not
deemed to have been an affiliate of Royal Phoenix at any time during the 90
days immediately preceding the sale and who has beneficially owned restricted
shares for at least two years is entitled to sell such shares under Rule
144(k) without regard to the resale limitations.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In June 2001, we engaged the services of Beckstead & Associates, C.P.A. of
Las Vegas, Nevada, to provide an audit of our financial statements for the
period from October 17, 2000 (inception) to September 30, 2001. This was our
first auditor. We have no disagreements with our auditor through the date of
this prospectus.
ROYAL PHOENIX
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET F-2
STATEMENT OF OPERATIONS F-3
STATEMENT OF STOCKHOLDERS' EQUITY F-4
STATEMENT OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6-F-9
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540 fax
INDEPENDENT AUDITOR'S REPORT
December 21, 2001
Board of Directors
Royal Phoenix
Las Vegas, NV
I have audited the Balance Sheets of Royal Phoenix (the "Company") (A
Development Stage Company), as of September 30, 2001 and December 31, 2000,
and the related Statements of Operations, Stockholders' Equity, and Cash
Flows for the nine months ended September 30, 2001, the period October 17,
2000 (Date of Inception) to December 31, 2000, and the period October 17,
2000 (Date of Inception) to September 30, 2001. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with auditing standards generally accepted
in the United States. Those standards require that I plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Royal Phoenix (A Development
Stage Company) as of September 30, 2001 and December 31, 2000, and the
results of its operations and cash flows for the nine months ended September
30, 2001, the period October 17, 2000 (Date of Inception) to December 31,
2000, and the period October 17, 2000 (Date of Inception) to September 30,
2001, in conformity with accounting principles generally accepted in the
United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 4 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in regard to these
matters are also described in Note 4. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
G. Brad Beckstead, CPA
Royal Phoenix
(a Development Stage Company)
Balance Sheet
September December
30, 31,
2001 2000
Assets
Current assets:
Cash $ 2,907 $ 8,997
------------------------
Total current assets 2,907 8,997
------------------------
$ 2,907 $ 8,997
========================
Liabilities and Stockholder's Equity
Current liabilities: $ - $ -
Total current liabilities - -
------------------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares
authorized, no shares issued and outstanding - -
Common stock, $0.001 par value, 20,000,000
shares
authorized, 710,000 shares issued and
outstanding 710 710
Additional paid-in capital 20,590 20,590
(Deficit) accumulated during development stage (18,393) (12,303)
-----------------------
2,907 8,997
-----------------------
$ 2,907 $ 8,997
========================
The accompanying notes are an integral part of these financial statements.
Royal Phoenix
(a Development Stage Company)
Statement of Operations
9 months October 17, October 17,
ending 2000 2000
September (inception) (inception)
30, to to
2001 December September
31, 30,
2000 2001
Revenue $ - $ - $ -
--------------------------------------
Expenses:
General and administrative expenses 2,534 9,869 12,403
Payroll - related party 3,556 2,434 5,990
--------------------------------------
Total expenses 6,090 12,303 18,393
--------------------------------------
Net (loss) $ (6,090) $ (12,303) $ (18,393)
======================================
Weighted average number of
common shares outstanding 710,000 591,579 684,212
======================================
Net (loss) per share $ (0.01) $ (0.02) $ (0.03)
======================================
The accompanying notes are an integral part of these financial statements.
Royal Phoenix
(a Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period October 17, 2000 (Inception) to September 30, 2001
Common Stock Additional (Deficit) Total
Shares Amount Paid-in Accumulated Stockholders'
Capital During Equity
Development
Stage
Balance, October
17, 2000 - $ - $ - $ - $ -
Shares retained
by founder 10,000 10 290 300
Shares issued
for services 250,000 250 7,250 7,500
Shares issued
for cash 250,000 250 7,250 7,500
Shares issued
for cash to 200,000 200 5,800 6,000
founder
Net (loss)
period ended
December 31, (12,303) (12,303)
2000 ----------------------------------------------------------
Balance,
December 31, 700,000 710 20,590 (12,303) 8,997
2000
Net (loss)
period ended
September 30,
2001 (6,090) (6,090)
-----------------------------------------------------------
Balance,
September 30,
2001 710,000 $ 710 $ 20,590 $ (18,393) $ 2,907
===========================================================
The accompanying notes are an integral part of these financial statements.
Royal Phoenix
(a Development Stage Company)
Statement of Cash Flows
October 17, October 17,
2000 2000
9 months (Inception) (Inception)
ending to to
September December September
30, 31, 30,
2001 2000 2001
Cash flows from operating activities
Net (loss) $ (6,090) $ (12,303) $ (18,393)
Shares issued for services - 7,500 7,500
------------------------------------
Net cash used by operating activities (6,090) (4,803) (10,893)
------------------------------------
Cash flows from investing activities
Net cash used by investing activities - - -
------------------------------------
Cash flows from financing activities
Common stock issued - 13,500 13,500
------------------------------------
Net cash provided by financing
activities - 13,500 13,500
------------------------------------
Net increase (decrease) in cash (6,090) 8,697 2,607
Cash - beginning 8,997 - -
------------------------------------
Cash - ending $ 2,907 $ 8,697 $ 2,607
====================================
Supplemental disclosures:
Interest paid $ - $ - $ -
====================================
Income taxes paid $ - $ - $ -
====================================
Non-cash investing and financing
activities:
Number of shares issued for services
and inventory - 250,000 250,000
====================================
The accompanying notes are an integral part of these financial statements.
Note 1 - Summary of significant accounting policies
Organization
The Company was organized October 17, 2000 (Date of Inception) under the laws
of the State of Nevada, as The Business Inn. The Company began activities to
license, manufacture and distribute vitamin formulations. The Company was
unsuccessful in conducting any business.
The Company has not commenced significant operations and, in accordance with
SFAS #7, the Company is considered a development stage company.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are considered to be
cash equivalents.
Revenue recognition
Sales and related cost of sales are generally recognized upon shipment of
products. Cost of goods sold generally represents the cost of items sold and
the related shipping and selling expenses.
Advertising Costs
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in general and administrative expenses as of
September 30, 2001 or December 31, 2000.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of September
30, 2001 and December 31, 2000. The respective carrying value of certain on-
balance-sheet financial instruments approximated their fair values. These
financial instruments include cash and accounts payable. Fair values were
assumed to approximate carrying values for cash and payables because they are
short term in nature and their carrying amounts approximate fair values or
they are payable on demand.
Impairment of long lived assets
Long lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of
an asset may not be recoverable or is impaired. No such impairments have
been identified by management at September 30, 2001 or December 31, 2000.
Stock-Based Compensation:
The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations and has adopted the disclosure-only
alternative of FAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and other non-
employees are accounted for using the fair value method as prescribed by FAS
No. 123.
Earnings per share
The Company follows Statement of Financial Accounting Standards No. 128.
"Earnings Per Share" ("SFAS No. 128"). Basic earning per common share
("EPS") calculations are determined by dividing net income by the weighted
average number of shares of common stock outstanding during the year.
Diluted earning per common share calculations are determined by dividing net
income by the weighted average number of common shares and dilutive common
share equivalents outstanding. During periods when common stock equivalents,
if any, are anti- dilutive they are not considered in the computation.
Segment reporting
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information". The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
Income taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision
for income taxes. Deferred tax assets and liabilities are computed based
upon the difference between the financial statement and income tax basis of
assets and liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the
asset or liability each period. If available evidence suggests that it is
more likely than not that some portion or all of the deferred tax assets will
not be realized, a valuation allowance is required to reduce the deferred tax
assets to the amount that is more likely than not to be realized. Future
changes in such valuation allowance are included in the provision for
deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-
current, depending on the classification of assets and liabilities to which
they relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
Recent pronouncements
The FASB recently issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133". The Statement defers for one year the effective date of
FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal
years beginning after June 15, 2000. In June 1998, the FASB issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement will require the company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income, if the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized
in earnings. The ineffective portion of a derivative's change in fair value
will be immediately recognized in earnings. The company does not expect SFAS
No. 133 to have a material impact on earnings and financial position.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
No. 101), which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101 did not impact
the company's revenue recognition policies.
Note 2 - Income taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax
assets and liabilities at the end of each period are determined using the
currently enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or
realized.
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The sources and tax effects of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
Total -%
As of September 30, 2001, the Company has a net operating loss carryforward
of approximately $18,000 for tax purposes, which will be available to offset
future taxable income. If not used, this carryforward will expire in 2021.
The deferred tax asset relating to the operating loss carryforward of
approximately $6,000 has been fully reserved at September 30, 2001.
Note 3 - Stockholder's equity
The Company is authorized to issue 5,000,000 shares of it $0.001 par value
preferred stock and 20,000,000 shares of its $0.001 par value common stock.
During October 2000, the Company issued 250,000 of its $0.001 par value
common stock at $0.03 per share to its director in exchange for services
valued at $7,500. The shares were deemed to have been issued pursuant to an
exemption provided by Section 4(2) of the Act, which exempts from
registration "transactions by an issuer not involving any public offering."
During October 2000, the Company issued 250,000 of its $0.001 par value
common stock at $0.03 per share for total cash of $7,500. The shares were
deemed to have been issued pursuant to an exemption provided by Section 4(2)
of the Act, which exempts from registration "transactions by an issuer not
involving any public offering."
During December 2000, the Company issued 200,000 of its $0.001 par value
common stock at $0.03 per share to its director in exchange for total cash of
$6,000. The shares were deemed to have been issued pursuant to an exemption
provided by Section 4(2) of the Act, which exempts from registration
"transactions by an issuer not involving any public offering."
During October 2000, the Company as a wholly owned subsidiary of Desert
Health Products, Inc., agreed under the terms and conditions of a Separation
and Distribution Agreement to issue 10,000 of its $0.001 par value common
stock at $0.03 per share to Desert Health Products, Inc. The Company
accounted for the shares in its fiscal year 2000 as founders shares. The
issuance of the shares occurred in June 2001 concurrent with the execution of
the Amended Separation and Distribution Agreement. The shares were deemed to
have been issued pursuant to an exemption provided by Section 4(2) of the
Act, which exempts from registration "transactions by an issuer not involving
any public offering."
There have been no other issuances of common stock.
Note 4 - Going concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern which contemplates the
recoverability of assets and the satisfaction of liabilities in the normal
course of business. As noted above, the Company is in the development stage
and, accordingly, has not yet generated revenues from operations. Since its
inception, the Company has been engaged substantially in financing activities
and developing its product line, incurring substantial costs and expenses. As
a result, the Company incurred accumulated net losses from October 17, 2000
(inception) through the period ended September 30, 2001 of $18,093. In
addition, the Company's development activities since inception have been
financially sustained by capital contributions.
The ability of the Company to continue as a going concern is dependent upon
its ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The Company
plans to raise an additional $25,000 through equity offerings in order to
continue operations for the next 12 months. The accompanying financial
statements do not include any adjustments that might be required should the
Company be unable to recover the value of its assets or satisfy its
liabilities.
Note 5 - Warrants and options
There are no warrants or options outstanding to acquire any additional shares
of common stock.
Note 6 - Related party transactions
The Company issued a combined total of 450,000 shares of its $0.001 par value
common stock to its director in exchange for cash and services valued at
$13,500.
The Company does not lease or rent any property other than the mail box
address, which is leased at a value of $180 per annum. Office services are
provided without charge by the Company's director. Such costs are immaterial
to the financial statements and, accordingly, have not been reflected
therein. The estimated fair market value for such facilities are estimated to
be $600 per annum.
No dealer, salesman or any other person
has been authorized to give any
information or to make any
representation other than those ROYAL PHOENIX
contained in this prospectus and, if
given or made, such information or
representation must not be relied upon $25,000
as having been authorized by us. This
prospectus does not constitute an offer
to sell or a solicitation of any offer
to buy any security other than the
shares of common stock offered by this
prospectus, nor does it constitute an
offer to sell or a solicitation of any
offer to buy the shares of a common
stock by anyone in any jurisdiction in
which such offer or solicitation is not
authorized, or in which the person
making such offer or solicitation is
not qualified to do so, or to any
person to whom it is unlawful to make
such offer or solicitation. Neither the
delivery of this prospectus nor any
sale made hereunder shall, under any
circumstances create any implication
that information contained herein is
correct as of any time subsequent to
the date hereof.
_____________________ _____________
TABLE OF CONTENTS PROSPECTUS
Page
Prospectus Summary 1 DEALER PROSPECTUS DELIVERY
Summary Financial Information 2 OBLIGATION
Capitalization 2
Risk Factors 3 Until the offering termination
Special Note Regarding Forward- date, all dealers that effect
Looking Statement 6 transactions in these securities,
Use of Proceeds 7 whether or not participating in
Determination of Offering Price 8 this offering, may be required to
Dilution 8 deliver a prospectus. This is in
Plan of Distribution 9 addition to the dealers'
Litigation 10 obligation to deliver a prospectus
Management 10 when acting as underwriters and
Principal Stockholders 11 with respect to their unsold
Description of Securities 11 allotments or subscriptions.
Legal Matters 13
Experts 13
Disclosure of Commission Position
of Indemnification of Securities
Act Liabilities 14
Our Business 15
Reports to Stockholders 19
Management Discussion and Analysis 19
Facilities 21
Market Price of Common Stock 21
Dividends 21
Executive Compensation 22
Shares Eligible for Future Sale 22
Changes in and Disagreements with
Accountants 23
Audited Financials Statements
Independent Auditors Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6
PART II: Information not required in Prospectus
INDEMNIFICATION OF OFFICERS AND DIRECTORS
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to us or our stockholders, (ii)
for acts or omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law, (iii) under applicable Sections of
the Nevada Revised Statutes, (iv) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes or, (v) for any transaction
from which the director derived an improper personal benefit.
The Bylaws provide for indemnification of the directors, officers, and
employees of Royal Phoenix in most cases for any liability suffered by them
or arising out of their activities as directors, officers, and employees of
Royal Phoenix if they were not engaged in willful misfeasance or malfeasance
in the performance of his or her duties; provided that in the event of a
settlement the indemnification will apply only when the Board of Directors
approves such settlement and reimbursement as being for the best interests of
the Corporation. The Bylaws, therefore, limit the liability of directors to
the maximum extent permitted by Nevada law (Section 78.751).
Our officers and directors are accountable to us as fiduciaries, which means
they are required to exercise good faith and fairness in all dealings
affecting us. In the event that a stockholder believes the officers and/or
directors have violated their fiduciary duties to us, the stockholder may,
subject to applicable rules of civil procedure, be able to bring a class
action or derivative suit to enforce the stockholder's rights, including
rights under certain federal and state securities laws and regulations to
recover damages from and require an accounting by management. Stockholders
who have suffered losses in connection with the purchase or sale of their
interest in Royal Phoenix in connection with such sale or purchase, including
the misapplication by any such officer or director of the proceeds from the
sale of these securities, may be able to recover such losses from us.
RECENT SALES OF UNREGISTERED SECURITIES
The Company is authorized to issue 5,000,000 shares of it $0.001 par value
preferred stock and 20,000,000 shares of its $0.001 par value common stock.
During October 2000, the Company issued 250,000 of its $0.001 par value
common stock at $0.03 per share to its director in exchange for services
valued at $7,500. The shares were deemed to have been issued pursuant to an
exemption provided by Section 4(2) of the Act, which exempts from
registration "transactions by an issuer not involving any public offering."
During October 2000, the Company issued 250,000 of its $0.001 par value
common stock at $0.03 per share for total cash of $7,500. The shares were
deemed to have been issued pursuant to an exemption provided by Section 4(2)
of the Act, which exempts from registration "transactions by an issuer not
involving any public offering."
During December 2000, the Company issued 200,000 of its $0.001 par value
common stock at $0.03 per share to its director in exchange for total cash of
$6,000. The shares were deemed to have been issued pursuant to an exemption
provided by Section 4(2) of the Act, which exempts from registration
"transactions by an issuer not involving any public offering."
During October 2000, the Company as a wholly owned subsidiary of Desert
Health Products, Inc., agreed under the terms and conditions of a Separation
and Distribution Agreement to issue 10,000 of its $0.001 par value common
stock at $0.03 per share to Desert Health Products, Inc. The Company
accounted for the shares in its fiscal year 2000 as founders shares. The
issuance of the shares occurred in June 2001 concurrent with the execution of
the Amended Separation and Distribution Agreement. The shares were deemed to
have been issued pursuant to an exemption provided by Section 4(2) of the
Act, which exempts from registration "transactions by an issuer not involving
any public offering."
There have been no other issuances of common stock.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index thereto,
are attached.
UNDERTAKINGS
A. The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and Notwithstanding the forgoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation From the low or high end of the estimated maximum offering range
may be reflected in the form of prospects filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
B.
(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
(2) In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business
issuer in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the small business issuer will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada, on
December 20, 2001.
ROYAL PHOENIX
By: /s/ Joseph Scott Wilson
Joseph Scott Wilson, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
/s/ Joseph Scott Wilson Sole Director December 20, 2001
Joseph Scott Wilson
/s/ Joseph Scott Wilson Principal Executive Officer December 20, 2001
Joseph Scott Wilson
/s/ Joseph Scott Wilson Principal Financial Officer December 20, 2001
Joseph Scott Wilson
/s/ Joseph Scott Wilson Principal Accounting Officer December 20, 2001
Joseph Scott Wilson
EXHIBIT INDEX
Financial Statements:
a) Royal Phoenix (Attached)
Report of Independent Auditor
Balance Sheet For The Period Ending September 30, 2001
Statement of Operations For The Period October 17, 2000 (Inception)
through September 30, 2001
Statement of Stockholders' Deficit For The Period October 17, 2000
(Inception) through September 30, 2001.
Statement of Cash Flows For The Period October 17, 2000 (Inception)
through September 30, 2001
Notes to Financial Statements
Exhibit Description
3i* Articles of Incorporation of Royal Phoenix filed on October
17, 2000 -
3ii* Bylaws of Royal Phoenix
5* Opinion of Donald J. Stoecklein, Esquire
10.1* Separation and Distribution Agreement dated October 18, 2001,
between Desert Health Products, Inc. and Royal Phoenix
10.2* License, Manufacture and Distribution Agreement
10.3* Addendum to Separation and Distribution Agreement
11 Statement re: Computation of per share earnings (Filed Herewith)
23-1 Consent of Beckstead & Associates, C.P.A. (Filed Herewith)
23-2* Consent of Donald J. Stoecklein, Esquire
*Filed in SB-2 on October 26, 2001