UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

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FORM 10-QSB

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934.

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For the quarter ended March 31, 2003                                                                          Commission file number 333-72230

 

 

**ROYAL PHOENIX**
(Exact name of registrant as specified in its charter)

 

 
**NEVADA **   **                                                                                                                                                    **88-0475757**
(State or other jurisdiction of                                                                                                                       (I.R.S. Employer 

incorporation or organization)                                                                                                                    Identification No.)
** 

4180 S. Sandhill Rd., Suite B-9

Las Vegas, Nevada                                                                                                                                                 89121
 (Address of principal executive offices)                                                                                                                (Zip Code)

  

  

**(702) 866-5835**
(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes__X__   No _____

 

As of May 1, 2003 there were 720,000 shares of common stock outstanding.

 

Transitional Small Business Disclosure Format (check one)

 

Yes_____     No __X__

 

 

 

 

ROYAL PHOENIX

MARCH 31, 2003

 

INDEX
 

 

PART I - FINANCIAL INFORMATION                                                                                                            Page No.

 

   Item 1.    Financial Statements

 

                  Balance Sheet as of March 31, 2003 and December 31, 2002                                                                         3

 

                  Statement of Operations three months ended March 31, 2003 and 2002                                                          4

 

                  Statement of Cash Flows three months ended March 31, 2003 and2002                                                         5

 

                  Notes to Unaudited Financial Statements                                                                                                         6

 

   Item 2.    Plan of Operation                                                                                                                                         7-9

 

   Item 3.    Controls and Procedures                                                                                                                                 9

 

PART II - OTHER INFORMATION

 

   Item 1.    Legal Proceedings                                                                                                                                         10

 

   Item 2.    Changes in Securities                                                                                                                                     10

 

   Item 3.    Defaults Upon Senior Securities                                                                                                                     10

 

   Item 4.   Submission of Matter to a Vote of Security Holders                                                                                       10

 

   Item 5.    Other Information                                                                                                                                          10

 

   Item 6.    Exhibits and Reports of Form 8-K                                                                                                                 10

 

   SIGNATURES                                                                                                                                                            11

 

   CERTIFICATION OF PRESIDENT AND CHIEF FINANCIAL OFFICER                                                             17

 

2

 

 
**ROYAL PHOENIX

(a Development Stage Company)

BALANCE SHEET

(Unaudited)

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 ****March 31, 2003**December 31, 2002**ASSETS
CURRENT ASSETS
         Cash
$                   351
$                     1,351
              TOTAL CURRENT ASSETS
351
1,351
$                   351
$                     1,351**LIABILITIES AND STOCKHOLDERS' EQUITY
 

 

CURRENT LIABILITIES
$                       0
$                            0
 

 

               TOTAL CURRENT LIABILITIES
0
0
 

 

STOCKHOLDERS' EQUITY
 

 

   Preferred stock, $.001 par value authorized 5,000,000;
   no shares issued and outstanding as of 3/31/03 and 12/31/02
0
0
 

 

   Common stock, $.001 par value, authorized 20,000,000
   shares; 720,000 shares issued and outstanding as of 3/31/03
   and 710, 000 shares issued and outstanding as of 12/31/02
   retroactively restated
 

 

 

720
 
 
 
710
 

 

Additional paid-in capital
21,580
20,590
 

 

(Deficit) accumulated during development stage
(21,949)
(19,949)
              TOTAL STOCKHOLDER'S EQUITY
351
1,351
$                   351
$                     1,351** 

 

The Accompanying Notes are an integral part of these financial statements.

 **
3
** 

 

ROYAL PHOENIX

(a Development Stage Company)

STATEMENT OF OPERATIONS

UNAUDITED

 

 **
 

Three Months Ended 

March 31,

2003
Three Months Ended 

March 31,

2002
For the Period October 17, 2000,(Inception) to March 31, 2003
Revenue
$                  0
$                    0
$                     0
 

 

EXPENSES
General and Administrative
2,000
56
21,949
 

 

TOTAL EXPENSES
2,000
56
21,949
 

 

NET (LOSS)
$         (2,000)
$                (56)
$         (21,949)
 

 

Weighted average number of common sharesoutstanding basic and fully diluted
720,000
710,000
 

 

Net (loss) per weighted shares-basic andfully diluted
$            (0.00)
$              (0.00)** 

The Accompanying Notes are an integral part of these financial statements.

 **
4
** ****ROYAL PHOENIX

(a Development Stage Company)

STATEMENT OF CASH FLOWS

UNAUDITED

 **
 

 

Three Months Ended 

March 31,

2003
Three Months Ended 

March 31,

2002
For the Period October 17, 2000,(Inception) to March 31, 2003
Cash Flows from
Operating Activities
      Net loss
$         (2,000)
$               (56)
$          (21,949)
      Shares issued for services
--
--
7,500
 

 

  Adjustment to reconcile net loss to net cash used by operations
         Note Payable
--
--
--
         Payroll Liabilities
--
--
--
 

 

Net cash used in operating activities
(2,000)
(56)
(14,449)
 

 

Cash Flows from Investing Activities
--
--
--
 

 

Cash Flows from Financing Activities
      Issuance of common stock
1,000
--
14,800
 

 

Net increase in cash
(1,000)
(56)
351
 

 

Cash, beginning of period
1,351
2,907
0
Cash, end of period
$              351
$            2,907
$                  351
 

 

Supplemental Disclouser
      Interest Paid
$                 --
$                  --
$                     --
      Taxes Paid
$                 --
$                  --
$                     --
 

 
**The Accompanying Notes are an integral part of these financial statements.

 **
5
** 

 

ROYAL PHOENIX

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

 

Note 1- Basis of Presentation

 

The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2002 and notes thereto included in the Company's 10-KSB annual report.  The Company follows the same accounting policies in the preparation of interim reports.

 

Results of operation for the interim period are not indicative of annual results.

 

**Note 2  - 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, setting up its e-commerce website, and incurring substantial costs and expenses. As a result, the Company incurred accumulated net losses from October 17, 2000 (inception) through the period ended March 31, 2003 of $(21,949). In addition, the Company's development activities since inception have been financially sustained through equity financing.

 

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 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 3  - Related party transactions**

 

The officer and director of the Company is involved in other business activities and may in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such person may face a conflict in selecting between the Company and its other business interests. The Company has not formulated a policy for the resolution of such conflicts.

 

6

 

**Item 2.  Plan of Operation.**

 

The following discussion and analysis should be read in conjunction with the Company's unaudited financial statements and the notes thereto contained elsewhere in this filing.

 

***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 separation 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 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, we will not be able to commence operations. We currently have insufficient capital to commence operations and are dependent on proceeds from our registration statement to fund operations along with future common stock offerings and bank borrowings to the extent available 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.  

   

***Satisfaction of our cash obligations for the next 12 months.*** Our plan of operation is to establish an operational website as soon as practical. When having established our website as operational, we are to commence advertising in selected periodicals, newspapers, and the Internet through banner advertising.  We are offering a maximum of 250,000 shares of common stock at a price of $0.10 per share, resulting in a maximum of $25,000 in proceeds.  The offering terminates on June 28, 2003.  The proceeds of our current registered offering are anticipated to provide our cash requirements for the next 12 months.  

   

7  

   

***Summary of any product research and development that we will perform for the term of the plan.*** We do not anticipate performing any significant product research and development under our plan of operation. In lieu of product research and development we anticipate maintaining control over our advertising, especially on the Internet, to assist us in determining the allocation of our limited advertising dollars.  

   

***Expected purchase or sale of plant and significant equipment.***We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time or in the next 12 months.  

   

***Significant changes in number of employees.*** The number of employees required to operate our business is currently one part time individual. After we commence generating revenues based upon the expenditures of our advertising dollars, and word of mouth advertising, and at the end of the initial 12 month period, our plan of operation anticipates our requiring additional capital to hire at least one full time person.  

   

**Liquidity and Capital Resources**

   

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.  

   

Over the next twelve months we believe that existing capital and anticipated funds from operations will not be sufficient to sustain operations and planned expansion.  Consequently, we will be required to seek additional capital in the future to fund growth and expansion through our current registered offering and additional equity or debt financing or credit facilities.  No assurance can be made that such financing would be available, and if available it may take either the form of debt or equity.  In either case, the financing could have a negative impact on our financial condition and our Stockholders.  

   

**Going Concern**

   

The consolidated financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern.  The Company's cash position may be inadequate to pay all of the costs associated with production and marketing.  Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required will be available.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.  

   

8  

   

**Item 3. Controls and Procedures
(a)	Under the supervision and with the participation of our management we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as amended, within 90 days prior to the filing date of this report.  Based on their evaluation, our sole officer concluded that our disclosure controls and procedures are effective.

(b)	There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.
**Forward-Looking Statements and Associated Risks

 

This Quarterly Report on Form 10-QSB contains forward-looking statements.  These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, many of which are beyond the Company's control, including, but not limited to, economic, competitive and other factors affecting the Company's operations, markets, products and services, expansion strategies and other factors discussed elsewhere in this report and the documents filed by the Company with the Securities and Exchange Commission.  Actual results could differ materially from these forward-looking statements.  In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will in fact prove accurate.  The Company does not undertake any obligation to revise these forward-looking statements to reflect future events or circumstances.

 

9

 

**PART II--OTHER INFORMATION**

 

Item 1.       Legal Proceedings.

 

None

 

Item 2.       Changes in Securities.

 

None

 

Item 3.       Defaults Upon Senior Securities.

 

None.

 

Item 4.       Submission of Matter to a Vote of Security Holders.

 

None

 

Item 5.       Other Information.

 

None

 

Item 6.       Exhibits and Reports on Form 8-K.

 

None.

 

10

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ROYAL PHOENIX

 

 

 

By:/s/  Joseph Scott Wilson        

Joseph Scott Wilson, President

 

Date: May 12, 2003

 

11

 

**CERTIFICATION**
I, Joseph Scott Wilson, certify that:

 

 

1.	I have reviewed this quarterly report on Form 10-QSB of Royal Phoenix;

 

 

2. 	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 

 

 

3. 	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 

 

 

4. 	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; 

b)	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

 

5. 	I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and 

b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

 

 

6. 	I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date: May 12, 2003

 

 

/s/Jospeh ScottWilson            

Joseph Scott Wilson, President
Chief Accounting Officer

 

12******************