The above figures represent only estimated costs. This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the status of and results from operations. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. Furthermore, we anticipate that we will need to secure additional funding for the fully implement our business plan.
If we raise the entire $20,000,000 in this Offering and in the event the proposed acquisitions of Summit Logistics, Sun Ray and Crystal Closet are consummated, the proceeds of this Offering will not be used to (1) compensate or otherwise make payments to officers of First Phoenix, Summit Logistics, Sun Ray and/or Crystal Closet or (2) to acquire Summit Logistics, Sun Ray and/or Crystal Closet’s existing assets, but (3) will be used solely for working capital and post-acquisition expansion because the interests of the management of First Phoenix, Summit Logistics, Sun Ray and Crystal Closet are the same. See “Interest of Management and Others In Certain Transactions.”
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6. DESCRIPTION OF BUSINESS
Our Company
First Phoenix Investments, Inc. (the “Company” or “First Phoenix”) was incorporated in the State of Delaware on September 7, 2016. Our corporate office is located 245 Park Avenue, 39th Fl, New York, NY 10167. We are incorporated to acquire companies engaged in Trucking, Retail Grocery and Variety Goods; and Online Retail Clothing operations. First Phoenix will act as the holding company for such acquired companies. First Phoenix has identified three (3) companies it intends to acquire: (1) Summit Logistics, Inc., a South Carolina trucking company based in Marion, SC. (“Summit” or “Summit Logistics”); (2) Sun Ray Healthy Market, Inc. a South Carolina corporation grocery business based in Myrtle Beach, SC. (“Sun Ray”); and (3) Crystal Closet, LLC., a South Carolina limited liability company and online clothing retailer based in Marion, SC. (“Crystal Closet”).
First Phoenix will execute its business plan for the trucking business line by acquiring 100% interest in Summit Logistics. Upon acquisition, First Phoenix intends to grow the Marion, SC based trucking network to compete with major US trucking operators, and offer pricing products that will increase its attractiveness to shippers of every size. This planned expansion will include a system of local delivery and long haul operations serving major metropolitan areas around the US utilizing an advanced trucking fleet and sort facilities along with established routes and customers acquired through consolidation, buyouts, and increased marketing campaigns. The main trucking operation and headquarters will be located in the Marion, SC. with a planned sub-hub at Louisville, KY. Dry vans will provide local service to/from sort facilities - which connect to other major markets via long haul tractor-trailer transport. The anticipated result will be an efficient hub and spoke trucking network. Whether the demand is for local or long haul service – our proposed new network is expected to provide cost effective logistics for customers through full truckload and less than truckload (LTL) operations throughout North America. Government regulations billed to go into effect in 2017 will require enforcement of maximum hour of driving with compliance monitoring gadget. We intend to deploy nonstop 24/7 delivery platform to stay ahead of the competition. We anticipate that in economic downturn, there will be less cargo business; however, since single owner operators work less and can only afford working on higher paid loads, we intend to consolidate cargo at our warehouses so as to continuously deliver, and grow our operations even in economic downturn.
For the Retail Grocery and Variety Goods operations, First Phoenix will execute its business plan by acquiring 100% of Sun Ray. Upon acquisition, First Phoenix intends to grow the Myrtle Beach, SC based grocery business from its current one (1) store location to ten (10) locations in the next three years while adding Variety Goods as an additional business line. First Phoenix believes that recent consolidation of variety goods industry giants (i.e., the merger of Family Dollar and Dollar Tree) has created franchising opportunity for new entrants as consolidated entities offer less franchising outlets. We hope to launch our Variety Goods line as part of the Retail Grocery Stores operations. For the Online Retail Clothing operations, First Phoenix will execute its business plan by acquiring 100% of Crystal Closet. Upon acquisition, First Phoenix intends to grow Crystal Closet’s online presence through marketing and advertising and adding brand name clothing lines. However, there is no assurance that we may raise sufficient proceeds through this offering in order to fully execute plans.
Uncertainty of Potential and Contemplated Acquisition of Summit Logistics, Sun Ray and Crystal Closet and Management Interests.
The planned acquisition of Summit Logistics, Sun Ray and Crystal Closet may not be probable. Consequently, if anyone of the planned acquisition is not consummated, First Phoenix intends to launch its own stand alone operations for the business that is not acquired. For example, if none of planned acquisitions is consummated, First Phoenix will launch its own stand alone Trucking, Retail Grocery Stores and Variety Goods lines and Online Retail Clothing Operations. However, if for example all other planned acquisitions are consummated and Summit Logistics is not, then First Phoenix will launch its own stand alone Trucking operations. Nonetheless, in the event the acquisitions of Summit Logistics, Sun Ray and/or Crystal Closet are consummated, the proceeds of the Offering will not be used to (1) compensate or otherwise make payments to officers of First Phoenix, Summit Logistics, Sun Ray and/or Crystal Closet or
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(2) to acquire Summit Logistics, Sun Ray and/or Crystal Closet’s existing assets, but (3) will be used for working capital and post-acquisition expansion because the interests of the management of First Phoenix, Summit Logistics, Sun Ray and Crystal Closet are the same. See “Interest of Management and Others In Certain Transactions.”
Government Regulation
Our business is subject to many laws and governmental regulations. Changes in these laws and regulations, or their interpretation by agencies and courts, occur frequently.
Employees:
Currently, the company does not have any full time employees. The company may hire a number of employees as needed after effectiveness of this offering primarily to support our acquisition and development efforts.
Legal Proceedings
We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
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7. DESCRIPTION OF PROPERTY
Our principal offices are located at 245 Park Avenue, 39th Fl, New York, N.Y. 10167. The office is provided free by Mr. Ray Watts. We do not currently lease or own any other real property.
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8. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Phoenix Investments, Inc. (the “Company” or “First Phoenix”) was incorporated in the State of Delaware on September 7, 2016 to engage primarily in trucking business and other business opportunities. First Phoenix principal executive offices are located at 245 Park Avenue, 39th Fl, New York, NY 10167. First Phoenix intends to execute its entry into trucking business through the planned acquisition of Summit Logistics. Following consummation of the planned acquisition, First Phoenix intends to grow the trucking network from its Marion, SC based hub and a planned sub-hub at Louisville, KY to compete with major US trucking operators, and offer a product that will increase its attractiveness to shippers of every size. This planned expansion will include a system of local delivery and long haul operations serving major metropolitan areas around the US utilizing an advanced trucking fleet and sort facilities along with established routes and customers acquired through consolidation, buyouts, and increased marketing campaigns.
Most current trucking operators are independent contractors who are limited in their available duty day because of DOT rest requirements. Drivers are tracked via electronic logbook and must discontinue driving if duty time is exceeded at any given time. Both regional and larger trucking operators are experiencing operating delays due to this restriction. In addition – operators tend to charge heavily for smaller loads (4 pallets or less) – due to minimum costs of delivery - making it unfeasible for smaller businesses to ship less than a predetermined amount set by the operator. As a result – many shippers are forced to pay a premium to go with operators, such as UPS and FedEx, to provide long haul – as well as local delivery service for smaller shipments. If a shipper does not sign a contract – major operators are charging a 4.9% rate increase (see recent FedEx and Conway increases). With 70% of all freight shipped via trucks - LTL shipments are drastically increasing and set to rise much higher.
First Phoenix intends to incorporate a continuous transport model of business to combat the duty time issue experienced by most operators. For example - a truck operator will drive a load from Marion to Atlanta with cargo heading to Dallas thereafter. The Atlanta shipment will be unloaded at a distribution center for local delivery. This trailer will then be filled to capacity with additional shipments heading to the Dallas metro area. With mandatory rest required for the original driver – a fresh driver will continue the delivery to the destination without delay or effect on scheduled service. This model can easily be adopted with the strategic locations of current and planned distribution/sort facilities – allowing for nationwide continuous operations 24/7 if desired. Furthermore – with distribution/sort facilities located at strategic locations throughout the US – First Phoenix Lines expects to provide highly cost effective solution to shippers looking to utilize LTL services. With local delivery, long haul, and sort operations in house – the Company can accept much smaller loads from shippers – while achieving necessary load capacities for cost efficient transport. This will open and tap into a large market potential – currently dominated by industry leaders like UPS and FedEx.
First Phoenix believes it is well positioned to capitalize on the explosive growth expected in the LTL and truckload shipping market. The Company believes it has the ability to meet government standards, operate efficiently, and retain customers. First Phoenix hopes to meet this demand by continuing the overall strategy: to provide the high standard of transportation services through reasonably safe and timely deliveries, fair and competitive pricing, and a safe workplace for our employees, coupled fairness and honesty in dealings with our customers and business partners.
Through post acquisition capital investment, we plan to grow our fleet to Fifty (50) trucks allocated to the following lanes: Marion, SC to Jacksonville, FL, 5 trucks; Marion, SC to Jersey City, NJ, 5 trucks; Marion, SC to Oklahoma City, OK, 5 trucks; Marion, SC to San Diego, CA, 5 trucks; Marion, SC to Page, AZ, 5 trucks; Marion, SC to Mexico City, NM, 5 trucks; Marion, SC to Quebec City, Quebec, Canada, 5 trucks; Louisville, KY to Durham, NH, 5 trucks; Louisville, KY to Monmouth, NJ 5 trucks; Louisville, KY to Burlington, VT, 5 trucks. Whether the demand is for local or long haul service – our proposed will provide cost effective logistics for customers through efficient truckload and less than truckload (LTL) operations throughout North America.
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For the Retail Grocery and Variety Goods operations, First Phoenix will execute its business plan for retail grocery and variety good business line by acquiring 100% of Sun Ray. Upon acquisition, First Phoenix intends to grow the Myrtle Beach, SC based grocery business from its current one (1) store location to ten (10) locations in the next three years while adding Variety Goods as an additional business line. First Phoenix believes that recent consolidation of variety goods industry giants (i.e., the merger of Family Dollar and Dollar Tree) has created franchising opportunity for new entrants as consolidated entities offer less franchising outlets. We hope to launch our Variety Goods line as part of the Retail Grocery Stores operations. For the Online Retail Clothing operations, First Phoenix will execute its business plan for Online Retail Clothing business line by acquiring 100% of Crystal Closet. Upon acquisition, First Phoenix intends to grow Crystal Closet’s online presence through marketing and advertising and adding brand name clothing lines to Crystal Closet’s product line.
Operating Results
As of October 31, 2016 we have not generated any revenues and incurred expenses of $3,500. Our operating expenses consist of the costs incurred in organizing the company and this offering. As a result, our net loss for the period from inception through October 31, 2016 was $3,500. Our accumulated deficit at October 31, 2016 was $3,500.
To meet our need for cash we are attempting to raise money from this offering. The maximum aggregate amount of this offering will be required to fully implement our business plan. If we are unable to successfully generate revenue we may quickly use up the proceeds from this offering and will need to find alternative sources. If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely.
Liquidity and Capital Resources
As of October 31, 2016, the Company had $6,500 in cash and total liabilities of $3,500. As of October 31, 2016, the Company has incurred total expenses since inception of $3,500, related entirely to legal fees associated with this Offering. In management’s opinion, the Company’s cash position is insufficient to maintain its operations at the current level for the next 12 months. We are attempting to raise funds to proceed with our plan of operation. The Company hopes to raise $20,000,000 in this Offering. If we are successful at raising the maximum amount of this offering, we believe that such funds will be sufficient to fund our expenses over the next twelve months.
We are highly dependent upon the success of this offering, as described herein. Therefore, the failure thereof would result in the need to seek capital from other resources such as taking loans, which would likely not even be possible for the Company. However, if such financing were available, because we are a development stage company with no operations to date, we would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing. If the Company cannot raise additional proceeds via a private placement of its equity or debt securities, or secure a loan, the Company would be required to cease business operations. As a result, investors would lose all of their investment.
Upon the qualification of the Form 1-A, the Company plans to pursue its investment strategy. There can be no assurance of the Company's ability to do so or that additional capital will be available to the Company. If so, the Company's investment objective will be adversely affected and the Company may not be able to execute on its business plan. The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company. There can be no assurance that additional capital will be available to the Company. If we are successful at raising capital by issuing more stock, or securities which are convertible into shares of the Company, your investment will be diluted as a result of such issuance.
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We are highly dependent upon the success of this offering, as described herein. Therefore, the failure thereof would result in the need to seek capital from other resources such as taking loans, which would likely not even be possible for the Company. However, if such financing were available, because we are a development stage company with no operations to date, we would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing. If the Company cannot raise additional proceeds via a private placement of its equity or debt securities, or secure a loan, the Company would be required to cease business operations. As a result, investors would lose all of their investment.
Off-Balance Sheet Arrangements
As of October 31, 2016 we did not have any off-balance sheet arrangements.
Plan of Operations
Over the next twelve months, and with the planned acquisition of Summit Logistics, the Company intends to execute on the proposed business plan of entering into the trucking business and the implementation of its computerized proprietary cargo handling operations for customers through full truckload and less than truckload (LTL) operations throughout North America.
Equally, with the planned acquisition of Sun Ray, First Phoenix intends to grow the Myrtle Beach, SC based grocery business from its current one (1) store location to ten (10) locations in the next three years while adding Variety Goods as an additional business line.; with the planned acquisition of Crystal Closet, we plan to grow Crystal Closet’s online presence through marketing and advertising and adding brand name clothing lines to its product line.
However, if we do not consummate anyone of the planned acquisition, we intend to launch its own our stand alone operations for the business that is not acquired. For example, if none of planned acquisitions is consummated, First Phoenix will launch its own stand alone Trucking, Retail Grocery Stores and Variety Goods Stores and Retail Clothing operations. However, if, for example, all other planned acquisitions are consummated and Summit Logistics is not, then First Phoenix will launch its own stand alone Trucking operations.
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9. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until her successor is elected and qualified, or until her earlier resignation or removal. Our directors and executive officers are as follows:
The table below lists our directors and executive officers, their ages, and the date of their first appointment to such positions. Each position is currently held with an indefinite term of office.
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
Our Bylaws provide that the Board of Directors shall consist of no more than two (2) directors. Each director of the Company serves until his successor is elected and qualified, subject to removal by the Company’s majority shareholders. Each officer shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors, and shall hold his office until his successor is elected and qualified, or until his earlier resignation or removal.
There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. In addition to having no nominating committee for that purpose, we currently have no specific audit committee and no audit committee financial expert. Based on the fact that our current business affairs are simple, any such committees are excessive and beyond the scope of our business and needs.
None.
No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting her involvement in any type of business, securities or banking activities,
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.
None.
The following table sets forth information about the annual compensation of each of our two highest-paid persons who were directors or executive officers during our last completed fiscal year.
