UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: June 30, 2000 Commission File No: 0-29915
FREFAX, INC.
----------------------------------------------
(Exact name of small Business Issuer as specified in its charter)
FLORIDA 65-0786722
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
270 NW 3rd Court Boca Raton, Florida 33432-3720
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone: (561) 368-1427 Issuer's Fax number: (561) 395-8312
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(b) of the Act: Common Stock $0.001
Par value
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15 (d) of the Exchange Act during the past 12 months (or 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 ( )
Check if there is no disclosure of delinquent filers in response to item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 1-KSB
or any amendment to this form 10-KSB. ( X )
State issuer's revenues for its most recent fiscal year: $None
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60 days
$9,016,800.00 As at August 30, 2000
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $0.001 Par Value Common Shares -
19,446,000 As of August 30, 2000.
Transitional Small Business Disclosure Format (Check One) Yes ( ) no (X)
<PAGE>
FREFAX, INC. FINANCIAL CORPORATION
FORM 10-KSB
TABLE OF CONTENTS
PART I ................................................................3
ITEM 1. DESCRIPTION OF BUSINESS ................................3
ITEM 2. DESCRIPTION OF PROPERTY ................................9
ITEM 3. LEGAL PROCEEDINGS ...................... .. ............9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....9
PART II .............................................................10
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
.............................................................10
ITEM 6. PLAN OF OPERATIONS...... ....... ......................10
ITEM 7. FINANCIAL STATEMENTS ..................................11
ITEM 8. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS .............11
PART III .............................................................11
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE
EXCHANGE ACT ..........................................11
ITEM 10. EXECUTIVE COMPENSATION. ...............................12
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.....................................12
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........12
ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K.......................13
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
Frefax, Inc. ( the "Company') was incorporated on September 26, 1997
under the laws of the State of Florida under the name of Central Group, Inc.
The name of the Company was changed to Frefax, Inc. by an amendment to
its Article of Incorporation filed with the Florida Department of State on
September 15, 1998.
From the date of its incorporation to July 30, 1998, the only
activities undertaken by the Company were two offerings of its common stock to
investors pursuant to Rule 504 of Regulation D as promulgated by the Securities
& Exchange Commission.
On July 30, 1998 the Company entered into a Stock Purchase Agreement
with three individuals who owned all of the stock of Frefax, Inc.,a Canadian
Corporation. See Exhibit 3, Page E-26. This Agreement provided as follows:
(1) The three shareholders of Frefax, Inc. (Canada) owned 10,000,000 shares
of that corporation which was all of the outstanding stock.
(2) Those shareholders agreed to sell all of their stock to Frefax, Inc.
(Florida) in exchange for receiving 10,000,000 shares of
Frefax,Inc.(Florida).
(3) The Agreement was executed July 30, 1998 and 10,000,000 shares of
Frefax, Inc. (Florida) were issued as of that date to the three selling
shareholders. All shares as issued have restrictive legends under Rule
144.
Acting through the brokerage firm of Sierra Brokerage Services, Inc.,
in October, 1998 the Company applied to the NASD pursuant to Rule 5740 and Rule
l5c2-11 under the Securities Exchange Act of 1934, for a listing on the OTC
Bulletin Board. This request was approved on November 4, 1998. The stock symbol
for the Company is: FFAX.
The Company acts solely as a holding company. Other than the
acquisition of the stock of Frefax, Inc. (Canada) as a wholly owned subsidiary,
the Company has had no separate business activities since its formation to the
current date. The Company is in good standing in the State of Florida.
(b) BUSINESS OF ISSUER
Frefax, Inc. (Canada), the wholly-owned subsidiary of Frefax, Inc.
(Florida), is the only active business entity of the Company. Consequently, the
comments that follow in describing the business of the issuer apply only to
Frefax, Inc. (Canada), (identified hereinafter as "FC").
FC was founded for the purpose of investigating the market for, and
technologies involved in, long distance faxing, with the ultimate goal of
creating a world-wide network, capable of providing unlimited use, flat rate,
fax calling service.
<PAGE>
The initial marketing focus is to business entities using long distance
fax services within Canada and the United States.
Product description
The products of FC are a combination of three components:
(1) A master "Black Box";
(2) A slave "Black Box"; and
(3) A Telephone Manager System.
The three components work in concert to create an autonomous system
designed to operate without human input. The system also performs
self-diagnostics and can initiate warm boot procedures from the head office.
The Slave unit is installed at the client's place of business. A single
line installation is performed in less than 30 seconds, and will require no
training for the fax operator. The client continues to use the fax machine(s) as
they always have.
A Master unit is then located in all franchisee and company-operated
regional offices. The Master Unit handles the security and information
processing functions. The Company's proprietary Encryption Technology increases
the security of transmissions, as well as providing a speedy method for dealing
with non-paying clients as the system can be turned "on" or "off" via the Master
Unit.
The Telephone Manager System works in parallel with the Master Unit by
keeping track of all incoming and outgoing calls. Detailed reports can be
created using the powerful database management functions of the Telephone
Manager. The Telephone Manager compiles a daily activity report, which is
transmitted to each client, showing both incoming and outgoing activity.
The Frefax system does not require a dedicated line nor an Internet
provider or service. In less than 30 seconds the customer is installed and
continues to use the Fax machine in the same manner as before, the only
difference is the absence of monthly long distance charges on the telephone
statement.
The corporation is in the process of diversifying its core business
from developing communication technology into a real estate development company,
which would also acquire environmental technologies to be used in numerous
applications.
Industry and Company Background
The most conservative estimate for the worldwide long distance market
is $110 Billion US. By the year 2000, it is expected that the long distance
telephone market will represent several hundred billion dollars in revenues to
the Telco industry. Of these figures, a recent article in the Economist suggests
that at least 25% is excessive profits, which are a direct result of the
monopolistic condition of the world's telecommunication companies.
For the industry in general, it is estimated that 150 million new phone
lines will be installed worldwide before the end of the century. This additional
capacity is equivalent to the number of lines currently in existence in North
America or currently operating in the UK, France and Germany combined. The
fundamental thrust of the Company's marketing strategy will be to utilize its
own Fax broadcast capabilities and customer lists.
<PAGE>
Evans Research Corp. has projected the sales growth of fax machines as
high as 90% per annum through 1998 in Canada. Fax technology is now also found
embedded in computer networks and PC's, as well as mobile/cellular fax systems.
All of these systems share one common feature, the use of telephone company
networks to transmit the Information. While fax technology has brought with it
tremendous productivity gains, this background use of telephone lines has also
been a windfall for the telcos (telephone companies).
Another medium for transmitting information is of course the Internet,
however, there are a number of problems inherent in this type of transmission
(see Competition).
The overall market potential for the FC system is anticipated to be in
excess of $25 billion annually. With a minimal market penetration generating an
assumed client base of 15,000 users. FC would generate revenues of $18 million
annually, resulting in annual profits of $20.8 million.
FC offers cost savings to many high volume long distance fax users.
Currently businesses can obtain discount rates in the neighborhood of 40% off
peak time of day rates from their long distance providers. Even with the
six-second incremental billing offered for dedicated fax lines, most companies
could unknowingly generate hundreds of dollars per month in long distance fax
charges.
The FC system is unique In that it requires no special phone lines and
does not discriminate between types of Fax machines whether stand alone,
PC-based group I, II or Ill. It does not require any special knowledge or skill
to operate, in fact it's operation is totally transparent to the user, who
simply uses his Fax machine as usual while the FC system operates in the
background.
Distribution Methods of the Products & Services
Current Situation
All major telephone companies generate profit from their long distance
customer base. The telcos offer no specific `deals' for timely fax service to
the general business customer (other than time-of-day or volume discounts).
Existing telco fax services merely offer billing in six-second increments and
the administration of large fax campaigns for a fee.
FC has developed a product/service with appeal to both an existing
marketplace of fax users, and a new generation of fax users who will surface to
take advantage of this cost effective marketing tool.
o Existing fax users will quickly see the benefit as they are
already sensitive to their faxing costs and are frequently
limited in their faxing abilities due to cost constraints. FC
effectively eliminates these concerns.
o Existing (or new) fax owners who have felt that fax
broadcasting (especially via long distance lines) was simply
beyond their reach from a cost perspective. Rather than
mailing out hundreds of customer contact pieces, which are
very expensive and yield extremely low response rates (1-3%),
these businesses can now contact thousands of prospective
customers for virtually pennies a page. FC will bring mass
marketing to the small, independent business owner at
affordable cost.
<PAGE>
Service Description
The FC system will revolutionize the use of fax machines for
telemarketing, customer service and sales & marketing due to the flat fee,
unlimited use feature. The ability to send an unlimited number of faxes (maximum
240/day, but extra increments can be purchased) at a fixed flat rate will be
extremely attractive. The monthly fee is $100, or the customer may elect to
prepay one year in advance for $1,000. Initially, FC will establish a Network of
approximately 27 offices throughout North America, in cities with population
over 600,000 and a high concentration of businesses.
In addition to existing product/service FC plans to introduce follow-on
products which are complimentary with the Telco industry. With our fax customer
volume driving down long distance costs, it is conceivable that FC could expand
into the long distance carrier market in the future.
The company also plans to introduce its Telephone Manager System to its
clients as an effective system for monitoring voice calls, both incoming and
outgoing. This can provide the customer with tailored usage reports, providing
the customer with detailed information not otherwise available and creating
incremental revenue.
As an extra service, FC will also have the capability of creating the
world's largest Fax database. With this capability, FC would be in a position to
offer list services (offering Fax Lists for sale by industry, region, SIC code
or other characteristic) and Fax campaign services to clients.
Market Segmentation
Canadian and U.S. Corporations and Small Businesses
Companies with large vendor or customer base applications will be
targeted. Examples would include banks, trust companies, insurance companies,
brokerage houses and promotion firms, advertising firms, importers, exporters,
OEMs and distributors. All of these types of business are dependent upon the
reliable and rapid transmission of documentation by fax. FC is a cost effective
fax alternative to their current long distance provider.
Repositioning FC in the minds of its customers as a marketing tool will
be a secondary strategy to justify the acquisition of additional systems within
the organization.
The Telephone Manager feature will offer additional benefits to the
customer which are likely unavailable to the average telco or other fax service
providers' customers.
Retailers and Other Distributors of Fax Machines and Related Products
FC will be approaching retailers and distributors of fax machines and
may, in time, also approach manufacturers. FC is currently in discussions with
Icon Office Solutions (a division of Alco Standard), a major supplier of Ricoh,
Sharp, Canon and Toshiba fax machines. Icon has a 20,000 strong sales staff,
giving FC access to thousands of prospective customers.
Through strategic alliances, retailers and distributors would purchase
a minimum black box inventory (100 units at a cost of $16,000) from FC. Each of
their customers who elects to purchase a box will be charged $250, but this will
be credited back to the customers when they sign up with FC at the rate of
$50/month for 5 months (on monthly service) or credited against the annual
service cost of $1,000.
<PAGE>
Other possible strategic partners include firms such as National
Utilities, a reseller of primarily utility services (gas, hydroelectric power,
etc.). Under this arrangement, FC. could be made available to their 5,000
corporate accounts across Canada.
Franchises and Other Outlets
In addition to the Faxback program aimed at end-users for the corporate
outlets, FC intends to develop a franchise network in North America with over
300 associate offices. These associate offices will service smaller regions and
will be offered specialized equipment that will allow them to set up their own
local customer base. Billing will be administered by the franchisee, who will
make an annual license renewal payment to FC. This will generate additional
revenues for the company and will serve to expand the customer base to almost
10% of the North American market very quickly.
All franchisees will make a $40,000 investment in equipment, which will
give them One (1) Master Black Box (the exclusive FC hardware and software) and
Sixty (60) Slave Units to be distributed to their customers. Franchisees should
generate approximately $60,000 in incremental revenue per year from this service
and will pay an annual $20,000 franchise license fee, commencing in year 2.
Successful franchises will be allowed to establish additional franchises.
In this way, FC will develop a well-crossed market, offering "local"
service, local supply and direct sales. Dealers and franchises will be able to
service smaller markets , which would not be economical to service through
Frefax's head office. The franchise and dealer systems are suitable for existing
companies who wish to supplement their operation's income with little investment
(other than inventory).
Competition
There are three direct competitors to the service at this time:
o Local Telco and other long distance resellers - offering
time-of-day and volume discounts
o Internet - customers may transmit their own messages at no
cost through the Net
o Other fax service providers - other companies purporting to
offer economical fax sending services
o Local Telcos and Long Distance Resellers - Increasing
competition in the long distance market has certainly reduced
long distance costs, however, it is extremely difficult for
any telco or conventional long distance reseller to compete
with flat rate long distance services such as FC which
purchase block long distance time in tremendous volume.
Individual consumers could not negotiate anywhere near the
favorable rates enjoyed by providers such as FC.
Within the Canadian market, flat Rate Long Distance Providers will also
provide competition as they sell blocks of long distance calling time for a flat
fee to consumers (in fact, FC will be utilizing some of their lines in setting
up this service). Their major disadvantage from the customer's perspective is
the necessity of dialing local access codes and then waiting for a line to dial
the intended recipient's fax number. Most also serve a limited market area, such
that clients cannot contact their entire fax list through a single source.
<PAGE>
Over time in the U.S., the company also expects limited competition
from MediaCon, which provides a "least-cost routing service" which automatically
routes calls through the long distance provider offering the best rate. This
service still only amounts to a discount service though, versus unlimited
flat-rate faxing through FC.
o Internet - In some respects, the Internet has offered a cheap
alternate to the use of fax technology, via E-mail systems,
however, these systems specialize in the transmission of
ASCII-type data or software-specific data that is transported
over private networks or among users operating common software
platforms. This means that "messages" sent via one software
platform often arrive as "gibberish" at their destination
point, if the recipient does not have the same software.
Alternatively, messages may be sent in a "plain text" format,
losing much of the impact of the message (logos, graphics,
etc.).
E-Mail faxes require the use of a computer, modem and
software, as well as a subscription to an Internet provider
and a telephone line. They do not offer a solution for the Fax
user who already owns a regular Fax machine or PC type
fax/modem. E-mail Faxing has done nothing to address the needs
of Fax users with ordinary `hard copy' fax machines or
ordinary fax/modem systems. Today, only one small company
offers flat fee Faxing via the Internet.
o Other fax service providers - Competitive threats today come
from Faxlink, owned by a long distance carrier, and Faxnet, a
private service offered over the Internet. Both of these
services lack the ability to allow a customer with a regular
fax machine to access the system. Their systems require the
use of E-mail type faxes, scanned documents or E-faxes on the
originating side.
As for their means of transporting the documents, both systems
use the Internet and are subject to the inherent bottlenecks
and data traps and delays that are common throughout the
system. Confidentiality is also not guaranteed, as anyone on
the Internet is able to intercept a copy of a fax message
(which is unacceptable in the case of sensitive material such
as legal correspondence).
In addition, the company's testing shows the Internet can be unreliable
and unpredictable when it comes to timely delivery of fax messages, yet timely
and reliable delivery is the precise reason why most clients elect to transmit
data and documents by fax. They are also perceived as an "unsecured" way of
transmitting sensitive data (such as legal correspondence) as they are subject
to interception while en-route. In most cases, it is difficult for the sender to
determine whether or not their message was delivered, or when.
In addition, both competitors are seeking distributors and cannot
guarantee delivery of a fax if they have no distributor in the client's calling
area. Once the fax has been initiated trough their systems, there is no feedback
to ensure clients that their fax message was received successfully. These
services likely neglect to report these major product flaws because they assume
over time that they will have full area coverage.
<PAGE>
Advertising and Promotion
FC quite literally intends to use itself to promote itself. Using the
Frefax system, FC will begin a telemarketing program by fax to approximately
1,000 businesses per day, including weekends.
Additionally, every fax message sent across the network to a first-time
recipient would have an additional page tagged onto it which will notify the
recipient of the FC service (as the FC promotion sheet will only be received
once, it will not be perceived as junk fax). This technique will increase the
number of businesses contacted, including those businesses that are not
currently in our own database and can also serve as a testimonial for the
product. Prospective clients can simply contact a customer or suppliers
currently using the system in order to hear first hand, how the company likes
the FC service.
Principal Suppliers
The principal equipment supplier for FC is Bell Canada. Eifron Morris &
Company, Ltd. provides FC with the boxes which facilitate the fax transmission.
Governmental Impact on FC Operations
At this time there is no required government approval of the products
and services offered by FC. Further, there are no direct governmental
regulations that impact the FC business operations.
Research and Development
FC estimates that over the past several years it has expended
substantial funds on research and development activities. None of these costs
were borne directly by customers.
Employees
Currently, FC has hired three (3) full-time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns no real property and has no leasehold interests.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECUTIY HOLDERS
During the fourth quarter of the fiscal year covered by this report,
there was not matter brought to a vote of security holders, through
the solicitation of proxies or otherwise.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) MARKET INFORMATION
The issuer's common equity is traded on the NASD OTC Bulletin Board under the
symbol: FFAXE
TRADING SUMMARY:
QUARTER ENDING HIGH BID LOW BID
-------------- -------- -------
12/30/98 3.000 .625
03/30/99 1.450 .650
06/30/99 1.250 .310
09/30/99 .370 .210
12/30/99 .070 .050
03/30/00 .850 .700
06/30/00 .650 .500
(b) HOLDERS
The approximate number of holders of record of each class of stock is as
follows:
CLASS OF STOCK NUMBER OF HOLDERS
-------------- -----------------
COMMON SHARES 44
(c) DIVIDENDS
The Company has never declared or paid dividends on its common stock or its
preferred stock. There are no restrictions, other than state law that may be
applicable, those limit the ability to pay out all earnings as dividends. The
Board of Directors does not anticipate paying any dividends in the foreseeable
future; it intends to retain the earnings which could be distributed, if any,
for the operations, expansion and development of its business.
ITEM 6. PLAN OF OPERATION
FC has not yet commenced active business operations as of date of this
filing. The plan of operation from a sales standpoint may be summarized
as follows:
(1) FC uses twenty-seven (27) machines maintained in its offices to send
soliciting messages by fax to various potential subscribers. FC intends
to send 1,000 such fax messages daily, with an anticipated acceptance
of two percent (2%) daily. On the basis of twenty working days per
month, this totals 400 acceptances monthly.
(2) FC also employs one full-time employee as a salesman who does direct
solicitations in person. It is anticipated that this salesman will
secure thirty percent (30%) sales success, which should equal the same
number of subscribers as the mechanical process - 400 acceptances
monthly.
(3) On the basis of 800 sales monthly at a gross revenue figure of $100 per
sale, FC should receive $80,000 in monthly gross revenues. FC
anticipates a fifty percent (50%) return on the gross revenue for a
monthly gross profit of $40,000.
<PAGE>
(4) FC expects total monthly operating costs of $20,000, leaving a monthly
net (pre-tax) profit of $20,000.
Based upon the sales plan as outlined above, FC anticipates satisfying
its cash requirements from current operations and should not have to raise
additional funds in the next twelve months.
FC does not plan any additional capital purchases, except for
operational equipment, which will be, purchased as additional sales dictate. FC
does not expect any significant change in its current base of three employees,
except to hire additional salesman as the need arises.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements for Frefax, Inc. for the fiscal year ending
June 30, 2000 are submitted in compliance with the requirements of Item 310 (a)
of Regulations S-B.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NOT APPLICABLE
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16 (a) OF THE EXCHANGE ACT
(a) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
Name, Municipality of Residence Age Length of Service
------------------------------- --- -------------------------
Tony Papa 52 Chairman of the Board and
Montreal, Quebec Appointed President
May 15, 2000
These individuals were appointed to the board of directors on September
19, 2000, Mr. Zave Aberman, Mr. Peter Varadi, Mr. Anthony R. Gallo, Mr. Howard
Labell and Mr. Michael Strizzi.
(b) AUDIT COMMITTEE
The audit committee is currently composed of the President, acting alone.
(c) IDENTIFY SIGNIFICANT EMPLOYEES
The Company does not expect to receive a significant contribution from employees
that are not executive officers.
(d) FAMILY RELATIONSHIPS
Currently, there are no directors, executive officers or persons nominated or
persons chosen by the Company to become a director or executive officer of the
Company who are directly related to an individual who currently holds the
position of director or executive officer or is nominated to one of the said
positions.
(e) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
There are no material events that have occurred to date that would affect the
evaluation of the ability or integrity of any director, person nominated to
become a director, executive officer, promoter or control person of the Company.
(f) COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
For the two fiscal year ended June 30,2000, to the best of the Company's
knowledge no director, executive officer and beneficial owner of more than ten
percent (10%) of any class of equity securities of the Company failed to file on
a timely basis reports required by section 16 (a) of the Exchange Act.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
NONE
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons (including any group as defined in Regulation
S-B, Section 228.403) are known to Frefax Inc., as the issuer, to be the
beneficial owner of more than five percent of any class of the said issuer's
voting securities:
<TABLE>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Owner of Class
---------------------- ------------------------------------------ -------------------- --------------------
<S> <C> <C> <C>
Common Ralph Papa 3,140,000 16.15
68 Chemin Stratford
Hamstead Quebec
H3X 3C9
Common Kim Moser 4,000,000 20.56
Concession 11237
Stauffville, Ontario
Canada
Common Sherway Holdings, Ltd. 4,000,000 20.56
c/o Cochrane, Tway & Assoc.
P.O. Box 128
Turks & Caicos, B.W.I.
Common Mills Sterling Aerospace, Ltd. 2,000,000 10.28
Concession 11237
Stauffville, Ontario
Canada
TOTAL 13,140,000 67.55%
</TABLE>
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following information lists, as to each class, equity securities
beneficially owned by all directors, and of the directors of the issuer, as a
group.
NOT APPLICABLE.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has received loan funds from Brigand Capital Corp., a Canadian
corporation, owned by V.T. Franzke, amounting to $130,274 as of June 30, 1999.
Brigand Capital Corp. owned 5.19% of the outstanding stock of the company and
V.T. Franzke individually owned 7.71% of the outstanding stock of the Company
prior to June 30, 2000.
FC purchased equipment and services amounting to $90,935 from Mills Sterling
Aerospace, Ltd., a Canadian corporation owning 10.28% of the outstanding stock
of the Company. The President of Mills Sterling Aerospace, ltd. Is Kim Moser who
individually owns 20.56% of the outstanding stock of the Company.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
Exhibit
Table Number Exhibit Name Page Number
------------ --------------------------------------------------- -----------
2 (i) Certificate of Incorporation of Central Group Inc. *
2 (ii) Articles of Amendments to Articles of Incorporation *
of Central Group Inc.
2 (iii) Bylaws of Frefax, Inc. *
3 Stock Purchase Agreement *
* Incorporated by reference to the Company's registration statement on Form
10-SB filed on 03-10-2000.
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: October 13, 2000 Frefax, Inc.,
-----------------------
By: /s Tony Papa
----------------------------
President and
Chairman, Board of Directors
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
AND
CUMULATIVE PERIOD FROM SEPTEMBER 26, 1997
(DATE OF INCEPTION) TO JUNE 30, 2000
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
number
---------
Independent auditors' report........................................ F-1
Consolidated balance sheet at June 30, 2000......................... F-2
Consolidated statements of operations and comprehensive income
(loss) for the years ended June 30, 2000 and 1999 and
cumulative period from September 26, 1997 (date of inception)
to June 30, 2000.................................................... F-3
Consolidated statement of stockholders' deficiency for the
period from September 26, 1997 (date of inception) to June 30,
2000................................................................ F-4 - F-5
Consolidated statements of cash flows for the years ended June
30, 2000 and 1999 and cumulative period from
September 26, 1997 (date of inception) to June 30, 2000............ F-6
Notes to consolidated financial statements.......................... F-7 - F-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Frefax, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of Frefax, Inc. and
Subsidiary (a development stage company) (the "Company") as of June 30, 2000 and
the related consolidated statements of operations and comprehensive income
(loss), stockholders' deficiency and cash flows for the years ended June 30,
2000 and 1999 and cumulative period from September 26, 1997 (date of inception)
to June 30, 2000. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of June 30, 2000 and the consolidated results of its operations and
cash flows for the years ended June 30, 2000 and 1999 and cumulative period from
September 26, 1997 (date of inception) to June 30, 2000 in conformity with
generally accepted accounting principles.
Massella, Tomaro & Co., LLP
Jericho, New York
October 11, 2000
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
ASSETS
Current assets:
Cash $ ....................................................... 280
Recoverable use tax ......................................... 4,656
---------
Total current assets .................................... 4,936
Furniture, fixtures and equipment, net ........................... 80,611
---------
Total assets ............................................ $ 85,547
=========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accrued expenses - Related party ............................ $ 28,500
Loans from related party ..................................... 148,689
---------
Total current liabilities ............................... 177,189
---------
Commitments and contingencies (Note 6) ........................... --
---------
Stockholders' deficiency:
Common stock - $.001 par value, 50,000,000 shares
authorized, 19,446,000 shares issued and outstanding ...... 19,446
Additional paid-in capital ....................................... 180,864
Accumulated deficit during the development stage ................. (87,973)
Accumulated other comprehensive income (loss) ............... (11,372)
Stock subscriptions receivable ............................... (192,607)
---------
Total stockholders' deficiency ................. (91,642)
---------
Total liabilities and stockholders' deficiency ................... $ 85,547
=========
See accompanying notes to consolidated financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Cumulative period from
For the year For the year September 26, 1997
ended June 30, ended June 30, (date of inception)
2000 1999 to June 30, 2000
-------------- -------------- -----------------------
<S> <C> <C> <C>
Income ......................................... $ - $ - $ -
-------------- --------------- -----------------------
Expenses:
Selling, general and administrative expenses 39,458 41,555 83,863
Research and development ................... 4,457 13,407 17,864
-------------- --------------- -----------------------
Total expenses ................................. 43,915 54,962 101,727
-------------- --------------- -----------------------
Loss before other income
(expense) and provision for income taxes ....... (43,915) (54,962) (101,727)
Other income (expense)
Gain on foreign currency transactions ....... 4,871 3,767 8,638
Interest income ............................. 3,744 1,836 5,580
Interest expense ............................ -- (360) (464)
Total other income .......................... 8,615 5,243 13,754
-------------- --------------- -----------------------
Loss before provision for income taxes ......... (35,300) (49,719) (87,973)
Provision for income taxes ..................... - - -
-------------- --------------- -----------------------
Net (loss) ..................................... (35,300) (49,719) (87,973)
Other items of comprehensive income (loss) ..... (4,936) (6,436) (11,372)
-------------- --------------- -----------------------
Comprehensive net (loss) ....................... $ (40,236) $ (56,155) (99,345)
Basic:
Net (loss) ................................. $ NIL $ NIL $ NIL
============== =============== =======================
Weighted average number of
common shares outstanding ..................... 19,446,000 13,659,614 12,548,090
============== =============== =======================
See accompanying notes to consolidated financial statements
F-3
<PAGE>
<CAPTION>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM SEPTEMBER 26, 1997 (DATE OF INCEPTION) TO JUNE 30, 2000
Deficit Accumulated
Common Stock Additional During the Other Stock Total
------------------------- Paid-in Development Comprehensive Subscriptions Stockholders'
Shares Amount Capital Stage Income (Loss) Receivable Deficiency
------------ ------------ ------------ ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock upon
capitalization of company ......... 500,000 $ 500 $ 2,000 $ -- $ -- $ 2,500
-- $ 2,500
Issuance of common stock in
connection with limited offerings . 403,000 403 297 -- -- -- 700
Net loss from date of inception
(September 26, 1997) to
June 30, 1998 -- -- -- (2,954) -- -- (2,954)
------------ ------------ ------------ ---------- ------------- ------------- -------------
Balances at June 30, 1998 ......... 903,000 903 2,297
(2,954) -- -- 246
Issuance of common
stock in connection with
acquisition of subsidiary ......... 10,000,000 10,000 -- -- -- -- 10,000
Issuance of common
stock in connection with
limited offering
(November 1998) ................... 6,001,000 6,001 54,009 -- (60,010) --
Issuance of common
stock in connection with
limited offering
(February 1999) ................... 2,542,000 2,542 124,558 -- -- (127,100) --
Accrued interest on
subscriptions receivable ....... -- -- -- -- -- (1,755) (1,755)
Foreign currency
translation adjustment ........ -- -- -- -- (6,436) -- (6,436)
Net loss for the year ended
June 30, 1999 ................... -- -- -- (49,719) -- -- (49,719)
------------ ------------ ------------ ---------- ------------- ------------- -------------
Balances at June 30, 1999
(forwarded)...................... 19,446,000 19,446 180,864 (52,673) (6,436) (188,865) (47,664)
See accompanying notes to consolidated financial statements
F-4
<PAGE>
<CAPTION>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM SEPTEMBER 26, 1997 (DATE OF INCEPTION) TO JUNE 30, 2000
Deficit Accumulated
Common Stock Additional During the Other Stock Total
-------------------------- Paid-in Development Comprehensive Subscriptions Stockholders'
Shares Amount Capital Stage Income (Loss) Receivable Deficiency
------------ ------------ ------------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at June 30, 1999
(from previous page) ... 19,446,000 $ 19,446 $ 180,864 $ (52,673) $ (6,436) $ (188,865) $ (47,664)
Accrued interest on
subscriptions receivable. -- -- -- -- -- (3,742) (3,742)
Foreign currency
translation adjustment ..... -- -- -- -- (4,936) -- (4,936)
Net loss for the year ended
June 30, 2000 .............. -- -- -- (35,300) -- -- (35,300)
------------ ------------ ------------- ---------- ------------- ------------- -------------
Balances at June 30, 2000 .... 19,446,000 $ 19,446 $ 180,864 $ (87,973) $ (11,372) $ (192,607) $ (91,642)
============ ============ ============= ========== ============= ============= =============
See accompanying notes to consolidated financial statements
F-5
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cumulative period from
For the year For the year September 26, 1997
ended June 30, ended June 30, (date of inception)
2000 1999 to June 30, 2000
---------------- -------------- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (35,300) $ (49,719) $ (87,973)
Adjustments to reconcile net (loss) to net
cash used for operating activities:
Foreign currency translation (4,936) (6,436) (11,372)
Depreciation 5,303 2,588 7,891
Interest income on subscriptions receivable (3,742) (1,755) (5,497)
(Increase) decrease in:
Recoverable use tax (412) (4,244) (4,656)
Security deposits 3,483 (3,483) --
Increase (decrease) in:
Accounts payable and accrued expenses 14,189 14,311
---------------- -------------- ------------------
Net cash used for operating activities (21,415) (48,738) (73,107)
---------------- -------------- ------------------
Cash flows from investing activities:
Purchase of furniture, fixtures and equipment (533) (87,969) (88,502)
---------------- -------------- ------------------
Net cash used for investing activities (533) (87,969) (88,502)
---------------- -------------- ------------------
Cash flows from financing activities:
Proceeds from initial capitalization of company
and from sale of common stock in connection
with private placements, -- -- 3,200
Loans from related parties 18,415 140,274 158,689
---------------- -------------- ------------------
Net cash provided by financing activities 18,415 140,274 161,889
---------------- -------------- ------------------
Net (decrease) increase in cash (3,533) 3,567 280
Cash, beginning of period 3,813 246 --
---------------- -------------- ------------------
Cash, end of period $ 280 $ 3,813 $ 280
---------------- -------------- ------------------
Supplemental disclosure of non-cash flow information:
Cash paid during the year for:
Interest $ -- $ -- $ --
================ ============== ==================
Income taxes $ -- $ -- $ --
================ ============== ==================
Schedule of non-cash investing activities:
Issuance of 8,543,000 shares of common stock
in exchange for subscription receivables $ -- $ 187,110 $ 187,110
================ ============== ==================
</TABLE>
See accompanying notes to consolidated financial statements
F6
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Frefax, Inc. (the "Company") was incorporated in the State of Florida
on September 26, 1997 as Central Group, Inc. The name of the Company
was changed on September 15, 1998 to its current name.
Pursuant to the stock purchase agreement dated July 30, 1998 between
the Company and the shareholders of Frefax, Inc. (Canada), ("Frefax
Canada"), a company incorporated in the province of Ontario, Canada,
the Company issued an aggregate of 10,000,000 shares of its $.001 par
value common stock to the shareholders of Frefax Canada in exchange for
100% of Frefax Canada's issued and outstanding common stock.
Accordingly, Frefax Canada became a wholly owned subsidiary of the
Company. Such transaction is considered a capital transaction whereby
Frefax Canada contributed its stock for the net book value of the
Company.
Frefax Canada was incorporated on September 5, 1996 for the purpose of
developing software to be utilized in reducing long distance telephone
fax charges.
As of June 30, 2000, the Company and Frefax Canada are considered to be
development stage companies. (See Note 9)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation
The Company is considered to be a development stage company as
of June 30, 2000 since planned principal operations have not
yet commenced.
b) Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company from September 26, 1997 (date of
inception) and its wholly owned subsidiary, Frefax Canada from
July 30, 1998 herein after referred to as the ("Companies")
after elimination of all significant intercompany transactions
and accounts.
c) Cash and cash equivalents
The Company considers highly liquid investments with
maturities of three months or less at the time of purchase to
be cash equivalents.
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
d) Furniture, fixtures, and equipment
Furniture, fixtures, and equipment are recorded at cost less
accumulated depreciation which is provided on the straight
line basis over the estimated useful lives of the assets which
range between three and seven years. Expenditures for
maintenance and repairs are expensed as incurred.
e) Income taxes
The Company accounts for income taxes in accordance with the
use of the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are
determined based on the difference between the financial
statement and tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes are
based on the respective periods' taxable income for federal,
state and foreign income tax reporting purposes.
f) Earnings per share
During 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings Per Share." SFAS No. 128 replaced the
previously required reporting of primary and fully diluted
earnings per share with basic and diluted earnings per share,
respectively. Unlike the previously reported primary earnings
per share, basic earnings per share exclude the dilutive
effects of stock options. Diluted earnings per share is
similar to the previously reported fully diluted earnings per
share. Earnings per share amounts for all periods presented
have been calculated in accordance with the requirements of
SFAS No. 128.
g) 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 reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
h) Fair value disclosure at June 30, 2000
The carrying value of cash, recoverable use tax and accrued
expenses - related party is a reasonable estimate of their
fair value.
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
i) Effect of New Accounting Standards
The Company does not believe that any recently issued
accounting standards, not yet adopted by the Company, will
have a material impact on its financial position and results
of operations when adopted.
j) Foreign Currency Translation
The functional currency for the Company's foreign operation is
the applicable local currency, Canadian dollars. The
translation from Canadian dollars to U.S. dollars is performed
for balance sheet accounts using current exchange rates in
effect at the balance sheet date and for revenue and expense
accounts using a weighted average exchange rate during the
period. The resulting translation adjustments are recorded as
a component of comprehensive income. Gains or losses resulting
from foreign currency transactions are included in the
statements of operations.
k) Research and Development Costs
Research and development costs are expensed as incurred. Such
costs amounted to $4,457 and $13,407 for the years ended June
30, 2000 and 1999 and $17,864 from September 26, 1997 (date of
inception) to June 30, 2000.
NOTE 3 - FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment are as follows at June 30,
2000:
Furniture & fixtures $17,488
Equipment 70,962
---------
88,450
Less: accumulated depreciation 7,839
----------
$ 80,611
Depreciationexpense for the years ended June 30, 2000 and 1999
amounted to $5,303 and $2,529, respectively. Cumulative
depreciation expense from September 26, 1997 (date of
inception) to June 30, 2000 amounted to $7,839.
NOTE 4 - ACCRUED EXPENSES - RELATED PARTY
Accrued expenses at June 30, 2000 of $28,500 consist of
professional fees which have been subsequently paid by the
Company's President.
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROVISION FOR INCOME TAX
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related to differences between the financial statement
and tax bases of assets and liabilities for financial statement and
income tax reporting purposes. Deferred tax assets and liabilities
represent the future tax return consequences of these temporary
differences, which will either be taxable or deductible in the year
when the assets or liabilities are recovered or settled. Accordingly,
measurement of the deferred tax assets and liabilities attributable to
the book-tax basis differentials are computed by the Company at a rate
of approximately15% for federal and 6% for state, and at 22% for Frefax
Canada.
The only material tax effect of significant items comprising the
Companies current deferred tax assets as of June 30, 2000 is the
Companies' net operating losses "NOL"s" which combined amounted to
approximately $59,000. The deferred tax asset associated with the
Companies' NOLs amounted to approximately $13,000 as of June 30, 2000.
The Companies have recorded a 100% valuation allowance for the deferred
tax asset since management could not determine that it was "more likely
than not" that the deferred tax asset would be realized in the future.
The Company's NOL's amounting to approximately $24,000 will expire
between the years 2013 - 2015, if not utilized. Frefax Canada's NOL
amounting to approximately $35,000 will expire between the years 2006 -
2008, if not utilized.
The Company and its subsidiary file separate tax returns for federal,
state and foreign tax purposes. Therefore, income tax expense is based
on the separate taxable income or loss of each entity.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
a) Rent
Frefax Canada leased office space under a one-year renewable lease
agreement, which expired November 30, 1999. Rent expense amounted to
$1,771 and $ 2,274 for the years ended June 30, 2000 and 1999 and
$4,045 cumulative from September 26, 1997 (date of inception) to June
30, 2000. During January 2000, Frefax Canada moved its operations to a
space owned by a shareholder of the Company on a month to month basis,
at no charge until a permanent location is found. The Company itself
does not require any significant office space and, accordingly, it
utilizes the mailing address of its outside counsel on a month to month
basis, at no charge.
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMITMENTS AND CONTINGENCIES (cont'd)
b) Lack of Insurance
The Company does not maintain any property, product liability, general
liability or any other form of insurance. Although the Company is not
aware of any claims resulting from product malfunctions, there is no
assurance that none exists. In addition, as a result of not maintaing
any property insurance, the Company's equipment is deemed to be at
risk.
NOTE 7 - STOCKHOLDER'S DEFICIENCY
a) Capitalization
The Company was organized during September 1997 by issuing an aggregate
of 500,000 shares of its $.001 par value common stock to its founder
for $2,500.
b) Acquisition of Subsidiary
Pursuant to a stock purchase agreement dated July 30, 1998 between the
Company and the shareholders of Frefax Canada, the Company issued an
aggregate of 10,000,000 shares of its $.001 par value common stock to
the shareholders of Frefax Canada in exchange for 100% of Frefax Canada
issued and outstanding common stock. Accordingly, after such
transaction, Frefax Canada became a wholly owned subsidiary of the
Company. Such transaction is considered a capital transaction whereby
Frefax Canada contributed its stock for the net book value of the
Company, and accordingly, no goodwill is recorded.
c) Limited Offering Memorandums
During October 1997, the Company commenced two Limited Offerings
pursuant to Rule 504 of Regulation D promulgated under the Securities
Act of 1933. The Company offered 400,000 shares of its common stock at
$.001 per share and 4,000 shares of its common stock at $ .10 per
share, respectively. The Company sold an aggregate of 403,000 shares of
common stock yielding net proceeds of $700.
d) Private Offerings
i) During November 1998, the Company offered 7,500,000 shares of
its common stock at $.01 per share pursuant to rule 504 of
regulation D promulgated under the Securities Act of 1933. The
Company sold a total of 6,001,000 shares of common stock in
exchange for a promissory note of $60,010 which has been
classified as a stock subscription receivable thereby reducing
stockholder's equity.
F-11
<PAGE>
FREFAX, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDER'S DEFICIENCY (cont'd)
d) Private Offerings (cont'd)
ii) During February 1999, the Company offered 10,000,000
shares of its common stock at $.05 per share pursuant
to Rule 504 of Regulation D promulgated under the
Securities Act of 1933. The Company sold a total of
2,542,000 shares of common stock in exchange for a
promissory note of $127,100, which has been
classified as a stock subscription receivable thereby
reducing stockholder's equity.
The above promissory notes are callable on demand and accrue
interest at a rate of 2% per annum. As of June 30, 2000, the
Company accrued $5,497 of interest receivable in connection
with such notes.
NOTE 8 - RELATED PARTY TRANSACTIONS
a) Loans From Related Parties
The Companies have been advanced funds from a Canadian corporation
which owns approximately 1.1 % of the outstanding common stock of the
Company. The loans are non-interest bearing and are due on demand. As
of June 30, 2000, such loans amounted to $148,689.
b) Rent Expense
During January 2000, Frefax Canada moved its equipment to a space
owned by one of the Company's shareholder on a month to month basis,
at no charge until a permanent location is found. The Company itself
does not require any significant office space and, accordingly, it
utilizes the mailing address of its outside counsel on a month to
month basis, at no charge.
c) Equipment Purchases
Frefax Canada purchased equipment and services amounting to $90,335
from a corporation which is a 10.3% shareholder of the Company. In
addition, the President of Frefax Canada beneficially owns an
additional 20.6% of the Company.
NOTE 9 - SUBSEQUENT EVENT
The corporation is in the process of diversifying its core business
from developing communication technology into a real estate development
company, which would also acquire environmental technologies to be used
in numerous applications.
