U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A No. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Fairfax Group, Inc.
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(Name of Small Business Issuer in its charter)
Florida 65-0832025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6758 N. Military Trail, Unit 303 West Palm Beach, Florida 33407
(Address of principal executive offices)(Zip Code)
Issuer's telephone number, (561) 840-9100
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With Copy To:
David M. Bovi, Esq.
David M. Bovi, P.A.
319 Clematis Street, Suite 812
West Palm Beach, Florida 33401
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Securities to be registered under Section 12(g) of the Act:
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Common Stock, $0.01 Par Value
(Title of class)
(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
DESCRIPTION OF BUSINESS.
GENERAL
Fairfax Group, Inc. (the "Company"), was incorporated under
the laws of the State of Florida on April 23, 1998 as a wholly
owned subsidiary of Fairfax Group, Inc., a Nevada corporation
("Fairfax Nevada"). On September 8, 1998, the Company became the
successor corporation to a merger between Fairfax Nevada and the
Company.
Fairfax Nevada was incorporated under the laws of the State
of Nevada on March 9, 1982 as Resorts Marketing Unlimited, Inc.
It was authorized to issue Twenty Five Million (25,000,000)
shares of common stock, $0.001 par value. Since its inception,
Fairfax Nevada never engaged in any substantive commercial
business or other business operations. In June, 1995, Fairfax
Nevada had a shareholder base of approximately 500 shareholders
with approximately 2,050,000 shares outstanding. On July 11,
1995, Mr. Fred Keller, an individual, made his initial purchase
of an aggregate of 1,800,000 shares from Twelve (12) Fairfax
Nevada affiliate shareholders and, as a result, became the only
affiliate shareholder out of the approximately 500 shareholders
of Fairfax Nevada. In September 1995, Fred Keller, Trustee,
Keller Trust, assigned certain judgments (the "Judgements") to
Fairfax Nevada in Exchange for Four Million (4,000,000) shares of
Fairfax Nevada valued at $100,000 or $0.025 per share issued to
Fred Keller, an individual. Fairfax Nevada never successfully
collected on the Judgments, and on February 24, 1998, Fairfax
Nevada reassigned the Judgements to Fred Keller in exchange for
$1,000 cash and Fred Keller making a $1,000 loan to the Company.
As described above, on September 8, 1998, the Company and
Fairfax Nevada merged, and the Company is the successor
corporation to the merger. The primary purpose of the merger was
to redomicile Fairfax Nevada to the State of Florida in order for
Fairfax Nevada to become a Florida corporation. Among other
things, the plan of merger provided that each share of the
Company's capital stock issued and outstanding prior to the
merger, and each share of the Company's capital stock held in
treasury prior to the merger, would cease to exist; and each
share of Fairfax Nevada's capital stock issued and outstanding
prior to the merger, and each share of the Fairfax Nevada's
capital stock held in treasury prior to the merger, would cease
to exist and be converted into an equal number of shares of the
Company's capital stock identical with the Fairfax Nevada shares
being exchanged.
The Company is in its early developmental and promotional
stages. The Company is a "shell" company conducting virtually no
business operation, other than its efforts to seek merger
partners or acquisition candidates. The Company does not engage
in any substantive commercial business or other business
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operations. The Company has no full time employees and owns no
real estate.
The Company is a corporate vehicle created to seek to effect
a merger, exchange of capital stock, asset acquisition or other
similar business combination (a "Business Combination") with an
operating or development stage business (the "Target Business")
which desires to employ the Company to become a reporting
corporation under the Securities Exchange Act of 1934 ("Exchange
Act"). On February 5, 1999, the Company elected to register the
Company's common stock, par value $0.01 (the "Common Stock")
pursuant to this Form 10-SB registration statement on a voluntary
basis in order to create a reporting "shell" company. The Company
has a shareholder base of approximately 500 shareholders and
6,150,000 shares of Common Stock outstanding, 5,800,000 of which
are restricted pursuant to Rule 144 of the Securities Act of
1933, as amended (the "Securities Act"). See "Description of
Securities". Pursuant to resolution of the Company's board of
directors, no Business Combination may occur prior to the Company
obtaining the requisite audited financial statements required
pursuant to Form 8-K (or its equivalent) promulgated under the
Exchange Act.
Upon the effectiveness of this registration statement, the
Company intends to seek potential business opportunities and
effectuate a Business Combination with a Target Business with
significant growth potential which, in the opinion of management,
could provide a profit to the Company and its shareholders. The
Company intends to seek opportunities demonstrating the potential
of long term growth as opposed to short term earnings. The
Company's efforts in identifying a prospective Target Business
are expected to emphasize businesses primarily located in the
United States; however, the Company reserves the right to acquire
a Target Business located primarily elsewhere. While the Company
may, under certain circumstances, seek to effect Business
Combinations with more than one Target Business, as a result of
its limited resources, the Company will, in all likelihood, have
the ability to effect only a single Business Combination. The
Company may effect a Business Combination with a Target Business
which may be financially unstable or in its early stages of
development or growth. The Company will not restrict its search
to any specific business, industry or geographical location, and
the Company may participate in a business venture of virtually
any kind or nature. Present management of the Company may become
involved in management of the Target Business and/or may hire
qualified but as yet unidentified individuals to manage such
Target Business. Presently, the Company has no plan, proposal,
agreement, understanding or arrangement to acquire or merge with
any specific business or company, and the Company has not
identified any specific business or company for investigation and
evaluation.
The discussion of the proposed business under this caption
and throughout this registration statement is purposefully
general and is not meant to be restrictive of the Company's
virtually unlimited discretion to search for and enter into
potential business opportunities.
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"SHELL" CORPORATION
Background.
Since the Company conducts virtually no business operations,
other than its efforts to effectuate a Business Combination, the
Company can be characterized as a "shell" corporation. As a shell
corporation, the Company faces special risks inherent in the
investigation, acquisition, or involvement in a new business
opportunity. Further, as a new or "start-up" company, the
Company faces all of the unforeseen costs, expenses, problems,
and difficulties related to new companies. The Company is
dependent upon its officers and directors and their efforts to
effectuate a Business Combination. Accordingly, the Company's
shareholders will not have an opportunity to evaluate the
specific merits or risks of any one or more Business Combinations
and will have no control over the decision making relating to
such. In the event the Company loses the services of any of
these officers or directors, the Company could be adversely
affected.
Due to the limited capital available to the Company, the
consummation of a Business Combination will likely involve the
acquisition of, or merger or consolidation with, a company that
does not need substantial additional capital but which desires to
establish a public trading market for its shares, while avoiding
what it might deem to be the adverse consequences of undertaking
a public offering itself, such as the time delays and significant
expenses incurred to comply with the various federal and state
securities laws that regulate initial public offerings. A Target
Business might desire, among other reasons, to create a public
market for their shares in order to enhance liquidity for current
shareholders, facilitate raising capital through the public sale
of securities of which a prior existence of a public market for
its securities exists, and/or acquire additional assets through
the issuance of securities rather than for cash.
No trading market in the Company's securities presently
exists. In light of the restrictions concerning shell companies
contained in many state blue sky laws and regulations, it is not
likely that a trading market will be created in the Company's
securities until such time as a Business Combination occurs with
a Target Business. No assurances are given that subsequent to
such a Business Combination that a trading market in the
Company's securities will develop. The Company presently has
6,150,000 shares of Common Stock outstanding, of which 5,800,000
of such shares are deemed to be "restricted securities", as that
term is defined under Rule 144 promulgated under the Securities
Act, in that such shares were issued in private transactions not
involving a public offering. Presently, so long as all other
conditions of Rule 144 are met, 5,800,000 of such shares are
eligible for sale under Rule 144, as currently in effect. No
assurances are made; however, that Rule 144 will be available at
any time for any shareholder's shares. The Company has not
provided to any shareholder registration rights to register under
the Securities Act any shareholder's shares for sale. See "Market
for Common Equity and Related Stockholder Matters".
The Company cannot estimate the time that it will take to
effectuate a Business Combination. It could be time consuming;
possibly in excess of many months or years. Additionally, no
assurance can be made that the Company will be able to effectuate
a Business Combination on terms favorable to the Company. The
Company might identify and effectuate a Business Combination with
a Target Business which proves to be unsuccessful for any number
of reasons, many of which are due to the fact that the Target
Business is not identified at this time. If this occurs, the
Company and its shareholders might not realize any type of
profit.
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Unspecified Industry and Target Business.
The Company will seek to acquire a Target Business without
limiting itself to a particular industry. Most likely, the Target
Business will be primarily located in the United States, although
the Company reserves the right to acquire a Target Business
primarily located outside the United States. In seeking a Target
Business, the Company will consider, without limitation,
businesses which (i) offer or provide services or develop,
manufacture or distribute goods in the United States or abroad,
including, without limitation, in the following areas: real
estate, health care and health products, educational services,
environmental services, consumer-related products and services
(including amusement, entertainment and/or recreational
services), personal care services, voice and data information
processing and transmission and related technology development or
(ii) is engaged in wholesale or retail distribution. To date, the
Company has not selected any particular industry or any Target
Business in which to concentrate its Business Combination
efforts. Accordingly, the Company is only able to make general
disclosures concerning the risks and hazzards of effectuating
a Business Combination with a Target Business since there is
presently no current basis for the Company to evaluate the
possible merits or risks of the Target Business or the particular
industry in which the Company may ultimately operate. Any Target
Business that is selected will be required to have audited
financial statements prior to the commencement of a the Business
Combination. To the extent the Company effects a Business
Combination with a financially unstable company or an entity in
its early stage of development or growth (including entities
without established records of sales or earnings), the Company
will become subject to numerous risks inherent in the business
and operations of financially unstable and early stage or
potential emerging growth companies. In addition, to the extent
that the Company effects a Business Combination with a Target
Business in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable
risks of that industry. An extremely high level of risk
frequently characterizes certain industries which experience
rapid growth. Although management will endeavor to evaluate the
risks inherent in a particular industry or Target Business, there
can be no assurances that the Company will properly ascertain or
assess all significant risk factors.
Probable Lack of Business Diversification.
As a result of the limited resources of the Company, the
Company, in all likelihood, will have the ability to effect only
a single Business Combination. Accordingly, the prospects for the
Company's success will be entirely dependent upon the future
performance of a single business. Unlike certain entities that
have the resources to consummate several Business Combinations or
entities operating in multiple industries or multiple segments of
a single industry, it is highly likely that the Company will not
have the resources to diversify its operations or benefit from
the possible spreading of risks or offsetting of losses. The
Company's probable lack of diversification could subject the
Company to numerous economic, competitive and regulatory
developments, any or all of which may have a material adverse
impact upon the particular industry in which the Company may
operate subsequent to consummation of a Business Combination. The
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prospects for the Company's success may become dependent upon the
development or market acceptance of a single or limited number of
products, processes or services. Accordingly, notwithstanding the
possibility of management assistance to the Target Business by
the Company, there can be no assurance that the Target Business
will prove to be commercially viable.
Limited Ability to Evaluate Target Business' Management.
While the Company's ability to successfully effect a
Business Combination will be dependent upon certain key
personnel, the future role of such personnel in the Target
Business cannot presently be stated with any certainty. It is
unlikely that any of the Company's key personnel will remain
associated in any operational capacity with the Company following
a Business Combination. Moreover, there can be no assurances
that such personnel will have any experience or knowledge
relating to the operations of the particular Target Business.
Furthermore, although the Company intends to closely scrutinize
the management of a prospective Target Business in connection
with evaluating the desirability of effecting a Business
Combination, there can be no assurances that the Company's
assessment of such management will prove to be correct,
especially since none of the Company's current key personnel are
professional business analysts. See "Directors, Executive
Officers, Promoters and Control Persons". Accordingly, the
Company will be dependant, in some significant respects, on the
ability of the management of the Target Business who are
unidentifiable as of the date hereof. In addition, there can be
no assurances that such future management will have the necessary
skills, qualifications or abilities to manage a public company.
The Company may also seek to recruit additional managers to
supplement the incumbent management of the Target Business. There
can be no assurances that the Company will have the ability to
recruit such additional managers, or that such additional
managers will have the requisite skill, knowledge or experience
necessary or desirable to enhance the incumbent management.
Opportunity for Shareholder Evaluation or Approval of Business
Combinations.
Non-affiliate shareholders, if any, of the Company will, in
all likelihood, neither receive nor otherwise have the
opportunity to evaluate any financial or other information which
will be made available to the Company in connection with
selecting a potential Business Combination until after the
Company has entered into an agreement to effectuate a Business
Combination. Such agreement to effectuate a Business Combination,
however, will be subject to shareholder approval pursuant to
applicable law. As a result, non-affiliate shareholders of the
Company will be almost entirely dependent on the judgment and
experience of management in connection with the selection and
ultimate consummation of a Business Combination. In addition,
under Florida law, the form of Business Combination could impact
upon the availability of dissenters' rights (i.e., the right to
receive fair payment with respect to the Company's Common Stock)
to shareholders disapproving the proposed Business Combination.
See "Certain Relationships and Related Transactions".
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Selection of a Target Business and Structuring of a Business
Combination.
The Company's management anticipates that the selection of a
Target Business will be complex and risky because of competition
for such business opportunities among all segments of the
financial community. The nature of the Company's search for the
acquisition of a Target Business requires maximum flexibility
inasmuch as the Company will be required to consider various
factors and circumstances which may preclude meaningful direct
comparison among the various business enterprises, products or
services investigated. Investors should recognize that the
possible lack of diversification among the Company's acquisitions
may not permit the Company to offset potential losses from one
venture against profits from another. Management of the Company
will have virtually unrestricted flexibility in identifying and
selecting a prospective Target Business. In addition, in
evaluating a prospective Target Business, management will
consider, among other factors, the following factors which are
not listed in any particular order:
- financial condition and results of operation of the Target
Business;
- growth potential and projected financial performance of the
Target Business and the industry in which it operates;
- experience and skill of management and availability of
additional personnel of the Target Business;
- capital requirements of the Target Business;
- the availability of a transaction exemption from
registration pursuant to the Securities Act for the Business
Combination;
- the location of the Target Business;
- competitive position of the Target Business;
- stage of development of the product, process or service of
the Target Business;
- degree of current or potential market acceptance of the
product, process or service of the Target Business;
- possible proprietary features and possible other protection
of the product, process or service of the Target Business;
- regulatory environment of the industry in which the Target
Business operates;
- costs associated with effecting the Business Combination;
and
<PAGE> 7
- equity interest in and possible management participation in
the Target Business.
The foregoing criteria are not intended to be exhaustive;
any evaluation relating to the merits of a particular Business
Combination will be based, to the extent relevant, on the above
factors as well as other considerations deemed relevant by
management of the Company in connection with effecting a Business
Combination consistent with the Company's business objective. In
many instances, it is anticipated that the historical operations
of a Target Business may not necessarily be indicative of the
potential for the future because of the possible need to shift
marketing approaches substantially, expand significantly, change
product emphasis, change or substantially augment management, or
make other changes. The Company will be dependent upon the
owners of a Target Business to identify any such problems which
may exist and to implement, or be primarily responsible for the
implementation of, required changes. Because the Company may
engage in a Business Combination with a newly organized firm or
with a firm which is entering a new phase of growth, the Company
will incur further risks, because in many instances, management
of the Target Business will not have proven its abilities or
effectiveness, the eventual market for the products or services
of the Target Business will likely not be established, and the
Target Business may not be profitable subsequent to a Business
Combination.
The Company's limited funds and the lack of full-time
management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a Target
Business before the Company commits its capital or other
resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent
analysis, market surveys and the like which, if the Company had
more funds available to it, would be desirable. The Company will
be particularly dependent in making decisions upon information
provided by the promoter, owner, sponsor, or others associated
with the business opportunity seeking the Company's
participation. In connection with its evaluation of a
prospective Target Business, management anticipates that it will
conduct a due diligence review which will encompass, among other
things, meetings with incumbent management and inspection of
facilities, as well as review of financial or other information
which will be made available to the Company. The time and costs
required to select and evaluate a Target Business (including
conducting a due diligence review) and to structure and
consummate the Business Combination (including negotiating
relevant agreements and preparing requisite documents for filing
pursuant to applicable securities laws and state "blue sky" and
corporation laws) cannot presently be ascertained with any degree
of certainty. The Company's management intends to devote only a
small portion of their time, approximately 25%, to the affairs of
the Company and, accordingly, consummation of a Business
Combination may require a greater period of time than if the
Company's management devoted their full time to the Company's
affairs. However, each officer and director of the Company will
devote such time as they deem reasonably necessary, up to 100%,
to carry out the business and affairs of the Company, including
the evaluation of potential Target Businesses and the negotiation
of a Business Combination and, as a result, the amount of time
devoted to the business and affairs of the Company may vary
significantly depending upon, among other things, whether the
Company has identified a Target Business or is engaged in active
negotiation of a Business Combination. Any costs incurred in
<PAGE> 8
connection with the identification and evaluation of a
prospective Target Business with which a Business Combination is
not ultimately consummated will result in a loss to the Company
and reduce the amount of capital available to otherwise complete
a Business Combination or for the resulting entity to utilize. In
the event the Company depletes its present cash reserves, the
Company might be forced to cease operations and a Business
Combination might not occur.
The Company anticipates that it will locate and make contact
with Target Businesses primarily through the reputation and
efforts of its management, who will meet personally with existing
management and key personnel, visit and inspect material
facilities, assets, products and services belonging to such
prospects, and undertake such further reasonable investigation as
management deems appropriate. The Company's management and
affiliate shareholder have a network of contacts in the State of
Florida, and will most likely concentrate its search efforts for
a Target Business in this geographic area. Management does not
intend to actively solicit or contact prospective Targets
directly. Rather, management believes that prospective Target
Businesses will be referred to the Company through management's
network of contacts. Existing clientele of the Company's
affiliate shareholder may be considered potential Target
Businesses; however, the Company will not engage in any
discussions regarding the possibility a Business Combination with
the Company until after the effective time of this registration
statement. The Company also expects that many prospective Target
Businesses will be brought to its attention from various other
non-affiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, and other
members of the financial community. The Company has neither the
present intention, nor does the present potential exist for the
Company, to consummate a Business Combination with a Target
Business in which the Company's management, promoters, or their
affiliates or associates directly or indirectly have a pecuniary
interest, although no existing corporate policies of the Company
would prevent this from occurring. The Company will not
advertise or promote itself in any financial or trade
publications, or any other type of written publications or other
type of media, to seek potential Target Businesses. Although
there are no current plans to do so, the Company may engage the
services of professional firms that specialize in finding
business acquisitions and pay a finder's fee or other
compensation. Since the Company has no current plans to utilize
any outside consultants or advisors to assist in a Business
Combination, no policies have been adopted regarding use of such
consultants or advisors, the criteria to be used in selecting
such consultants or advisors, the services to be provided, the
term of service, or regarding the total amount of fees that may
be paid. However, because of the limited resources of the
Company, it is likely that any such fee the Company agrees to pay
would be paid in stock and not in cash. In no event will the
Company pay a finder's fee or commission to officers or directors
of the Company or any entity with which they are affiliated for
such service. Moreover, in no event shall the Company issue any
of its securities to any officer, director or promoter of the
Company, or any of their respective affiliates or associates, in
connection with activities designed to locate a Target Business.
As a general rule, Federal and state tax laws and
regulations have a significant impact upon the structuring of
business combinations. The Company will evaluate the possible tax
consequences of any prospective Business Combination and will
endeavor to structure a Business Combination so as to achieve the
most favorable tax treatment to the Company, the Target Business
<PAGE> 9
and their respective stockholders. There can be no assurance that
the Internal Revenue Service or relevant state tax authorities
will ultimately assent to the Company's tax treatment of a
particular consummated Business Combination. To the extent the
Internal Revenue Service or any relevant state tax authorities
ultimately prevail in recharacterizing the tax treatment of a
Business Combination, there may be adverse tax consequences to
the Company, the Target Business and their respective
stockholders. Tax considerations as well as other relevant
factors will be evaluated in determining the precise structure of
a particular Business Combination, which could be effected
through various forms of a merger, consolidation or stock or
asset acquisition.
Although the Company has no commitments as of the date of
this registration statement to issue any shares of Common Stock,
preferred stock, options or warrants, other than as described in
this registration statement, the Company will, in all likelihood,
issue a substantial number of additional shares in connection
with the consummation of a Business Combination. To the extent
that such additional shares are issued, dilution to the interests
of the Company's stockholders will occur. Additionally, if a
substantial number of shares of Common Stock are issued in
connection with the consummation of a Business Combination, a
change in control of the Company is likely to occur which will
likely affect, among other things, the Company's ability to
utilize net operating loss carry forwards, if any. Any such
change in control may also result in the resignation or removal
of the Company's present officers and directors. If there is a
change in management, no assurance can be given as to the
experience or qualification of such persons, either in the
operation of the Company's activities or in the operation of the
business, assets or property being acquired. Management
considers it likely that in order to consummate a Business
Combination, a change in control will occur; therefore,
management anticipates offering a controlling interest in the
Company to a Target Business in order to effectuate a Business
Combination.
The officers and directors of the Company may actively
negotiate for or otherwise consent to the disposition of any
portion of their Common Stock as a condition to or in connection
with a Business Combination. Therefore, it is possible that the
terms of any Business Combination will provide for the sale of
some shares of Common Stock held by management or affiliates of
management. It is likely that no other shareholder of the Company
will be afforded the right to sell their shares of Common Stock
in connection with a Business Combination pursuant to the same
terms that such selling officers and directors will be provided.
Pursuant to Section. 607.0902(5) of the Florida Business
Corporation Act, the Company has inserted certain provisions in
its articles of incorporation, as amended, which has the effect
of removing the Company from the purview of the control-share
acquisition statute promulgated under Section 607.0902 of the
Florida Business Corporation Act and hence, the protection
afforded by such statute. Section. 607.0902 of the Florida
Business Corporation Act denies corporate control to an acquirer
of control shares by extinguishing the voting rights of shares of
an "issuing public corporation", as defined therein, acquired in
a "control share acquisition", as defined therein. Voting rights
may be reinstated to the extent provided in a shareholders'
resolution approved by (1) each class or series entitled to vote
separately on the proposal by a majority of all votes entitled to
be cast by such class or series and (2) each class or series
entitled to vote separately on the proposal by a majority of all
votes entitled to be cast by such class or series, excluding all
"interested shares" (ie., generally speaking, those shares that
<PAGE> 10
may be voted by or at the direction of a person who made a
control-share acquisition or an officer or employee/director of
the subject "issuing public corporation"). The acquisition of
shares is not directly affected, only the voting rights attendant
to control shares. Other shares of the same corporation that are
owned or acquired by the same person are not affected. The stated
purpose of the control share acquisitions statute is to protect
Florida shareholders by affording them an opportunity to decide
whether a change in corporate control is desirable. By removing
the Company from the purview of Florida's control-share
acquisition statute, shares of an "issuing public corporation"
acquired pursuant to a control acquisition are not deemed to be
"control-share acquisitions", which, in the Company's case,
effectively denies non-management/non-affiliate shareholders an
opportunity to approve or consent to an acquirer's purchase of
such management or affiliate's stock pursuant to a Business
Combination. See "Description of Business - Shell Corporation -
Conflicts of Interest".
There are currently no limitations relating to the Company's
ability to borrow funds to increase the amount of capital
available to the Company to effect a Business Combination or
otherwise finance the operations of the Target Business. However,
the Company's limited resources and lack of operating history
could make it difficult for the Company to borrow additional
funds from other sources. The amount and nature of any borrowings
by the Company will depend on numerous considerations, including
the Company's capital requirements, potential lenders' evaluation
of the Company's ability to meet debt service on borrowings and
the then prevailing conditions in the financial markets, as well
as general economic conditions. The Company does not have any
arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that such
arrangements if required or otherwise sought, would be available
on terms commercially acceptable or otherwise in the best
interests of the Company. The inability of the Company to borrow
funds required to effect or facilitate a Business Combination, or
to provide funds for an additional infusion of capital into a
Target Business, may have a material adverse effect on the
Company's financial condition and future prospects, including the
ability to effect a Business Combination. To the extent that debt
financing ultimately proves to be available, any borrowings may
subject the Company to various risks traditionally associated
with indebtedness, including the risks of interest rate
fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Target Business may have already
incurred debt financing and, therefore, all the risks inherent
thereto.
If securities of the Company are issued as part of an
acquisition, such securities are required to be issued either in
reliance upon exemptions from registration under applicable
federal or state securities laws or registered for public
distribution. The Company intends to primarily target only those
companies where an exemption from registration would be
available; however, since the structure of the Business
Combination has yet to be determined, no assurances can be made
that the Company will be able to rely on such exemptions.
Registration of securities typically requires significant costs
and time delays are typically encountered. In addition, the
issuance of additional securities and their potential sale in any
trading market which might develop in the Company's Common Stock,
of which there is presently no trading market and no assurances
can be given that one will develop, could depress the price of
<PAGE> 12
the Company's Common Stock in any market which may develop in the
Company's Common Stock. Further, such issuance of additional
securities of the Company would result in a decrease in the
percentage ownership of the Company's present shareholders.
Due to the Company's small size and limited amount of
capital, considerable business constraints could be imposed on
the Company with respect to its ability to raise additional
capital if and when needed. Until such time as any enterprise,
product or service which the Company acquires generates revenues
sufficient to cover operating costs, it is conceivable that the
Company could find itself in a situation where it needs
additional funds in order to continue its operations. This need
could arise at a time when the Company is unable to borrow funds
and when market acceptance for the sale of additional shares of
the Company's Common Stock does not exist. See "Management's
Discussion and Analysis or Plan of Operation".
Conflicts of Interest.
None of the Company's affiliates, officers and directors are
required to commit their full time to the affairs of the Company
and, accordingly, such persons may have conflicts of interest in
allocating management time among various business activities.
The affiliates, officers and directors of the Company may engage
in other business activities similar and dissimilar to those
engaged in by the Company. To the extent that such persons
engage in such other activities, they will have possible
conflicts of interest in diverting opportunities to other
companies, entities or persons with which they are or may be
associated or have an interest, rather than diverting such
opportunities to the Company.
Presently, Mr. Keller and Mr. Porter are involved in
overseeing and controlling their various holdings and
investments. Mr. Ritts is the Chief Financial Officer of Kellway
Company, and Mr. Korte is involved in the management of Kellway
Company, a private commercial/industrial real estate investment
and management company. See "Directors, Executive Officers,
Promoters and Control Persons". Also, certain affiliates,
officers and directors of the Company may in the future become
affiliated with additional other entities, which may engage in
business activities similar to those intended to be conducted by
the Company. Such potential conflicts of interest include, among
other things, time, effort and corporate opportunity involved in
their participation in other business transactions. As no policy
has been established for the resolution of such a conflict, the
Company could be adversely affected should such affiliates,
officers or directors choose to place their other business
interests before those of the Company. No assurance can be given
that such potential conflicts of interest will not cause the
Company to lose potential opportunities.
In the course of their other business activities, including
private investment activities, the Company's affiliates,
officers, and directors may become aware of investment and
business opportunities which may be appropriate for presentation
to the Company as well as the other entities with which they are
affiliated. Such persons may have conflicts of interest in
determining to which entity a particular business opportunity
should be presented. In general, officers and directors of
corporations are required to present certain business
opportunities to such corporations. Accordingly, as a result of
<PAGE> 12
multiple business affiliations, the Company's officers and
directors may have similar legal obligations relating to
presenting certain business opportunities to multiple entities.
In addition, conflicts of interest may arise in connection with
evaluations of a particular business opportunity by the board of
directors with respect to the foregoing criteria. There can be no
assurances that any of the foregoing conflicts will be resolved
in favor of the Company. The Company may consider Business
Combinations with entities owned or controlled by persons other
than those persons described above. There can be no assurances
that any of the foregoing conflicts will be resolved in favor of
the Company.
The officers and directors of the Company may actively
negotiate for or otherwise consent to the disposition of any
portion of their Common Stock as a condition to or in connection
with a Business Combination. Therefore, it is possible that the
terms of any Business Combination will provide for the sale of
some shares of Common Stock held by management or affiliates.
Pursuant to Section. 607.0902(5) of the Florida Business
Corporation Act, the Company has inserted certain provisions in
its articles of incorporation, as amended, which has the effect
of removing the Company from the purview of the control-share
acquisition statute promulgated under Section 607.0902 of the
Florida Business Corporation Act and hence, the protection
afforded by such statute. Thus, it is likely that no other
shareholder of the Company will be afforded the right to sell
their shares of Common Stock in connection with a Business
Combination pursuant to the same terms that such selling
officers, directors or affiliates will be provided. Also, such
shareholders will not be afforded an opportunity to approve or
consent to such management or affiliate's stock purchase. See
"Description of Business - Shell Corporation - Selection of a
Target Business and Structuring of a Business Combination".
Investment Company Act and Other Regulation
The Company may participate in a Business Combination by
purchasing, trading or selling the securities of such Target
Business. The Company does not, however, intend to engage
primarily in such activities. Specifically, the Company intends
to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940
(the "Investment Act"), and therefore to avoid application of the
costly and restrictive registration and other provisions of the
Investment Act, and the regulations promulgated thereunder.
The Company's plan of business may involve changes in its
capital structure, management, control and business, especially
if it consummates a Business Combination as discussed above.
Each of these areas is regulated by the Investment Act, in order
to protect purchasers of investment company securities. Since
the Company will not register as an investment company,
stockholders will not be afforded these protections.
Any securities which the Company might acquire in exchange
for its Common Stock will be "restricted securities" within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"). If the Company elects to resell such
securities, such sale cannot proceed unless a registration
statement has been declared effective by the Securities and
Exchange Commission or an exemption from registration is
<PAGE> 13
available. Section 4(1) of the Securities Act, which exempts
sales of securities not involving a public distribution by
persons other than the issuer, would in all likelihood be
available to permit a private sale. Although the Company's plan
of operation does not contemplate the resale of an acquired
Target Business' securities, if such a sale were to be necessary,
the Company would be required to comply with the provisions of
the Securities Act to effect such resale.
An acquisition made by the Company may be in an industry
which is regulated or licensed by federal, state or local
authorities. Compliance with such regulations can be expected to
be a time-consuming and expensive process.
Penny Stock Regulations - State Blue Sky restrictions -
Restrictions on Marketability.
The Securities and Exchange Commission (the "Commission")
has adopted regulations which generally define "penny stock" to
be any equity security that has a market price (as defined) less
than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. The Company's securities
may be covered by the penny stock rules, which impose additional
sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and
accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouse). For transactions covered by the
rule, the broker-dealers must make a special suitability
determination for the purchase and receive the purchaser's
written agreement of the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers
sell the Company's securities and also may affect the ability of
shareholders of the Company to sell their shares of the Company
in the secondary market.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks". Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6,
and 15g-9 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny
stocks" within the meaning of the rules, the rules would apply to
the Company and to its securities. The rules may further affect
the ability of the Company's shareholders to sell their shares in
any public market which might develop.
Shareholders should be aware that, according to Securities
and Exchange Commission Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud
and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices
through prearranged matching of purchases and sales and false and
misleading press releases; (iii) "boiler room" practices
involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been
manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor
losses. The Company's management is aware of the abuses that have
occurred historically in the penny stock market. Although the
<PAGE> 14
Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of
practical limitations to prevent the described patterns from
being established with respect to the Company's securities.
The Company has 50,000,000 shares of authorized Common Stock
with 6,150,000 shares of Common Stock outstanding. See
"Description of Securities". No trading market in the Company's
securities presently exists. In light of the restrictions
concerning shell companies contained in many state blue sky laws
and regulations, it is not likely that a trading market will be
created in the Company's securities until such time as a Business
Combination occurs with a Target Business. No assurances are
given that subsequent to such a Business Combination that a
trading market in the Company's securities will develop. The
Company presently has 6,150,000 shares of Common Stock
outstanding, of which 5,800,000 of such shares are deemed to be
"restricted securities", as that term is defined under Rule 144
promulgated under the Securities Act, in that such shares were
issued in private transactions not involving a public offering.
Presently, so long as all other conditions of Rule 144 are met,
5,800,000 of such shares are eligible for sale under Rule 144, as
currently in effect. No assurances are made; however, that Rule
144 will be available at any time for any shareholder's shares.
The Company has not provided to any shareholder registration
rights to register under the Securities Act any shareholder's
shares for sale. See "Market for Common Equity and Related
Stockholder Matters".
COMPETITION
The Company expects to encounter intense competition from
other entities having a business objective similar to that of the
Company. Many of these entities are well-established and have
extensive experience in connection with identifying and effecting
business combinations directly or through affiliates. Many of
these competitors possess greater financial, marketing,
technical, personnel and other resources than the Company and
there can be no assurances that the Company will have the ability
to compete successfully. The Company's financial resources will
be limited in comparison to those of many of its competitors.
This inherent competitive limitation could compel the Company to
select certain less attractive Target Businesses for a Business
Combination. There can be no assurances that such Target
Businesses will permit the Company to meet its stated business
objective. Management believes, however, that the Company's
status as a reporting public entity could give the Company a
competitive advantage over privately held entities having a
similar business objective to that of the Company in acquiring a
Target Business with significant growth potential on favorable
terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a
Business Combination, the Company will, in all likelihood, become
subject to intense competition from competitors of the Target
Business. In particular, certain industries which experience
rapid growth frequently attract an increasingly larger number of
competitors, including competitors with increasingly greater
<PAGE> 15
financial, marketing, technical and other resources than the
initial competitors in the industry. The degree of competition
characterizing the industry of any prospective Target Business
cannot presently be ascertained. There can be no assurances that,
subsequent to a Business Combination, the Company will have the
resources to compete effectively, especially to the extent that
the Target Business is in a high-growth industry.
FEDERAL SECURITIES LAWS COMPLIANCE
Under the Federal securities laws, companies reporting under
the Exchange Act must furnish stockholders certain information
about significant acquisitions, which information may require
audited financial statements for a Target Business with respect
to one or more fiscal years, depending upon the relative size of
the acquisition. Consequently, the Company's policy is to only
effect a Business Combination with a Target Business that has
available the requisite audited financial statements. See
"Description of Securities--Securities Exchange Act of 1934".
FACILITIES
The executive and business office of the Company consist of
office space located at 6758 N. Military Trail, Unit 303 West
Palm Beach, Florida 33407. Pursuant to a written lease agreement
(the "Lease") between the Company and Fred Keller, Trustee, Land
Trust No. 1. Mr. Keller is an affiliate shareholder of the
Company. The term of the lease is for a period of one year
beginning April 15, 1998 and ending April 14, 1999 with an annual
base rent of $26,400 per year, plus Florida tax and other
increases as described in the Lease. The lease provides for an
automatic one year renewal. The Company has renewed the lease for
an additional one year period pursuant to the terms of the lease,
which includes a 3% increase in annual base rent. The Company
believes this office space is adequate to serve its needs until
such time as a Business Combination occurs. The Company expects
to be able to utilize these offices, pursuant to the terms
described above, until such time as a Business Combination
occurs. See "Description of Property" and "Certain Relationships
and Related Transactions".
EMPLOYEES
As of the date of this Prospectus, the Company is in the
development stage and currently has no full time employees.
Management of the Company serves the Company on a part time
basis. Management of the Company expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking
and evaluating Target Businesses. The need for employees and
their availability will be addressed in connection with the
decision whether or not to acquire or participate in a specific
Business Combination.
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Registrant is presently a development stage company
conducting virtually no business operation, other than its
efforts to effect a Business Combination with a Target Business
which the Registrant considers to have significant growth
potential. To date, the Registrant has neither engaged in any
operations nor generated any revenue. It receives no cash flow.
The Registrant will carry out its plan of business as discussed
above. See "Description of Business". The Registrant cannot
predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a Business Combination
or whether its capital will be further depleted by the operating
losses, if any, of the Target Business which the Registrant
effectuates a Business Combination with.
The Registrant does not generate any cash revenue or receive
any type of cash flow. Since February of 1997, Fred Keller,
Trustee, Fred Keller Trust, an affiliate shareholder of the
Registrant, has made loans to the Registrant on an almost month
by month basis in the form of demand notes payable bearing
interest at the prime rate plus two percent adjusted quarterly.
<PAGE> 17
The Registrant has obtained a written commitment from Fred
Keller, Trustee, Fred Keller Trust, to continue to make such
loans to the Registrant during the next 12 months, and management
considers this commitment sufficient to enable the Registrant to
meet its cash requirements for the next 12 months. The
Registrant's operating costs, which includes professional fees
and costs related to a Business Combination, are likely to
approximate $100,000 during the next 12 months.
As of the date of this report, the Registrant has not yet
identified a Target Business to effectuate a Business Combination
with. Therefore, the Registrant is unable predict its cash
requirements subsequent to a Business Combination with the
unidentified Target Business. Subsequent to the occurrence of a
Business Combination, the Registrant may be required to raise
capital through the sale or issuance of additional securities in
order to ensure that the Registrant can meet its operating costs
for the remainder of its fiscal year. No commitments of any kind
to provide additional funds to the Registrant subsequent to a
Business Combination have been made by management, other
shareholders or any other third person. Accordingly, there can be
no assurance that additional funds will be available to the
Registrant to allow it to cover its expenses subsequent to a
Business Combination. If the Registrant cannot meet its operating
costs subsequent to a Business Combination, unless the Registrant
can obtain additional capital, the Registrant may cease
operations.
DESCRIPTION OF PROPERTY.
The executive and business office of the Company consist of
office space located at 6758 N. Military Trail, Unit 303 West
Palm Beach, Florida 33407. Pursuant to a written lease agreement
(the "Lease") between the Company and Fred Keller, Trustee, Land
Trust No. 1, an affiliate shareholder of the Company. The term
of the lease is for a period of one year beginning April 15, 1998
and ending April 14, 1999 with an annual base rent $26,400 per
year, plus Florida tax and other increases as described in the
Lease. The lease provides for an automatic one year renewal. The
Company has renewed the lease for an additional one year period
pursuant to the terms of the lease, which includes a 3% increase
in annual base rent. The Company believes this office space is
adequate to serve its needs until such time as a Business
Combination occurs. The Company expects to be able to utilize
these offices, pursuant to the terms described above, until such
time as a Business Combination occurs. See "Description of
Property" and "Certain Relationships and Related Transactions".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date hereof, the
names, addresses, amount and nature of beneficial ownership and
percent of such ownership of each person known to the Company to
be the beneficial owner of more than five percent (5%) of
Company's Common Stock:
<PAGE> 18
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Owner Class
<S> <C> <C>
Fred Keller 5,800,000 94.3%
6758 North Military Trail, Suite 303
West Palm Beach, Florida 33407
</TABLE>
The following table sets forth, as of the date hereof, the
names, addresses, amount and nature of beneficial ownership and
percent of such ownership of the Company's Common Stock of each
of the officers and directors of the Company, and the officers
and directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Owner Class
<S> <C> <C>
Ernest L. Porter - 0%
6758 North Military Trail, Suite 303
West Palm Beach, FL 33407
William H. Ritts - 0%
6758 North Military Trail, Suite 303
West Palm Beach, FL 33407
Kember C. Korte - 0%
6758 North Military Trail, Suite 301
West Palm Beach, FL 33407
All Officers and Directors
as a Group (3 persons). - 0%
</TABLE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The current directors and executive officers of the Company
are as follows:
Name Age Position
Ernest L. Porter 60 Director, Chief Executive
Officer, President
<PAGE> 19
William H. Ritts, III 55 Director, Chief Financial
Officer, Secretary
Kember C. Korte 47 Director
_________________________
Mr. Porter has served as a Director and Chief Executive
Officer of the Company since its inception in April of 1998. From
September 1997 to April 1998, Mr. Porter worked as a Senior Loan
Officer at Flagship Mortgages Services, a division of Republic
Bank, West Palm Beach, Florida. From June 1988 to September
1998, Mr. Porter served as the President and Chief Executive
Officer of Florida Realty Group, Inc. a private real estate
investment company. Mr. Porter received his Bachelor of Arts
Degree in English from Stetson University in 1961.
Mr. Ritts has served as a Director, Chief Financial Officer
and Secretary of the Company since December 1998. Mr. Ritts
presently also serves as the Chief Financial Officer of Kellway
Company, a private commercial/industrial real estate investment
and management company. From 1996 to December 1998, Mr. Ritts
served as Chief Financial Officer and Senior Vice President of
City Auto Resources, Inc., a private automobile financing
company. From 1994 to 1995, Mr. Ritts served as Treasurer and
Chief Financial Officer of General Acceptance Corporation, a
publically traded automobile financing company. Mr. Ritts
received his Bachelor of Science Degree in Accounting from
Pennsylvania State University in 1965.
Mr. Korte has served as a director and of the Company since
February 1999. From 1987 to present, Mr. Korte also serves as a
Vice President and General Manager of Kellway Company, a private
commercial/industrial real estate investment and management
company. Mr. Korte received his Bachelor of Arts Degree in
English from Salisbury State University in 1973.
For the past 40 years, Mr. Fred Keller, an affiliate
shareholder of the Company, has been a self-employed investor,
investing primarily in real estate.
There are no agreements or understandings for any officer or
director to resign at the request of another person, and none of
the officers and directors of the Company are acting on behalf of
or will act at the discretion of any other person.
Presently, the only persons who perform material operations
on behalf of the Company are the Company's officers and
directors. Until such time as a Business Combination occurs, the
officers and directors of the Company do not expect any
significant changes in the composition of the Company's officers
or board of directors. See "Directors, Executive Officers,
Promoters and Control Persons".
OTHER BLANK CHECK ACTIVITIES
None of the Company's executive officers, directors, and
principal shareholders have previously held management positions
<PAGE> 20
in or promoted other blank check companies.
EXECUTIVE COMPENSATION.
Executive Compensation.
<TABLE>
<CAPTION>
Executive Compensation.
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Annual Restricted Securities All Other
Name & Compen- Stock Underlying LTIP Compen-
Position Year Salary($) Bonus($) sation Award(s) Options/ Payouts sation
($) ($) Sars(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rose Keller.
Director,
President
Secretary(1) 1998 -0- -0- -0- -0- -0- -0- -0-
Ernest L.
Porter.
Director
Chmn. of the
Board/Presi
dent/CEO 1998 30,000 -0- -0- -0- -0- -0- -0-
____________________________________
</TABLE>
(1) The positions held by Ms. Keller were with respect to
the Company's predecessor, Fairfax Group, Inc., a Nevada
Corporation.
Compensation of Directors
During 1998, no other officer or director received any type
of compensation from the Company for serving as such.
For 1999, in consideration for serving as directors of the
Company, the Company compensates each of its directors $1,000 per
year plus expenses related to serving as a director of the
Company. Until the Company effectuates a Business Combination,
it is not anticipated that any other officer or director will
receive additional compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of
the Company. See "Certain Relationships and Related
Transactions". The Company has no stock option, retirement,
pension, or profit-sharing programs for the benefit of directors,
officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future.
No other arrangements are presently in place regarding
compensation to directors for their services as directors or for
committee participation or special assignments.
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was incorporated under the laws of the State of
Florida on April 23, 1998 as a wholly owned subsidiary of Fairfax
Group, Inc., a Nevada corporation ("Fairfax Nevada"). On
September 8, 1998, the Company became the successor corporation
to a merger between Fairfax Nevada and the Company. The primary
purpose of the merger was to redomicile Fairfax Nevada to the
State of Florida in order for Fairfax Nevada to become a Florida
corporation. Among other things, the plan of merger provided
that each share of the Company's capital stock issued and
outstanding prior to the merger, and each share of the Company's
capital stock held in treasury prior to the merger, would cease
to exist; and each share of Fairfax Nevada's capital stock issued
and outstanding prior to the merger, and each share of the
Fairfax Nevada's capital stock held in treasury prior to the
merger, would cease to exist and be converted into an equal
number of shares of the Company's capital stock identical with
the Fairfax Nevada shares being exchanged.
No officer, director promoter or affiliate of the Company
has or proposes to have any direct or indirect material interest
in any asset proposed to be acquired by the Company through
security holdings, contracts, options, or otherwise.
It is not currently anticipated that any other salary,
consulting fee, or finder's fee shall be paid to any of the
Company's directors or executive officers, or to any other
affiliate of the Company except as described in this registration
statement. See "Executive Compensation".
Although management has no current plans to cause the
Company to do so, the officers and directors of the Company may
actively negotiate for or otherwise consent to the disposition of
any portion of their Common Stock as a condition to or in
connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide
for the sale of some shares of Common Stock held by management or
affiliates of management. Thus, it is likely that no other
shareholder of the Company will be afforded the right to sell
their shares of Common Stock in connection with a Business
Combination pursuant to the same terms that such selling
officers, directors or affiliates will be provided. Also, such
shareholders will not be afforded an opportunity to approve or
consent to such management or affiliate's stock purchase. See
"Description of Business - Shell Corporation - Selection of a
Target Business and Structuring of a Business Combination". It is
more likely than not that any sale of securities by the Company's
current stockholders to an acquisition candidate would be at a
price substantially higher than that originally paid by such
stockholders. Any payment to current stockholders in the context
of an acquisition involving the Company would be determined
entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity. See "Description of
Business - Shell Corporation - Selection of a Target Business and
Structuring of a Business Combination".
Since February, 1997, Fred Keller, Trustee, Fred Keller
Trust, an affiliate shareholder of the Company, has made loans to
the Company on an almost month by month basis in the form of
demand notes payable bearing interest at the prime rate plus two
percent (2%) adjusted quarterly. As of the date of this
registration statement, the aggregate value of the principle on
such loans approximated $137,662.
<PAGE> 22
Pursuant to Section 607.0901(5) of the Florida Business
Corporation Act, the Company has inserted certain provisions in
its articles of incorporation, as amended, which has the effect
of removing the Company from the purview of the affiliated
transaction statute promulgated under Section 607.0901 of the
Florida Business Corporation Act and hence, the protection
afforded by such statute. Section 607.0901 applies to
transactions between a corporation and an "interested
shareholder" (i.e., generally speaking, a "beneficial owner" of
more than 10% of the outstanding voting shares of such
corporation) or any "affiliate" or "associate" of the interested
shareholder, as defined in the statute. In general, the statute
requires that either a majority of the disinterested directors or
a super majority of the disinterested shareholders of the
corporation approve certain significant corporate transactions
with certain related or "affiliated" parties -- "affiliated
transactions". By removing the Company from the purview of
Florida's affiliated transaction statute, the special shareholder
and director voting requirements of the statute do not apply to
affiliated transactions with the Company.
LEGAL PROCEEDINGS.
As of the date hereof, the Company is not a party to any
material legal proceedings, nor is it aware of any threatened
litigation of a material nature.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
No public trading market presently exists for the Company's
Common Stock, and there are no present plans, proposals,
arrangements or understandings with any person with regard to the
development of any trading market in any of the Company's
securities. No shares of Common Stock have been registered for
resale under the blue sky laws of any state. The holders of
shares of Common Stock and persons who may desire to purchase
shares of Common Stock in any trading market that might develop
in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of shareholders
to sell their shares and of purchasers to purchase the shares of
Common Stock. Some jurisdictions may not allow the trading or
resale of blind-pool or "blank-check" securities under any
circumstances. Accordingly, shareholders should consider the
secondary market for the Company's securities to be a limited
one.
Pursuant to resolution of the Company's board of directors,
the Company will not develop any trading market in the Company's
Common Stock until such time as a Business Combination is
effectuated and the requisite audited financial statements
required pursuant to Form 8-K (or its equivalent) are filed with
the SEC. No assurances are made, however, that a trading market
for the Company's Common Stock will ever develop.
No shares of Common Stock of the Company are presently
subject to outstanding options or warrants to purchase, or
securities convertible into, common equity of the Company.
Approximately 500 shareholders hold the Company's Common Stock.
<PAGE> 23
The Company presently has 6,150,000 shares of Common Stock
outstanding, of which 5,800,000 of such shares are deemed to be
"restricted securities", as that term is defined under Rule 144
promulgated under the Securities Act, in that such shares were
issued in private transactions not involving a public offering.
Presently, so long as all other conditions of Rule 144 are met,
5,800,000 of such shares are eligible for sale under Rule 144, as
currently in effect. No assurances are made; however, that Rule
144 will be available at any time for any shareholder's shares.
The Company has not provided to any shareholder registration
rights to register under the Securities Act any shareholder's
shares for sale.
In general, under Rule 144, as currently in effect, subject
to the satisfaction of certain other conditions, a person,
including an affiliate of the Company (or persons whose shares
are aggregated), who has beneficially owned restricted shares of
Common Stock for at least one year is entitled to sell, within
any three-month period, a number of shares that does not exceed
the greater of 1% of the total number of outstanding shares of
the same class or, if the Common Stock is traded on a national
securities exchange or the NASDAQ system, the average weekly
trading volume during the four calendar weeks preceding the sale.
A person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale and who has
beneficially owned restricted shares of Common Stock for at least
two years is entitled to sell such shares under Rule 144 without
regard to any of the limitations described above. No assurances
are made; however, that Rule 144 will be available at any time
for any shareholder's shares.
The Company has no present plans, proposals, arrangements,
understandings or intention of selling any amount of shares of
Common Stock in the public market subsequent to a Business
Combination. Nevertheless, in the event that substantial
amounts of Common Stock are sold in the public market subsequent
to a Business Combination, such sales may adversely affect the
price for the sale of the Company's equity securities in any
trading market which may develop. No prediction can be made as to
the effect, if any, that market sales of restricted shares of
Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time.
DIVIDENDS
The Company has not paid any dividends on its Common Stock
to date and does not presently intend to pay cash dividends prior
to the consummation of a Business Combination. The payment of
cash dividends in the future, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to the consummation of a
Business Combination. The payment of any dividends subsequent to
a Business Combination will be within the discretion of the
Company's then board of directors. It is the present intention of
the board of directors to retain all earnings, if any, for use in
the Company's business operations and, accordingly, the board of
directors does not anticipate paying any cash dividends in the
foreseeable future.
<PAGE> 24
RECENT SALES OF UNREGISTERED SECURITIES.
The Company was incorporated under the laws of the State of
Florida on April 23, 1998 as a wholly owned subsidiary of Fairfax
Nevada. On September 8, 1998, the Company became the successor
corporation to a merger between Fairfax Nevada and the Company.
The primary purpose of the merger was to redomicile Fairfax
Nevada to the State of Florida in order for Fairfax Nevada to
become a Florida corporation. Among other things, the plan of
merger provided that each share of the Company's capital stock
issued and outstanding prior to the merger, and each share of the
Company's capital stock held in treasury prior to the merger,
would cease to exist; and each share of Fairfax Nevada's capital
stock issued and outstanding prior to the merger, and each share
of the Fairfax Nevada's capital stock held in treasury prior to
the merger, would cease to exist and be converted into an equal
number of shares of the Company's capital stock identical with
the Fairfax Nevada shares being exchanged. The Company relied
upon Section 3(a)(9) of the Securities Act with respect to this
transaction. As of the date of this registration statement,
during the past three years, no other shares of the Company's
Common Stock have been issued in a transaction not registered
under the Securities Act.
DESCRIPTION OF SECURITIES.
GENERAL
The Company is authorized to issue 50,000,000 shares of
Common Stock. As of the date of this registration statement
6,150,000 shares of Common Stock are outstanding, held of record
by approximately 500 shareholders. No other type of securities
are authorized by the Company at this time.
COMMON STOCK
The holders of Common Stock are entitled to one vote for
each share held of record on all matters to be voted on by
shareholders. There is no cumulative voting with respect to the
election of directors, with the result that the holders of more
than 50% of the shares voted for the election of directors can
elect all of the directors. By virtue of his ownership of more
than 50% of the outstanding Common Stock, Mr. Fred Keller, the
Company's sole affiliate shareholder can elect all of the
directors of the Company. Florida law permits the holders of the
minimum number of shares necessary to take action at a meeting of
shareholders (normally a majority of the outstanding shares) to
take action by written consent without a meeting, provided notice
is given within ten days to all other shareholders. The holders
of Common Stock are entitled to receive dividends when, as and if
declared by the board of directors out of funds legally available
therefor. In the event of liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the
Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive, redemption provisions or other
subscription rights. All of the outstanding shares of Common
Stock are fully paid and non-assessable.
<PAGE> 25
DIVIDENDS
The Company has not paid any dividends on its Common Stock
to date and does not presently intend to pay cash dividends prior
to the consummation of a Business Combination. The payment of
cash dividends in the future, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to
a Business Combination will be within the discretion of the
Company's then board of directors. It is the present intention of
the board of directors to retain all earnings, if any, for use in
the Company's business operations and, accordingly, the board
does not anticipate paying any cash dividends in the foreseeable
future.
SECURITIES EXCHANGE ACT OF 1934
By virtue of filing this registration statement, the Company
is making an application with the Commission to register its
Common Stock under the provisions of Section 12(g) of the
Exchange Act. Such registration will require the Company to
comply with periodic reporting, proxy solicitations and certain
other requirements of the Exchange Act. If the Company seeks
shareholder approval of a Business Combination at such time as
the Company's securities are registered pursuant to Section 12(g)
of the Exchange Act, the Company's proxy solicitation materials
required to be transmitted to shareholders may be subject to
prior review by the Securities and Exchange Commission. Under the
federal securities laws, public companies must furnish certain
information about significant acquisitions, which information may
require audited financial statements of an acquired company with
respect to one or more fiscal years, depending upon the relative
size of the acquisition. Consequently, if a prospective Target
Business did not have available and was unable to reasonably
obtain the requisite audited financial statements, the Company
could, in the event of consummation of a Business Combination
with such company, be precluded from (i) any public financing of
its own securities for a period of as long as three years, as
such financial statements would be required to undertake
registration of such securities for sale to the public; and (ii)
registration of its securities under the Exchange Act. As a
result these requirements, and in order to remain in compliance
with the Company's board of director's resolution, Target
Businesses will be required to possess the requisite audited
financial statements prior to the consummation of a Business
Combination. See "Description of Business- General" and "Market
For Common Equity and Related Stockholder Matters- Market
Information".
In the event the Company's obligation to file periodic
reports under the Exchange Act is suspended, the Company
presently intends to continue to file such periodic reports on a
voluntary basis.
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
The Company's bylaws provide, among other things, that (i)
officers and directors of the Company will be indemnified to the
fullest extent permitted under Florida law. See "Indemnification
<PAGE> 26
of Directors and Officers".
TRANSFER AGENT
The Company's transfer agent is CJB Transfer Services
located at 400 Inverness Drive South, Suite 200, Englewood,
Colorado 80112.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws contain the broadest form of
indemnification for its officers and directors and former
officers and directors permitted under Florida law. The
Company's bylaws generally provide that: The Company shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (other than an action by, or in the right of the
Company) by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or
agent of any other corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorney's
fees),judgments, fines, amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding, including any appeal thereof, if he acted in good
faith in a manner he reasonably believed to be in, or not opposed
to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contenders or its equivalent shall not
create, of itself, a presumption that the person did not act in
good faith or in a manner which he reasonably believed to be in,
or not opposed to, the best interests of the Company or, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
To the extent that a director, officer, employee or agent of
the Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or
in any defense of any claim, issue or matter therein, he shall be
indemnified against expenses, including attorneys fees, actually
and reasonably incurred by him in connection therewith.
Any indemnification shall be made only if a determination is
made that indemnification of the director, officer, employee or
agent is proper in the circumstances because such person has met
the applicable standard of conduct set forth above. Such
determination shall be made either (1) by the Board of Directors
by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (2) by the
shareholders who were not parties to such action, suit or
proceeding. If neither of the above determinations can occur
because the Board of Directors consists of a sole director or the
Company is owned by a sole shareholder, then the sole director or
sole shareholder shall be allowed to make such determination.
<PAGE> 27
Expenses incurred in defending any action, suit or
proceeding may be paid in advance of the final disposition of
such action, suit or proceeding as authorized in the manner
provided above upon receipt of any undertaking by or on behalf of
the director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that he is entitled to
be indemnified by the Company.
The indemnification provided shall be in addition to the
indemnification rights provided pursuant to Chapter 607 of the
Florida Statutes, and shall not be deemed exclusive of any other
rights to which any person seeking indemnification may he
entitled under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who
has ceased to be a director, officer, employee or agent of the
Company and shall inure to the benefit of the heirs, executors
and administrators of such a person.
FINANCIAL STATEMENTS
APPENDIX A
===========
FAIRFAX GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
EXAMINATION OF FINANCIAL STATEMENTS
FOR THE YEARS ENDED
FEBRUARY 28, 1999 AND 1998
<PAGE>
TABLE OF CONTENTS
Page
Independent Auditor's Report F-1
Financial Statements:
Balance Sheets F-2
Statements of Operations F-3
Statements of Changes in Stockholders' Deficit F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 & F-7
<PAGE>
Independent Auditor's Report
To the Board of Directors and Stockholders
of Fairfax Group, Inc.
West Palm Beach, Florida
We have audited the accompanying balance sheets of Fairfax Group, Inc. (a
development stage company) as of February 28, 1999 and 1998 and the
related statements of operations, changes in stockholders' deficit, and
cash flows for the years then ended and for the period from March 1, 1991
(date of quasi-reorganization) through February 28, 1999. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 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 audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fairfax
Group, Inc. as of February 28, 1999 and 1998, and the results of its
operations and its cash flows for the fiscal years then ended and for the
period from March 1, 1991 (date of quasi-reorganization) through February
28, 1999, in conformity with generally accepted accounting principles.
Michaelson & Co., P.A.
May 21, 1999
<PAGE> F-1
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
FEBRUARY 28, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,706 $ 2,758
--------- ---------
1,706 2,758
--------- ---------
TOTAL ASSETS $ 1,706 $ 2,758
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,072 $ 537
Stockholder notes payable 111,814 14,301
--------- ---------
112,886 14,838
========= =========
STOCKHOLDERS' DEFICIT:
Common stock; $.01 par value, authorized
50,000,000 shares at February 28, 1999 and
$.001 par value, authorized 25,000,000
shares at February 28, 1998, 6,150,000 shares 61,500 6,150
issued and outstanding at February 28, 1999
and 1998.
(Deficit) accumulated during the development
stage (172,680) (18,230)
-------- --------
(111,180) (12,080)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,706 $ 2,758
======== ========
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-2
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND 1998 AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY 28, 1999
<TABLE>
<CAPTION>
MARCH 1
FOR THE YEAR ENDED 1991 THROUGH
FEBRUARY 28 FEBRUARY 28
1999 1998 1999
--------- -------- ------------
<S> <C> <C> <C>
REVENUES:
Income $ - $ - $ 2,676
--------- --------- ---------
- - 2,676
--------- --------- ---------
COSTS AND EXPENSES:
Advertising and promotion 131 - 180
Licenses,Permits and Filing 1,762 1,153 4,373
Bank service charges 183 165 584
Collection costs - - 1,341
Contract labor 9,364 575 11,439
Dues and subscriptions 408 - 473
Rent 25,652 - 25,652
Interest 6,019 993 7,808
Office expenses 5,720 - 5,871
Organizational expense - amortization - - 2,150
Professional fees 19,887 537 25,158
Salaries and payroll taxes 29,892 - 34,894
Travel & Entertainment 52 - 52
Miscellaneous Expenses 30 - 30
--------- --------- ---------
99,100 3,423 120,005
--------- --------- ---------
NET (LOSS) $ (99,100) $ (3,423) $(117,329)
========= ========= =========
(Loss) per share data:
Basic and diluted $ (0.02) $ (0.00) $ (0.04)
========= ========= =========
Weighted average shares outstanding - basic 6,150,000 6,150,000 2,866,500
========= ========= =========
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-3
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM MARCH 1, 1991 (Date of Quasi-Reorganization)
THROUGH FEBRUARY 28, 1999
<TABLE>
<CAPTION>
(DEFICIT)
ACCUMULATED
DURING THE
COMMON STOCK DEVELOPMENT
SHARES AMOUNT STAGE TOTAL
<S> <C> <C> <C> <C>
BALANCE AT MARCH 1, 1991 2,150,000 $ 2,150 $ - $ 2,150
Net (loss) - - - -
--------- -------- --------- ----------
BALANCE AT FEBRUARY 29, 1992 2,150,000 2,150 - 2,150
Net (loss) - - - -
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1993 2,150,000 2,150 - 2,150
Net (loss) - - - -
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1994 2,150,000 2,150 - 2,150
Net (loss) - - - -
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1995 2,150,000 2,150 - 2,150
Stock issued at par value for
cash and judgements
(9/15/95) 4,000,000 4,000 - 4,000
Net (loss) - - (12,738) (12,738)
--------- -------- --------- ----------
BALANCE AT FEBRUARY 29, 1996 6,150,000 6,150 (12,738) (6,588)
Net (loss) - - (2,069) (2,069)
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1997 6,150,000 6,150 (14,807) (8,657)
Net (loss) - - (3,423) (3,423)
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1998 6,150,000 6,150 (18,230) (12,080)
Change in par value
(Note 2) 55,350 (55,350) -
Net (loss) - - (99,100) (99,100)
--------- -------- --------- ----------
BALANCE AT FEBRUARY 28, 1999 6,150,000 $ 61,500 $(172,680) $ (111,180)
========= ======== ========= ==========
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-4
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND 1998 AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY 28, 1998
<TABLE>
<CAPTION>
MARCH 1
FOR THE YEAR ENDED 1991 THROUGH
FEBRUARY 28 FEBRUARY 28
1999 1998 1999
--------- --------- ------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (99,100) $ (3,423) $ (117,329)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Changes in assets and liabilities:
Other assets - 1 4,056
Accounts payable 268 49 268
Accrued expenses 267 1,111 804
--------- -------- ----------
NET CASH (USED IN) OPERATING ACTIVITIES (98,565) (2,262) (112,201)
---------- -------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder notes payable 97,513 4,000 109,908
Proceeds from issuance of common stock - - 3,999
---------- -------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 97,513 4,000 113,907
---------- -------- ----------
NET INCREASE (DECREASE) IN CASH (1,052) 1,738 1,706
CASH AT BEGINNING OF PERIOD 2,758 1,020 -
---------- -------- ----------
CASH AT END OF PERIOD $ 1,706 $ 2,758 $ 1,706
========== ======== ==========
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-5
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 28, 1999 and 1998 AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY 28, 1999
(See Independent Auditor's Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization:
Fairfax Group, Inc. (the Company) is a development stage enterprise,
which was incorporated under the laws of the State of Nevada on
March 1982. On September 8, 1998, the Company was merged into a
newly formed Florida Corporation.
Method of Accounting:
The company reports the results of its operations using the accrual
method of accounting for both financial and income tax purposes.
Under this method, income is recognized when earned and expenses are
deducted when incurred. The accounting policies of the Company are
in accordance with generally accepted accounting principles and
conform to the standards applicable to development stage companies.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
Reclassification of Financial Statement Presentation:
Certain reclassifications have been made to the 1998 financial
statements to conform with the 1999 financial statement
presentation. Such reclassification had no effect on net loss as
previously reported.
Stockholder Notes Payable:
The stockholder notes payable consists of demand notes to the
majority stockholder bearing interest at the prime rate plus two
percent adjusted quarterly.
Income Taxes:
The Company has no taxable income to date; therefore, no provision
for federal or state taxes has been made. The Company may have a
net operating loss carryforward at February 28, 1999. No tax assets
have been recognized due to the uncertainty of future recovery for
tax purposes.
<PAGE> F-6
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 28, 1999 and 1998 AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY 28, 1998
(See Independent Auditor's Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)
Computation of Net Loss Per Share:
In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, Earnings Per Share. The Company has reflected the
provisions of SFAS No. 128 in the accompanying consolidated
financial statements for all periods presented. SFAS 128 replaces
the presentation of primary Earnings Per Share (EPS) with a
presentation of basic EPS, which excludes dilution and is computed
by dividing income or loss available to common shareholders by the
weighted average number of common shares outstanding for the period.
The Statement also requires the dual presentation of basic and
diluted EPS on the face of the income statement for all entities
with complex capital structures. During the periods presented, the
Company did not have a complex capital structure.
Related Party Transactions:
The Company entered into a business lease agreement with an entity
affiliated with the majority shareholder as of April 8, 1998. The
one-year lease includes an annual base rent of $26,400 plus sales
tax for office facilities and equipment with an effective date of
April 15, 1998. Before this date, the majority shareholder allowed
the Company to utilize the office space and equipment for free.
2. PAR VALUE
On February 5, 1999, par value was changed from $.001 to $.01 per
share.
<PAGE> F-7
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for Fairfax Group, Inc.
1. Balance Sheets dated February 28, 1999 and 1998.
2. Statement of Operations for the Years ended February
28, 1999 and 1998 and the period from March 1, 1991
(date of quasi-reorganization) through February 28,
1999.
3. Statements of Changes in Stockholders' Deficit for the
period from March 1, 1991 (date of quasi-
reorganization) through February 28, 1999.
4. Statements of Cash Flows for the Years ended February
28,1999 and 1998 and the period from March 1, 1991
(date of quasi-reorganization) through February 28,
1999.
5. Notes to Financial Statements for the Years ended
February 28,1999 and 1998 and the period from March 1,
1991 (date of quasi-reorganization) through February
28, 1999.
<PAGE> 28
(b) Pursuant to Item 601 of Regulation S-B, the Company
includes the following exhibits:
Sequential
Exhibit No. Description of Exhibit Page No.
(3) Charter and Bylaws.
3.1 Articles of Incorporation.*
3.2 Amended Articles of Incorporation.*
3.3 Bylaws.*
(4) Instruments defining the rights of
security holders.
4.1 Articles of Incorporation.*
4.2 Amended Articles of Incorporation.*
4.3 Bylaws.*
(10) Material Contracts.
10.1 Articles of Merger (Agreement and
Plan of Merger incorporated therein).*
10.2 Business Lease.*
10.3 Ernest Porter Employment Contract.*
10.4 Specimen Sample of Demand Promissory
Notes made by the Company to Fred Keller.*
<PAGE> 29
(27) Financial Data Schedule.
27.1 Financial Data Schedule.
* Incorporated by reference to Registrant's Form 10-SB
filed February 23, 1999.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
FAIRFAX GROUP, INC.
Date: June 21, 1999 By:/s/Ernest L. Porter
Ernest L. Porter, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> MAR-01-1998
<CASH> 1,706
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,706
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,706
<CURRENT-LIABILITIES> 112,886
<BONDS> 0
0
0
<COMMON> 61,500
<OTHER-SE> (172,680)
<TOTAL-LIABILITY-AND-EQUITY> 1,706
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,019
<INCOME-PRETAX> (99,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (99,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99,100)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
