U.S. Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission File number 0-25429
Fairfax Group, Inc.
(Exact name of small business issuer as
specified in its charter)
Florida 65-0832025
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6758 N. Military Trail, Suite 303, West Palm Beach, Florida 33407
(Address of principal executive offices)
(561) 840-9100
(Issuer's telephone number)
(Former name, former address, and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: As of May 31, 2000, there were 6,150,000 shares of
common stock, $0.01 par value, issued and outstanding.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [X]
<PAGE>
FAIRFAX GROUP, INC.
Form 10-QSB Index
May 31, 2000
Page
Part I: Financial Information ............................ 2
Item 1. Financial Statements......................... 2
Accountants' Review Report........................... 3
Balance Sheet Unaudited as of May 31, 2000........... 4
Statements of Operations for the Quarters Ended
May 31, 2000 and 1999 and for the Period from
March 1, 1991 (Date of Quasi-Reorganization)
Through May 31, 2000................................ 5
Statements of Changes in Stockholders' Deficit
for the Periods from March 1, 1991 (Date of
Quasi-Reorganization) Through May 31, 2000.......... 6
Statements of Cash Flows for the Quarters Ended
May 31, 2000 and 1999 and for the Period from
March 1, 1991 (Date of Quasi-Reorganization)
Through May 31, 2000................................ 7
Notes to Unaudited Financial Statements ............. 8
Item 2. Management's Discussion and
Analysis or Plan of Operation ....................... 10
Part II: Other Information.............................. 11
Item 1. Legal Proceedings ........................ 11
Item 2. Changes in Securities..................... 11
Item 3. Defaults Upon Senior Securities........... 11
Item 4. Submission of Matters to a Vote
of Security Holders....................... 11
Item 5. Other Information ........................ 11
Item 6. Exhibits and Reports on Form 8-K ......... 11
Signatures................................................ 11
<PAGE>
Part I
Financial Information
Item 1. Financial Statements Fairfax Group,Inc
<PAGE> 2
[LOGO] MICHAELSON & CO., P.A.
------------------------------------------------------------------------
Certified Public Accountants and Consultants
Accountants' Review Report
--------------------------
To the Board of Directors and Stockholders
of Fairfax Group, Inc.
West Palm Beach, Florida
We have reviewed the accompanying balance sheet of Fairfax Group,
Inc. (a development stage company) as of May 31, 2000 and the
related statements of operations, changes in stockholders' deficit,
and cash flows for the quarter then ended and the quarter ended May
31, 1999 and for the period from March 1, 1991 (date of quasi-
reorganization) through May 31, 2000. All information included in
these financial statements is the responsibility of the management
of Fairfax Group, Inc.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in
order for them to be in conformity with generally accepted
accounting principles.
/s/Michaelson & Co., P.A.
July 6, 2000
The Forum-Suite 710 - 1655 Palm Beach Lakes Boulevard - West Palm Beach,
Florida 33401 - (561) 683-6800 - (800) 905-7206
Fax: (561) 471-1443 E-mail: [email protected]
Internet: http://www.michaelsoncpa.com
-------------------------------------------------------------------------
Member of the American Institute of Certified Public Accounants and the
Florida Institute of Certified Public Accountants
<PAGE> 3
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
May 31, 2000
MAY 31,
2000
----------
ASSETS
CURRENT ASSETS:
Cash $ 1,496
----------
1,496
----------
TOTAL ASSETS $ 1,496
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,111
Stockholder notes payable 246,308
----------
249,419
----------
STOCKHOLDERS' DEFICIT:
Common stock; $.01 par value, authorized
50,000,000 shares at May 31, 2000;
6,150,000 shares issued and outstanding
at May 31, 2000 61,500
(Deficit) accumulated during the
development stage (309,423)
----------
(247,923)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,496
==========
See Accountants' Review Report and Accompanying Notes
<PAGE> 4
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MAY 31, 2000 AND 1999
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH MAY 31, 2000
<TABLE>
<CAPTION>
MARCH 1,
FOR THE QUARTERS ENDED 1991 THROUGH
MAY 31, MAY 31, MAY 31,
2000 1999 2000
------------ ----------- ------------
<S> <C> <C> <C>
REVENUES:
Income $ - $ - $ 2,676
---------- ---------- ----------
- - 2,676
---------- ---------- ----------
COSTS AND EXPENSES:
Advertising and promotion - - 366
Licenses, permits and filing fees 150 595 6,080
Bank service charges 45 45 824
Collection costs - - 1,341
Contract labor - - 12,735
Dues and subscriptions - - 473
Rent 7,136 6,996 60,772
Interest 6,319 3,132 31,395
Office expenses 1,171 1,180 12,443
Organizational expense-amortization - - 2,150
Professional fees 3,975 8,123 52,325
Salaries and payroll taxes 8,130 8,216 75,472
Travel & entertainment - 33 296
Miscellaneous expenses - - 77
---------- ---------- ----------
26,926 28,320 256,749
---------- ---------- ----------
NET (LOSS) $ (26,926) $ (28,320) $ (254,073)
========== ========== ==========
(Loss) per share data:
Basic and diluted $ (0.00) $ (0.00) $ (0.08)
========== ========== ==========
Weighted average shares
outstanding - basic 6,150,000 6,150,000 3,310,216
========== ========== ==========
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 5
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIODS FROM MARCH 1, 1991 (Date of Quasi-Reorganization)
THROUGH MAY 31, 2000
<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 6,150,00 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)
--------- ----------- ----------- -----------
Net (loss) - - (109,817) (109,817)
--------- ----------- ----------- -----------
BALANCE AT FEBRUARY 29, 2000 6,150,000 61,500 (282,497) (220,997)
--------- ----------- ----------- -----------
Net (loss) - - (26,926) (26,926)
--------- ----------- ----------- -----------
BALANCE AT MAY 31, 2000 6,150,000 $ 61,500 $ (309,423) $ (247,923)
========= =========== ========== ===========
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 6
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MAY 31, 2000 AND 1999
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH MAY 31, 2000
<TABLE>
<CAPTION>
MARCH 1,
FOR THE QUARTERS ENDED 1991 THROUGH
MAY 31, MAY 31, MAY 31,
2000 1999 2000
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (26,926) $ (28,320) $ (254,073)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Changes in assets and liabilities:
Other assets - - 4,056
Accounts payable 1,714 - 2,320
Accrued expenses (106) 3,029 (641)
----------- ----------- ------------
NET CASH (USED IN) OPERATING ACTIVITIES (25,318) (25,291) (248,338)
----------- ----------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder notes payable 22,820 27,001 245,835
Proceeds from issuance of common stock - - 3,999
----------- ----------- ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 22,820 27,001 249,834
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH (2,498) 1,710 1,496
CASH AT BEGINNING OF PERIOD 3,994 1,706 -
----------- ----------- ------------
CASH AT END OF PERIOD $ 1,496 $ 3,416 $ 1,496
=========== =========== ============
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 7
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED MAY 31, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH MAY 31, 2000
(See Accountants' Review 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 in March 1982. On September 8, 1998, the Company was
merged into a newly formed Florida Corporation that was
incorporated on April 23, 1998.
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.
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 had a net operating loss (NOL) carryforward at February
29, 2000 amounting to $113,726. The expiration dates
associated with this carryforward are as follows:
YEAR ENDED NOL YEAR EXPIRES
---------- --- ------------
2/28/96 $ 10,943 2011
2/28/97 1,704 2012
2/28/98 1,979 2013
2/28/99 99,100 2019
-----------
$ 113,726
===========
<PAGE> 8
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED MAY 31, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH MAY 31, 2000
(See Accountants' Review Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)
------------------------------------------
Income Taxes (continued):
------------------------
No tax assets have been recognized due to the uncertainty of
future recovery for tax purposes.
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 beginning April
8, 1998. On March 13, 2000, the lease was extended for one
year beginning April 15, 2000. The lease includes an annual
base rent of $27,200 plus sales tax for office facilities and
equipment. 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> 9
Item 2. Management's Discussion and Analysis or Plan of
Operation.
(a) Plan of Operation
Fairfax Group, Inc. (the "Registrant") is presently a
development stage company conducting virtually no business
operation, other than its efforts 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 ("Target Business") which desires to
employ the Registrant to become a reporting corporation under the
Securities Exchange Act of 1934. To date, the Registrant has
neither engaged in any operations nor generated any revenue. It
receives no cash flow. 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. No purchase or sale of significant
equipment or significant changes in the Registrant's number of
employees are expected prior to the consummation of a Business
Combination.
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.
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.
<PAGE> 10
PART II
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Not Applicable
Item 2. Change in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter
ended May 31, 2000.
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FAIRFAX GROUP, INC.
Registrant
Date: July 17, 2000 /s/ Ernest L. Porter
Ernest L. Porter,
Chief Executive Officer
Date: July 17, 2000 /s/ Ernest L. Porter
Ernest L. Porter,
Chief Executive Officer
Date: July 17, 2000 /s/Charles S. Hafer
Charles S. Hafer
Chief Financial Officer and
Director
