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 August 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, Unit 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 _X_ No ___
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
September 18, 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
August 31, 2000
Page
Part I: Financial Information .................................. 3
Item 1. Financial Statements................................. 3
Accountant's Review Report........................... 4
Balance Sheet Unaudited as of August 31, 2000........ 5
Statements of Operations for the Quarters Ended
August 31, 2000 and 1999, Year-To-Date through
August 31, 2000 and 1999, and for the Period
from March 1, 1991 (Date of Quasi-Reorganization)
Through August 31, 2000.............................. 6
Statements of Changes in Stockholders' Deficit
for the Periods from March 1, 1991 (Date
of Quasi-Reorganization) Through
August 31, 2000...................................... 7
Statements of Cash Flows Year-To-Date through
August 31, 2000 and 1999, and for the Period
from March 1, 1991 (Date of Quasi-Reorganization)
Through August 31, 2000.............................. 8
Notes to Unaudited Financial Statements ............. 9
Item 2. Management's Discussion and Analysis or Plan
of Operation ........................................ 11
Part II: Other Information ................................... 12
Item 1. Legal Proceedings ................................... 12
Item 2. Changes in Securities ............................... 12
Item 3. Defaults Upon Senior Securities ..................... 12
Item 4. Submission of Matters to a Vote of
Security Holders................................... 12
Item 5. Other Information ................................... 12
Item 6. Exhibits and Reports on Form 8-K .................... 12
Signatures ..................................................... 12
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE> 3
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 August 31, 2000 and the related
statements of operations, changes in stockholders' deficit, and cash
flows for the quarter then ended and the quarter ended August 31, 1999
and for the period from March 1, 1991 (date of quasi-reorganization)
through August 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.
September 26, 2000
<PAGE> 4
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
August 31, 2000
ASSETS
CURRENT ASSETS:
Cash $ 2,340
2,340
-----------
TOTAL ASSETS $ 2,340
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 780
Stockholder notes payable 284,484
-----------
285,264
-----------
STOCKHOLDERS' DEFICIT:
Common stock; $.01 par value, authorized 50,000,000
shares at May 31, 2000; 6,150,000 shares
issued and outstanding at August 31, 2000 61,500
(Deficit) accumulated during the development stage (344,424)
-----------
(282,924)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2,340
===========
See Accountants' Review Report and Accompanying Notes
<PAGE> 5
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED AUGUST 31, 2000 AND 1999,
YEAR-TO-DATE THROUGH AUGUST 31, 2000 AND 1999,
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH AUGUST 31, 2000
<TABLE>
<CAPTION>
MARCH 1,
FOR THE QUARTERS ENDED YTD THROUGH 1991 THROUGH
AUG. 31, AUG. 31, AUG. 31, AUG. 31, AUG. 31,
2000 1999 2000 1999 2000
----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Income $ - $ - $ - $ - $ 2,676
----------- ------------ ----------- ----------- ------------
- - - - 2,676
COSTS AND EXPENSES:
Advertising and promotion - 186 - 186 366
Licenses, permits & filing fees 431 641 581 1,236 6,511
Bank service charges 45 60 90 105 869
Collection costs - - - - 1,341
Contract labor - - - - 12,735
Dues and subscriptions - - - - 473
Rent 7,206 6,996 14,342 13,992 67,978
Interest 7,677 3,959 13,996 7,091 39,072
Office expenses 1,895 1,531 3,066 2,711 14,338
Organizational exp. - amort. - - - - 2,150
Professional fees 9,673 9,989 13,648 18,112 61,998
Salaries and payroll taxes 8,074 7,946 16,204 16,162 83,546
Travel & entertainment - 44 - 77 296
Miscellaneous expenses - - - - 77
----------- ------------ ----------- ----------- ------------
35,001 31,352 61,927 59,672 291,750
----------- ------------ ----------- ----------- ------------
NET (LOSS) $ (35,001) $ (31,352) $ (61,927) $ (59,672) $ (289,074)
=========== ============ =========== =========== ============
(Loss) per share data:
Basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.09)
=========== ============ =========== =========== ============
Weighted average shares
outstanding - basic 6,150,000 6,150,000 6,150,000 6,150,000 3,384,947
=========== ============ =========== =========== ============
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 6
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 AUGUST 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 & 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)
--------- --------- ---------- ----------
Net (loss) - - (109,817) (109,817)
--------- --------- ---------- ----------
BALANCE AT FEBRUARY 29, 2000 6,150,000 61,500 (282,497) (220,997)
--------- --------- ---------- ----------
Net (loss) - - (61,927) (61,927)
--------- --------- ---------- ----------
BALANCE AT AUGUST 31, 2000 6,150,000 $ 61,500 ($ 344,424) ($ 282,924)
========= ========= ========== ==========
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 7
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
YEAR-TO-DATE THROUGH AUGUST 31, 2000 AND 1999
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH AUGUST 31, 2000
<TABLE>
<CAPTION>
MARCH 1,
YTD THROUGH 1991 THROUGH
AUGUST 31, AUGUST 31, AUGUST 31,
2000 1999 2000
------------ ------------- ------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (61,927) $ (59,672) $ (289,074)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Changes in assets and liabilities:
Other assets - - 4,056
Accounts payable (617) (1,051) (11)
Accrued expenses (106) 3,029 (641)
----------- ------------- ------------
NET CASH (USED IN) OPERATING ACTIVITIES (62,650) (57,694) (285,670)
----------- ------------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder notes payable 60,996 59,961 284,011
Proceeds from issuance of common stock - - 3,999
----------- ------------- ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 60,996 59,961 288,010
----------- ------------- ------------
NET INCREASE (DECREASE) IN CASH (1,654) 2,267 2,340
CASH AT BEGINNING OF PERIOD 3,994 1,706 -
----------- ------------- ------------
CASH AT END OF PERIOD $ 2,340 $ 3,973 $ 2,340
=========== ============= ============
</TABLE>
See Accountants' Review Report and Accompanying Notes
<PAGE> 8
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED AUGUST 31, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH AUGUST 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. The Company's offices are in West
Palm Beach, Florida, its' only location.
Fairfax Group, Inc. presently conducts no business operations,
other than to effect a merger, exchange of capital stock, asset
acquisition or other similar business combination with an operating
or development stage business which desires to employ the Company to
become a reporting corporation under the Securities Exchange Act
of 1934.
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 as
published in the Wall Street Journal, plus two percent, adjusted
quarterly. The interest rate used during the quarter ended
August 31, 2000 was 11.5%.
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:
<PAGE> 9
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED AUGUST 31, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH AUGUST 31, 2000
(See Accountants' Review Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)
------------------------------------------
Income Taxes (continued):
------------------------
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
==============
Although deferred tax assets existed at August 31, 2000, they
were offset in full by a valuation allowance due to the
uncertainty of future recovery.
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> 10
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation
This Quarterly Report on Form 10-QSB should be read in conjunction
with our unaudited financial statements included as part of this Form 10-
QSB Report. This Quarterly Report on Form 10-QSB contains forward-looking
statements. For this purpose, any statements contained in it that are
not statements of historical fact should be regarded as forward looking
statements. For example, the words "believes," "anticipates," "plans,"
and "expects" are intended to identify forward-looking statements. There
are a number of important factors that could cause our Company's actual
results to differ materially from those indicated by such forward-looking
statements.
Fairfax Group, Inc. (the "Company") is presently a development stage
company conducting virtually no business operation, other than 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 our Company to become a reporting corporation under the Securities
Exchange Act of 1934. To date, we have neither engaged in any
operations nor generated any revenue. We receive no cash flow. We cannot
predict to what extent our liquidity and capital resources will be
diminished prior to the consummation of a Business Combination or whether
our capital will be further depleted by the operating losses, if any, of
the Target Business which we effectuate a Business Combination with. No
purchase or sale of significant equipment or significant changes in our
number of employees are expected prior to the consummation of a Business
Combination.
We do not generate any cash revenue or receive any type of cash
flow. Since February of 1997, Fred Keller, Trustee, Fred Keller Trust,
one of our affiliate shareholders, has made loans to our Company 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. We have
obtained a written commitment from Fred Keller, Trustee, Fred Keller
Trust, to continue to make such loans to our Company during the next 12
months, and our management considers this commitment sufficient to enable
our Company to meet its cash requirements for the next 12 months. Our
operating costs, which includes professional fees and costs related to
a Business Combination, are likely to approximate $100,000 during the
next 12 months.
To date, we have not yet identified a Target Business to effectuate
a Business Combination with. Therefore, we are unable predict our cash
requirements subsequent to a Business Combination with the unidentified
Target Business. Subsequent to the occurrence of a Business Combination,
we may be required to raise capital through the sale or issuance of
additional securities in order to ensure that we can meet our operating
costs for the remainder of our fiscal year. No commitments of any kind
to provide additional funds to our Company subsequent to a Business
Combination have been made by management, other shareholders or any other
third person. Accordingly, we cannot assure that additional funds will
be available to us to allow us to cover our expenses subsequent to a
Business Combination. If we cannot meet our operating costs subsequent
to a Business Combination, unless we can obtain additional capital, we
may cease operations.
<PAGE> 11
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
August 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: September 22, 2000 /s/ Ernest L. Porter
Ernest L. Porter,
Chief Executive Officer
Date: September 22, 2000 /s/ Ernest L. Porter
Ernest L. Porter,
Chief Executive Officer
Date: September 22, 2000 /s/ Charles S. Hafer
Charles S. Hafer
Chief Financial Officer
<PAGE> 12
