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 November 30, 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.)
222 Lakeview Avenue, Suite 409, West Palm Beach, Florida 33401
-------------------------------------------------------------------------------
(Address of principal executive offices)
(561) 832-5696
---------------------------
(Issuer's telephone number)
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(Former name, former address, and former fiscal year,
if changed since last report)
<PAGE>
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 January 15, 2001, there were
16,150,000 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
November 30, 2000
Page
Part I: Financial Information .......................................... 1
Item 1. Financial Statements............................................. 2
Accountant's Review Report... ...................................... 1
Balance Sheet Unaudited as of November 30, 2000....................... 2
Statements of Operations for the Quarters Ended November 30, 2000 and
1999, Year-To-Date through November 30, 2000 and 1999, and for the
Period from March 1, 1991 (Date of Quasi-Reorganization) Through
November 30, 2000. ................................................... 3
Statements of Changes in Stockholders' Deficit for the Periods from
March 1, 1991 (Date of Quasi-Reorganization) Through
November 30, 2000...................................................... 4
Statements of Cash Flows Year-To-Date through November 30, 2000 and
1999, and for the Period from March 1, 1991 (Date of Quasi-
Reorganization) Through November 30, 2000............................... 5
Notes to Unaudited Financial Statements ............................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation ......... 8
Part II: Other Information .............................................. 9
Item 1. Legal Proceedings .............................................. 9
Item 2. Changes in Securities .......................................... 9
Item 3. Defaults Upon Senior Securities ................................ 9
Item 4. Submission of Matters to a Vote of Security Holders............. 9
Item 5. Other Information .............................................. 9
Item 6. Exhibits and Reports on Form 8-K ............................... 9
Signatures ................................................................ 10
ii
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
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 November 30, 2000 and the related statements of
operations for the quarters and nine-month periods ended November 30, 2000 and
1999 and for the period from March 1, 1991 (date of quasi-reorganization)
through November 30, 2000. We have also reviewed the related statements of cash
flows for the nine-month periods ended November 30, 2000 and 1999 and for the
period from March 1, 1991 (date of quasi-reorganization) through November 30,
2000. Additionally, we have reviewed the related statements of changes in
stockholders' deficit for the period from March 1, 1991 (date of
quasi-reorganization) through November 30, 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.
Michaelson & Co., P.A.
December 13, 2000
Michaelson & Co., P.A.
1655 Palm Beach Lakes, Blvd., Suite 710
West Palm Beach, Florida 33401
Phone: (800) 905-7206; E-Mail: [email protected]; Fax: (561) 471-1443
1
<PAGE>
<TABLE>
<CAPTION>
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
November 30, 2000
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 1,164
--------------
1,164
--------------
TOTAL ASSETS 1,164
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 5,842
Stockholder notes payable 309,016
--------------
314,858
--------------
STOCKHOLDERS' DEFICIT:
Common stock; $.01 par value, authorized 50,000,000
shares at November 30, 2000; 6,150,000 shares issued
and outstanding at November 30, 2000
61,500
(Deficit) accumulated during the development stage (375,194)
--------------
(313,694)
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,164
==============
</TABLE>
See Accountants' Review Report and Accompanying Notes
2
<PAGE>
<TABLE>
<CAPTION>
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED NOVEMBER 30, 2000 AND 1999,
YEAR-TO-DATE THROUGH NOVEMBER 30, 2000 AND 1999,
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH NOVEMBER 30, 2000
MARCH 1,
FOR THE QUARTERS ENDED YTD THROUGH 1991 THROUGH
OV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
2000 1999 2000 1999 2000
--------------- --------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Income $ - $ - $ - $ - $ 2,676
--------------- --------------- -------------- -------------- -------------
- - - - 2,676
--------------- --------------- -------------- -------------- -------------
COSTS AND EXPENSES:
Advertising and promotion 214 - 214 186 580
Licenses, permits & filing
fees - 220 581 1,456 6,511
Bank service charges 45 45 135 150 914
Collection costs - - - - 1,341
Contract labor - 704 - 704 12,735
Dues and subscriptions 35 - 35 - 508
Rent 2,402 9,328 16,744 23,320 70,380
Interest 8,531 4,793 22,527 11,884 47,603
Office expenses 1,339 1,024 4,405 3,735 15,677
Organizational exp. - amort. - - - - 2,150
Professional fees 10,131 2,399 23,779 20,511 72,129
Salaries and payroll taxes 8,073 8,072 24,277 24,234 91,619
Travel & entertainment - 156 - 233 296
Miscellaneous expenses - 47 - 47 77
--------------- --------------- -------------- -------------- -------------
30,770 26,788 92,697 86,460 322,520
--------------- --------------- -------------- -------------- -------------
NET (LOSS) $ (30,770) $ (26,788) $ (92,697) $ (86,460) $ (319,844)
=============== =============== ============== ============== =============
(Loss) per share data:
Basic and diluted $ (0.01) $ (0.00) $ (0.02) $ (0.01) $ (0.09)
=============== =============== ============== ============== =============
Weighted average shares
outstanding - basic 6,150,000 6,150,000 6,150,000 6,150,000 3,455,846
=============== =============== ============== ============== =============
</TABLE>
See Accountants' Review Report and Accompanying Notes
3
<PAGE>
<TABLE>
<CAPTION>
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 NOVEMBER 30, 2000
(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)
Net (loss) - - (109,817) (109,817)
----------- ------------ -------------- -------------
BALANCE AT FEBRUARY 29, 2000 6,150,000 61,500 (282,497) (220,997)
Net (loss) - - (92,697) (92,697)
----------- ------------ -------------- -------------
BALANCE AT NOVEMBER 30, 2000 6,150,000 $61,500 ($375,194) ($313,694)
=========== ============ ============== =============
</TABLE>
See Accountants' Review Report and Accompanying Notes
4
<PAGE>
<TABLE>
<CAPTION>
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
YEAR-TO-DATE THROUGH NOVEMBER 30, 2000 AND 1999
AND FOR THE PERIOD FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH NOVEMBER 30, 2000
MARCH 1,
YTD THROUGH 1991 THROUGH
NOVEMBER 30,
NOV. 30,2000 NOV. 30,1999 2000
-------------- ---------------- ---------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (92,697) $ (86,460) $ (319,844)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Changes in assets and liabilities:
Other assets - - 4,056
Accounts payable (937) (1,051) (331)
Accrued expenses 5,276 3,038 4,741
-------------- ---------------- ---------------
NET CASH (USED IN) OPERATING ACTIVITIES (88,358) (84,473) (311,378)
-------------- ---------------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder notes payable 85,528 85,253 308,543
Proceeds from issuance of common stock - - 3,999
-------------- ---------------- ---------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 85,528 85,253 312,542
-------------- ---------------- ---------------
NET INCREASE (DECREASE) IN CASH (2,830) 780 1,164
CASH AT BEGINNING OF PERIOD 3,994 1,706 -
-------------- ---------------- ---------------
CASH AT END OF PERIOD $ 1,164 $ 2,486 $ 1,164
============== ================ ===============
</TABLE>
See Accountants' Review Report and Accompanying Notes
5
<PAGE>
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED NOVEMBER 30, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH NOVEMBER 30, 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 November 30, 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:
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
=============
6
<PAGE>
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED NOVEMBER 30, 2000 AND 1999 AND FOR THE PERIOD
FROM MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH NOVEMBER 30, 2000
(See Accountants' Review Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)
Although deferred tax assets existed at November 30, 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.
3. SUBSEQUENT EVENT:
On December 11, 2000, the Company's affiliate shareholder entered into a Stock
Purchase Agreement, which provides for the buyer to acquire 4,200,000 shares of
the Company's outstanding common stock held by the seller in exchange for
$2,000. Additionally, pursuant to a Substitution of Debtor Agreement of the same
date, the buyer promised to assume and discharge all of the debts of the Company
owed to The Keller Trust in the amount of $323,000 and repay this amount to The
Keller Trust. The seller also agreed to enter into an option agreement with
unrelated third parties whereby the seller granted an option to such third
parties to acquire an aggregate of up to 1,600,000 shares of the Company's
outstanding common stock held by the seller in exchange for an aggregate amount
of up to $30.
On December 21, 2000, the stock purchase transaction closed and a change of
control resulted.
7
<PAGE>
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.
On or about December 21, 2000, a Stock Purchase Agreement(the "Agreement")
was closed between Charles Adams, Fred Keller("Keller") and Fred Keller, Trustee
("KellerTrsut"). The Agreement provided for Charles Adams to acquire 4,200,000
shares of the Company's outstanding Common Stock held by Keller in exchange for
$2,000. Additionally pursuant to a Substitution of Debtor Agreement, of the same
date, which was attached and made a part of the Agreement, the buyer promised to
assume and discharge all of the debts of the Issuer owed to Keller Trust in the
amount of $323,000 and repay this amount to Keller Trusts.
RIGHT TO DESIGNATE DIRECTORS; THE DESIGNEE
The Board of Directors of the Company currently consists of three (3)
members. Each director holds office until his or her successor is elected and
qualified or until his or her death, resignation or removal. When the
Transaction closed, the former directors of the Company resigned, and prior to
resigning, named the Designee, Charles Adams, to the Board as successor. The
Designee has agreed to act as a director.
The purpose of the transaction was to grant control of the Issuer to
Charles Adams. Mr. Adams is an affiliate shareholder of the Issuer, and is
seeking candidates for merger with or acquisition by the Issuer.
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. The Company obtained a written commitment from Fred
Keller, Trustee, Fred Keller Trust, to continue to make such loans to the
Company during the next 12 months. This commitment was terminated on December
21, 2000, and assumed by Mr. Adams. Management considers this commitment
sufficient to enable the Company to meet its cash requirements for the next
twelve (12) months. Our operating costs, which includes professional fees and
costs related to a Business Combination, are likely to approximate $50,000
during the next 12 months.
<PAGE>
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.
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
On December 21, 20000, the major stockholders of the Company entered into an
a Stock Purchase Agreement(the "Agreement") with Charles Adams. The Agreement
provided for Charles Adams to acquire 4,200,000 shares of the Company's
outstanding Common Stock in exchange for $2,000. Additionally pursuant to a
Substitution of Debtor Agreement, of the same date, which was attached and made
a part of the Agreement, the buyer promised to assume and discharge all of the
debts of the Issuer owed to the Keller Trust in the amount of $323,000 and repay
this amount to Keller Trusts.
The purpose of the transaction was to grant control of the Issuer to Charles
Adams. Mr. Adams is an affiliate shareholder of the Issuer, and is seeking
candidates for merger with or acquisition by the Issuer.
The principal executive office of the Company is currently located at 6758
North Military Trail, Suite 303, West Palm Beach, Florida 33407. The current
principal office of the Company is located at 222 Lakeview Avenue, Suite 409,
West Palm Beach, Florida 33401.
<PAGE>
Copies of the Agreement and has been filed as an Exhibit to the Company's 8
K which was filed with the Securities and Exchange Commission on January 3, 2001
and is incorporated herein by reference.
On December 21, 2000, the Board of Directors of the Company
authorized the issuance of 10,000,000 shares of the common stock of the Company
to Charles Adams as reimbursement to him of proceeds and future costs of
operations of the Company advanced by Mr. Adams. Such advances are not
anticipated to exceed $10,000. These shares are included as currently issued and
outstanding shares as of January 15, 2001.
Item 6. Exhibits and Reports on Form 8-K
(a) Financial Data Schedule.
(b) The Company filed a Form 8-K with the Securities and Exchange
Commission (the "SEC") on January 3, 2001 to reflect the change in
control of the registrant.
<TABLE>
<S> <C>
Exhibit No. Description
----------- --------------------------------------------------------
3.1 Articles of Incorporation.(1)
3.2 Amended Articles of Incorporation (1)
3.3 Bylaws.(1)
4.1 Articles of Incorporation (1)
4.2 Amended Articles of Incorporation (1)
4.3 Bylaws.(1)
10.1 Articles of Merger (Agreement and Plan of Merger incorporated therein).(1)
10.2 Business Lease.(1)
10.3 Ernest Porter Employment Contract.(1)
10.4 Specimen Sample of Demand Promissory (1)
Notes made by the Company to Fred Keller.(1)
</TABLE>
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10- SB.
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: January 16, 2001 /s/ Charles Adams
-------------------------------------
Charles Adams, Sole Officer & Director
