UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Amendment #2
General Form for Registration of Securities
of Small Business Issuers under Section 12(b) or (g)
of the Securities Exchange Act of 1934
FAIRCHILD INTERNATIONAL CORPORATION
(Name of Small Business Issuer in its Charter)
Nevada 91-1880015
(State or other jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
Suite 600, 596 Hornby Street, Vancouver, B.C. Canada V6C 1A4
(Address of Principal Executive Offices) (Zip Code)
(604) 646-5614
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
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Table of Contents
Part I
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Item 1. Description of Business. . . . . . . . . . . . . . . . . . . . .Page 3
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . .Page 14
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . . .Page 15
Item 4. Security Ownership of Certain Beneficial Owners and Management . .Page 15
Item 5. Directors, Executive Officers, Promoters and Control Persons. . . Page 16
Item 6. Executive Compensation. . . . . . . . . . . . . . . . . . . . . .Page 17
Item 7. Certain Relationships and Related Transactions. . . . . . . . Page 17
Item 8. Description of Securities. . . . . . . . . . . . . . . . . . . .Page 18
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters . . . . . . . . . . . . . . . . .Page 20
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . Page 21
Item 3. Changes in and Disagreements with Accountants. . . . . . . . Page 21
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . . .Page 21
Item 5. Indemnification of Directors and Officers. . . . . . . . . . .Page 22
Part F/S
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 24
Part III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . .Page 25
Item 2. Description of Exhibits. . . . . . . . . . . . . . . . . . . . .Page 25
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
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PART I
To simplify the language in this Registration Statement, Fairchild International
Corp. is referred to herein as "the Company" or "We."
Item 1. Description of Business
Business Development.
We were incorporated in Nevada on June 20, 1997 as Goanna Resources, Inc. by Mr.
David Stadnyk to pursue potential opportunities in the mining business in
Australia. Mr. Stadnyk originally formed Goanna Resources. In March 12, 1999,
Mr. Stadnyk resigned as our director and president, and enlisted our current
management to pursue our current plan of business, when it became apparent that
such mining opportunities would not come to fruition. Toward this end, on June
24, 1999, we changed our name to Fairchild International Corporation. Mr.
Stadnyk was later retained as our consultant, because of his familiarity with
our plan of business and his business contacts, including his knowledge of
Praxis Pharmaceuticals, Inc., a corporation that is conducting research and
development on our behalf.
Our current plan of business involves the development of two potential products,
the anti-wrinkle and anti-arthritic product. These potential products are being
developed in conjunction with our agreement with Praxis Pharmaceuticals. We
also have a domain name registered under the name www.Healthpharmacy that may
market the products when Praxis Pharmaceuticals completes their development, if
ever. The website is currently undergoing development, but there is no
assurance that we will ever complete its development. In addition, there is no
assurance that we will ever complete development of the two potential products,
the anti-wrinkle or anti-arthritic product.
In approximately January 1999, we began negotiations with Praxis
Pharmaceuticals, Inc. for that corporation to conduct research and develop a
line of nutri-ceutical products on our behalf. Praxis Pharmaceuticals is a
pharmaceutical company with a staff of medical doctors and seven scientists that
conducts research in pharmaceutical and non-pharmaceutical drugs and treatments.
In October 1999, we entered into a licensing agreement with Praxis
Pharmaceuticals.
On February 15, 1999, we reverse split our stock on a one (1) share for twenty
(20) share basis to reduce the number of shares outstanding. We originally
planned to seek financing subsequent to the reverse split, which would have
placed additional shares of our common stock in the market. After the reverse
split, however, our common stock became volatile. Our shareholders expressed
concern that our stock price was too high for an OTCBB stock. As a result, on
September 13, 1999, we forward split our stock on a ten (10) share for one (1)
share basis to adjust for the effects of our February 15, 1999 reverse stock
split. Unless indicated otherwise, all statements herein reflect both of these
stock splits. We have not been involved in any bankruptcy, receivership or
similar proceeding. We have not been involved in any material reclassification,
merger, or purchase or sale of a significant amount of assets not in the
ordinary course of business.
During the early part of 1999 we had specific cosmetic products and had
developed a full product line that we wished to bring to market. However,
problems developed with the agent who proposed to assemble the product line and
place it with a manufacturer. Specifically, we disagreed with the agent's
exorbitant fees and royalties. Accordingly, we cancelled our proposed
arrangements with the agent. Subsequently, we started discussions with a
manufacturer, Agera Skincare Systems, a division of Biosyn, Inc. of New Orleans,
Louisiana, for that company to manufacture a full line of skin care products on
our behalf. We never finalized an agreement with Agera Skincare Systems
because of our financial limitations and our decision to focus our business on
the research and development that Praxis Pharmaceuticals would conduct on our
behalf.
In approximately mid-1999, Praxis Pharmaceuticals, on our behalf entered into
discussions with Aeterna Laboratories, Inc. headquartered in Quebec City,
Canada, for a possible joint venture involving the anti-wrinkle product. The
discussions are temporarily suspended until such time as the anti-wrinkle patent
is filed, if ever.
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Business of Issuer.
We have operational losses and no revenues. Our ability to continue in business
is dependent upon our ability to generate sufficient funds to conduct our
operations and to attain profitability and/or raise equity capital or borrow
from third parties and/or related parties sufficient to meet current and future
obligations. We are registering our common stock on a voluntary basis under
Section 12(g) of the Exchange Act in order to comply with the recently enacted
Over the Counter Bulletin Board ("OTCBB") listing requirements. From June 19,
1997 to February 25, 1999, we were engaged in the mining business. We are no
longer engaged in the mining business. We plan to develop a website named
www.Healthypharmacy.com marketing various anti-aging and nutritional products
such as vitamin supplements and homeopathic arthritis and skin care products.
Our website is in the developmental stages and is not yet operational.
We have obtained the domain names, youthfulyou.com and healthypharmacy.com. We
plan to offer products through the healthypharmacy.com site. We have not yet
determined our intended use for the youthfulyou.com site. We plan to contract
with Netcom Canada to connect our web site to the Internet. We have contracted
with Zappworx Visual Management to develop and maintain our web site. We
launched our website as a "work in progress" on November 1, 1999 and expected to
have our web site operational by early 2000. However, development of our
website has taken longer than expected because we focused upon the research and
development conducted by Praxis Pharmaceuticals. If our website becomes
operational at that time, we plan to take orders via our website; however, there
is no assurance that we will develop that capability or be operational at any
time.
Web site shoppers will be able to browse our site and place their secured orders
on line. We plan to process orders by online credit card or cyber cash systems.
We have not secured contracts with providers of credit card or cyber cash
systems. Upon credit approval, we will arrange for delivery of the ordered
products via courier service such as Federal Express or United Parcel Service.
To date, we have not entered into agreements for the shipment of our products
with any courier services. Customers will be able to place orders seven days a
week, twenty-four hours a day to be delivered to their specified destination.
We will attempt to offer our products at prices competitive with other shopper
websites. Initially, we anticipate approximately 5-10 products in our online
catalogue format with new product lines being added as web traffic and sales
increase. We have entered into an agreement with Praxis Pharmaceuticals to sell
their anti-wrinkle formula. Further, we are in discussions with a third party
seeking to acquire their anti-wrinkle formula that Praxis Pharmaceuticals is
developing on our behalf. As of the date of this registration statement, we
have not reached a formal agreement with any third party to sublicense our
formulas.
We intend to sell our products to male and female consumers over the age of 35.
We have not agreed to a marketing alliance with any company at this time. We
intend to use both traditional and non-traditional means of advertising. We
anticipate that our primary source of advertising will be the Internet. We
also plan to advertise through e-mail distribution. We have not formulated any
specific plans for implementing our advertising. We have not entered into formal
contracts with search engines or other potential advertising or marketing
outlets.
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Our business development has proceeded since our inception, as follows:
- In 1997, at our inception, we were in the business of mining in Australia
- In June 1999, we changed our name to Fairchild International Corporation
to conduct research and develop a line of nutri-ceutical products.
- In September 1999, we entered in to a license agreement with Praxis
Pharmaceuticals to conduct research and development into an anti-wrinkle
product and an anti-arthritic product.
- We are currently undergoing development of a website under the name
www.Healthpharmacy.com
We are in the research and development stages of development of our proposed
products, an anti-wrinkle product and anti-arthritic product. We now have no
products that have completed development.
A potential conflict of interest existed at the time we were negotiating an
agreement with Praxis Pharmaceuticals because at that time Mr. Standyk was our
consultant and a secretary and director of Praxis Pharmaceuticals. Because Mr.
Standyk was familiar with the potential product we wished to develop through his
relationship with Praxis Pharmaceuticals, we felt that his relationship with
both companies was mutually beneficial to both companies. In addition, we feel
that Mr. Standyk was acting to the mutual benefit of both companies, because
Praxis Pharmaceuticals had difficulty negotiating an agreement with other
companies because those companies wanted to review Praxis Pharmaceutical's
confidential formula for the anti-wrinkle product and the anti-arthritic
product, which Praxis Pharmaceuticals refused to do.
During May 1999 we entered into negotiations with Praxis Pharmaceuticals to
develop a line of cosmetics and market anti-wrinkle products. At the time,
Praxis Pharmaceuticals was in the process of developing an anti-wrinkle compound
that we felt would be beneficial to our potential product line. At the time we
began negotiations Mr. Standyk was a director and secretary of Praxis
Pharmaceuticals and had already resigned as our director, and acted as our
consultant. Our negotiations with Praxis Pharmaceuticals continued until
September 1999, at which time we entered into an agreement that provided for the
research and development of an anti-wrinkle product and an anti-arthritic
product.
Currently, there are no common officers, directors, or management between Praxis
Pharmaceuticals and us. Praxis Pharmaceuticals does not have any intentions of
participating in our management. We are dependent upon Praxis Pharmaceuticals,
only in so far as that company is conducting research and development for the
anti-wrinkle compound and anti-arthritic compound. Effective October 1999,
Praxis Pharmaceuticals owns approximately 23% of our common stock, as a result
of our agreement with them to obtain the exclusive rights to the anti-wrinkle
compound and anti-arthritic compound. Praxis Pharmaceuticals is not financially
dependent upon us; instead, their continued financial existence is their $2
million joint venture agreement with Rothchild Bioscience Managers Party
Limited. This joint venture is totally independent of our agreement with Praxis
Pharmaceuticals.
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We entered into research, development and license agreements with Praxis
Pharmaceuticals effective September 30, 1999, to acquire an exclusive license to
make, use and sell pharmaceutical products and processes relating to arthritis
and dermal wrinkles. We agreed to pay $250,000 by October 1, 2000 for research
on the products and issue 2,600,000 post-split common shares for consideration
for the license. We will pay a net revenue royalty of 35% on revenue for
licensed products. The agreement is with a company formerly under common
management.
Praxis Pharmaceuticals has an agreement with ANUTECH, the business arm of the
Australian National University that permits Praxis Pharmaceuticals the use of
certain patents based on carbohydrate science that were developed by Praxis
Pharmaceuticals' medical staff. In turn, Praxis Pharmaceuticals has agreed to
further solidify the patent position on the anti-wrinkle compounds so it has an
absolute patent position for the products we hope to market.
The only clinical trails that Praxis Pharmaceuticals has conducted on our behalf
have been carried out on animal models, specifically rats. These clinical
trials have been conducted in conjunction with our agreement with Praxis
Pharmaceuticals. These trials are still in process in an attempt to develop an
effective dermal compound that has the ability to go through the skin to reach
the sub-surface area, i.e. the wrinkle. In approximately March 2000, Praxis
Pharmaceuticals employed a technician full-time to the dermal wrinkles and
arthritis testing projects.We will attempt to develop salable products through
our agreement with Praxis Pharmaceuticals.
The following describes the time line represented by Praxis Pharmaceuticals to
us for testing of the anti-wrinkle and anti-arthritic products.
Scale-Up Process - Estimated time - 2 months
- Scale-up process
- Bulk Isolation and purification for bath preparations
Arthritis trials - Estimated time - 6 months
- Ethics Committee Approval
- Re-establishing active and passive model
- Delivery and dose-finding studies including:
* Gavage
* Drinking water
* Food
* Confirmation of mini-osmotic pump delivery
Skin Trials - Estimated time - 6 - 8 months
- Formulation preparation
- Evaluate dermal delivery formulations
- Establishing a model for quick delivery assessment
- Establish a wrinkle model and test materials
We hope to meet the following schedule:
0-3 months:
- Preparation of batch material for subsequent testing
- Produce formulations for skin testing
- Commence trials in animal models of theumatoid arthritis
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3-6 months:
- Test skin formulations for penetration and effect
- Complete rheumatoid arthritis animal studies
6-9 months:
- Begin skin toxicity studies
- File skin cosmetic patent (material and formulation coverage)
9-12 months:
- Complete skin toxicity studies
- Commence animal wrinkle model studies
12 months:
- Complete wrinkle model studies
Upon completion of testing to our satisfaction that these potential products are
viable for public use, we will attempt to obtain product insurance. We estimate
a maximum approximate cost of $50,000 cost attributed with our efforts at
finding a joint venture partner to market and distribute their products, upon
completion of the product development.
As of May, 2000, Praxis Pharmaceuticals has made the following progress through
our agreement with them:
Further progress has been made in improving the efficiency of compound isolation
and purification, steps which will be necessary in order to produce the material
in large quantities for pre-clinical and clinical studies will be essential for
eventual manufacturer.
A technician was employed to work full time on the dermal wrinkles and arthritis
project. In association with the chemists and animal scientist working part
time on these projects the man House equivalent is two full time positions
employed. The priority is generating sufficient supportive data to file the
completed patent on the treatment of dermal wrinkles as per milestones. This
was due to occur at 6-9 months and should be on schedule. We are currently
behind in milestone progress for the arthritis and skin programs for various
technical reasons. One of the reasons has been a technical problem in scaling
up the purification of the carbohydrate agent for use in oral studies, in
rheumatoid arthritis and dermal studies.
Animal Studies.
A total of nine compounds have been examined for their ability to induce
mononuclear cell infiltration into the dermis of rats. Of these, four compounds
were effective and five were not.
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Praxis Pharmaceuticals advised us on July 6, 2000 that they have made the
following progress and expect the research and development project to proceeds,
as follows:
Expected Timing:
0-3 months
Preparation of batch material for all subsequent testing.
A large-scale preparation of material has been produced and purified using a gel
filtration procedure. A quantity of approximately 50 grams has been purified
but the gel filtration procedure still inefficient and 50 grams is still not
sufficient for the oral availability studies to be commended (and completed). A
new and hopefully more efficient gel filtration column is currently being
installed in the laboratory for this purpose.
Produce formulations for skin testing.
Several skin formulations have been assessed in the rat model and to date none
of these formulations have had an effect equivalent he intrademal injection of
material. The skin formulations tested to date have included ethanol, DMSO and
oleic acid. A consultant specialist skin formulation company has been
approached to provide alternative formulations for testing.
Commence trials in animal models of rheumatoid arthritis.
An animal model of rheumatoid arthritis has been established in rats. The model
is called the adjuvant arthritis model and is the result of adjuvant treatment
of rats, which cause joint swelling and inflammation within three weeks.
Lymphocytes from adjuvant treated rats are transferred to na ve rats and these
rats develop joint signs within two weeks. The severity of the arthritis is
assessed by measuring the thickness of the ankle joints daily and by
histological examination of the joints after two weeks. Using this model it
has been found that the agents consistently and significantly reduce the
severity of the arthritis. Several agents have been tested and shown to work in
the model. The agents were administered by infusion pump into the subcutaneous
tissue over a two-week period. Now that the model is established and we have
shown the efficacy of the agents under development it is awaiting sufficient to
test the oral effectiveness which requires the agents to be administered in the
drinking water. It is hoped that sufficient will be available to start this in
3 weeks time.
3-6 months
Test skin formulations for penetration and effect.
As noted, several skin formulations have been produced and tested for their
effectiveness in remodeling the skin of rats. No formulations have been as
effective as an intradermal injection. Penetration is to be assessed in the
future fluorescent-labeled materiel, which can be assessed for penetration using
standard immunohistology procedures.
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Complete rheumatoid arthritis animal studies.
As noted these studies cannot be commenced until sufficient materiel has finally
been purified (100 grams).
Goals of Praxis Pharmaceuticals Agreement
The goals of our agreement with Praxis Pharmaceuticals are to develop
anti-wrinkle and anti-arthritic salable products during approximately 2001. At
this time, we can not predict whether we will be successful in developing any
products as a result of our agreement with Praxis Pharmaceuticals, especially
because Praxis Pharmaceutical's research and development efforts will take at
least another nine to twelve months to complete.
Once Praxis Pharmaceuticals files its patent for the anti-wrinkle product, the
following additional tasks will need to be undertaken:
- Continued research by Praxis Pharmaceuticals
- We will seek a joint venture partner to market the products with a
pharmaceutical or cosmetics company - A joint venture of this nature would
require an up-front payment by our joint venture partner and a grant of
royalties by us to the joint venture partner. There is no assurance that
we will find a joint venture partner who will be willing to enter into an
agreement with us. There is no assurance that we will be able to enter
into an agreement with a joint venture partner upon favorable terms.
- Direct Sales - We will attempt to develop our direct sales through our
website. We have not begun development of any direct sales plan or direct
sales strategies. There is no assurance that we will be successful in
developing a direct sales plan.
Status of any Publicly Announced New Product.
We are attempting to develop a line of health care and anti-aging products. We
are currently seeking a manufacturer to produce our products.
Competitive Business Conditions.
The online retail industry is highly competitive with respect to price, service,
quality and Internet marketing. There are numerous, well-established, large
competitors in the online industry with comprehensive web sites, possessing
substantial financial, marketing, personnel and other resources. In contrast,
our company is in the developmental stages and lacks such resources. There can
be no assurance that we will be able to respond to various competitive factors
affecting our business. We plan to attempt to gain a competitive advantage
over our competitors by working directly with wholesalers enabling us to obtain
and pass on to a diverse consumer base quality products at competitively lower
prices.
Anti-aging, nutritional and dietary supplement markets are highly competitive.
The development of online product catalogs will involve an ever-changing and
evolving process. We will attempt to competitively price products on our
website, provide superior quality products, and achieve success through
efficient customer service and effective marketability strategies. We are
limited, however, by among other factors, the developmental character of our
company, the unpredictability and uncertainty of our future revenues and the
intensely competitive nature of the anti-aging and vitamin product industry in
which established companies and new entrants may have a distinct competitive
advantage. There are many well-established competitors with substantially
greater financial revenues. Many of these competitors have been in existence
for substantially longer periods of time than we have and may be better
established in the market where we plan to operate. Further, they may have
sufficient revenue streams to engage in extensive advertising and promotional
campaigns far in excess of our marketing capabilities. Our competition cannot be
determined with any certainty because certain data is not available from private
competitors. Accordingly, our competition is difficult to assess with any
preciseness, and there is no guarantee that we will be able to compete in the
industry, within which we operate. As such, our operations may be adversely
effected.
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Manufacturing. We do not currently manufacture any products, and we will rely on
third-party manufacturers. We are in the process of locating a manufacturer to
produce our products.
Raw Materials and Suppliers.
We anticipate that the principal suppliers of our products will be wholesale
distributors, who generally act as suppliers to retail stores. We plan to enter
contract negotiations with several distributors of health care and anti-aging
products. A delay in establishing suppliers or distributors could have an
adverse effect on our revenues and cash flow. In the event that we are unable
to locate manufacturers of anti-aging products or if any manufacturer that we
depend upon in the future ceases operations or cannot continue to manufacture
our retail products our business could be adversely affected.
Herbal supplements and anti-aging products contain ingredients that are
harvested by and obtained from third-party suppliers. Some of these ingredients
are harvested internationally, only once per year or on a seasonal basis. An
unexpected interruption of supply, such as a harvest failure, could cause our
operations to be adversely affected.
We do not have contracts with any suppliers, entities or persons committing
suppliers to provide the materials required for the production of anti-aging
products. There can be no assurance that suppliers will provide the raw
materials needed for anti-aging products in the quantities requested or at a
price that our manufacturers are willing to pay. In the past five years,
natural vitamin E, beta-carotene and melatonin have been subject to unusual
price fluctuations as a result of supply shortages and/or increased demand.
Because we do not control the actual production of these raw materials, it is
also subject to delays caused by interruption in production of materials based
on conditions not within our control. Such conditions include job actions or
strikes by employees of suppliers, weather, crop conditions, transportation
interruptions, natural disasters or other catastrophic events. Our
manufacturers' inability to obtain adequate supplies of raw materials for
anti-aging products at favorable prices, or at all, as a result of any of the
foregoing factors or otherwise, could have a material adverse effect on our
business.
Dependence on Certain Customers.
As of the date of this registration we have not developed a customer base. We
do not believe that we will be dependent upon any single customer once we have
developed a customer base; however, there can be no assurance that we will not
become dependent upon one or a few customers.
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Intellectual Property.
Although many of the products that we intend to sell will rely upon proprietary
technology, we do not own any registered patents, trademarks, copyrights or
franchises. We have licensed a product through Praxis Pharmaceuticals that has
a patent through Annutech of the Australian National University. This patent
only covers the anti-arthritic product. We have written a preliminary patent
for that we expect to file with the U.S. Patent Office within the next thirty
days. That preliminary patent is for the anti-wrinkle product. Other than the
Praxis Pharmaceuticals agreement discussed below, we are not a party to any
royalty agreement or other agreement providing for proprietary interests.
Praxis Pharmaceuticals Licensing Agreement. Through contacts of our consultant
and promoter, Mr. Stadnyk, our management became acquainted with Praxis
Pharmaceuticals, a company that developed an anti-wrinkle cream. We entered
into a Research, Development, and Licensing Agreement with Praxis
Pharmaceuticals on May 11, 1999 (effective as of September 30, 1999), to obtain
an exclusive, worldwide license to make, use and sell pharmaceutical products
and processes relating to arthritis and dermal wrinkles. We feel we will
develop a product line through this agreement.
We have agreed to pay $250,000 and issue 2,600,000 shares of our common stock,
as consideration for the worldwide license. We made an initial payment to of
$62,500 to Praxis Pharmaceuticals on October 1, 1999. Three installments of
$50,000 are due quarterly, commencing on January 1, 2000 or completion of the
first milestone set forth in the agreement. A final payment of $37,500 is due
on the latter of October 1, 2000 or completion of the final milestone set forth
in the agreement. We have agreed to pay Praxis Pharmaceuticals a 35% royalty of
the net proceeds earned from sales of the licensed products or the granting of a
sub-license, less the $250,000 referred to above and any other costs of
development, manufacturing, production, marketing and selling.
We expect to add dermal wrinkle and arthritis products to our product line,
through execution of this agreement. In exchange for our cash and equity
consideration, Pharmaceuticals has agreed to conduct certain research projects,
secure proprietary protection on their anti-wrinkle and arthritis compounds and
to provide us with the exclusive right to make, market and sell such products
for a perpetual period beginning September 30, 1999. Praxis Pharmaceuticals'
performance is based upon certain milestones set forth in this agreement. These
milestones are, as follows:
0-3 MONTHS
Preparation of batch material for all subsequent testing
Produce formulations for skin testing
Commence trials in animal models of rheumatoid arthritis
3-6 MONTHS
Test Skin formulations for penetration and effect
Complete rheumatoid animal studies
6-9 MONTHS
Begin skin toxicity studies
File skin cosmetic patent (material and formulation coverage)
9-12 MONTHS
Complete skin toxicity studies
Commence animal wrinkle model studies
12 MONTHS-
Complete wrinkle model studies
Mr. Stadnyk's contact, Dr. Cowden, will perform the work with seven scientists
under Dr. Cowden's employment. Praxis Pharmaceuticals must complete product
trials and solidify patent protection, before we market these products. Praxis
Pharmaceuticals has assured us that our total product development budget will
not exceed $250,000.
Government Approvals.
We are currently, not subject to direct regulation by any government agency,
other than regulations applicable to businesses generally and regulations
applicable to commerce on the Internet. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted with respect to the Internet, covering issues such as
user privacy, pricing, and characteristics and quality of products and services.
Furthermore, the growth and development of the market for Internet commerce may
prompt calls for more stringent consumer protection laws that may impose
additional burdens on those companies conducting business over the Internet. The
adoption of any additional laws or regulations may decrease the growth of the
Internet, which, in turn, could decrease the demand for our Internet products
and increase our cost of doing business or otherwise have an adverse effect on
our business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws in various jurisdictions
governing issues such as sales tax, libel and personal privacy is uncertain and
may take years to resolve.
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In addition, as our service becomes available over the Internet in multiple
states and if we begin to sell to numerous consumers residing in various states,
such jurisdictions may claim that we are required to qualify to do business as a
foreign corporation in each such state and foreign country. Our failure to
qualify as a foreign corporation in a jurisdiction where it is required to do so
could subject our business to taxes and penalties for failure to qualify. Any
such existing or new legislation or regulation, including state sales tax, or
the application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
Our manufacturers will be subject to extensive and rigorous governmental
regulation concerning the protection of the environment and the quality of
manufacturing. Federal, state and local regulatory agencies actively enforce
these regulations and conduct periodic inspections to determine compliance with
such government regulations. The Food and Drug Administration (the "FDA")
enforces regulations regarding the quality of manufacturing, Good Manufacturing
Practices ("GMP"), through periodic surveillances and audits. In particular, the
FDA regulates the safety, manufacturing, labeling and distribution of cosmetics,
dietary supplements, including vitamins, minerals and herbs, food additives,
food supplements, over-the-counter drugs and prescription drugs, medical devices
and cosmetics. We anticipate that the FDA will promulgate GMP, which are
specific to dietary supplements and require at least some of the quality control
provisions contained in the GMPs for drugs. GMP regulation would require
supplements to be prepared, packaged and held in compliance with such rules, and
may require similar quality control provisions contained in the GMP regulation
for drugs. There is no assurance that, if the FDA adopts GMP regulations
specific to dietary supplements, manufacturers of anti-aging products will be
able to comply with such GMP rules upon promulgation or without incurring
material expenses to do so.
In addition, the Federal Trade Commission (hereinafter the "FTC") has
overlapping jurisdiction with the FDA to regulate the labeling, promotion and
advertising of dietary supplements, over the counter drugs, cosmetics and foods.
Failure to comply with applicable regulatory requirements may result in fines,
suspension of approvals, cessation of distribution, product recalls and criminal
prosecution, any of which would have a material adverse effect on us if other
manufacturers could not be arranged within a reasonable time.
Changes in existing regulations, the interpretation thereof or adoption of new
regulations could impose costly new procedures for compliance. Such new
procedures could prevent us from obtaining or affect the timing of additional
regulatory approvals. The FTC and state and local authorities regulate the
advertising of over-the-counter drugs and cosmetics. The Federal Food, Drug and
Cosmetic Act, as amended (the "Food and Drug Act"), and the regulations
promulgated thereunder, and other federal and state statutes and regulations,
govern, among other things, the testing, manufacture, safety, effectiveness,
labeling, composition storage, record keeping, approval, advertising and
promotion of our products.
12
<PAGE>
In general, products falling within the FDA's definition of "new drugs" require
pre-market approval by the FDA while products falling within the FDA's
definition of "cosmetics" do not require pre-market approval. We feel that
anti-aging products, fall within the FDA's definition of "cosmetics" and
therefore do not require pre-market approval. There can be no assurance,
however, that the FDA will concur in this view. In the event that we fail to
comply with applicable regulations with respect to any products, we may be
required to change our labeling, formulation or possibly cease manufacture and
marketing of such products. The FDA may require post-marketing testing and
surveillance to monitor the record of our products and continued compliance with
regulatory requirements. The FDA also may require the submission of any lot of a
product for inspection and may restrict the release of any lot that does not
comply with FDA standards, or may otherwise order the suspension of manufacture,
recall or seizure if a non-compliant product is discovered. Product approvals
may be withdrawn if compliance with regulatory standards is not maintained or if
problems concerning safety or efficacy of a product are discovered following
approval.
We may also be subject to foreign regulatory authorities governing testing or
sales of certain of our products. Despite the fact that FDA approval may be
obtained, approval of a product by the comparable regulatory authorities of
foreign countries must be obtained in certain cases prior to the commencement of
marketing of the product in those countries. There can be no assurance that any
product developed or marketed by us will be approved by the FDA or any foreign
regulatory authority.
Research and Development.
In our past two fiscal years, we have spent approximately $132,500 on product
research and development. Our research and development has been conducted
through our agreement with Praxis Pharmaceuticals, as described above. We do not
anticipate that this cost will be borne directly by the customers; however,
there can be no such assurances.
Compliance with Environmental Laws.
Other than environmental laws to which corporations may generally be subject, we
do not believe that we are subject to any environmental law compliance. If such
compliance should become necessary, we do not believe expenses associated with
such compliance would be material to our operations.
Employees.
As of the date of this registration statement, we have one full time employee
that is also our President, Mr. Byron Cox.
None of our employees are members of a union. We believe that our relationship
with our employees is favorable. We do not intend to add additional employees
in the next twelve months.
13
<PAGE>
Item 2. Plan of Operation
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS REGISTRATION STATEMENT.
We eventually plan to develop specialized e-commerce sites on the Internet.
Over the next twelve months, we plan to focus on development of an Internet
portal for alternative health care products. We hope that this site will offer
our products, as well as those of other companies. In addition, we plan to
offer information on related topics on the website.
In the past, we have relied upon funding from our former officer and director,
Mr. Stadnyk. We borrowed approximately $44,000 from Mr. Stadnyk during our
development stage, $40,000 of which has been repaid. We are currently unable to
satisfy our cash requirements without the financial support of our President,
Byron Cox, or his designee. We anticipate that we will meet our cash
requirements for the next twelve months through Mr. Cox's financial support,
even though Mr. Cox has not supplied funds to the Company in the past.
Currently, we have no commitment for funding from our past or present officers
and directors or any other party. Eventually, we will need to raise additional
funds, if we plan to implement an advertising and marketing plan to advance our
website. We have not yet determined how we plan to obtain these additional
funds.
In 1999, we raised cash proceeds of $475,000 from the sale of our common stock
to business associates and friends of Mr. Standyk and Mr. Cox. These funds were
for general operating expenses. At the time these funds were raised they were
not intended for the Praxis Pharmaceuticals licensing agreement. In this regard,
we issued 3,000,000 shares for $150,000 on March 15, 1999 and we issued
1,000,000 shares on April 1, 1999 for $300,000. The proceeds are to be used to
implement our new plan of business. At the time of sale, the proceeds were not
earmarked for the Praxis Pharmaceuticals licensing agreement.
Since we have entered into an agreement with Praxis Pharmaceuticals for research
and development, we will encounter significant research and development expenses
over the next twelve months. In addition to the terms of the Praxis
Pharmaceuticals agreement, we may seek to conduct other research and
development, which would result in expenses beyond those outlined in the
agreement with Praxis Pharmaceuticals.
Our goal is to have Praxis Pharmaceuticals provide us with products that are
ready for market. The first product that we hope to receive from Praxis
Pharmaceuticals is the anti-wrinkle compound while the second is an arthritis
product.
Since we outsource most of our operations, we do not anticipate establishing our
own manufacturing facilities over the next twelve months. Beyond this time
frame, we plan to make a decision with regard to purchase or sale of any plant
and significant equipment in the long term after products are introduced to the
public through our website, if ever.
14
<PAGE>
As conditions dictate, we will engage additional employees. We do not plan to
make any significant changes in the number of employees over the next twelve
months.
Item 3. Description of Property
We currently occupy space at Suite 600, 596 Hornby Street, Vancouver, B.C.
Canada V6C 1A4. This space is approximately 250 square feet and is occupied by
us on a proportional cost basis on a month-to-month basis. We share office
space with numerous companies, only two of which are related to us in any
fashion, Praxis Pharmaceuticals and Alexander Cox and Company. Praxis
Pharmaceuticals only maintains a subsidiary administrative office at this
location and their primary offices are located in Seattle Washington, and
Canberra, Australia. We are charged for office rental and administrative
expenses on a proportional basis. During 1999, we paid $31,696 of
administrative expenses to an Alexander Cox and Company, a private company that
is controlled by our director and officer, Byron Cox. Also during 1999, we paid
$31,240 of administrative fees to our director and one of our former directors.
Therefore, during 1999, we paid total expenses of $63,136 for our office space
and administrative expenses. Administrative expenses include, among other
things, telephone, secretary, and other office expensesWe feel that we will be
able to occupy these premises or obtain other adequate space if necessary.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The table below sets forth information with respect to the beneficial ownership
of the Common Stock by (a) each person known by the Company to be the beneficial
owner of five percent or more of the outstanding common stock, and (b) all
executive officers and directors individually and as a group, as of January 25,
2000. Unless otherwise indicated, the Company believes that the beneficial
owner has sole voting and investment power over such shares.
Security Ownership of Certain Beneficial Owners.
<TABLE>
<CAPTION>
Title of Class Name & Address of Beneficial Number of Beneficially Percentage
Owner Owned Shares Ownership of Class
-------------- ---------------------------- ----------------------- -------------------
<S> <C> <C> <C>
Common Winston Cabell 737,000 6.7%
28 Royalist Road
Mosman NSW 9083 WA 6000
Australia
-------------- ---------------------------- ----------------------- -------------------
Common David Lane 757,000 6.9%
1632 McPherson Drive
Port Coquetlam, B.C. Canada
-------------- ---------------------------- ----------------------- -------------------
Common Dr. Brett Charlton 2,600,000 23.7%
Dr. William Cowden
Mr. David Stadnyk
Praxis Pharmaceuticals, Inc.
595 Hornby Street, Suite 600
Vancouver, BC Canada
-------------- ---------------------------- ----------------------- -------------------
Common David Stadnyk 2,375,000 (1) 19.8%
595 Hornby Street, Ste. 600
Vancouver, B.C. Canada
<FN>
(1) This amount includes options to purchase 500,000 shares of our common stock at
$0.05 per share and options to purchase an additional 500,000 shares of our common
stock at $0.15 per share. These options will expire in March 2000.
</TABLE>
15
<PAGE>
Security Ownership of Management.
<TABLE>
<CAPTION>
Title Name & Address of Beneficial Number of Beneficially Percentage
Owner Owned Shares Ownership of Class
------------ ---------------------------- ---------------------- -------------------
<S> <C> <C> <C>
President Byron Cox 200,000 Common 1.8%
Director 595 Hornby St., Ste. 600
Vancouver, B.C. Canada
------------ ---------------------------- ---------------------- -------------------
All Officers 1 person 200,000 Common 1.8%
& Directors
</TABLE>
Change in Control.
There are no arrangements, which may result in a change in control of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
Directors and Executive Officers.
The following sets forth the names and ages of the Company's officers and
directors. The shareholders elect the directors of the Company annually, and
the board of directors appoints the officers annually.
Name Age Position Term of Office
--------------------------------------------------------------------------------
Byron Cox 62 President, Director Annual
Byron Cox
Mr. Cox has served as President and Director of the Company since March 12,
1999. From 1997 to the present, Mr. Cox has worked at Alexander-Cox & Company,
Vancouver, B.C., as the company's President, where he provides investment
advisory services specializing in raising capital and investing in emerging
growth companies, as well as developing investor relations programs,
particularly on American Stock Exchanges. Mr. Cox holds a B.A. from the
University of Toronto, a Diploma in Business Administration (Marketing) from
Ryerson Polytechnic Institute and a certificate in Strategic Marketing
Management from the Harvard Business School. He holds professional accreditation
in the American Public Relations Society, as well as the Canadian Public
Relations Society.
Significant Employees.
There are no employees not mentioned above who are expected to make a
significant contribution to the business.
Family Relationships.
There are no family relationships among directors, executive officers, or
persons nominated for such positions.
16
<PAGE>
Involvement in Certain Legal Proceedings.
In October of 1997, a bankruptcy receiving order was made against Record
Publishing, Inc. (Estate No: 25-060808) in Canada. Mr. Cox was an officer of
this Company at the time of the bankruptcy.
Other than the aforementioned, there have been no bankruptcies, criminal
proceedings, or other legal proceedings during the past five years which would
be material to the evaluation of the ability or integrity of any director,
executive officer, any person nominated for such positions, any control person
or any promoter of the Company [see prior comment 13-clarify whether there are
no such persons to disclose).
Item 6. Executive Compensation
The following table present, for the fiscal years ended December 31, 1999, the
compensation paid by the Company to the Company's chief executive officer.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
----------------------------
Name and Year Salary Bonus Other Annual Restricted Securities LTIP Other
Principle Position ($) ($) Compensation ($) Stock Award(s) Underlying Payouts ($)
($) Options (#) ($)
------------------ ---- -------- ------ ---------------- -------------- ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Byron Cox, 1997 0 0 0 0 0 0 0
President 1998 0 0 0 0 0 0 0
1999 $ 28,000 0 0 0 0 0 0
</TABLE>
Item 7. Certain Relationships and Related Transactions
Certain Transactions.
Stadnyk Consulting Agreement. On March 15, 1999, we entered into a consulting
agreement with David Stadnyk who was our prior Director, President and Secretary
and who is a beneficial owner of our common stock, for services as a public
relations and business consultant. We paid a retainer of $25,000 and issued
500,000 common shares of our stock to him as compensation for these services.
In addition, we granted him the option to purchase 500,000 shares of our common
stock at $0.05 per share and the option to purchase an additional 500,000 shares
of our common stock at $0.15 per share. These options are exercisable for a
period of one year from the date of the agreement. Further, the agreement
provides that, should we obtain listing on the NASDAQ small-cap market, Mr.
Stadnyk would have a period of two years from the date of such listing to
exercise an option to purchase 5% of the outstanding common stock of the Company
at $0.50 per share. The agreement is for a period of twelve months. We have
paid $25,000 and issued 50,000 pre-split common stock at an assigned value of
$0.50 per share. Other than the aforementioned, we do not intend to enter into
any transactions with our beneficial owners.
Praxis Pharmaceuticals Licensing Agreement. On May 11, 1999 we entered into an
agreement with Praxis Pharmaceuticals, effective September 30, 1999, to acquire
an exclusive license to make, use and sell pharmaceutical products and processes
relating to arthritis and dermal wrinkles. We have agreed to pay approximately
$250,000 for research on the products and issue 2,600,000 common shares of our
common stock in consideration for the license. We have paid $132,500 to Praxis
Pharmaceuticals and issued 2,600,000 post-split common stock in consideration
for the license. The balance of $117,500 cash consideration to Praxis
Pharmaceuticals is due by October 31, 2000. We will pay Praxis Pharmaceuticals
a royalty of 35% of the net proceeds earned from sales of products sold under
the terms of this agreement. David Stadnyk is an Officer and Director of Praxis
Pharmaceuticals.
17
<PAGE>
Parents
We are not a subsidiary of any parent company.
Item 8. Description of Securities
Common Stock.
In General. We are authorized to issue 50,000,000 shares of common stock, par
value $0.001 per share, of which 10,988,210 shares were issued and outstanding
as of January 25, 2000. All of the issued and outstanding common stock is fully
paid and non-assessable.
Voting. Each share of our common stock designated at issuance to have voting
rights would entitle the holder thereof to one vote in the election of directors
and in all other matters upon which stockholders are entitled to vote. The
holders of shares of common stock do not have cumulative voting rights, which
means that the holders of more than 50% of the outstanding voting shares in an
election of directors can elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining shares will not be able to
elect any of our directors.
Dividends. Each share of common stock entitles the holder thereof to receive
cash dividends, as the Board of Directors may declare from funds legally
available therefore. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Rights. There are no preemptive rights with respect to our common stock. Upon
liquidation, dissolution or winding up of the affairs of the Company, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of common stock, after giving preference to any preferred shares
outstanding. The Board of Directors reserves the right to fix or determine
the designations, rights, preferences or other variations on each class of
capital stock of the Company.
Preferred Stock.
In General. We have authorized 1,000,000 shares of preferred stock, par value
$0.01. As of January 25, 2000, there were no preferred shares issued and
outstanding.
Voting. Each share of our preferred stock designated at issuance to have voting
rights would entitle the holder thereof to one vote in the election of directors
and in all other matters upon which stockholders are entitled to vote. The
holders of shares of preferred stock do not have cumulative voting rights, which
means that the holders of more than 50% of the outstanding voting shares in an
election of directors can elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining shares will not be able to
elect any of our directors.
18
<PAGE>
Dividends. Each share of preferred stock entitles the holder thereof to receive
cash dividends, as the Board of Directors may declare from funds legally
available therefore. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Rights. There are no preemptive rights with respect to the preferred stock.
Upon liquidation, dissolution or winding up of the affairs of the Company, and
after payment of creditors, the assets legally available for distribution will
be divided ratably on a share-for-share basis among the holders of the
outstanding shares of preferred stock, before giving preference to any common
shares outstanding. The Board of Directors reserves the right to fix or
determine the designations, rights, preferences or other variations on each
class of capital stock of the Company.
Debt Securities
We currently have no debt securities outstanding.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Market Information.
Our common stock is traded on the NASDAQ Over the Counter Bulletin Board
("OTCBB") under the symbol FRCD. There is no active trading market for the
common stock. The following bid quotations have been reported for the period
beginning July 8, 1998, our initial quotation date, and ended September 30,
1999:
Bid Quotations
Period High Low
July 8 - September 30, 1998 $ 3/4 $ 1/4
October 1 - December 31, 1998 $9/16 $ 0.05
January 1 - March 31, 1999 $0.40 $ 0.13
April 1 - April 15, 1999
April 15, 1999 Reverse split 1:20 **** ****
April 16 - June 30, 1999
July 1 - September 13, 1999 $9.00 $2 3/8
September 13, 1999 Forward Split 10:1 **** ****
September 14 - September 30, 1999 $7/16 $ 7/16
October 1 - December 31, 1999 $0.59 $ 0.05
19
<PAGE>
Such quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission. Such quotes are not necessarily representative of actual
transactions or of the value of our securities and are, in all likelihood, not
based upon any recognized criteria of securities valuation as used in the
investment banking community.
The Company has been advised that approximately 11 member firms of the NASD are
currently acting as market makers for the common stock. There is no assurance
that an active trading market will develop which will provide liquidity for the
Company's existing shareholders or for persons who may acquire common stock
through the exercise of warrants.
Holders.
As of January 25, 2000, there were approximately 57 holders of record of our
10,988,210 shares of common stock outstanding. Of these 10,988,210 shares,
4,958,490 are restricted securities within the meaning of Rule 144(a)(3)
promulgated under the Securities Act of 1933, as amended, because such shares
were issued and sold by the Company in private transactions not involving a
public offering. Certain of the shares of common stock are held in "street"
name and may, therefore, be held by several beneficial owners. Our transfer
agent is American Securities Transfer & Trust, Inc. located at 12039 West
Alameda Parkway, Lakewood, CO 80228.
No prediction can be made as to the effect, if any, that future sales of shares
of common stock or the availability of common stock for future sale will have on
the market price of the common stock prevailing from time-to-time. Sales of
substantial amounts of common stock on the public market could adversely affect
the prevailing market price of the common stock.
Dividends.
We have not paid a cash dividend on the common stock since inception. The
payment of dividends may be made at the discretion of our Board of Directors and
will depend upon, among other things, our operations, our capital requirements
and our overall financial condition. As of the date of this registration
statement, we have no intention to declare dividends.
Item 2. Legal Proceedings
We are currently unaware of any pending legal proceeding or any proceeding
contemplated by a governmental authority in which we may be involved.
Item 3. Changes In and Disagreements With Accountants
We have not had any resignation or dismissal of our principal independent
accountants. As of the date of this registration statement, Steele & Co.,
located in Vancouver, British Columbia, serve as our independent accountants and
have prepared the audited statements included as exhibits hereto.
Item 4. Recent Sales of Unregistered Securities.
On June 20, 1997, we sold 2,500,000 shares of our common stock to the public for
$50,000.00. On August 7, 1997, we sold 128,250 shares of our common stock to
the public for $51,300.00. On August 15, 1997, we sold 41,611 shares of our
common stock to the public for $41,611.00.
20
<PAGE>
On August 31, 1998, we issued 508,312 shares of our common stock to several
parties rendering Business Consulting Services valued at $223,657.50 to the
Company. On October 20, 1998, we issued 150,000 shares of our common stock for
$15,000.00 consideration from Jewett Finance. On December 10, 1998, we issued
250,000 shares of common stock to Stockbroker Relations, Inc. for Public
Relations Services valued at $56,000.00. On December 10, 1998 we also issued
650,000 options to purchase our common stock to Stockbroker Relations, Inc. at
prices above market in exchange for public relations services.
On March 15, 1999, we sold 3,000,000 shares of our common stock to the public
for $150,000.00. On March 15, 1999, we issued 500,000 shares of our common
stock to David Stadnyk for Business Consulting Services valued at $25,000.00.
We also issued 1,000,000 options to purchase our common stock at prices above
market to David Stadnyk as consideration for Business Consulting Services to be
rendered. On April 1, 1999, we sold 1,000,000 shares of our common stock to the
public for $300,000.00.
We relied upon Rule 504 of Regulation D for the above issuances of our common
stock. These securities were issued without a restrictive legend. We relied
upon the following facts in determining that Rule 504 was available: (a) We were
not subject to the reporting requirements of Section 13 or 15 (d) of the
Exchange Act; (b) we were not a development stage Company without a specific
business plan nor a company whose business plan was to merge with an
unidentified private entity; (c) the aggregate offering price within any twelve
months did not exceed $1,000,000. No commissions were paid in these offerings.
Additionally, on August 5, 1997 we issued 200,000 shares of our common stock to
Stephen Payne and 110,000 shares to Vern Strange for the acquisition of real
property valued at $310,000. These shares were issued with a restrictive legend
and were issued pursuant to Section 4(2) of the Securities Act of 1933.
In October 1999, we issued 2,600,000 shares of our common stock to Praxis
Pharmaceuticals, Inc. pursuant to the terms of our May 11, 1999 agreement with
them for research, development and licensing. These shares were issued pursuant
to section 4(2) of the Securities Act of 1933.
Item 5. Indemnification of Directors and Officers
Section 78.7502 of the NRS provides that Nevada corporations may limit, through
indemnification, the personal liability of their directors or officers in
actions, claims or proceedings brought against such person by reason of that
person's current or former status as an officer or director of the corporation.
Indemnification of directors or officers is available if the person acted in
good faith and in a manner the person reasonably believed was, at least, not
opposed to the best interests of the corporation. In the event of a criminal
action or proceeding, indemnification is not available if the person had
reasonable cause to believe their action was unlawful.
Further, in an action brought by the corporation or in the right of the
corporation, if the person, after exhaustion of all appeals, is found to be
liable to the corporation, or if the person makes payment to the corporation in
settlement of the action, indemnification is available only to the extent a
court of competent jurisdiction determines the person is fairly and reasonably
entitled to indemnification. Such discretionary indemnification is available
21
<PAGE>
only as authorized on a case-by-case basis by: (1) the stockholders; (2) a
majority of a quorum of the board of directors consisting of members of the
board who were not parties to the action, suit or proceeding; (3) if a majority
of a quorum of the Board of Directors consisting of members of the Board who
were not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or (4) if a quorum of the Board of Directors
consisting of members of the Board who were not parties to the action cannot be
obtained, by independent legal counsel in a written opinion.
To the extent that a director or officer of a corporation is successful in
defending against an action, suit or proceeding brought against that person as a
result of their current or former status as an officer or director, the
corporation must indemnify the person against all expenses actually and
reasonably incurred by the person in connection with their defense. Nevada law
also allows Nevada corporations to advance expenses of officers and directors
incurred in defending a civil or criminal action as they are incurred, upon
receipt of an undertaking by or on behalf of the director or officer to repay
such expenses if it is ultimately determined by a court of competent
jurisdiction that such officer or director is not entitled to be indemnified by
the corporation because such officer or director did not act in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation.
Section 78.751 of the NRS provides that any indemnification provided for by NRS
78.7502 (by court order or otherwise) shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled and that the scope of
indemnification shall continue as to directors or officers who have ceased to
hold such positions and to their heirs, executors and administrators.
Section 78.752 of the NRS allows corporations to provide insurance, or other
financial arrangements such as a program of self-insurance, for their directors
or officers. Such insurance may provide coverage for any liability asserted
against the person and liability and expenses incurred by the person in their
capacity as a director or officer or arising out of their status as such,
whether or not the corporation has the authority to indemnify the person against
such liability and expenses. However, no financial arrangement made under
Section 78.752 may provide protection for a person adjudged by a court of
competent jurisdiction, after exhaustion of all appeals there from, to be liable
for intentional misconduct, fraud or a knowing violation of law, except with
respect to the advancement of expenses or indemnification ordered by a court.
Our By-laws provide for the indemnification of its directors and officers to the
maximum extent provided by law. It is the position of the Securities and
Exchange Commission and certain state securities administrators that any attempt
to limit the liability of persons controlling an issuer under the federal
securities laws or state securities laws is contrary to public policy and
therefore unenforceable.
22
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE PERIODS ENDED
TO SEPTEMBER 30
SEPTEMBER 30
EXPENSES 1999 1999 1998
<S> <C> <C> <C>
ADVERTISING $ 9,008 $ - $ -
BANK CHARGES AND EXCHANGE 12,439 2,310 2,125
CONSULTING 49,540 25,664 14,460
RESEARCH AND DEVELOPMENT 96,500 96,500 -
OFFICE AND SECRETARIAL 18,727 12,044 1,326
PROMOTION AND TRAVEL 318,095 97,396 133,061
PROFESSIONAL FEES 57,264 32,954 7,963
RELATED PARTY
ADMINISTRATION CHARGES 88,678 42,692 19,477
RENT
SHAREHOLDER INFORMATION 14,558 4,099 2,255
STOCK OPTION COMPENSATION 120,000 120,000
TELEPHONE 2,996 1,655 848
TRANSFER AGENT FEES 7,566 3,408 2,516
------------- --------- --------
795,371 438,722 184,031
MINERAL INTEREST AND
EXPLORATION COSTS 99,627 - 26,264
------------- --------- --------
NET LOSS FOR THE PERIOD 894,998 438,722 210,295
=============
DEFICIT BEGINNING OF THE PERIOD 456,276 130,662
-------- --------
DEFICIT END OF THE PERIOD $894,998 $340,957
-------- --------
BASIC LOSS PER SHARE $ 0.07 $ 0.07
======== ========
</TABLE>
UNAUDITED
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
(EXPRESSED IN U.S. DOLLARS)
ASSETS 1999
<S> <C>
CURRENT
CASH $ 173,181
==========
LIABILITIES
CURRENT
ACCOUNTS PAYABLE $ 13,226
OWING TO RELATED PARTIES 66,184
----------
79,410
STOCK OPTION PLAN COMPENSATION (NOTE 3) 120,000
----------
$ 199,410
----------
COMMITMENTS (NOTE 3)
STOCKHOLDERS' EQUITY
SHARE CAPITAL
AUTHORIZED
50,000,000 COMMON SHARES WITH A PAR VALUE
OF $0.001 PER SHARE
1,000,000 PREFERRED SHARES WITH A PAR VALUE
OF $0.01 PER SHARE
ISSUED AND FULLY PAID (NOTE 2)
8,388,170 COMMON SHARES 868,769
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (894,998)
----------
TOTAL STOCKHOLDERS' EQUITY 26,229
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 173,181
==========
APPROVED BY THE DIRECTOR
-----------------------------
</TABLE>
UNAUDITED
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE PERIODS ENDED
TO SEPTEMBER 30
SEPTEMBER 30
1999 1999 1998
<S> <C> <C> <C>
CASH PROVIDED (USED) BY $ - $ -
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(894,998) $(438,722) $(210,295)
ITEM NOT AFFECTING CASH FLOW
ISSUE OF SHARES FOR SERVICES
AND MINERAL INTEREST 210,858 25,000 123,658
CHANGE IN NON-CASH
STOCK OPTION PLAN COMPENSATION 120,000 120,000
OPERATING ITEM
ACCOUNTS PAYABLE 13,226 5,876 1,325
---------- ---------- ----------
(550,914) (287,846) (85,312)
---------- ---------- ----------
FINANCING ACTIVITIES
OWING TO RELATED PARTIES 66,184 10,432 17,497
SHARE CAPITAL ISSUED FOR CASH 657,911 450,000 142,911
SHARE SUBSCRIPTIONS - - (92,911)
---------- ---------- ----------
724,095 460,432 67,497
---------- ---------- ----------
CHANGE IN CASH FOR THE PERIOD $ 173,181 172,586 (17,815)
========== ----------
CASH BEGINNING OF THE PERIOD 595 68,115
---------- ----------
CASH END OF THE PERIOD $ 173,181 $ 50,300
========== ==========
</TABLE>
UNAUDITED
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1 ACCOUNTING POLICES AND NOTES
The accounting policies followed by the Company are unchanged from those
outlined in the audited financial statements for the year ended December
31, 1998. The notes to the financial statements at December 31, 1998
substantially apply to the interim financial statements at September 30,
1999 and are not repeated here. All adjustments have been made which,
in the opinion of management, are necessary in order to make these
financial statements not misleading.
<TABLE>
<CAPTION>
2 SHARE CAPITAL
SHARES CONSIDERATION
--------- --------------
<S> <C> <C>
Common shares issued and fully paid
Balance at December 31, 1998 7,776,346 $393,769
--------- --------
Consolidated on a 1 new share for
20 old shares basis 388,817 $393,769
Issued during the period
For cash
@ $0.50 per share 300,000 150,000
@ $3.00 per share 100,000 300,000
For services
@ $0.50 per share 50,000 25,000
--------- --------
838,817 $868,769
--------- --------
Split on a 10 new share for 1 old share basis and
balance at September 30, 1999
8,388,170 $868,769
========= ========
</TABLE>
On September 13, 1999, the common shares were split on a 10 new shares for 1
old share basis.
UNAUDITED
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
3. COMMITMENT
a. Pharmaceutical Research and Development
The Company has entered into Research, Development and License Agreements,
effective September 30. 1999, to acquire an exclusive license to make, use
and sell pharmaceutical products and processes relating to arthritis and
dermal wrinkles. The Company has paid $96,500 of the total research and
development funding obligation of $250,000 and will issue 2,600,000
post-split common shares in consideration for the license. The balance of
the funding obligation is due by October 1, 2000. The shares issued were
subsequent to the period end and recorded at a nominal value of $0.01 per
share and are subject to regulatory restrictions relating to their
saleability. A net revenue royalty of 35% will be payable by the Company on
revenue for licensed products. The agreement is with a company formerly
under common management.
b. Consulting Agreement
The Company entered into a consulting agreement with a former director for
public relations services for a twelve month period to March 15, 2000. As
consideration for the services, the Company:
- paid cash of $25,000;
- issued 500,000 post-split (50,000 pre-split) shares at an ascribed
value of $.50 per share;
- granted options to acquire to March 15, 2000 500,000 post-split
common shares at $.05 and 500,000 post-split common shares at $.15;
and
- granted an option to acquire up to 5% of the outstanding common
shares of the Company when these shares qualify for the NASDAQ
small cap over the counter public trading at $.50 per share for a
period of two years from the date of the listing.
As of September 30, 1999, the quoted market price of the shares exceeded
the option exercise price by an aggregate of $120,000 and the excess is
recognized in the current period.
UNAUDITED
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
(EXPRESSED IN U.S. DOLLARS)
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
We have audited the accompanying balance sheets of Fairchild International
Corporation (formerly Goanna Resources Inc.) (a development stage company) as of
December 31, 1999 and 1998 and the related statements of operations and deficit,
changes in stockholders' equity and cash flow for the periods ended December 31,
1999, 1998 and 1997 and cumulative to December 31, 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 audit.
We conducted our audit 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 audit provides 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 Fairchild International
Corporation (formerly Goanna Resources Inc.) as of December 31, 1999 and 1998
and the results of its operations and its cash flows for each of the periods in
the three year period then ended and cumulative to December 31, 1999 in
conformity with U.S. generally accepted accounting principles consistently
applied.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses from operations, has a net
capital deficiency and there is no revenue stream from operations. As a result,
there is substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Vancouver, Canada "STEELE & CO."
June 7, 2000 CHARTERED ACCOUNTANTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT
CASH $ 36,966 $ 595
========== ==========
LIABILITIES
CURRENT
ACCOUNTS PAYABLE $ 8,205 $ 7,350
OWING TO RELATED PARTIES (NOTE 4) 61,205 55,752
---------- ----------
69,410 63,102
---------- ----------
COMMITMENTS (NOTE 7)
STOCKHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL (NOTE 5)
AUTHORIZED
50,000,000 COMMON SHARES WITH A PAR VALUE OF $.001
PER SHARE
1,000,000 PREFERRED SHARES WITH A PAR VALUE OF
$.01 PER SHARE
ISSUED
10,988,210 COMMON SHARES 894,769 393,769
DEFICIT ACCUMULATED DURING (927,213) (456,276)
---------- ----------
THE DEVELOPMENT STAGE
TOTAL STOCKHOLDERS' DEFICIENCY (32,444) (62,507)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' $ 36,966 $ 595
========== ==========
DEFICIENCY
</TABLE>
APPROVED BY THE DIRECTOR
"Byron Cox"
--------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE PERIODS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
CUMULATIVE PERIOD ENDED DECEMBER 31,
TO
DECEMBER 31,
1999 1999 1998 1997
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
EXPENSES
ADVERTISING $ 9,008 $ - $ 5,517 $ 3,491
BANK CHARGES AND 12,065 1,936 9,631 498
FOREIGN EXCHANGE
CONSULTING 39,267 15,391 7,194 16,682
OFFICE, RENT AND 19,156 12,473 2,891 3,792
SECRETARIAL
PROFESSIONAL FEES 76,455 52,145 12,964 11,346
PROMOTION AND TRAVEL 325,040 104,341 202,302 18,397
RELATED PARTY 109,122 63,136 32,349 13,637
ADMINISTRATION
CONSULTING 50,000 50,000 - -
RESEARCH AND 158,500 158,500 - -
DEVELOPMENT AND
LICENCE FEES (NOTE 7)
SHAREHOLDER 18,022 7,563 2,255 8,204
INFORMATION
TELEPHONE 3,194 1,853 849 492
TRANSFER AGENT FEES 7,757 3,599 3,366 792
----------- ---------- ---------- ---------
827,586 470,937 279,318 77,331
MINERAL INTERESTS AND 99,627 - 46,296 53,331
----------- ---------- ---------- ---------
EXPLORATION COSTS
NET LOSS FOR THE PERIOD $ 927,213 470,937 325,614 130,662
===========
(NOTE 6)
DEFICIT BEGINNING OF THE PERIOD 456,276 130,662 -
---------- ---------- ---------
DEFICIT END OF THE PERIOD $ 927,213 $ 456,276 $ 130,662
========== ========== =========
BASIC LOSS PER SHARE $ .03 $ .05 $ .02
========== ========== =========
PRE STOCK SPLITS
POST STOCK SPLITS $ .06 $ .10 $ .05
========== ========== =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
PRE STOCK SPLITS 14,643,086 6,358,643 5,531,429
========== ========== =========
POST STOCK SPLITS 7,321,543 3,179,322 2,765,715
========== ========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN DEFICIT TOTAL
------------ EXCESS OF ------- STOCK-
PAR VALUE HOLDERS'
---------- EQUITY
--------
SHARES AMOUNT
--------- -------
<S> <C> <C> <C> <C> <C>
ISSUED FOR CASH 5,000,000 $ 5,000 $ 45,000 $ - $ 50,000
@ $.01/SHARE
ISSUED FOR MINERAL 620,000 620 5,580 - 6,200
INTERESTS
@ $.01/SHARE
ISSUED FOR CASH
@ $.20/SHARE 256,500 257 51,043 - 51,300
@ $.50/SHARE 83,222 83 41,528 - 41,611
--------- ------- -------- ---------- ----------
5,959,722 5,960 143,151 149,111
NET LOSS FOR THE - - - (130,662) (130,662)
--------- ------- -------- ---------- ----------
PERIOD ENDED
DECEMBER 31, 1997
STOCKHOLDERS' 5,959,722 5,960 143,151 (130,662) 18,449
EQUITY (DEFICIENCY) AT
DECEMBER 31, 1997
ISSUED FOR CASH
@ $.05/SHARE 300,000 300 14,700 - 15,000
@ $.11/SHARE 454,545 455 49,545 - 50,000
ISSUED FOR SERVICES
@ $.112/SHARE 500,000 500 55,500 - 56,000
@ $.22/SHARE 562,080 562 123,096 - 123,658
--------- ------- -------- ---------- ----------
7,776,347 7,777 385,992 (130,662) 263,107
NET LOSS FOR THE
YEAR ENDED - - - (325,614) (325,614)
--------- ------- -------- ---------- ----------
DECEMBER 31, 1998
STOCKHOLDERS' EQUITY 7,776,347 $ 7,777 $385,992 $(456,276) $ (62,507)
========= ======= ======== ========== ==========
(DEFICIENCY) AT
DECEMBER 31, 1998
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN DEFICIT TOTAL
------------ EXCESS OF ------- STOCK-
PAR VALUE HOLDERS'
---------- EQUITY
--------
SHARES AMOUNT
--------- -------
<S> <C> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY 7,776,347 $ 7,777 $385,992 $(456,276) $ (62,507)
(DEFICIENCY) AT
DECEMBER 31, 1998
STOCK SPLIT (7,387,526) - - - -
----------- ------- -------- ---------- ----------
1 NEW FOR 20 OLD
BALANCE 388,821 7,777 385,992 (456,276) (62,507)
POST-STOCK SPLIT
ISSUED FOR CASH
@ $.50 300,000 300 149,700 - 150,000
@ $3.00 100,000 100 299,900 - 300,000
ISSUED FOR SERVICES
@ $.50 50,000 50 24,950 - 25,000
----------- ------- -------- ---------- ----------
BALANCE PRE-SPLIT 838,821 8,227 860,542 (456,276) 412,493
STOCK SPLIT 7,549,389 - - - -
----------- ------- -------- ---------- ----------
10 NEW FOR 1 OLD
BALANCE 8,388,210 8,227 860,542 (456,276) 412,493
POST-STOCK SPLIT
ISSUED FOR LICENCE 2,600,000 2,600 23,400 - 26,000
----------- ------- -------- ---------- ----------
2,600,000 @ $.001
10,988,210 10,827 883,942 (456,276) 438,493
NET LOSS FOR THE YEAR
ENDED DECEMBER31,1999 - - - (470,937) (470,937)
----------- ------- -------- ---------- ----------
STOCKHOLDERS' EQUITY 10,988,210 $10,827 $883,942 $(927,213) $ (32,444)
=========== ======= ======== ========== ==========
(DEFICIENCY) AT
DECEMBER 31, 1999
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
FOR THE PERIODS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
CUMULATIVE PERIOD ENDED DECEMBER 31,
TO
DECEMBER 31
1999 1999 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(927,213) $(470,937) $(325,614) $(130,662)
NON-CASH ITEMS
ISSUE OF SHARES FOR SERVICES, 236,858 51,000 179,658 6,200
MINERAL INTERESTS, RESEARCH
AND DEVELOPMENT AND
LICENCES
CHANGE IN NON-CASH
OPERATING ITEM
ACCOUNTS PAYABLE 8,205 855 2,428 4,922
---------- ---------- ---------- ----------
(682,150) (419,082) (143,528) (119,540)
---------- ---------- ---------- ----------
FINANCING ACTIVITIES
OWING TO RELATED PARTIES 61,205 5,453 11,008 44,744
SHARE CAPITAL ISSUED
FOR CASH 657,911 450,000 157,911 50,000
SHARE SUBSCRIPTIONS - - (92,911) 92,911
---------- ---------- ---------- ----------
719,116 455,453 76,008 187,655
---------- ---------- ---------- ----------
CHANGE IN CASH FOR THE PERIOD $ 36,966 36,371 (67,520) 68,115
==========
CASH BEGINNING OF THE PERIOD 595 68,115 -
---------- ---------- ----------
CASH END OF THE PERIOD $ 36,966 $ 595 $ 68,115
========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(EXPRESSED IN U.S. DOLLARS)
1. ACCOUNTING POLICIES
a. Incorporation and Basis of Presentation
The Company was incorporated in the State of Nevada, U.S.A. on June
20, 1997. These financial statements have been prepared in accordance
with accounting principles and practices generally accepted in the
United States.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompany-ing disclos-ures. Although these estimates
are based on management's best knowledge of current events and actions
the Company may undertake in the future, actual results ultimately may
differ from the estimates.
c. Foreign Currency
Transactions in foreign currency are translated at rates prevailing on
the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies have been translated into U.S.
dollars at the rate of exchange prevailing at the year end. Exchange
gains and losses from foreign currency translation adjustments are
included in current costs.
d. Income Taxes
The Company has incurred operating losses and resource-related
expenditures which are available for tax credit carry-forward. No
certainty exists whether it is more likely than not that some portion
of these amounts will be realized by a reduction of future taxes
payable and no deferred tax asset has been recognized.
e. Year 2000 Issue
It is not possible to be certain that all aspects of the Year 2000
Issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(EXPRESSED IN U.S. DOLLARS)
2. GOING CONCERN CONSIDERATIONS
As of December 31, 1999, the Company had not reached a level of operations
which would finance day to day activities. These financial statements have
been prepared on the assumption that the Company is a going concern,
meaning it will continue in operation for the foreseeable future and will
be able to realize assets and discharge liabilities in the ordinary course
of operations. Different basis of measurement may be appropriate when a
company is not expected to continue operations for the foreseeable future.
The Company's continuation as a going concern is dependent upon its ability
to attain profitable operations and generate funds therefrom and/or raise
equity capital or borrowings from third parties and related parties
sufficient to meet current and future obligations. The Company suffered
losses from operations of $470,937, $325,614 and $130,662 for the fiscal
periods ended December 31, 1999, 1998 and 1997 respectively and had a net
capital deficiency of $32,444 as of December 31, 1999.
3. MINERAL INTERESTS
The Company abandoned its rights to the prospecting licences in Western
Australia by not making the required payments and share issuances. The
Company has no further rights or obligations relating to these property
licences.
4. RELATED PARTY TRANSACTIONS
The Company shares office facilities and has common management and
directorships with a number of public and private corporate related
parties. The Company is charged for office rentals and administrative
services on a proportional cost basis. Management believes that the methods
of cost allocations and resultant costs are reasonable. Accounts with
companies with common management and directorships, management, directors
and a stockholder are unsecured with no fixed terms of interest or
repayment. Fees paid to related parties during the three fiscal periods
ended December 31 are:
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Administration expenses paid to a $ 31,896 $21,879 $13,637
company controlled by a director
Administration fees paid to a director 31,240 10,470 -
and former director
Consulting fees paid to a former 50,000 - -
-------- ------- -------
director (Note 7)
$113,136 $32,349 $13,637
======== ======= =======
</TABLE>
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(EXPRESSED IN U.S. DOLLARS)
5. SHARE CAPITAL
a. Authorized
50,000,000 Common shares with a par value of $.001 per share
1,000,000 Preferred shares with a par value of $.01 per share
b. Common Shares Issued Price per
Share SharesConsideration
----- -------------------
For cash $ .01 5,000,000 $ 50,000
For mineral interests $ .01 620,000 6,200
------------- ---------
Balance at December 31, 1997 5,620,000 56,200
For cash $ .05 300,000 15,000
For cash $ .11 454,545 50,000
For cash $ .20 256,500 51,300
For cash $ .50 83,222 41,611
For services $ .112 500,000 56,000
For services $ .22 562,080 123,658
------------- ---------
Balance at December 31, 1998 7,776,347 $ 393,769
============= =========
Stock split
1 new share for 20 old basis 388,821 $ 393,769
Issued during the year
For cash $ .50 300,000 150,000
For cash $ 3.00 100,000 300,000
For services $ .50 50,000 25,000
------------- ---------
838,821 $ 868,769
============= =========
Stock split
10 new shares for 1 old basis 8,388,210 $ 868,769
Issued for licence acquisition $ .01 2,600,000 26,000
------------- ---------
Balance at December 31, 1999 10,988,210 $ 894,769
============= =========
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(EXPRESSED IN U.S. DOLLARS)
6. INCOME TAXES
The Company has incurred operating losses of approximately $764,000 which
are available to reduce future years' taxable income. No future benefits
have been recognized in the accounts. The availability of these losses is
as follows:
Until 2012 $ 128,000
Until 2018 $ 315,000
Until 2019 $ 321,000
No income taxes were payable by the Company for the three fiscal periods
ended December 31, 1999.
7. COMMITMENTS
a. Pharmaceutical Research and Development
The Company has entered into Research, Development and Licence
Agreements, effective September 30, 1999, to acquire an exclusive
licence to make, use and sell pharmaceutical products and processes
relating to arthritis and dermal wrinkles. The Company has paid
$132,500 of the total research and development funding obligation of
$250,000 and issued 2,600,000 post-split common shares in
consideration for the licence. The balance of the funding obligation
is due by October 1, 2000. The shares have been issued at a nominal
value of $.01 per share and are subject to regulatory restrictions
relating to their saleability. A net revenue royalty of 35% will be
payable by the Company on revenue for licensed products. The agreement
is with a company formerly under common management.
b. Consulting Agreement
The Company entered into a consulting agreement with a former director
for public relations services for a twelve month period to March 15,
2000. As consideration for the services, the Company:
- paid cash of $25,000;
- issued 500,000 post-split (50,000 pre-split) shares at an
ascribed value of $.50 per share;
- granted options to acquire to March 15, 2000 (lapsed
subsequent to the year end without being exercised) 500,000
post-split common shares at $.05 and 500,000 post-split
common shares at $.15; and
- granted an option to acquire up to 5% of the outstanding
common shares of the Company when these shares qualify for the
NASDAQ small cap over the counter public trading at $.50 per
share for a period of two years from the date of the listing.
As of December 31, 1999, the exercise price of outstanding stock
options exceeded the quoted market value of the shares. Accordingly,
no stock option compensation has been recognized in the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE PERIOD ENDED
TO MARCH 31
MARCH 31
EXPENSES 2000 2000 1999
<S> <C> <C> <C>
ADVERTISING $ 9,008 $ - $ -
BANK CHARGES AND
FOREIGN EXCHANGE 12,108 43 196
CONSULTING 39,267 - 664
OFFICE, RENT AND SECRETARIAL 25,040 5,884 5,380
PROFESSIONAL FEES 78,183 1,728 -
PROMOTION AND TRAVEL 331,040 6,000 47,962
RELATED PARTY
ADMINISTRATION CHARGES 119,855 10,733 5,000
CONSULTING FEES 50,000 - 50,000
RESEARCH AND DEVELOPMENT AND
LICENSE FEES 163,520 5,020 -
SHAREHOLDER INFORMATION 19,769 1,747 664
TELEPHONE AND UTILITIES 3,440 246 438
TRANSFER AGENT FEES 7,757 - 1,045
-------- -------- --------
858,987 31,401 111,349
MINERAL INTEREST AND
EXPLORATION COSTS 99,627 - -
-------- -------- --------
NET LOSS FOR THE PERIOD 958,614 31,401 111,349
========
DEFICIT BEGINNING OF THE PERIOD 927,213 456,276
-------- --------
DEFICIT END OF THE PERIOD $958,614 $567,625
-------- --------
BASIC LOSS PER SHARE
PRE STOCK SPLITS $ 0.01 $ 0.01
======== ========
POST STOCK SPLITS $ 0.01 $ 0.03
======== ========
</TABLE>
UNAUDITED
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2000
(EXPRESSED IN U.S. DOLLARS)
ASSETS 2000
<S> <C>
CURRENT
CASH $ 5,186
==========
LIABILITIES
CURRENT
ACCOUNTS PAYABLE $ 7,826
OWING TO RELATED PARTIES 61,205
----------
69,031
----------
COMMITMENTS (NOTE 3)
STOCKHOLDERS' EQUITY
SHARE CAPITAL
AUTHORIZED
50,000,000 COMMON SHARES WITH A PAR VALUE
OF $0.001 PER SHARE
1,000,000 PREFERRED SHARES WITH A PAR VALUE
OF $0.01 PER SHARE
ISSUED AND FULLY PAID (NOTE 2)
10,988,210 COMMON SHARES 894,769
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (958,614)
----------
TOTAL STOCKHOLDERS' EQUITY (63,845)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,186
==========
APPROVED BY THE DIRECTOR
</TABLE>
-------------------------------
UNAUDITED
<PAGE>
<TABLE>
<CAPTION>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE PERIODS ENDED
TO SEPTEMBER 30
MARCH 31
2000 2000 1999
<S> <C> <C> <C>
CASH PROVIDED (USED) BY $ - $ -
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(958,614) $(31,401) $(111,349)
NON-CASH ITEMS
ISSUE OF SHARES FOR SERVICES
AND MINERAL INTEREST 236,858 - -
CHANGE IN NON-CASH
OPERATING ITEM
ACCOUNTS PAYABLE 7,826 (379) (5,020)
---------- --------- ----------
(713,930) (31,780) (116,369)
---------- --------- ----------
FINANCING ACTIVITIES
OWING TO RELATED PARTIES 61,205 - 87,451
SHARE CAPITAL ISSUED FOR CASH 657,911 - -
SHARE SUBSCRIPTIONS - - 30,000
---------- --------- ----------
719,116 - 117,451
---------- --------- ----------
CHANGE IN CASH FOR THE PERIOD $ 5,186 (31,780) 1,082
========== ----------
CASH BEGINNING OF THE PERIOD 36,966 595
--------- ----------
CASH END OF THE PERIOD $ 5,186 $ 1,677
========= ==========
</TABLE>
UNAUDITED
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2000
1. ACCOUNTING POLICIES AND NOTES
The accounting policies followed by the Company are unchanged from those
outlined in the audited financial statements for the year ended December
31, 1999. The notes to the financial statements at December 31, 1999
substantially apply to the interim financial statements at March 31, 2000
and are not repeated here. All adjustments have been made which, in the
opinion of management, are necessary in order to make these financial
statements not misleading.
2. SHARE CAPITAL
Common shares issued and fully paid SHARES CONSIDERATION
------ -------------
Balance at March 31, 2000 and December 31, 1999 10,988,210 $ 894,769
---------- ------------
3. COMMITMENTS
a. Pharmaceutical Research and Development
The Company has entered into Research, Development and License
Agreements to acquire an exclusive license to make, use and sell
pharmaceutical products and processes relating to arthritis and dermal
wrinkles. The Company has paid $137,520 of the total research and
development funding obligation of $250,000 and issued 2,600,000
post-split common shares in consideration for the license. The balance
of the funding obligation is due by October 1, 2000. The shares have
been issued at a nominal value of $.01 per share and are subject to
regulatory restrictions relating to their saleability. A net revenue
royalty of 35% will be payable by the Company on revenue for licensed
products. The agreement is with a company formerly under common
management.
b. Consulting Agreement
The Company entered into a consulting agreement with a former director
for public relations services for a twelve month period to March 15,
2000. As consideration for the services, the Company:
- paid cash of $25,000;
- issued 500,000 post-split (50,000 pre-split) shares at an
ascribed value of $.50 per share;
- granted options to acquire to March 15, 2000 (lapsed without
being exercised) 500,000 post-split common shares at $.05 and
500,000 post-split common shares at $.15; and
- granted an option to acquire up to 5% of the outstanding
common shares of the Company when these shares qualify for the
NASDAQ small cap over the counter public trading at $.50 per
share for a period of two years from the date of the listing.
As of March 31, 2000, the exercise price of outstanding stock options
exceeded the quoted market value of the shares. Accordingly, no stock
option compensation has been recognized in the financial statements.
UNAUDITED
EXHIBIT INDEX
EXHBIT # ITEM PAGE
Ex. 3.1 Articles of Incorporation
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 3.2 Bylaws
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 4 Share Certificate
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 10 Material Contracts - Praxis Pharmaceuticals, Inc.
Ex. 10.1 Development Program for Neutraceutical and Cosmetic Agents.
Ex. 27 Financial Data Schedule
(as filed in the November 30,1999 filing of the Form 10-SB)
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.
FAIRCHILD INTERNATIONAL CORP.
Dated: 7/11/00 By: /s/ Byron Cox
----------------
Byron Cox, President and Director
24
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