Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number: 000-53835
FAIRWAY PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 41-2251802
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State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
340 S Lemon Ave #5353, Walnut, CA 91789
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
866-532-4792
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
registered on which registered
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Not Applicable Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. |_|
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |_| No |X|
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data file required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files)
Yes |_| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |X|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
On May 4, 2012, the 348,750 shares of common stock were held by non-affiliates
and had a value of $69,750 based on the average closing bid and ask of $0.20 per
share.
There were 1,404,000 shares issued and outstanding of the registrant's Common
Stock as of May 4, 2012.
TABLE OF CONTENTS
PART I
ITEM 1 Business
ITEM 1 A. Risk Factors
ITEM 1 B. Unresolved Staff Comments
ITEM 2 Properties
ITEM 3 Legal Proceedings
ITEM 4 Mine Safety Disclosure
PART II
ITEM 5 Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
ITEM 6 Selected Financial Data
ITEM 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
ITEM 7 A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8 Financial Statements and Supplementary Data
ITEM 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
ITEM 9 A. Controls and Procedures
ITEM 9 A(T). Controls and Procedures
ITEM 9B Other Information
PART III
ITEM 10 Directors, Executive Officers, and Corporate Governance
ITEM 11 Executive Compensation
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
ITEM 13 Certain Relationships and Related Transactions, and Director
Independence
ITEM 14 Principal Accounting Fees and Services
PART IV
ITEM 15 Exhibits, Financial Statement Schedules
SIGNATURES
FORWARD LOOKING STATEMENTS
This document includes forward-looking statements, including, without
limitation, statements relating to Fairway Properties, Inc. ("Fairway") plans,
strategies, objectives, expectations, intentions and adequacy of resources.
These forward-looking statements involve known and unknown risks, uncertainties,
and other factors that may cause Fairway's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. These
factors include, among others, the following: ability of Fairway's to implement
its business strategy; ability to obtain additional financing; Fairway's limited
operating history; unknown liabilities associated with future acquisitions;
ability to manage growth; significant competition; ability to attract and retain
talented employees; and future government regulations; and other factors
described in this document or in other of Fairway's filings with the Securities
and Exchange Commission. Fairway is under no obligation, to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
For further information about these and other risks, uncertainties and factors,
please review the disclosure included in this report under Item 1A "Risk
Factors."
PART I
ITEM 1. BUSINESS
General
The following is a summary of some of the information contained in this
document. Unless the context requires otherwise, references in this document to
"We," Us," or the "Company" are to Fairway Properties, Inc.
About Fairway Properties, Inc.
Fairway Properties, Inc. ("We," "Us," "Our," or "Fairway") was incorporated
under the laws of the State of Nevada on September 10, 2007. It is a Nevada
corporation organized for the purpose of offering real estate professionals and
advertisers a reliable, high quality, niche marketing tool,
www.FairwayProperties.com (the "Website"). Our website is not incorporated as
part of this document.
We completed development and begun operation of our website in 2010. Through the
website, we capitalize on the unique features of e-business technology. It
enables professionals and advertisers to deliver information about golf
properties and related real estate matters to prospective buyers. Buyers can
quickly locate, view, and evaluate properties anywhere and anytime they have
internet access. We provide an efficient and mutually beneficial means for real
estate professionals and advertisers to conduct business with prospective real
estate buyers and sellers.
We have begun initial operations. We have no employees at the present time. We
outsource website and customer support through Niche Technologies Inc. (formerly
known as Niche Properties) ("Niche Technologies"), a majority shareholder of the
Company. Currently, the executive officers of the Company contribute their
services and are not receiving salaries at this time.
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From incorporation through July 31, 2009, we worked with Niche Technologies to
develop and refine a website that we could use to advertise golf course real
estate listings. After several iterations of the website, Niche Technologies
delivered a functioning system in late July 2009 that could perform all the
necessary functionality.
Fairway's Core Services
o Online marketing of property listings for paying listors
o Property search capabilities for buyers (and connecting them with
listors)
o Advertising (banners/rich media)
o Affiliation marketing offering links and advertising to affiliates
within the FairwayProperties.com community
Niche Technologies, Inc. License
On October 26, 2007, we entered into a Technology License Agreement ("License")
with Niche Technologies, Inc., our majority shareholder. Niche Technologies
operates our Website. Niche Technologies is a Colorado company that is owned and
operated by Michael D. Murphy, Sean Murphy, and Darren Murphy, officers,
directors and shareholders of the Company.
The Licensed products and services include:
(a) Domain Names: FairwayProperties.com, FairwayProperty.com,
Fairway-Properties.com, and Fairway-Property.com
(b) FairwayProperties.com Website: Includes initial site production,
general site maintenance, and use of the web application and database.
The License has a term of ten years and is from the effective date, and
thereafter, shall be automatically renewable for successive 1 year periods,
unless 60 days prior to the termination any party hereto gives written notice to
the other party of its election not to renew this Agreement for an additional 1
year period, in which event the License shall terminate at the end of the period
in which such notice was given. The Royalty Rate is 25% of all membership and
advertising revenues. On March 5, 2010, we agreed to amend the License Agreement
with Niche Technologies to:
(a) Waive all prior owing Guaranteed Minimum Royalties;
(b) Eliminate the $10,000.00 annual Guaranteed Minimum Royalty;
(c) Pay a new Guaranteed Minimum Royalty of $500 per month beginning with
March 2010; and
(d) Provide us the ability to resell services provided by Niche
Properties, for which we will submit 75% of the revenues from these
services to Niche Properties.
Our financial strategy has been to maintain a low overhead and to cross promote
to existing client management relationships. We will pay 25% of all our core
revenues on a monthly basis as a license fee to Niche Technologies and 75% of
our affiliate revenues on a monthly basis as an affiliate fee to Niche
Technologies.
STRATEGY AND SALES SUMMARY
Services Competitive Advantage
Vertical Search - The recent trend of vertical search (a methodology allowing
users to search across specialized and targeted fields) is changing the online
real estate market. It saves users time and effort, and delivers more meaningful
search results.
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Site Design and Usability - Our website includes professional programming, code,
and design. Most competitors in this niche market use websites that lack the
usability of our website. Visitors to websites choose to leave or stay in a
matter of moments. By showcasing our site, we plan to retain visitors to our
site, which we believe will increase page views and traffic.
SALES STRATEGY
Salesforce - The majority of the sales cycle will be processed through the
Customer Relationship Management (CRM) application Salesforce.com. We will track
leads, create accounts, run reports, and pursue sales campaigns through this
application. Leads will be generated through golf course community networks,
viral marketing, cold calling, and email campaigns. All information for these
processes will be tracked through Salesforce. The use of Salesforce.com is
provided by Niche Technologies.
Search Engine Optimization - We use search engine optimization techniques to
improve search rankings and drive traffic to the Website. These will include
providing rich content on the site, using appropriate descriptions, titles,
keywords, and meta data in the page source code, and generating links from
external sites with appropriate anchor text.
Search Engine Marketing - Through our website Licensor, Niche Technologies, we
use highly scalable and efficient pay-per-click techniques. These consist of
targeting keywords that buyers and sellers of real estate often use on search
engines, and then creating advertisements that will appear when someone searches
for those keywords across all major search engines, including Google, Bing, and
Yahoo.
Niche Properties Network Reselling - FairwayProperties.com is a member of the
Niche Properties Network, a collection of real estate websites focused on
lifestyle real estate. Several members of the network offer packages that
include listing syndication to FairwayProperties.com. When a listing syndication
deal is done by a member website, we receive a percentage of the revenue for
placing the listings on FairwayProperties.com.
Listing Packages
We offer two types of listing packages for individual property listors. The
first, our pay-per-listing package, is geared towards those wishing to list a
finite amount of properties for a finite period of time. The second, our
subscription package, caters to those wishing to list unlimited properties for
as long as they want. Listings purchased under both packages receive the same
benefits on FairwayProperties.com, which include:
(1) Property listing page with photos and information about the property
(2) Link to the property listor's website
(3) Property listor contact information displayed with property listing
(4) Custom FairwayProperties.com url that is indexed by search engines
We also offer two programs geared toward real estate brokerages: our Company
Listing Plan and our Company Partnership Plan.
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Company Listing Plans:
These plans are designed for companies wishing to display all of their
properties on one or more sites within the Niche Properties Network. Listing
Plans include the following: (1) data feed of unlimited listings displayed on
the FairwayProperties.com, (2) company profile page with contact information and
logo, and (3) syndication to two additional sites within the Niche Properties
Network.
Company Partnership Plans:
These plans are designed for companies wishing to promote FairwayProperties.com
to its agents in exchange for the following:
(1) a referral fee for each agent that registers on the website
(2) Co-branded welcome page which describes the agent listing packages
(3) All Company agents receive 20% off regular listing package prices;
and
(4) No monetary fees for Companies.
Companies participating in the Partnership Plan must (1) place a link to
FairwayProperties.com on its website homepage or partner page and (2) send at
least one email to its agents promoting the partnership.
COMPETITION, MARKETS AND REGULATION
Competition.
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We compete through the use of our website, an easy to use web application that
provides real estate professionals and advertisers a reliable, high quality
alternative to traditional offline real estate marketing. The Company is a B2B
business. We sell online marketing and advertising to real estate companies and
businesses. Further, the website can also be considered a B2C2C business. This
term means we (a business) sell listings to individual real estate professionals
(consumers) who can then use the website to market and advertise to their
customers (consumers). We use the term B2C2C to show how our model helps
individual real estate professionals target their potential clients. However, by
strict definition we are a B2B business since we sell marketing and advertising
services to business and real estate professionals acting on behalf of their
business.
While our management team has significant business experience, we, as a company,
have no proven track record in the internet based real estate marketing
industry. We can provide no assurance that we will be able to successfully
market a commercially viable product or compete in this industry.
We will potentially compete with numerous providers of real estate software and
real estate services companies such as, GolfCourseHome.net,
GolfCourseRealty.com, GolfHomeConnect.com, and GolfHomes.com. Recently, two of
our top competitors shifted their business model from a free listing service to
a pay-for listing service. We believe this shift validates our model but may
pose a competitive threat if we are not able to execute our marketing and
advertising campaigns.
Markets.
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Our target market consists of real estate agents, for-sale-by-owner sellers,
brokerages, and golf communities that may require marketing and advertising
services for properties on or near golf courses worldwide.
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Brokerages
A brokerage that signs up on the site can display any of its niche related
properties on the website. Some brokerages have numerous fairway properties
while others have only a few. The website will initially target those brokerages
with a significant amount of listings.
Agents
If a brokerage does not sign up, an individual broker or agent may want an
account and/or profile to market his listings and/or himself. We will create a
brokerage company account (as a placeholder) to associate that agent in system.
This will create an additional brokerage lead for us. If the agent chooses the
standard account, only his listings will appear on the site. If he upgrades to a
premium account, then the agent will get a profile on the site. Since most
agents only have a few niche listings it will be very easy for them to
personally upload their information to the site.
Golf Communities
These are companies that build, operate, and/or manage exclusive gated golf
course communities. These communities are a major market segment. It will be
much easier to market our services to a community built around the same niche as
we promote. We intend to provide these companies value by marketing to their
target audience.
Owners
"For-sale-by-owner" listors are typically private sellers who have undertaken
the marketing of their properties without the assistance of a real estate
professional to save on commission costs. Any for-sale-by-owner listor will be
able to list his property on the site for a fee.
CURRENT OPERATIONAL STATUS
Our business plan has been to earn revenue from the sale of property and agent
listings on our web site, as well as reselling services offered through the
Niche Properties Network, such as property and agent listings on other niche
websites and Luxury Property Blog advertising.
With the completion of our website, we have only generated minimal revenues of
the last two years, not enough to support the ongoing operations of the Company
or to support growth activities. Given the current state of the real estate
industry, management believes that the Company's ability to generate revenue
solely through its current operational activities is limited until the real
estate industry for such properties begins to improve. In that regard,
management has expanded is business plan as discussed below.
We intend to obtain debt and, or, equity finance to meet our ongoing operating
expenses and attempt to merge with another entity with experienced management
and opportunities for growth in return for shares of our common stock to create
value for our shareholders. There is and can be no assurance that these events
can be successfully completed. In particular there is no assurance that any such
business will be located or that any stockholder will realize any return on
their shares after such a transaction. Any merger or acquisition completed by us
can be expected to have a significant dilutive effect on the percentage of
shares held by our current stockholders.
We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we have. In view of our limited
financial resources and limited management availability, we will continue to be
at a significant competitive disadvantage compared to our competitors.
5
We intend to seek, investigate and, if such investigation warrants, acquire an
interest in business opportunities presented to us by persons or firms which
desire to seek the advantages of an issuer who has complied with the Securities
Act of 1934 (the "1934 Act"). We will not restrict our search to any specific
business, industry or geographical location, and we may participate in business
ventures of virtually any nature. This discussion of our proposed business is
purposefully general and is not meant to be restrictive of our unlimited
discretion to search for and enter into potential business opportunities. We
anticipate that we may be able to participate in only one potential business
venture because of our lack of financial resources.
We may seek a business opportunity with entities which have recently commenced
operations, or that desire to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
We expect that the selection of a business opportunity will be complex. Due to
general economic conditions, rapid technological advances being made in some
industries and shortages of available capital, we believe that there are
numerous firms seeking the benefits of an issuer who has complied with the 1934
Act. Such benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all stockholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. We have, and will continue to have, essentially
no assets to provide the owners of business opportunities. However, we will be
able to offer owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in an issuer who has complied with the 1934 Act
without incurring the cost and time required to conduct an initial public
offering.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, our Board of Directors. We intend to concentrate on identifying
preliminary prospective business opportunities which may be brought to our
attention through present associations of our director, professional advisors or
by our stockholders. In analyzing prospective business opportunities, we will
consider such matters as (i) available technical, financial and managerial
resources; (ii) working capital and other financial requirements; (iii) history
of operations, if any, and prospects for the future; (iv) nature of present and
expected competition; (v) quality, experience and depth of management services;
(vi) potential for further research, development or exploration; (vii) specific
risk factors not now foreseeable but that may be anticipated to impact the
proposed activities of the company; (viii) potential for growth or expansion;
(ix) potential for profit; (x) public recognition and acceptance of products,
services or trades; (xi) name identification; and (xii) other factors that we
consider relevant. As part of our investigation of the business opportunity, we
expect to meet personally with management and key personnel. To the extent
possible, we intend to utilize written reports and personal investigation to
evaluate the above factors.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Acquisition Opportunities
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another company or entity. We may also acquire stock or assets of
an existing business. Upon consummation of a transaction, it is probable that
our present management and stockholders will no longer be in control of us. In
addition, our current directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
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stockholders, or our controlling shareholder may sell his stock in us. Any such
sale will only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under application federal
and state securities laws. In some circumstances, as a negotiated element of the
transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after it has successfully consummated a merger or acquisition and is no
longer considered a shell company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected that
the parties to any business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the business transaction in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owner of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event, our
stockholders would retain less than 20% of the issued and outstanding shares of
the surviving entity. This would result in significant dilution in the equity of
our stockholders.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of 1933, as
amended, and the 1934 Act, we believe we will not be subject to regulation under
the Investment Company Act of 1940 (the "1940 Act") insofar as we will not be
engaged in the business of investing or trading in securities. In the event we
engage in business combinations that result in us holding passive investment
interests in a number of entities, we could be subject to regulation under the
1940 Act. In such event, we would be required to register as an investment
company and incur significant registration and compliance costs. We have
obtained no formal determination from the SEC as to our status under the 1940
Act and, consequently, any violation of the 1940 Act would subject us to
material adverse consequences. We believe that, currently, we are exempt under
Regulation 3a-2 of the 1940 Act.
Governmental Regulation.
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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
generally, covering issues such as user privacy, pricing, and characteristics
and quality of products and services. Similarly, 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 such laws or regulations may
decrease the growth of commerce over the Internet, increase our cost of doing
business or otherwise have a harmful effect on our business.
Currently, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New and existing laws may
cover issues that include:
* Sales and other taxes;
* User privacy;
* Pricing controls;
* Characteristics and quality of products and services;
* Consumer protection;
* Cross-border commerce;
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* Libel and defamation;
* Copyright, trademark and patent infringement; and
* Other claims based on the nature and content of Internet materials.
These new laws may impact Niche Technologies ability to develop and our ability
to market the website application in accordance with our business plan.
ITEM 1A. RISK FACTORS
FORWARD LOOKING STATEMENTS
This document includes forward-looking statements, including, without
limitation, statements relating to Fairway's plans, strategies, objectives,
expectations, intentions and adequacy of resources. These forward-looking
statements involve known and unknown risks, uncertainties, and other factors
that may cause Fairway actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. These factors include,
among others, the following: ability of Fairway to implement its business
strategy; ability to obtain additional financing; Fairway's limited operating
history; unknown liabilities associated with future acquisitions; ability to
manage growth; significant competition; ability to attract and retain talented
employees; and future government regulations; and other factors described in
this document or in other of Fairway filings with the Securities and Exchange
Commission. Fairway is under no obligation, to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Risk Factors
GENERAL BUSINESS RISK FACTORS
OUR COMPANY RISK FACTORS
Each prospective investor should carefully consider the following risk factors,
as well as all other information set forth elsewhere in this prospectus, before
purchasing any of the shares of our common stock.
We incorporated and now operate the Company during a severe real estate
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downturn, amidst poor general economic conditions.
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After boom years during the mid 2000's, the real estate industry has suffered
difficult times the past several years. Fewer houses have sold, times on market
have increased, overall price levels have dropped, and the number of real estate
agents has declined as many professionals have moved to different industries to
find enough work to make ends meet. Further, less people are looking to buy real
estate given the uncertain economic outlook and general condition of the
economy.
We have a lack of revenue history and have a limited performance history since
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we are a start-up development stage company.
-------------------------------------------
We were incorporated on September 10, 2007 for the purpose of engaging in any
lawful business and have adopted a plan to offer real estate professionals and
advertisers a reliable, high quality, niche marketing tool,
FairwayProperties.com that enables professionals and advertisers to deliver
information about golf properties and related real estate matters to prospective
buyers. We have had only nominal revenues since incorporation and only
subsequent to December 31, 2009. During the year ended December 31, 2010,
revenues decreased from $1,136 in 2010 to $500 for the year ended December 31,
2011.
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Such revenue has not been enough to support operations and we have only seen
insignificant increases or growth in revenue over prior year. We are not
profitable and the business effort is considered to be in an early development
stage. We must be regarded as a new or development venture with all of the
unforeseen costs, expenses, problems, risks and difficulties to which such
ventures are subject.
We can give no assurance of success or profitability.
----------------------------------------------------
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate profits or that the market price of our common
stock will be increased thereby.
We may have a shortage of working capital in the future which could jeopardize
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our ability to carry out our business plan.
------------------------------------------
Our capital needs consist primarily of expenses related to development and
marketing costs for an on-line golf course real estate sales tool, licensing
fees from Niche Technologies for a website and domain names, and to fund the
costs and fees associated with being a smaller reporting company and could
exceed $75,000 in the next twelve months. We have cash as of the date of this
filing of approximately $814.
Our ultimate success depends upon our ability to generate revenue. If we are
unable to generate sufficient revenues, we may need to raise additional capital.
We have not investigated the availability, source, or terms that might govern
the acquisition of additional capital and will not do so until we determine a
need for additional financing. If we need additional capital, we have no
assurance that funds will be available from any source or, if available, that
they can be obtained on terms acceptable to us. If not available, our operations
will be limited to those that can be financed with our modest capital.
We intend to pursue the acquisition of an operating business.
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Part of our operational plan is to acquire an operating business. Successful
implementation of this strategy depends on our ability to identify a suitable
acquisition candidate, acquire such company on acceptable terms and integrate
its operations. In pursuing acquisition opportunities, we compete with other
companies with similar strategies. Competition for acquisition targets may
result in increased prices of acquisition targets and a diminished pool of
companies available for acquisition. Acquisitions involve a number of other
risks, including risks of acquiring undisclosed or undesired liabilities,
acquired in-process technology, stock compensation expense, diversion of
management attention, potential disputes with the seller of one or more acquired
entities and possible failure to retain key acquired personnel. Any acquired
entity or assets may not perform relative to our expectations. Our ability to
meet these challenges has not been established.
At the time of this filing, we have not executed any formal arrangement,
agreement or understanding with respect to engaging in a merger with, joint
venture with or acquisition of a private or public entity. There can be no
assurance that we will be successful in identifying and evaluating suitable
business opportunities or in concluding a business combination. We have not
identified any particular industry or specific business within an industry for
evaluation. There is no assurance we will be able to negotiate a business
combination on terms favorable, if at all.
We have not established a specific length of operating history or specified
level of earnings, assets, net worth or other criteria which we will require a
target business opportunity to have achieved, and without which we would not
consider a business combination. Accordingly, we may enter into a business
combination with a business opportunity having no significant operating history,
losses, limited or no potential for earnings, limited assets, negative net worth
or other negative characteristics.
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Scarcity of, and competition for, business opportunities and combinations
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We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we have. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than us and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, we will also compete in seeking
merger or acquisition candidates with numerous other small public companies. In
view of our limited financial resources and limited management availability, we
will continue to be at a significant competitive disadvantage compared to our
competitors.
We may in the future issue more shares which could cause a loss of control by
--------------------------------------------------------------------------------
our present management and current stockholders.
-----------------------------------------------
We may issue further shares as consideration for the cash or assets or services
out of our authorized, but unissued, common stock that would, upon issuance,
represent a majority of the voting power and equity of our Company. The result
of such an issuance would be those new stockholders and management would control
our Company, and persons unknown could replace our management at this time. Such
an occurrence would result in a greatly reduced percentage of ownership of our
Company by our current shareholders, which could present significant risks to
investors.
Our Officers and Directors are related to one another and are the majority
--------------------------------------------------------------------------------
shareholders of the Company. As such there is a possibility of them controlling
--------------------------------------------------------------------------------
the Company to the detriment of outsiders.
-----------------------------------------
Messrs. Michael D. Murphy, Sean Murphy and Darren Murphy are brothers. They are
officers, directors and shareholders of the Company. In addition, they are the
majority shareholders of Niche Technologies, the majority shareholder of our
Company. As such they will be able to control the operations and the direction
of the Company with very little outside influence.
Our officers and directors may have conflicts of interest which may not be
--------------------------------------------------------------------------------
resolved favorably to us.
------------------------
Certain conflicts of interest may exist between us and our officers and
directors. Our Officers and Directors have other business interests to which
they devote their attention and may be expected to continue to do so although
management time should be devoted to our business. As a result, conflicts of
interest may arise that can be resolved only through exercise of such judgment
as is consistent with fiduciary duties to us. Our officers are spending
part-time in this business - up to 10 hours per week.
Our officers and directors are not employed full-time by us which could be
--------------------------------------------------------------------------------
detrimental to the business.
---------------------------
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, our officers and directors may have
potential conflicts including their time and efforts involved in participation
with other business entities. Each officer and director of our business is
engaged in business activities outside of our business, and the amount of time
they devote as Officers and Directors to our business will be up to 10 hours per
week.
10
We do not know of any reason other than outside business interests that would
prevent them from devoting full-time to our Company, when the business may
demand such full-time participation.
Our officers and directors may have conflicts of interests as to corporate
--------------------------------------------------------------------------------
opportunities which we may not be able or allowed to participate in.
-------------------------------------------------------------------
Presently there is no requirement contained in our Articles of Incorporation,
Bylaws, or minutes which requires officers and directors of our business to
disclose to us business opportunities which come to their attention. Our
officers and directors do, however, have a fiduciary duty of loyalty to us to
disclose to us any business opportunities which come to their attention, in
their capacity as an officer and/or director or otherwise. Excluded from this
duty would be opportunities which the person learns about through his
involvement as an officer and director of another company. We have no intention
of merging with or acquiring business opportunity from any affiliate or officer
or director.
We have agreed to indemnification of officers and directors as is provided by
--------------------------------------------------------------------------------
Nevada Statute.
--------------
Nevada Statutes provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities our behalf. We will also bear
the expenses of such litigation for any of our directors, officers, employees,
or agents, upon such person's promise to repay us therefore if it is ultimately
determined that any such person shall not have been entitled to indemnification.
This indemnification policy could result in substantial expenditures by us that
we will be unable to recoup.
Our directors' liability to us and shareholders is limited.
----------------------------------------------------------
Nevada Revised Statutes exclude personal liability of our directors and our
stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more limited right of
action against our directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
RISK FACTORS RELATING TO OUR BUSINESS
We are dependent on the web application provided by Niche Technologies to
--------------------------------------------------------------------------------
provide the functionality for our website. If the Niche Technologies web
--------------------------------------------------------------------------------
application contains programming errors or defects, it would adversely affect
--------------------------------------------------------------------------------
our reputation and cause us to lose customers.
---------------------------------------------
The development and operation of our website requires that we be integrated with
the Niche Technologies web application. There is a risk that the system
integration and software programming that we receive from Niche Technologies
will contain errors and defects including errors and defects in the system's
security subsystem that we will not be able to discover until we commence
operations with a particular version of the system software. The website may
develop system errors or defects or security failures that cause harm to our
users' data. Problems experienced by users and loss of users data and business
processes will adversely impact our reputation and ability to earn revenues, to
retain existing customers or to develop new customers.
If we are not able to adapt to rapid technology changes affecting our website
--------------------------------------------------------------------------------
and continually upgrade the services and offerings of our website to outperform
--------------------------------------------------------------------------------
our competition, we may not be able to attract or retain customers and our
--------------------------------------------------------------------------------
business will fail.
------------------
We will rely on Niche Technologies, to continually update the website's
technology once we emerge from the beta stage in order to address technological
changes. The market for websites such as ours is subject to rapid technological
11
changes; frequent new service offerings and changes in customer requirements. We
may be unable to respond quickly or effectively to these changes, as we rely on
Niche Technologies for our website. If Niche Technologies is unable to update
and refine our website and services once the beta stage is complete in response
to technological changes, we may then not be able to attract or retain customers
and our business will fail.
If Niche Technologies is unable to refine the FairwayProperties.com web site or
--------------------------------------------------------------------------------
we are unable to develop a market for our internet website, our ability to
--------------------------------------------------------------------------------
generate revenue would be limited.
---------------------------------
Our website is currently in the beta development stage. Sales have commenced in
this stage but we believe it best to complete testing of the website prior to
commencing full commercial operations in order to ensure that the website is
functioning properly and is capable of being marketed to the public. If we are
unable to complete these final website developments, we will not be able to
market our program or earn revenues to the level we desire.
We will experience substantial competition for supplies in the business
--------------------------------------------------------------------------------
technology industry.
-------------------
We will be required to compete with a large number of entities which are larger,
have greater resources and more extensive operating histories than we do.
Shortages of supplies may result from this competition and will lead to
increased costs and delays in operations which will have a material adverse
effect on us.
We may depend upon outside advisors, who may not be available on reasonable
--------------------------------------------------------------------------------
terms and as needed.
-------------------
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, we anticipate that
such persons will be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
RISK FACTORS RELATED TO OUR STOCK
Because Michael D. Murphy, our CEO, and Sean Murphy, one of our directors, and
--------------------------------------------------------------------------------
Darren Murphy, our Secretary, control approximately 56% of our outstanding
--------------------------------------------------------------------------------
common stock, they will control and make corporate decisions and investors will
--------------------------------------------------------------------------------
have limited ability to affect corporate decisions.
--------------------------------------------------
At December 31, 2011, Michael, Sean and Darren Murphy control approximately 56%
of our outstanding common stock.
Michael Murphy has control of approximately 43% of the outstanding shares of
common stock beneficially through Niche Technologies our majority shareholder.
This beneficial ownership, combined with his individual holdings in Fairway,
gives him almost complete influence in determining the outcome of all corporate
transactions and business decisions. The interests of Mr. Murphy may differ from
the interests of the other stockholders, and since he has the ability to control
most decisions through his control of our common stock, our investors will have
limited ability to affect decisions made by management.
12
The regulation of penny stocks by SEC and FINRA may discourage the tradability
--------------------------------------------------------------------------------
of our securities.
-----------------
We are a "penny stock" company. Our common stock trades on the OTCQB Market and
are subject to a Securities and Exchange Commission rule that imposes special
sales practice requirements upon broker-dealers who sell such securities to
persons other than established customers or accredited investors. For purposes
of the rule, the phrase "accredited investors" means, in general terms,
institutions with assets in excess of $5,000,000, or individuals having a net
worth in excess of $1,000,000 or having an annual income that exceeds $200,000
(or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Effectively, this discourages
broker-dealers from executing trades in penny stocks. Consequently, the rule
will affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore because it imposes additional
regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
We will pay no foreseeable dividends in the future.
--------------------------------------------------
We have not paid dividends on our common stock and do not ever anticipate paying
such dividends in the foreseeable future.
Our shareholders may suffer future dilution due to issuances of shares for
--------------------------------------------------------------------------------
various considerations in the future.
------------------------------------
There may be substantial dilution to our shareholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
Fairway's stock will in all likelihood be thinly traded and as a result an
--------------------------------------------------------------------------------
investor may be unable to sell at or near ask prices or at all if the investor
--------------------------------------------------------------------------------
needs to liquidate shares.
-------------------------
The shares of Fairway's common stock is thinly-traded in the OTCQB, meaning that
the number of persons interested in purchasing Fairway's common shares at or
near ask prices at any given time may be relatively small or non-existent. This
situation is attributable to a number of factors, including the fact that
Fairway is a small company which is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if Fairway came to the
attention of such persons, they tend to be risk-averse and would be reluctant to
13
follow an unproven, early stage company such as Fairway or purchase or recommend
the purchase of any of Fairway's securities until such time as Fairway becomes
more seasoned and viable. As a consequence, there may be periods of several days
or more when trading activity in Fairway's securities is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on securities price. The Company cannot give you any assurance
that a broader or more active public trading market for Fairway's common
securities will develop or be sustained, or that any trading levels will be
sustained. Due to these conditions, Fairway can give investors no assurance that
they will be able to sell their shares at or near ask prices or at all if the
investor needs money or otherwise desires to liquidate the securities of
Fairway.
Trading in our shares in the public market will most likely be volatile because
--------------------------------------------------------------------------------
of factors beyond our control.
-----------------------------
There can be no assurance that our shares will continue to be quoted on the
OTCQB or that if they are, there will be an active trading market for the
shares. Accordingly, it could be difficult for holders of our common stock to
liquidate their shares.
The market price of our common stock could be subject to significant
fluctuations and the market price could be subject to any of the following
factors:
o our failure to achieve and maintain profitability;
o changes in earnings estimates and recommendations by financial
analysts;
o actual or anticipated variations in our quarterly and annual results
of operations;
o changes in market valuations of similar companies;
o announcements by us or our competitors of significant contracts, new
services, acquisitions, commercial relationships, joint ventures or
capital commitments;
o loss of significant clients or customers;
o loss of significant strategic relationships; and
o general market, political and economic conditions.
In the past, following periods of extreme volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. A securities class action suit against us could result in
substantial costs and divert our management's time and attention, which would
otherwise be used to benefit our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our executive offices are located at 340 S Lemon Ave #5353, Los Angeles, CA
91789 and the telephone number is (866) 532-4792; and the fax number is (866)
789-4653. At this time Niche Technologies allows Fairway to use its offices for
its operations without charge.
14
ITEM 3. LEGAL PROCEEDINGS
Fairway anticipates that it (including any future subsidiaries) will from time
to time become subject to claims and legal proceedings arising in the ordinary
course of business. It is not feasible to predict the outcome of any such
proceedings and Fairway cannot assure that their ultimate disposition will not
have a materially adverse effect on Fairway's business, financial condition,
cash flows or results of operations. As of the filing of this document, we are
not a party to any pending legal proceedings, nor are we aware of any civil
proceeding or government authority contemplating any legal proceeding.
ITEM 4. MINING SAFETY DISCLOSURE
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
There is a limited public trading market for the common stock. On March 18,
2011, the Company's common stock was accepted for trading by FINRA on the OTCQB
and was assigned the symbol is "FRYP" on the OTC/QB.
The following table sets forth the range of high and low sales prices for the
Company's common stock for each of the fiscal quarters for the past year as
reported on the OTC Markets' OTCQB and the OTC Bulletin Board. These prices
represent inter-dealer prices without adjustments for mark-up, mark-down, or
commission and do not necessarily reflect actual transactions.
High Low
Year Ended December 31, 2011:
First quarter $ -- $ --
Second quarter 0.20 0.05
Third quarter 0.20 0.20
Fourth quarter 0.20 0.20
Holders
As of December 31, 2011, we have approximately 43 shareholders of record of our
common stock.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about us.
Under Rule 144(k), a person who has not been one of our affiliates at any time
during the three months preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least 6 months, is entitled to sell shares
without complying with the manner of sale, volume limitation or notice
provisions of Rule 144.
Dividend Policy
As of the filing of this annual report, we have not paid any dividends to
shareholders. There are no restrictions which would limit our ability to pay
dividends on common equity or that are likely to do so in the future. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends where, after
15
giving effect to the distribution of the dividend; we would not be able to pay
our debts as they become due in the usual course of business; or our total
assets would be less than the sum of the total liabilities plus the amount that
would be needed to satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
Recent Sales of Unregistered Securities
During the years ended December 31, 2011 and 2010, we made no sale or issuance
of our unregistered securities.
Issuer Purchases of Equity Securities
Fairway did not repurchase any shares of its common stock during the year ended
December 31, 2011.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENTS' DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein.
This discussion contains forward-looking statements, such as statements relating
to our financial condition, results of operations, plans, objectives, future
performance and business operations. These statements relate to expectations
concerning matters that are not historical facts. These forward-looking
statements reflect our current views and expectations based largely upon the
information currently available to us and are subject to inherent risks and
uncertainties. Although we believe our expectations are based on reasonable
assumptions, they are not guarantees of future performance and there are a
number of important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements. By making
these forward-looking statements, we do not undertake to update them in any
manner except as may be required by our disclosure obligations in filings we
make with the Securities and Exchange Commission under the Federal securities
laws. Our actual results may differ materially from our forward-looking
statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2011 includes a "going concern"
explanatory paragraph that describes substantial doubt about the Company's
ability to continue as a going concern.
PLAN OF OPERATIONS
Plan of Operations
------------------
Fairway is a development stage company and has minimal revenue producing
activities. Niche Properties delivered a website with the necessary
functionality for us to generate revenue in late July 2009. We worked with Niche
Properties throughout 2009 to refine the website and prepare it for operations.
16
Since the website launched, our business plan has been to earn revenue from the
sale of property and agent listings on our web site, as well as reselling
services offered through the Niche Properties Network, such as property and
agent listings on other niche websites and Luxury Property Blog advertising.
With the completion of our website, we have only generated minimal revenues of
the last two years, not enough to support the ongoing operations of the Company
or to support growth activities. Given the current state of the real estate
industry, management believes that the Company's ability to generate revenue
solely through its current operational activities is limited until the real
estate industry for such properties begins to improve. In that regard,
management has expanded is business plan as discussed below.
We intend to obtain debt and, or, equity finance to meet our ongoing operating
expenses and attempt to merge with another entity with experienced management
and opportunities for growth in return for shares of our common stock to create
value for our shareholders. There is can be no assurance that these events can
be successfully completed. In particular there is no assurance that any such
business will be located or that any stockholder will realize any return on
their shares after such a transaction. Any merger or acquisition completed by us
can be expected to have a significant dilutive effect on the percentage of
shares held by our current stockholders.
We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we have. In view of our limited
financial resources and limited management availability, we will continue to be
at a significant competitive disadvantage compared to our competitors.
We intend to seek, investigate and, if such investigation warrants, acquire an
interest in business opportunities presented to us by persons or firms which
desire to seek the advantages of an issuer who has complied with the Securities
Act of 1934 (the "1934 Act"). We will not restrict our search to any specific
business, industry or geographical location, and we may participate in business
ventures of virtually any nature. This discussion of our proposed business is
purposefully general and is not meant to be restrictive of our unlimited
discretion to search for and enter into potential business opportunities. We
anticipate that we may be able to participate in only one potential business
venture because of our lack of financial resources.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2011, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
RESULTS OF OPERATIONS
For the Year Ended December 31, 2011 compared to the Year Ended December 31,
--------------------------------------------------------------------------------
2010.
----
During the years ended December 31, 2011 we recognized revenues of $500 from our
operational activities compared to $1,136 from our operational activities during
the year ended December 31, 2010. The decrease of $636 in revenues is both a
result of the Company's inability to fund and expand it marketing activities due
to a lack of funding and the depressed real estate market.
During the year ended December 31, 2011, we incurred operational expenses of
$35,006 compared to $53,188 during the year ended December 31, 2010. The
decrease of $18,182 was a result the Company's decreased activities,
significantly the $18,536 decrease in professional fees offset by $800 increase
in licensing fees.
During the year ended December 31, 2011, we incurred a net loss of $34,506
compared to a net loss of $52,054 during the year ended December 31, 2010. The
17
decrease of $17,548 was a result of the $18,182 decrease in operational expenses
combined with the $636 decrease in revenues, discussed above.
LIQUIDITY
At December 31, 2011, we had total current assets of $814, consisting solely of
cash. At December 31, 2011, we had current liabilities of $49,312, consisting
solely of accounts payable. At December 31, 2011, we had working capital deficit
of $48,498.
During the year ended December 31, 2011, we used $10,508 in our operating
activities. During the year ended December 31, 2011, net losses of $34,506 were
not adjusted for any non-cash items. During the year ended December 31, 2011,
accounts payable and accrued interest increased by $23,998.
During the year ended December 31, 2010, we used $27,453 in our operating
activities. During the year ended December 31, 2010, net losses of $52,054 were
not adjusted for any non-cash items. During the year ended December 31, 2010,
accounts payable and accrued interest increased by $24,601.
During the years ended December 31, 2011 and 2010, we did not use or receive
funds from any investing activities.
During the years ended December 31, 2011 and 2010, we did not use or receive
funds from financing activities.
Going Concern
-------------
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2011, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
Capital Resources
-----------------
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year.
Need for Additional Financing
-----------------------------
We do not have capital sufficient to meet our cash needs on a long-term basis.
Based on our current cash reserves of $814 at December 31, 2011, we have an
operational budget of less than one year. If this does not prove to be
sufficient to cover our operational needs, we may have to seek loans or equity
18
placements to cover such cash needs. We are dependent on our
majority-shareholder Niche Technologies to provide the platform and the
technical support for our website
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred or if needed.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Fairway's operations do not employ financial instruments or derivatives which
are market sensitive. Short term funds are held in non-interest bearing accounts
and funds held for longer periods are placed in interest bearing accounts. Large
amounts of funds, if available, will be distributed among multiple financial
institutions to reduce risk of loss. Our cash holdings do not generate any
significant interest income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The audited financial statements of Fairway Properties, Inc. for the years ended
December 31, 2011 and 2010, period from September 10, 2007 (inception) through
December 31, 2011 starts on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief
Financial Officer, Mr. Michael Murphy, carried out an evaluation under the
supervision and with the participation of our management, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 15d-14 as of the quarter ended December 31, 2010. Based on
the foregoing evaluation, Mr. Murphy has concluded that our disclosure controls
and procedures are effective in timely alerting them to material information
required to be included in our periodic SEC filings and to ensure that
information required to be disclosed in our periodic SEC filings is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required
disclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Fairway's management is responsible for establishing and maintaining adequate
internal control over financial reporting for the company in accordance with as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. The Company's internal control over financial
reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
Company's assets;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that the Company's
receipts and expenditures are being made only in accordance with
authorizations of Fairway's management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on Fairway's financial
statements.
Management's assessment of the effectiveness of the registrant's internal
control over financial reporting is as of the year ended December 31, 2011. The
19
Company believes that internal control over financial reporting is effective.
The Company has not identified any current material weaknesses considering the
nature and extent of its current operations and any risks or errors in financial
reporting under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to permanent rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in the Company's internal control over financial reporting
that occurred during the fiscal quarter ended December 31, 2011, that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth information as to persons who currently serve as
Fairway's directors or executive officers, including their ages as of December
31, 2011.
Name Age Position Term
----------------------- --------------- --------------------------- ------------
Michael D. Murphy 30 Chief Executive Officer, Annual
Treasurer and Director
Sean Murphy 27 President and Director Annual
Darren Murphy 26 Secretary Annual
Edward Sigmond 53 Director Annual
Michael D. Murphy, Sean Murphy and Darren Murphy are brothers.
Presently, Messrs. Murphy, Murphy, and Murphy are employed by and involved in
the management of and are owners of Niche Technologies. Additionally, Niche
Technologies, is a majority shareholder of Fairway.
Fairway officers are elected by the board of directors at the first meeting
after each annual meeting of Fairway shareholders and hold office until their
successors are duly elected and qualified under Fairway bylaws.
The directors named above will serve until the next annual meeting of Fairway's
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of directors absent any employment agreement. There is no
arrangement or understanding between the directors and officers of Fairway and
20
any other person pursuant to which any director or officer was or is to be
selected as a director or officer.
The directors and officers of Fairway will devote part-time (up to 10 hours
weekly) to Fairway's affairs.
Biographical Information
MICHAEL D. MURPHY, age 30, is Chief Executive Officer, Treasurer and a Director
of Fairway Properties, Inc.
Mr. Murphy oversees all technology and management for Fairway Properties Inc.
His experience includes co-founding and operating companies in the real estate,
technology and luxury industries. He co-founded Luxurio Inc. in 2006. He is
currently employed at Niche Technologies, Inc., which he co-founded in 2007.
Michael began his entrepreneurial career as Chief Financial Officer at a Denver
real estate start-up (2005-2006) and served a term at the Financial Accounting
Standards Board (2005) as a postgraduate assistant. He is an active Certified
Public Accountant and inactive licensed real estate broker. Mr. Murphy holds BBA
and MS in Accountancy degrees from the University of Notre Dame's Mendoza
College of Business, where he graduated as the valedictorian of both his
respective classes (2004 & 2005)
SEAN MURPHY, age 27, is President and a Director of Fairway Properties, Inc.
Mr. Murphy oversees all business development, sales and marketing initiatives
for Fairway Properties Inc. His experience includes working with technology and
start-up companies in the real estate, video and luxury industries. He joined
Michael and Robert Murphy at Niche Technologies Inc. in 2007. He is currently
employed at Niche Technologies, Inc. Before joining Niche Technologies, Inc.,
Sean was a full-time student at the University of Notre Dame. As a student he
has founded a personal finance consulting company. He holds a B.A. in Theology
and Psychology from the University of Notre Dame. Mr. Murphy served as the
Corporate Secretary from inception through July 1, 2008.
DARREN MURPHY, age 26, is Secretary of Fairway Properties, Inc.
Mr. Murphy was appointed Secretary of Fairway Properties, Inc. on July 1, 2008.
He manages company training and human resource initiatives for Fairway
Properties, Inc. His experience includes administering websites in various
industries, including online real estate, video distribution, and network
marketing. Mr. Murphy joined Niche Technologies, Inc. in 2008. Mr. Murphy
graduated from the University of Colorado at Boulder in 2008 with a BA in
Psychology and minors in Neurological Sciences and Pre-Professional Studies.
Before 2008, Mr. Murphy was a full-time student.
EDWARD SIGMOND, age 53, is a Director of Fairway Properties, Inc.
Mr. Sigmond is a partner in Sigmond and Johnson, Inc., a Dallas based investment
banking firm specializing in working with public micro cap companies. He's been
with Sigmond and Johnson, Inc since conception in 2006. He founded the Great
American Food Chain, Inc. in 2003 and currently serves as President and Chairman
of the Board. Mr. Sigmond also owns Kestrel Holdings, Inc., a real estate and
equity investment company which he founded in 1999. His properties are typically
concentrated in the retail, entertainment and restaurant/bar markets. He is a
member of the Board of Directors of MultiCell Technology, Inc., a publicly held
biotech company and has served in this capacity since 2000. He founded and
served as president of American Machine and Bearing (1992-1996) and Specialty
Food Products (1987-1990) both of Dallas, Texas. Other positions include
Assistant to President of Alpha Aviation, Dallas, Texas (1990-1992) and
VP/Regional Manager of Geodata Corporation, Houston, Texas (1981-1987). He has
held executive sales, marketing and operations management positions for nearly
25 years.
21
Our officers are spending up to 10 hours per week on our business at this time.
At such time as the Company is financially capable of paying salaries, it is
anticipated that management will assume full time roles in the Company's
operations and be paid accordingly or find additional managers that will be
accordingly.
Committees of the Board of Directors
Fairway is managed under the direction of its board of directors.
Executive Committee
The members of the Board of Directors serve as its executive committee.
Audit Committee
The members of the Board of Directors serve as its audit committee.
Previous "Blank Check" or "Shell" Company Involvement
Management of Fairway has not been involved in prior private "blank-check" or
"shell" companies.
Conflicts of Interest - Niche Technologies
------------------------------------------
Our Officers and Directors are related to one another and are the majority
--------------------------------------------------------------------------------
shareholders of the Company. As such there is a possibility of them controlling
--------------------------------------------------------------------------------
the Company to the detriment of outsiders.
-----------------------------------------
Messrs. Michael D. Murphy, Sean Murphy and Darren Murphy are brothers. Together,
Michael, Sean, and Darren Murphy are majority shareholders of Niche
Technologies, Inc., the majority shareholder of our Company, As such they will
be able to the control the operations and the direction of the Company with very
little outside influence. Our third Director, Ed Sigmond, is not related to the
Murphy family.
Presently, Messrs. Murphy, Murphy, and Murphy are employed by and involved in
the management of and are owners of Niche Technologies, Inc.
Conflicts of Interest - General.
-------------------------------
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporate
opportunities involved in participation with such other business entities. While
each officer and director of our business is engaged in business activities
outside of our business, the amount of time they devote to our business will be
up to approximately 10 hours per week.
Conflicts of Interest - Corporate Opportunities
-----------------------------------------------
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
22
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
Annual Meeting
The annual meeting of Fairway stockholders is expected to be held at a future
date as soon as practicable. This will be an annual meeting of stockholders for
the election of directors. The annual meeting will be held at the Fairway's
principal office or at such other place as permitted by the laws of the State of
Nevada and on such date as may be fixed from time to time by resolution of
Fairway board of directors.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to officers and board
members during the fiscal years ended December 31, 2011, 2010 and 2009. The
table sets forth this information for Fairway, including salary, bonus, and
certain other compensation to the Board members and named executive officers for
the past three fiscal years and includes all Board Members and Officers as of
December 31, 2011.
The officers and directors of the Company do not intend to receive cash
remuneration or salaries for their efforts unless and until the Company's
business operations are profitable, at which time salaries and other
remuneration will be established by the Board of Directors, as appropriate.
23
SUMMARY EXECUTIVES COMPENSATION TABLE
Non-qualified
Non-equity deferred
Stock Option incentive plan compensation All other
Name & Salary Bonus awards awards compensation earnings compensation Total
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------- ------ -------- --------- --------- --------- ----------------- ---------------- ----------------- -------
Michael D.
Murphy, CEO
and 2011 0 0 0 0 0 0 0 $0
Treasurer 2010 0 0 0 0 0 0 0 $0
(1) 2009 0 0 0 0 0 0 0 $0
Sean Murphy, 2011 0 0 0 0 0 0 0 $0
President (2) 2010 0 0 0 0 0 0 0 $0
2009 0 0 0 0 0 0 0 $0
(1) Michael and Sean Murphy are employees of Niche Technologies.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Fairway does not have a stock option plan as of the date of this filing. There
was no grant of stock options to the Chief Executive Officer and other named
executive officers during the fiscal years ended December 31, 2011 and 2010.
Employment Contracts and Termination of Employment and Change-in-Control
--------------------------------------------------------------------------------
Arrangements
------------
There are no employment contracts, compensatory plans or arrangements, including
payments to be received from us, with respect to any of our directors or
executive officers which would in any way result in payments to any such person
because of his or her resignation, retirement or other termination of employment
with us, any change in control of us, or a change in the person's
responsibilities following such a change in control.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Fairway board of directors in its entirety acts as the compensation
committee for Fairway.
Stock Option Plan
-----------------
The Company does not have or intend to develop a stock option plan at this time.
24
Director Compensation
The following table sets forth certain information concerning compensation paid
to our directors for services as directors, but not including compensation for
services as officers reported in the "Summary Executives Compensation Table"
during the year ended December 31, 2011:
Non-qualified
Non-equity deferred
Fees incentive plan compensation All other
earned Stock Option compensation ($) earnings compensation Total
Name or paid awards awards ($) ($) ($)
in cash ($) ($)
($)
-------------- ---------- ---------- ---------- ----------------- ----------------- ----------------- -------
Michael D. $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Murphy
Sean Murphy $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Edward $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Sigmond
All of our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to conduct their
own independent business interests.
It is possible that situations may arise in the future where the personal
interests of the officers and directors may conflict with our interests. Such
conflicts could include determining what portion of their working time will be
spent on our business and what portion on other business interest. To the best
ability and in the best judgment of our officers and directors, any conflicts of
interest between us and the personal interests of our officers and directors
will be resolved in a fair manner which will protect our interests. Any
transactions between us and entities affiliated with our officers and directors
will be on terms which are fair and equitable to us. Our Board of Directors
intends to continually review all corporate opportunities to further attempt to
safeguard against conflicts of interest between their business interests and our
interests.
We have no intention of merging with or acquiring an affiliate, associated
person or business opportunity from any affiliate or any client of any such
person.
At this time, our Directors do not receive compensation for serving on the
Fairway Board of Directors. Our directors were issued shares of common stock
upon their initial appointment to the Board of Directors in September 2007.
Limitation on Liability and Indemnification
Fairway is a Nevada corporation. The Nevada Revised Statutes (NRS) provides that
the articles of incorporation of a Nevada corporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, except that any such provision may not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) acts
specified in Section 78 (concerning unlawful distributions), or (iv) any
transaction from which a director directly or indirectly derived an improper
25
personal benefit. Fairway articles of incorporation contain a provision
eliminating the personal liability of directors to Fairway or Fairway
shareholders for monetary damages to the fullest extent provided by the NRS.
The NRS provides that a Nevada corporation must indemnify a person who was
wholly successful, on the merits or otherwise, in defense of any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal (a
"Proceeding"), in which he or she was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection with
the Proceeding, unless such indemnity is limited by the corporation's articles
of incorporation. Fairway articles of incorporation do not contain any such
limitation.
The NRS provides that a Nevada corporation may indemnify a person made a party
to a Proceeding because the person is or was a director against any obligation
incurred with respect to a Proceeding to pay a judgment, settlement, penalty,
fine (including an excise tax assessed with respect to an employee benefit plan)
or reasonable expenses incurred in the Proceeding if the person conducted
himself or herself in good faith and the person reasonably believed, in the case
of conduct in an official capacity with the corporation, that the person's
conduct was in the corporation's best interests and, in all other cases, his or
her conduct was at least not opposed to the corporation's best interests and,
with respect to any criminal proceedings, the person had no reasonable cause to
believe that his or her conduct was unlawful. The Company's articles of
incorporation and bylaws allow for such indemnification. A corporation may not
indemnify a director in connection with any Proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation or, in
connection with any other Proceeding charging that the director derived an
improper personal benefit, whether or not involving actions in an official
capacity, in which Proceeding the director was judged liable on the basis that
he or she derived an improper personal benefit. Any indemnification permitted in
connection with a Proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with such Proceeding.
The NRS, unless otherwise provided in the articles of incorporation, a Nevada
corporation may indemnify an officer, employee, fiduciary, or agent of the
corporation to the same extent as a director and may indemnify such a person who
is not a director to a greater extent, if not inconsistent with public policy
and if provided for by its bylaws, general or specific action of its board of
directors or shareholders, or contract. Fairway articles of incorporation
provide for indemnification of directors, officers, employees, fiduciaries and
agents of Fairway to the full extent permitted by Nevada law.
Fairway articles of incorporation also provide that Fairway may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of Fairway or who is or was serving at the request of Fairway as a director,
officer or agent of another enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity or arising out of his
or her status as such, whether or not Fairway would have the power to indemnify
him or her against such liability.
EQUITY COMPENSATION PLAN INFORMATION
The Company has not established an equity compensation plan or Incentive Stock
Option Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth information with respect to the beneficial
ownership of Fairway outstanding common stock by:
26
o each person who is known by Fairway to be the beneficial owner of five
percent (5%) or more of Fairway common stock;
o Fairway chief executive officer, its other executive officers, and
each director as identified in the "Management -- Executive
Compensation" section; and
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock and options, warrants
and convertible securities that are currently exercisable or convertible within
60 days of the date of this document into shares of Fairway common stock are
deemed to be outstanding and to be beneficially owned by the person holding the
options, warrants or convertible securities for the purpose of computing the
percentage ownership of the person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
The information below is based on the number of shares of Fairway common stock
that Fairway believes was beneficially owned by each person or entity as of
December 31, 2011.
There are currently 140,000,000 common shares authorized of which 1,404,000 are
outstanding.
Title of Class Name and Address of Beneficial Owner Amount and Nature of
Beneficial Owner* Percent of Class
--------------------- ---------------------------------------- ------------------------ -------------------
Common shares Niche Technologies, Inc. (beneficially 600,000 42.73%
Michael D. Murphy, Sean Murphy and
Darren Murphy)
340 S Lemon Ave #5353
Walnut, CA 91789
Common shares Darren Murphy, Secretary 72,000 5.12%
340 S Lemon Ave #5353
Walnut, CA 91789
Common shares Michael D. Murphy, 58,000 4.13%
CEO/Treasurer and Director
340 S Lemon Ave #5353
Walnut, CA 91789
Common shares Sean Murphy, 58,000 4.13%
President and Director
340 S Lemon Ave #5353
Walnut, CA 91789
Common shares Edward Sigmond, Director 81,250 5.79%
2808 Cole Avenue
Dallas, TX 75204
Common shares Kestrel Holdings, Inc. (beneficially 186,000 13.24%
Edward Sigmond)
2808 Cole Avenue
Dallas, TX 75204
------------------------ -------------------
Officers and Directors (4 individuals) 1,055,250 75.16%
27
*Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person. The Company
does not have an options or warrants outstanding at December 31, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the stock transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
founders, directors, executive officers, shareholders or any members of the
immediate family of any of the foregoing had or is to have a direct or indirect
material interest.
License Agreements
------------------
On October 26, 2007, we entered into a Technology License Agreement ("License")
with Niche Technologies, Inc., our majority shareholder. Niche Technologies owns
and operates our website. Niche Technologies is a Colorado company that is owned
and operated by Michael D. Murphy, Sean Murphy, and Darren Murphy.
On March 5, 2010, we agreed to amend the License Agreement with Niche
Technologies to:
(a) Waive all prior owing Guaranteed Minimum Royalties;
(b) Eliminate the $10,000.00 annual Guaranteed Minimum Royalty;
(c) Pay a new Guaranteed Minimum Royalty of $500.00 per month beginning
with March 2010; and
(d) Provide us the ability to resell services provided by Niche
Properties, for which we will submit 75% of the revenues from these
services to Niche Properties.
Credit Line
-----------
The Company has a credit line with a $5,000 limit, extended by Niche
Technologies, a majority shareholder of the Company, under common control. The
credit line has an interest rate of 10% on principal and a due date of December
31, 2012. At December 31, 2012, the Company owes $1,000 on the credit line. The
Company has paid Niche Technologies approximately $6,000 and $5,000 in 2011 and
2010 under a technology licensing agreement. At the year ended December 31, 2011
and 2010, the Company owed Niche Technologies $7,000 and $1,000 in accrued fees
from the technology licensing agreement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
GENERAL. Ronald R. Chadwick, P.C. ("Chadwick") is the Company's principal
auditing accountant firm. The Company's Board of Directors has considered
whether the provisions of audit services are compatible with maintaining
Chadwick's independence.
28
The following table represents aggregate fees billed to the Company for the
years ended December 31, 2011 and December 31, 2010 by Ronald R. Chadwick, P.C.
Year Ended December 31,
2011 2010
------------------- -------------------
Audit Fees $7,750 $7,750
Audit-related Fees $0 $0
Tax Fees $0 $0
All Other Fees $0 $0
------------------- -------------------
Total Fees $7,750 $7,750
All audit work was performed by the auditors' full time employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of
Regulation S-K.
(a) Audited financial statements for years ended
December 31, 2011 and 2010
(b) Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation of Fairway Properties, Inc. (1)
3.2 Bylaws of Fairway Properties, Inc. (1)
10.1 Technology License Agreement (1)
10.2 Amended Technology License Agreement (2)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act (3)
32.1 Certification of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act (3)
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
29
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
-------------------------------------------------------------------------------------
(1) Incorporated by reference from the exhibits included in the Company's
Registration Statement on Form 10 filed with the Securities and Exchange
Commission (www.sec.gov), dated November 18, 2009.
(2) Incorporated by reference from the exhibits included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on
March 31, 2010.
(3) Filed herewith.
30
FAIRWAY PROPERTIES, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
AND
FROM SEPTEMBER 10, 2007 (INCEPTION) THROUGH DECEMBER 31, 2011
F-1
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Fairway Properties, Inc.
Denver, Colorado
I have audited the accompanying balance sheets of Fairway Properties, Inc. (a
development stage company) as of December 31, 2011 and 2010, and the related
statements of operations, stockholders' equity and cash flows for the years then
ended and for the period from September 10, 2007 (inception) through December
31, 2011. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I 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. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Fairway Properties, Inc. as of
December 31, 2011 and 2010, and the results of its operations and its cash flows
for the years then ended and for the period from September 10, 2007 (inception)
through December 31, 2011 in conformity with accounting principles generally
accepted in the United States of America.
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 that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
May 2, 2012 RONALD R. CHADWICK, P.C.
F-2
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2011 2010
-------------------- -------------------
Assets
Current Assets:
Cash $ 814 $ 11,322
-------------------- -------------------
Total Current Assets 814 11,322
-------------------- -------------------
Total Assets $ 814 $ 11,322
==================== ===================
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable $ 48,312 $ 25,314
Credit Line 1,000 -
-------------------- -------------------
Total Current Liabilities 49,312 25,314
-------------------- -------------------
Stockholders' (Deficit) Equity
Common stock, $0.001 par value; 140,000,000 shares
authorized, 1,404,000 and 1,404,000 shares issued and
outstanding, respectively 1,404 1,404
Additional paid-in capital 75,181 75,181
Deficit accumulated during the development stage (125,083) (90,577)
-------------------- -------------------
Total Stockholders' Equity (48,498) (13,992)
-------------------- -------------------
Total Liabilities and Stockholders' Equity $ 814 $ 11,322
==================== ===================
See the notes to these financial statements.
F-3
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
September 10, 2007
Year Ended (Inception) Through
December 31, December 31, December 31,
2011 2010 2010
---------------------- ------------------ --------------------------
Revenue: $ 500 $ 1,136 $ 1,636
---------------------- ------------------ --------------------------
Operational expenses:
General and administrative expenses 778 1,224 12,686
Licensing fees 6,000 5,200 11,200
Professional fees 28,228 46,764 101,132
---------------------- ------------------ --------------------------
Total operational expenses (35,006) (53,188) (125,018)
---------------------- ------------------ --------------------------
Other income (expense):
Interest income (expense) 0 (2) (1,701)
---------------------- ------------------ --------------------------
Net loss $ (34,506) $ (52,054) $ (125,083)
====================== ================== ==========================
Per share information
Net loss per common share
Basic and fully diluted $ (0.02) $ (0.04)
====================== ==================
Weighted average number of common
stock outstanding 1,404,000 1,404,000
====================== ==================
See the notes to these financial statements.
F-4
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Year Ended September 30, 2007
December 31, December 31, (Inception) Through
2011 2010 December 31, 2011
------------------ ------------------ -------------------
Cash Flows from Operating Activities:
Net Loss $ (34,506) $ (52,054) $ (125,083)
Adjustments to reconcile net loss to net cash used in
operating activities:
Common stock issued for services - - 6,835
Increase in assets and liabilities:
Increase (decrease) in accounts payable and other
current liabilies 23,998 24,601 49,312
------------------ ------------------ -------------------
Net Cash Used by Operating Activities (10,508) (27,453) (68,936)
------------------ ------------------ -------------------
Cash Flows from Financing Activities:
Proceeds from sale of common stock - - 69,750
Proceeds from note payable, related party - - 25,000
Payment of note payable, related party - - (25,000)
------------------ ------------------ -------------------
Net Cash Provided by Financing Activities - - 69,750
------------------ ------------------ -------------------
Net Increase in Cash (10,508) (27,453) 814
Cash and Cash Equivalents - Beginning of Period 11,322 38,775 -
------------------ ------------------ -------------------
Cash and Cash Equivalents - End of Period $ 814 $ 11,322 $ 814
================== ================== ===================
Supplemental Disclosure
Cash paid for interest $ - $ 2 $ -
================== ================== ===================
Cash paid for income taxes $ - $ - $ -
================== ================== ===================
See the notes to these financial statements.
F-5
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE PERIOD OF SEPTEMBER 10, 2007 (INCEPTION) THROUGH DECEMBER 31, 2011
Deficit Accum
Additional During
Common Stock Amount Paid-in Development
Number of shares $.001 Par Capital Stage Totals
----------------- ------------ ------------ --------------- -------------
Beginning Balance - September 10, 2007 - $ - $ - $ - $ -
Common stock issued to directors for
services 485,802 486 - - 486
Common stock issued for services 608,000 608 792 - 1,400
Net loss - - - (19,250) (19,250)
----------------- ------------ ------------ --------------- -------------
Balance - December 31, 2007 1,093,802 1,094 792 (19,250) (17,364)
----------------- ------------ ------------ --------------- -------------
Common stock issued to directors 11,448 11 - 11
Common stock issued for services 19,750 20 4,918 - 4,938
Common stock issued for cash 279,000 279 69,471 - 69,750
Net loss - - - (16,640) (16,640)
----------------- ------------ ------------ --------------- -------------
Balance - December 31, 2008 1,404,000 1,404 75,181 (35,890) 40,695
----------------- ------------ ------------ --------------- -------------
Net loss - - - (2,633) (2,633)
----------------- ------------ ------------ --------------- -------------
Balance - December 31, 2009 1,404,000 1,404 75,181 (38,523) 38,062
----------------- ------------ ------------ --------------- -------------
Net loss - - - (52,054) (52,054)
----------------- ------------ ------------ --------------- -------------
Balance - December 31, 2010 1,404,000 1,404 75,181 (90,577) (13,992)
----------------- ------------ ------------ --------------- -------------
Net loss - - - (34,506) (34,506)
----------------- ------------ ------------ --------------- -------------
Balance - December 31, 2011 1,404,000 $ 1,404 $ 75,181 $ (125,083) $ (48,498)
================= ============ ============ =============== =============
See the notes to these financial statements.
F-6
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2011 and 2010
NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business
Fairway Properties, Inc. ("the Company") was incorporated on September 10, 2007
in the state of Nevada. The Company's fiscal year end is December 31st.
The Company offers real estate professionals and advertisers a niche marketing
tool, FairwayProperties.com (the "Website"), which enables professionals and
advertisers to deliver information about golf properties and related real estate
matters to prospective buyers.
Basis of Presentation
Development Stage Company
The Company has not earned significant revenues from planned operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Company." Among the disclosures required, are that the
Company's financial statements of operations, stockholders' equity and cash
flows disclose activity since the date of the Company's inception.
Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
Loss Per Share
Earnings per Share, requires dual presentation of basic and diluted earnings or
loss per share (EPS) with a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. Basic EPS excludes dilution. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity.
F-7
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2011 and 2010
Income Taxes
Provision for income taxes represents actual or estimated amounts payable on tax
return filings each year. Deferred tax assets and liabilities are recorded for
the estimated future tax effects of temporary differences between the tax basis
of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carry forwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustment to the tax
provision or benefit in the period of enactment.
Recent Accounting Pronouncements
There were various accounting standards and interpretations issued during the
year ended December 31, 2011, none of which are expected to have a material
impact on the Company's financial position, operations or cash flows.
NOTE 2 - GOING CONCERN
In the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2011, the Report of the Independent Registered Public Accounting Firm
includes an explanatory paragraph that describes substantial doubt about the
Company's ability to continue as a going concern. The Company's financial
statements for the years ended December 31, 2011 and 2010 have been prepared on
a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. The
Company reported a net loss of $34,506 for the year ended December 31, 2011, and
an accumulated deficit of $125,083 as of December 31, 2011. At December 31,
2011, the Company had a working capital deficit of $48,498.
The future success of the Company is likely dependent on its ability to attain
additional capital and ultimately, upon its ability to attain future profitable
operations. There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations. Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide the opportunity for the
Company to continue as a going concern.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company has a credit line with a $5,000 limit, extended by a related party
company under common control. The credit line has an interest rate of 10% on
principal and a due date of December 31, 2012. At December 31, 2012, the Company
owes $1,000 on the credit line. The paid the related party company approximately
$6,000 and $5,000 in 2011 and 2010 under a technology licensing agreement. At
end 2011 and 2010 the Company owed the related party company $7,000 and $1,000
in accrued fees from the technology licensing agreement.
NOTE 4 - STOCKHOLDERS' EQUITY (DEFICIT)
The authorized capital stock of the Company is 140,000,000 shares with a $0.001
par value. At December 31, 2011, the Company had 1,404,000 shares of its common
stock issued and outstanding. The Company does not have any preferred shares
issued or authorized.
F-8
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2011 and 2010
During the years ended December 31, 2011 and 2010, the Company did not issue any
shares of its common stock.
NOTE 5 - INCOME TAXES
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets and liabilities.
2011 2010
------------- -------------
Deferred tax assets
Net operating loss carryforwards $ 25,017 $ 18,115
Valuation allowance ( 25,017) ( 18,115)
------------- -------------
Net deferred tax assets $ - $ -
============= =============
At December 31, 2011 and at December 31, 2010, the Company had net operating
loss carryforwards of approximately $125,083 and $90,577, respectively, for
federal income tax purposes. These carryforwards, if not utilized to offset
taxable income, will begin to expire in 2028.
NOTE 5 - SUBSEQUENT EVENTS
The Company has evaluated it activities subsequent to the year ended December
31, 2011 through May 4, 2012 and found no reportable subsequent events.
F-9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
/s/ Michael D. Murphy May 8, 2012
------------------------------------------------------------
Michael D. Murphy
(Chief Financial Officer/Principal
Accounting Officer/Treasurer and Chief Executive Officer/
Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Ed Sigmond May 8, 2012
------------------------------------------------------------
Ed Sigmond, Director
/s/ Michael D. Murphy May 8, 2012
------------------------------------------------------------
Michael D. Murphy, Director, Chief Financial Officer &
Chief Executive Officer
/s/ Sean Murphy May 8, 2012
------------------------------------------------------------
Sean Murphy, Director and President
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