MICHAEL A. LITTMAN
ATTORNEY AT LAW
7609 Ralston Road
Arvada, Colorado 80002
(303) 422-8127 * Fax (303) 431-1567
April 26, 2010
United States
Securities and Exchange Commission
Attn: Katherine Wray
Mail Room 4561
Washington, D.C. 20549
Re: Fairway Properties, Inc.
Registration Statement on Form 10
Filed November 18, 2009
File No. 000-53835
Dear: Ms. Wray:
GENERAL
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1. PLEASE NOTE THAT YOUR REGISTRATION STATEMENT WILL BECOME EFFECTIVE
BY OPERATIONS OF LAW 60 DAYS FROM THE DATE YOU FILED IT AND THAT YOU WILL THEN
BE RESPONSIBLE FOR FILING REPORTS REQUIRED BY SECTION 13(A) OF THE SECURITIES
EXCHANGE ACT OF 1934. WE ALSO MAY CONTINUE TO COMMENT ON YOUR REGISTRATION
STATEMENT AFTER THE EFFECTIVE DATE. IF YOU DO NOT WISH TO INCUR THOSE
OBLIGATIONS UNTIL ALL OF THE FOLLOWING ISSUES ARE RESOLVED, YOU MAY WISH TO
CONSIDER WITHDRAWING YOUR REGISTRATION STATEMENT AND RESUBMITTING A NEW
REGISTRATION STATEMENT WHEN YOU HAVE REVISED YOUR DOCUMENT.
We have considered your comment and have filed our Annual Report on Form 10K for
the year ended December 31, 2009 in light of your comments.
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ITEM 1. BUSINESS
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GENERAL, PAGE 2
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2. YOU DISCLOSE THAT YOUR BUSINESS REVENUES DEPEND ON YOUR WEBSITE
FUNCTIONALITY TO REACH YOUR CUSTOMER BASE AND THAT, ALTHOUGH YOUR WEBSITE IS
OPERATIONS, YOU ARE CURRENTLY IN THE BETA DEVELOPMENT STAGE OF TESTING YOUR
WEBSITE. PLEASE EXPAND YOUR DISCUSSION OF THE CURRENT STATUS OF YOUR WEBSITE,
INCLUDING HOW LONG YOU ANTICIPATE BETA TESTING WILL LAST, TO HELP INVESTORS
BETTER UNDERSTAND YOUR BUSINESS OPERATIONS. REFER TO ITEM 101(H)(4)(I) OF
REGULATION S-K.
Our website is currently in a stage of beta testing. Beta testing means we are
in a period of development where we are testing the website for quality
assurance and implementing functionality to the website. As a part of the beta
testing stage we are also gathering feedback from beta website users to help us
improve the website for each development cycle. During the beta testing stage
several improvements have been added to the website to give us a competitive
advantage in the market. These improvements include integration of Omniture
SiteCatalyst. This helps us track analytics and behavior of all visitors to the
website. It tracks and reports a variety of metrics including how a visitor
searches for property on the site, what pages they view, and how they progress
through the website's checkout process when purchasing a listing. Omniture
SiteCatalyst can be used to track the success of any search engine marketing
campaigns using Google Adwords. This allows us to target advertising and
marketing to potential customers searching Google. Another important improvement
to the site has been integrating PayPal to the checkout process to allow
individual property listors to purchase listing packages through the website.
This allows the website to process orders on the website so we do not have to
restrict orders and transactions to phone calls.
Sales may commence in the beta testing 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, optimized with analytic
tracking and is capable of being marketed to the public. The beta testing stage
is expected to be completed during the second or third quarter of 2010. To
complete beta testing we must optimize the checkout process on the website to
make it easier and more efficient to convert website visitors into customers.
This part of the website is fully functional, but needs improved to increase our
customer conversion rates according to our analytics. If we are unable to
complete these final website developments, we may not be able to market the
website or earn revenues to the level we desire.
We have added this disclosure to the document on page 3.
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COMPANY OVERVIEW, PAGE 3
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3. YOU STATE THAT BASED ON YOUR CURRENT CASH RESERVES OF $40,000, YOU
HAVE AN OPERATIONAL BUDGET OF NEARLY TWO YEARS, AS MOST OF YOUR OPERATIONAL
COSTS ARE "NOMINAL," YET ELSEWHERE IN YOUR FILING, YOU STATE THAT YOU WILL NEED
SUBSTANTIAL ADDITIONAL CAPITAL TO SUPPORT YOUR PROPOSED FUTURE WEBSITE
OPERATIONS. REFER TO PAGE 14 OF YOUR FILING. PLEASE CLARIFY YOUR CURRENT
LIQUIDITY POSITION AND DISCLOSE IN YOUR OVERVIEW THAT YOUR AUDITORS HAVE NOTED
THAT THERE IS SUBSTANTIAL DOUBT ABOUT YOUR ABILITY TO CONTINUE AS A GOING
CONCERN.
In response to your comment we have updated the disclosures on pages 5 and 17
regarding our current cash reserves and have included information regarding the
"Going Concern" opinion issued by our auditors.
4. FURTHER, YOU STATE THAT YOU EXPECT YOUR MONTHLY SALES WILL COVER
YOUR MONTHLY OPERATIONAL COSTS SOMETIME DURING LATE 2010, WHICH WILL ENABLE YOU
TO CONTINUE FORWARD WITHOUT RAISING MONEY THROUGH ADDITIONAL OFFERING OF SHARES.
PROVIDE ADDITIONAL SUPPORT FOR YOUR STATEMENT THAT YOU EXPECT YOUR MONTHLY SALES
TO COVER YOUR MONTHLY OPERATIONAL COSTS SOMETIME DURING LATE 2010. IN THIS
REGARD, WE NOTE THE DISCLOSURES INDICATING THAT YOU ARE OBLIGATED TO PAY NICHE
PROPERTIES, INC. A GUARANTEED MINIMUM ROYALTY OF $10,000 PER YEAR. TO THE EXTENT
YOUR FILING CONTINUES TO INCLUDE STATEMENTS THAT PREDICT ACCOMPLISHMENTS IN THE
FUTURE, EXPAND TO PROVIDE MEANINGFUL DISCUSSIONS OF THE EVENTS OR CIRCUMSTANCES
THAT MAY PREVENT THE ACCOMPLISHMENT OF THESE OBJECTIVES.
We have added information on page 5 where marked (Comment #4).
SERVICES COMPETITIVE ADVANTAGE, PAGE 7
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5. PLEASE PROVIDE US WITH SUPPORTING MATERIAL FOR YOUR STATEMENT: "IT
IS AGREED VERTICAL SEARCH ISN'T A PASSING INTERNET TREND, BUT A SEGMENT OF THE
SEARCH MARKET WITH A LARGE GROWTH POTENTIAL."
In response to your comment we have removed the statement. Please see area
marked (Comment #5) on page 9.
COMPETITION, MARKETS, REGULATION AND TAXATION, PAGE 10
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6. YOUR DISCLOSURES INDICATE THAT THREE OF THE FOUR COMPETITORS YOU
IDENTIFY DO NOT CHARGE FOR THEIR LISTING SERVICES. EXPAND YOUR DISCLOSURE TO
DISCUSS MORE FULLY YOUR ANTICIPATED METHODS OF COMPETITION, SPECIFICALLY
ADDRESSING HOW YOU PLAN TO DISTINGUISH YOURSELF FROM THESE COMPETITORS AND WHY
YOU THINK THAT YOUR TARGETED AUDIENCE WILL PAY TO LIST ON YOUR SITE. SEE ITEM
101(H)(4)(IV) OF REGULATION S-K.
-3-
In light of your comment, we have provided greater response beginning on page 12
as to how we plan to distinguish ourselves from our competition. Please see area
marked (Comment #6).
7. PLEASE DEFINE YOUR REFERENCE TO "A B2C2C SOLUTION" ON PAGE 11 OF
YOUR FILING.
We have provided a definition to our reference as "a B2C2C solution" on page 11
where marked (Comment #7).
OWNERS, PAGE 12
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8. WE NOTE THAT YOU HAVE PROVIDED MARKET ANALYSIS REGARDING POTENTIAL
CUSTOMERS. PLEASE PROVIDE US WITH SUPPORTING MATERIAL FOR THE FIGURES OBTAINED
AND USED IN YOUR CHART.
We have removed the chart on page 14 where marked (Comment #8).
IN FURTHERANCE OF OUR BUSINESS MODEL, PAGE 13
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9. YOU STATE THAT YOU WILL DISCUSS EACH ELEMENT IN YOUR PLAN OF
OPERATIONS IN TERMS OF TIME AND COST. HOWEVER, WHILE YOU HAVE LISTED EACH
ELEMENT, YOU HAVE NOT INCLUDED THE CORRESPONDING PROJECTED TIME TO COMPLETION OR
ANTICIPATED COSTS. PLEASE REVISE ACCORDINGLY.
We have updated our plan of operations on pages 15 and 16 to address when we
expect to perform certain operational activities as well as the corresponding
costs for those activities. Our budget on page 16 includes all of our expected
costs over the next 12 months.
PLAN OF OPERATIONS, PAGE 14
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10. WE NOTE YOUR DISCLOSURES ON PAGE 14 REGARDING THE FUNDS YOU INTEND
TO DISBURSE DURING THE NEXT YEAR. TELL US WHY YOU HAVE NOT INCLUDED THE MINIMUM
ROYALTY PAYMENTS DUE TO NICHE PROPERTIES OF $10,000 PER YEAR IN THIS TABLE OR
REVISE ACCORDINGLY. SIMILAR REVISIONS SHOULD BE MADE TO YOUR RISK FACTOR
DISCLOSURES ON PAGE 21, AS NECESSARY.
In light of your comment we have updated the Budget table on page 17 where
marked (Comment #10).
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ITEM 1A. RISK FACTORS, PAGE 15
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GENERAL
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11. YOUR REFERENCES TO AN OFFERING IN SEVERAL OF YOUR RISK FACTORS
APPEAR TO BE INAPPROPRIATE. PLEASE ADVISE OR REVISE ACCORDINGLY. WE NOTE THE
FOLLOWING AS EXAMPLES OF REFERENCES THAT SHOULD BE REVISED.
o "OUR SECURITIES, AS OFFERED HEREBY, ARE HIGHLY
SPECULATIVE...," PAGE 15;
o "ONCE WE RECEIVE THE PROCEEDS FROM THIS OFFERING...," PAGE 17;
o "ANY PERSON OR ENTITY CONTEMPLATING AN INVESTMENT IN THE
SECURITIES OFFERED HEREBY...," PAGE 18;
o "THERE MAY BE SUBSTANTIAL DILUTION TO OUR SHAREHOLDERS
PURCHASING IN THIS [O]FFERING," PAGE 23;
o "THE PRICE OF OUR COMMON STOCK THAT WILL PREVAIL IN THE MARKET
AFTER THIS OFFERING...," PAGE 24; AND
o "ASSUMING ALL THE SHARES OF COMMON STOCK WE ARE OFFERING UNDER
THIS REGISTRATION STATEMENT...," PAGE 25.
We have reviewed and removed such references where marked (Comment #11)
throughout the document.
"BECAUSE OUR DIRECTORS AND OFFICERS LACK EXPERIENCE..." PAGE 20
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12. THIS RISK FACTOR SUGGESTS THAT YOUR BUSINESS MAY FAIL DUE TO THE
FACT THAT YOUR OFFICERS AND DIRECTORS LACK EXPERIENCE IN OPERATING
INTERNET-BASED REAL ESTATE MARKETING SERVICES. HOWEVER, YOU STATE ELSEWHERE IN
THE FILING THAT CERTAIN OF YOUR OFFICERS AND DIRECTORS ALSO OWN AND OPERATE
NICHE PROPERTIES, WHICH YOU ASSERT HAS MONETIZED TWO SIMILAR LIFE-STYLE-BASED
REAL ESTATE WEBSITES. PLEASE REVISE AS APPROPRIATE TO RECONCILE THESE
SEEMINGLY-INCONSISTENT DISCLOSURES; OR ADVISE.
In response to your comment, after consideration, we have removed the risk
factor on page 23 where marked (Comment #12).
ITEM 2. FINANCIAL INFORMATION, PAGE 26
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13. PLEASE NOTE THAT RELIANCE UPON THE SAFE HARBOR PROTECTIONS FOR
FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT IS
NOT PERMITTED IN INITIAL PUBLIC OFFERINGS, WHICH WE CONSIDER THIS TO BE. PLEASE
EITHER DELETE ANY REFERENCES TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OR
MAKE CLEAR THAT THE SAFE HARBOR DOES NOT APPLY TO YOU.
We have revised and deleted. Please see page 28 where marked (Comment #13).
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14. CONSIDER INCLUDING A HEADING ENTITLED, "MANAGEMENT'S DISCUSSION AND
ANALYSIS" TO ALERT INVESTORS TO THE DISCUSSION BY MANAGEMENT OF THE COMPANY'S
FINANCIAL CONDITION. FURTHER, CONSIDER INCLUDING AN OVERVIEW OF MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TO
PROVIDE A BALANCED, EXECUTIVE-LEVEL DISCUSSION THAT IDENTIFIES THE MOST
IMPORTANT THEMES OR OTHER SIGNIFICANT MATTERS THAT MAY IMPACT YOUR FINANCIAL
CONDITION AND OPERATING RESULTS. AS EXAMPLES OF SUCH THEMES AND MATTERS, WE NOTE
THE RISK FACTORS RELATING TO THE SEVERE REAL ESTATE DOWNTURN AND POOR GENERAL
ECONOMIC CONDITIONS ON PAGE 15 AND THAT YOU WILL NEED ADDITIONAL FINANCING FOR
WHICH YOU HAVE NO COMMITMENTS ON PAGE 16. FOR GUIDANCE SEE SECTION III.A OF SEC
RELEASE NO. 33-8350, AVAILABLE ON OUR WEBSITE AT
HTTP://WWW.SEC.GOVE/RULES/INTERP/33-8350.HTM.
We have included the title "Management's Discussion and Analysis" on page 28
where marked (Comment #14).
15. PLEASE EXPAND YOUR DISCLOSURE TO DISCUSS THE ADDITIONAL EXPENSES
YOU WILL INCUR UPON BECOMING A PUBLIC COMPANY IN ADDITION TO ANY OTHER MATERIAL
PLANNED CAPITAL EXPENDITURES THAT MAY RESULT FROM A KNOWN DEMAND OR TREND. FOR
GUIDANCE, SEE SECTION III.B OF SEC RELEASE NO. 33-6835, AVAILABLE ON OUR WEBSITE
AT HTTP://WWW.SEC.GOV/RULES/INTERP/33-6835.HTM.
We have included a discussion of the additional expenses likely to be incurred
as a result of being public on page 31 where marked (Comment #15)
LIQUIDITY, PAGE 27
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16. YOU STATE ELSEWHERE IN YOUR REGISTRATION STATEMENT THAT YOU ARE
REQUIRED TO PAY NICHE PROPERTIES, INC. A MINIMUM ROYALTY PAYMENT OF $10,000 PER
YEAR PURSUANT TO YOUR TECHNOLOGY LICENSE AGREEMENT. TELL US WHAT CONSIDERATION
YOU HAVE GIVEN TO INCLUDING DISCLOSURE ABOUT THIS OBLIGATION IN YOUR LIQUIDITY
DISCUSSION. IN THIS REGARD, WE REFER YOU TO ITEM 303(1)(1) OF REGULATION S-K,
WHICH CALLS FOR DISCLOSURE OF KNOWN COMMITMENTS OR EVENTS THAT WILL OR ARE
REASONABLY LIKELY TO RESULT IN DECREASING YOUR LIQUIDITY POSITION IN ANY
MATERIAL WAY.
We have updated the language on page 30 where marked (Comment #16).
SHORT TERM, PAGE 28
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17. YOU DISCLOSE THAT ON A SHORT-TERM BASIS, YOU DO NOT HAVE ANY
REVENUES "SUFFICIENT TO COVER OPERATIONS." PLEASE REVISE TO DISCUSS SPECIFICALLY
HOW YOU PLAN TO FINANCE YOUR OPERATIONS FOR THE NEXT 12 MONTHS. STATE CLEARLY
WHETHER YOUR CURRENTLY AVAILABLE AND CONTRACTUALLY COMMITTED CAPITAL RESOURCES
ARE SUFFICIENT TO FUND PLANNED OPERATIONS FOR A PERIOD OF NOT LESS THAN 12
MONTHS. IF THE CURRENTLY AVAILABLE AND CONTRACTUALLY COMMITTED CAPITAL RESOURCES
ARE NOT SUFFICIENT TO FUND PLANNED OPERATIONS FOR THAT 12-MONTH PERIOD, STATE
THE DEFICIENCY IN QUANTITATIVE TERMS. IN ADDITION, ENSURE THAT YOUR DISCLOSURE
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IN "LIQUIDITY" IS CONSISTENT WITH RELATED DISCLOSURES ELSEWHERE IN THE FILING,
FOR EXAMPLE, THE DISCUSSIONS ON PAGE 3 AND 14 RELATING TO THE COMPANY'S CASH
RESERVES AND ANTICIPATED COSTS OF OPERATIONS.
We have included a paragraph on page 30 titled "Short Term" where marked
(Comment #17). We have also updated the discussions on pages 3 and 14 to ensure
consistency with disclosures in "Liquidity."
18. YOU REFER SEVERAL TIMES ON PAGES 28 AND 29 TO "EXPLORATION" BY THE
COMPANY. AS ONE EXAMPLE, YOU STATE ON THE TOP OF PAGE 29 THAT YOU MAY NEED
SUBSTANTIAL CAPITAL "FOR PARTICIPATION, INVESTIGATION, EXPLORATION, ACQUISITIONS
AND WORKING CAPITAL." THESE REFERENCES TO EXPLORATION AND RELATED ACTIVITIES
APPEAR UNRELATED THE COMPANY'S PLANNED BUSINESS ACTIVITIES, AS DISCLOSED
ELSEWHERE IN YOUR FILING. PLEASE REVISE AS APPROPRIATE; OR ADVISE.
We have revised and removed language where marked (Comment #18) on page 31.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, PAGE 29
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19. PLEASE REVISE THE HEADER IN YOUR TABLE OF BENEFICIAL OWNERSHIP ON
PAGE 20 THAT REFERS TO THE "PRE-OFFERING" PERCENT OF CLASS SO THAT IT CONFORMS
TO THE TABLE CALLED FOR BY ITEM 403(A) OF REGULATION S-K.
We have revised and removed the language on page 33 where marked (Comment #19).
20. YOUR BENEFICIAL OWNERSHIP TABLE INDICATES THAT 600,000 SHARES OF
YOUR COMMON STOCK HELD BY NICHE TECHNOLOGIES, INC. ARE BENEFICIALLY OWNED BY
MESSRS. ROBERT, MICHAEL, SEAN AND DARREN MURPHY, AND THAT 200,000 SHARES OF YOUR
COMMON STOCK HELD BY KESTREL HOLDINGS, INC., ARE BENEFICIALLY OWNED BY MR.
EDWARD SIGMUND. HOWEVER, YOU DO NOT APPEAR TO HAVE INCLUDED THESE 800,000 SHARES
IN CALCULATING THE TOTAL NUMBER OF SHARES BENEFICIALLY OWNED BY YOUR DIRECTORS
AND EXECUTIVE OFFICERS AS A GROUP, OR THE PERCENTAGE OF YOUR COMMON STOCK SO
OWNED. PLEASE REVISE AS APPROPRIATE, OR ADVISE. SEE ITEM 403(B) OF REGULATION
S-K. IN ADDITION, ENSURE THAT YOUR RISK FACTOR DISCLOSURE REGARDING THE
CONTROLLING OWNERSHIP INTEREST HELD BY MANAGEMENT, FOR EXAMPLE THE RISK FACTOR
AT THE TOP OF PAGE 22, IS MATERIALLY COMPLETE, ACCURATE AND CONSISTENT WITH YOUR
BENEFICIAL OWNERSHIP DISCLOSURE.
We have updated the beneficial table on page 33 where marked (Comment #20) to
include the additional shares.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
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BIOGRAPHICAL INFORMATION, PAGE 32
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21. PLEASE ENSURE THAT YOUR DISCLOSURE BRIEFLY DESCRIBES THE BUSINESS
EXPERIENCE DURING THE PAST FIVE YEARS OF EACH DIRECTOR AND EXECUTIVE OFFICERS AS
REQUIRED BY ITEM 401(E) OF REGULATION S-K. INCLUDE THE NAMES OF THE BUSINESS OR
ORGANIZATION, ALONG WITH RESPECTIVE DATES OF EMPLOYMENT, FOR EACH DIRECTOR AND
EXECUTIVE OFFICER. IN THIS REGARD, WE NOTE DISCLOSURES ON PAGE 17, WHERE YOU
STATE THAT YOUR 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, AND ON PAGE 36, WHERE YOU
STATE THAT ALL OF YOUR OFFICERS AND/OR DIRECTORS WILL CONTINUE TO BE ACTIVE IN
OTHER COMPANIES. WE NOTE FURTHER FROM YOUR DISCLOSURES ON PAGE 4 THAT MESSRS.
MICHAEL, ROBERT, SEAN AND DARREN MURPHY ARE CURRENTLY OWNERS AND OPERATORS OF
NICHE PROPERTIES.
We have updated the biographies beginning on page 35 where marked (Comment #21).
CONFLICTS OF INTEREST - GENERAL, PAGE 33
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22. YOU STATE THAT YOUR DIRECTORS AND OFFICERS ARE OR MAY BECOME
OFFICERS, DIRECTORS, CONTROLLING SHAREHOLDERS OR PARTNERS OF OTHER ENTITIES
ENGAGED IN A VARIETY OF BUSINESSES, AND YOU INDICATE THAT CONFLICTS OF INTEREST
RELATING TO THE COMPANY MAY ARISE FROM THE MULTIPLE AFFILIATIONS OF YOUR
OFFICERS AND DIRECTORS. PLEASE SPECIFICALLY IDENTIFY IN THE CONFLICTS OF
INTEREST SECTION ANY SUCH EXISTING AND POTENTIAL CONFLICTS OF INTEREST RELATING
TO THE COMPANY.
We have added a section entitled "Conflicts of Interests - Niche Properties" on
page 36 where marked (Comment #22).
ITEM 6. EXECUTIVE COMPENSATION
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DIRECTOR COMPENSATION, PAGE 36
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23. WE NOTE THAT YOUR DIRECTORS RECEIVED STOCK AWARDS FOR SERVICES
PERFORMED DURING THE PERIOD OF SEPTEMBER 10, 2007 THROUGH DECEMBER 31, 2008, AND
THE PARAGRAPH PRECEDING THE DIRECTOR COMPENSATION TABLE INDICATES THAT THE TABLE
DISCLOSES THE COMPENSATION PAID TO YOUR DIRECTORS FOR THEIR SERVICES AS
DIRECTORS. HOWEVER, ON PAGE 37, YOU STATE THAT DIRECTORS RECEIVE NO COMPENSATION
FOR SERVING AS DIRECTORS. PLEASE CLARIFY THESE SEEMINGLY CONFLICTING
DISCLOSURES.
We have revised the language on page 40 where marked (Comment #23).
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, PAGE 38
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24. PLEASE IDENTIFY THE PROMOTERS OF FAIRWAY PROPERTIES AND PROVIDE THE
DISCLOSURE CALLED FOR BY ITEM 404(B)(1) OF REGULATION S-K; OR TELL US WHY NO
SUCH DISCLOSURE IS REQUIRED. PLEASE SEE THE DEFINITION OF PROMOTER IN RULE 405
OF REGULATION C.
We have reviewed Item 404(b)(1) of Regulation S-K and Rule 405 of Regulation C
and have added additional language on page 42 where marked (Comment #24).
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
HOLDERS, PAGE 40
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25. YOU STATE THAT AS OF THE DATE OF THIS REGISTRATION STATEMENT, YOUR
"SELLING SHAREHOLDERS HOLD 1,404,000 [S]HARES, ALL OF WHICH MAY BE SOLD PURSUANT
TO THIS REGISTRATION STATEMENT." PLEASE REVISE TO REMOVE THE SUGGESTION THAT YOU
ARE REGISTERING AN OFFERING OF SECURITIES; OR ADVISE.
We have removed the paragraph on page 44 where marked (Comment #25).
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES, PAGE 41
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26. WE NOTE THAT YOU HAVE 1,404,000 COMMON SHARES OUTSTANDING, YET YOUR
DISCLOSURES OF RECENT SALES OF UNREGISTERED SECURITIES ONLY ACCOUNTS FOR
1,376,250 SHARES. PLEASE ADVISE; OR REVISE YOUR TABLE OF RECENT SALES OF
UNREGISTERED SECURITIES TO INCLUDE DISCLOSURE REGARDING THE REMAINING SHARES
OUTSTANDING. INCLUDE THE CORRESPONDING DATES, NAMES, AND EXEMPTIONS RELIED UPON
FOR EACH TRANSACTION.
We have amended the table on page 45 where marked (Comment #26).
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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STATEMENT OF OPERATIONS, PAGE F-4
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27. WE NOTE THAT ON OCTOBER 26, 2007, YOU ENTERED INTO A TECHNOLOGY
LICENSE AGREEMENT WITH NICHE PROPERTIES THAT INCLUDES A GUARANTEED MINIMUM
ROYALTY OF $10,000 PER CALENDAR YEAR PAYABLE TO NICHES. PLEASE CLARIFY WHETHER
YOUR STATEMENTS OF OPERATIONS FOR FISCAL 2007 AND 2008 REFLECT THESE PAYMENTS.
IF NOT, PLEASE EXPLAIN WHY AND REVISE YOUR DISCLOSURES AND/OR FINANCIAL
STATEMENTS ACCORDINGLY. IN ADDITION, TELL US WHEN (OR IF) YOU INTEND TO RECORD
THIS CHARGE IN FISCAL 2009. IF YOU BELIEVE THESE PAYMENTS ARE NOT CURRENTLY DUE,
THEN PLEASE CITE THE SPECIFIC TERMS OF THE AGREEMENT THAT ALLOW FOR DEFERRAL OF
SUCH PAYMENTS.
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The Technology License Agreement between Niche Properties and Fairway
Properties, Inc. was amended in March 2010, with the guaranteed minimum royalty
being waived retroactively and modified to $500 per month going forward. Thus,
no accrual was made on the financial statements.
NOTE 3. STOCKHOLDERS' EQUITY, PAGE F-9
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28. WE NOTE THAT DURING FISCAL 2008 YOU ISSUED 11, 448 SHARES TO YOUR
DIRECTORS, WHICH YOU VALUED AT $.001 PER SHARE OR $11.00. PLEASE TELL US HOW YOU
DETERMINED THE VALUE OF SUCH SHARES. IN THIS REGARD, SPECIFICALLY ADDRESS HOW
YOU CONSIDERED THE SALES OF COMMON STOCK THROUGHOUT FISCAL 2008 AT $0.25 PER
SHARE IN DETERMINING THE VALUE OF THE SHARES ISSUED TO DIRECTORS AT OR AROUND
THE SAME TIME.
The common stock issuance of 11,448 shares took place in the first week of
January 2008. The issuance was for services by directors rendered in the
formation stage of the Company in September 2007 and should have been part of
those issuances to directors, which were recorded at $.001 per share. No stock
subscription payable was recorded due to the immaterial amount involved of $11.
SIGNATURE, PAGE 47
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29. PLEASE REVISE YOUR SIGNATURE PAGE TO CONFORM TO THE REQUIREMENTS OF
THE SIGNATURES PORTION OF FORM 10 PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934.
Please see page 51, where the page has been revised to comply.
EXHIBIT 10.1
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30. WE NOTE THAT THE VERSION OF THE TECHNOLOGY LICENSE AGREEMENT
BETWEEN THE COMPANY AND NICHE PROPERTIES FILED AS EXHIBIT 10.1 IS NOT EXECUTED.
PLEASE FILE THE FULLY-EXECUTED VERSION OF THIS AGREEMENT PURSUANT TO ITEM
601(B)(10) OF REGULATION S-K.
A fully executed version of Exhibit 10.2 is attached to this amended
Form 10. A complimentary PDF version is also attached for your records.
We hope that this amendment satisfies your concerns. Please let us know if you
have any further comments.
Sincerely,
/s/ Michael A. Littman
Michael A. Littman
-10-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
FAIRWAY PROPERTIES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Nevada 41-2251802
- ---------------------------------------- ----------------------------
State or other jurisdiction of IRS Identification No.
incorporation or organization
1357 Ocean Avenue, Suite 4, Santa Monica, CA 90401
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (866) 532-4792
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered Name of each exchange on
which each class is to be
registered
- ---------------------------------------- ----------------------------
Not Applicable Not Applicable
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
------------
(Title of class)
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_]
(Do not check if a smaller
reporting company)
- ------------------------------ ---------- ---------------------------- --------
TABLE OF CONTENTS
TITLE PAGE NUMBER
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Item 1 BUSINESS 2
Item 1A RISK FACTORS 18
Item 2 FINANCIAL INFORMATION 28
Item 3 PROPERTIES 31
Item 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 32
Item 5 DIRECTORS AND EXECUTIVE OFFICERS 34
Item 6 EXECUTIVE COMPENSATION 38
Item 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 42
Item 8 LEGAL PROCEEDINGS 43
Item 9 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON 43
EQUITY AND RELATED STOCKHOLDER MATTERS
Item 10 RECENT SALES OF UNREGISTERED SECURITIES 45
Item 11 DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED 47
Item 12 INDEMNIFICATION OF DIRECTORS AND OFFICERS 48
Item 13 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 49
Item 14 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 50
AND FINANCIAL DISCLOSURE
Item 15 FINANCIAL STATEMENTS AND EXHIBITS 50
-1-
ITEM 1. BUSINESS
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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
"FAIRWAY," "WE," "US", "OUR" OR THE "COMPANY" ARE TO FAIRWAY PROPERTIES, INC.
AND ITS SUBSIDIARIES.
ABOUT FAIRWAY PROPERTIES, INC.
Fairway Properties, Inc. ("We," "Us," "Our") 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 have
recently completed development and begun operation of our website. 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. (dba
Niche Properties) ("Niche Properties"), a majority shareholder of the Company.
Through the period ended February 28, 2010, the executive officers contributed
their services and are not receiving salaries at this time. We will begin to pay
salaries to the executive officers in the first fiscal quarter the Company
achieves net income, though we cannot make any assurances as to if the Company
will achieve net income.
From incorporation through July 31, 2009, we worked with Niche Properties to
develop and refine a website that we could use to advertise golf course real
estate listings. After several iterations of the website, Niche Properties
delivered a functioning system in late July 2009 that could perform all the
necessary functionality we need to generate revenue.
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
REVENUE STREAMS
o Property Listing Fees (both one-time and subscriptions)
o Listing Upgrade Fees (for featured listings and featured agents)
-2-
o Advertising Fees (for textual, banner, and rich media ads placed
throughout the website)
o Affiliate Reselling of Niche Properties' Services
On September 13, 2007, in exchange for $25,000 together with interest thereon at
an annual rate of 10%, we executed an unsecured corporate promissory note with
Niche Properties. The note had a term of one year and was due on September 13,
2008. The note was timely paid in full with interest.
On September 19, 2007, we issued 600,000 shares of our common stock to Niche
Properties for services valued at $1,400. These services were in connection with
their work on our website.
Our financial strategy is to maintain low overhead, cross promote to existing
client management relationships, and grow the company organically in the early
stages. We will pay 25% of all our core revenues on a monthly basis as a license
fee to Niche Properties and 75% of our affiliate revenues on a monthly basis as
an affiliate fee to Niche Properties.
WEBSITE STATUS (COMMENT #2)
Our website is currently in a stage of beta testing. Beta testing means we are
in a period of development where we are testing the website for quality
assurance and implementing functionality to the website. As a part of the beta
testing stage we are also gathering feedback from beta website users to help us
improve the website for each development cycle. During the beta testing stage
several improvements have been added to the website to give us a competitive
advantage in the market. These improvements include integration of Omniture
SiteCatalyst. This helps us track analytics and behavior of all visitors to the
website. It tracks and reports a variety of metrics including how a visitor
searches for property on the site, what pages they view, and how they progress
through the website's checkout process when purchasing a listing. Omniture
SiteCatalyst can be used to track the success of any search engine marketing
campaigns using Google Adwords. This allows us to target advertising and
marketing to potential customers searching Google. Another important improvement
to the site has been integrating PayPal to the checkout process to allow
individual property listors to purchase listing packages through the website.
This allows the website to process orders on the website so we do not have to
restrict orders and transactions to phone calls.
Sales may commence in the beta testing 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, optimized with analytic
tracking and is capable of being marketed to the public. The beta testing stage
is expected to be completed during the second or third quarter of 2010. To
complete beta testing we must optimize the checkout process on the website to
make it easier and more efficient to convert website visitors into customers.
This part of the website is fully functional, but needs improved to increase our
customer conversion rates according to our analytics. If we are unable to
complete these final website developments, we may not be able to market the
website or earn revenues to the level we desire.
-3-
With our new website operational, we have begun generating minimal revenue and
are planning additional steps to support revenue growth:
(1) We hired a commission based salesperson in early October 2009 to begin
selling the website's services to real estate agents, property
developers, brokerages, and home builders. This salesperson did not
perform any sales before leaving the Company in January 2010, but did
create a salesperson handbook which we will use once we recruit
additional commission based salespeople.
(2) We have engaged a third party call center to place calls on our behalf
to send potential customers to the website where they can sign up to
list property and make a payment. Phone calls are expected to commence
the final week of April.
(3) We have conducted, and are planning additional, pay-per-click campaigns
with search engines targeting potential property listors. Our most
recent campaign in early March 2010 generated our first paying customer
through the Website.
(4) We are intending to launch several email marketing campaigns to opt-in
customers of other Niche Properties websites. Niche Properties' network
of websites deliver lifestyle targeted real estate searches, and
include LuxuryProperty.com, HistoricalProperties.com,
SkiProperties.com, BankProperties.com, EcoProperties.com,
CastleProperties.com, WaterfrontageProperties.com, MovieProperties.com,
LoftProperties.com, CollegetownProperties.com, and RaceProperties.com.
Niche Properties owns, developed, maintains, updates, and markets the
aforementioned websites. We have engaged a search engine optimization
specialist, through Niche Properties and our website now has (a) Google
page rank of 3 and (b) first page search engine placement for prime
keywords like "golf homes," "golf homes for sale," and "golf homes for
rent."
(5) We have entered in an Affiliate Agreement with Niche Properties whereby
our sales team can resell services offered through the Niche Properties
Network to enhance our service offering.
We are working closely with Niche Properties to implement the above activities,
which we believe will assist in generating revenue. Niche Properties has
monetized two similar lifestyle-based real estate websites (LuxuryProperty.com
and HistoricalProperties.com) using these strategies.
BUSINESS PLAN
GENERAL INFORMATION
Our Company, Fairway Properties, Inc., was incorporated on September 10, 2007.
We are a Nevada corporation organized for the purpose of offering real estate
professionals and advertisers a niche marketing tool, FairwayProperties.com (the
"Website"). Through the Website, we capitalize on the features of e-business
technology. It enables professionals and advertisers to deliver information
-4-
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. Fairway Properties, Inc. provides a means for real
estate professionals and advertisers to conduct business with prospective real
estate buyers and sellers.
COMPANY OVERVIEW
We are a development stage company and have not begun 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.
Since the website launched, we have been focused on hiring salespeople, amassing
prospect lists, preparing email marketing campaigns, and optimizing our search
engine rankings. Using this revenue generating strategy, Niche Properties has
generated revenue for two of its related niche lifestyle websites
(LuxuryProperty.com and HistoricalProperties.com).
Based on our current cash reserves of $35,000, we estimate that we have an
operational budget of one year. During 2010 we have begun to generate revenue
and expect that our monthly sales will cover our monthly operational costs
sometime during late 2010. This expectation is based on (1) the ability of other
websites in the Niche Properties Network, specifically LuxuryProperty.com and
HistoricalProperties.com, to generate revenue and positive ROI and (2) an
amendment to our Technology Licensing Agreement with Niche Properties that
reduces our minimum technology licensing fee. Management believes that this will
enable us to continue forward without raising money through additional offering
of shares, at this time. (COMMENT #4)
We have no recent operating history and no representation is made, nor is any
intended, that we will able to carry on our activities profitably. The
independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009, 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. (COMMENT #3) The viability of the proposed business effort is
dependent upon the generation of revenues from the activities discussed herein,
of which there is no assurance. Michael D. Murphy, Chief Executive Officer,
Treasurer and Director as well as Sean Murphy, President and Director, Darren
Murphy, Secretary, Robert Murphy, Chairman of the Board, and Edward Sigmond,
Director, have prior experience in the e-business technology industry. Michael
D. Murphy, Sean Murphy, Darren Murphy, Robert Murphy and Edward Sigmond devote
part-time efforts to our affairs.
Michael D. Murphy, Sean Murphy and Darren Murphy are brothers. Robert Murphy is
their uncle.
-5-
Our Goals for the next year are as follows:
MILESTONES
- ---------------------------------------- -- ------------------------------------------------------------------------
2nd Quarter 2010 Completion of Registration Statement. Pay-per-click and email
marketing campaigns to generate revenue and solicit feedback from
customers.
- ---------------------------------------- -- ------------------------------------------------------------------------
3rd Quarter 2010 Marketing and selling of golf-centric real estate website and building
awareness and interest in the real estate industry regarding the
advantages and effectiveness of the Company's solution to the golf
real estate niche
- ---------------------------------------- -- ------------------------------------------------------------------------
4th Quarter 2010 Continue phone sales. Partner with golf-related companies to promote
advertising on the Website. Send additional email marketing messages
to prospects. Further strengthen our search engine optimization to
drive online conversions.
- ---------------------------------------- -- ------------------------------------------------------------------------
1st Quarter 2011 Same as Q2 2010. Also, cross promote the Website through other Niche
real estate websites and identify banner advertisers interested in
targeting property searchers on our website.
- ---------------------------------------- -- ------------------------------------------------------------------------
Our plan is 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. We have already earned revenue through both of these
activities.
NICHE TECHNOLOGIES, INC., D/B/A NICHE PROPERTIES LICENSE
On October 26, 2007, we entered into a Technology License Agreement ("License")
with Niche Technologies, Inc., d/b/a/ Niche Properties, our majority
shareholder. Niche Properties owns and operates a collection of lifestyle themed
real estate websites. The websites feature all types of property in all areas of
the world. Niche Properties makes money from property listing fees and banner
advertising on its websites. Niche Properties is a Colorado company that is
owned and operated by Michael D. Murphy, Robert Murphy, Sean Murphy, and Darren
Murphy.
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 Niche Properties web application and
database.
-6-
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 Properties 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.
E-BUSINESS TECHNOLOGY
As an e-commerce business, we intend to capitalize on the unique features of
e-business. These features are not available via traditional offline marketing
solutions. As additional marketing dollars shift from traditional offline
advertising to online advertising, we are poised to leverage our advanced
technology to drive revenues.
E-Business technology stands to revolutionize the traditional marketing
industry. Fairway Properties, Inc. has designed its business to leverage the
core dimensions of e-business technology.
- ---------------------------- --------------------------------------- ------------------------------------------
E-BUSINESS TECH BUSINESS SIGNIFICANCE FAIRWAY PROPERTIES, INC.
DIMENSION SIGNIFICANCE
- ---------------------------- --------------------------------------- ------------------------------------------
UBIQUITY The marketplace extends beyond The desire to search for real estate can
Internet/Web traditional boundaries and is removed happen anytime and anywhere. By
technology is available from a temporal and geographic utilizing the power of the internet, our
everywhere: at home, at location. Shopping, posting listing marketing and advertising services are
work, and elsewhere via information, and web surfing can take designed to create convenience and
mobile devices. place everywhere the internet is flexibility for people visiting the
available. Customer convenience is Website.
enhanced and shopping costs are
reduced.
- ---------------------------- --------------------------------------- ------------------------------------------
GLOBAL REACH Cultural and national boundaries are As the world becomes more globalized the
The technology reaches not an issue for the internet. As the internet gives us the ability to
across national world becomes more globalized the leverage its services across the planet.
boundaries. internet is the primary means to Our clients are not restricted by
reach anyone at anytime. geographic location if they wish to use
"Marketspace" includes potentially our services. Advertisers on the Website
billions of consumers and millions of can reach a global audience.
businesses worldwide.
- ---------------------------- --------------------------------------- ------------------------------------------
-7-
UNIVERSAL By utilizing the internet there is Universal standards make it easy for
STANDARDS a global standard of technology. visitors to come to the Website to
There is one set of Internet technology is the same access information and use our services.
technology standards, throughout the world. Internet users are familiar with
namely internet standards. navigating websites making it seamless
for a wide audience to use our services.
- ---------------------------- --------------------------------------- ------------------------------------------
RICHNESS Video, audio, and text By using media rich content visitors to
The internet makes marketing messages are the Website will be able to fully
video, audio, and integrated into a single experience properties. Off-line
text marketing marketing message and marketing techniques can not convey the
possible consumer 'experience.' richness of internet technologies. We
will integrate video, audio, and text
marketing to create a dynamic experience
for our users.
- ---------------------------- --------------------------------------- ------------------------------------------
INTERACTIVITY Consumers are engaged in a Rich content and productive usability
E-business dialogue that dynamically will make the Website an extremely
technology works adjusts the experience to the interactive experience. People will be
through interaction individual, and makes the able to post and view listings. They
with the user. consumer a co-participant in will be able to view agent, brokerage,
the process of delivering goods and development profile pages. There will
to the market. be videos, which are one of the most
engaging forms of media on the internet.
- ---------------------------- --------------------------------------- ------------------------------------------
INFORMATION Information processing, storage, and We will be able to display large amounts
DENSITY communication costs drop of listing information. Unlike off-line
Web technology reduces dramatically, while relevance, techniques it will not be restricted to
information costs and accuracy, and timeliness improve a page of a newspaper or catalogue.
raises quality. greatly. Information becomes
plentiful and accurate.
- ---------------------------- --------------------------------------- ------------------------------------------
PERSONALIZATION Personalization of marketing messages The primary strategic advantage of our
The technology allows and customization of products and Company is our ability to target a niche
personalized messages to service are based on individual real estate market. As internet users
be delivered to preferences. become more plentiful and search becomes
individuals and groups. more refined, users will gravitate to
niche sites that are tailored and
dedicated to their interests.
- ---------------------------- --------------------------------------- ------------------------------------------
-8-
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. We, in our specific golf real estate vertical, seek to
capitalize on this trend. (COMMENT #5)
RICH MEDIA - Web 2.0 is defined by rich, interactive media. We intend to use
video and a blog to convey a unique and dynamic user experience. Video is still
very new to online real estate, and the ability to implement this technology
will set us apart from our competitors.
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, traffic and ultimately,
revenue.
DOMAIN NAMES - Many niche real estate websites have long domain names, which are
too long to be effective or memorable. We look to capitalize where our
competition has failed by securing premium niche domain names through licensing
agreements. These short, generic, and market specific names have a greater
likelihood of generating direct navigation traffic to the Website.
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 Properties.
SEARCH ENGINE OPTIMIZATION - We intend to 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 Properties, we
intend to 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.
EMAIL MARKETING - We will design and coordinate email campaigns targeted to
sellers of golf real estate. These emails will have tracking code to determine
click through rates and user behavior on the website in order to gauge the
effectiveness of the emails.
-9-
PHONE SALES - We will utilize a trained group of consultants to place phone
calls to golf real estate agents. Larger revenue deals, such as those geared
towards golf course developments and real estate brokerages, will be handled by
company executives.
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
Pay-Per-Listing Packages:
o 1 listing for 3 months - $9.98/month
o 3 listings for 3 months - $29.95/month
o 5 listings for 3 months - $49.92/month
o Additional months may be purchased on a per listing basis for
$9.98/month
Subscription Packages:
o Unlimited listings for 3 months - $49.98/month
o Unlimited listings for 6 months - $41.66/month
o Unlimited listings for 12 months - $29.16/month
We also offer two programs geared toward real estate brokerages: our Company
Listing Plan and our Company Partnership Plan.
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. Pricing for the Company Listing Plans is as follows:
-10-
6 MONTHS 12 MONTHS
-------- ---------
Small Companies (1-100 agents) $6,000 USD $8,000 USD
Medium Companies (101-500 agents) $7,500 USD $10,000 USD
Large Companies (501+ agents) $9,000 USD $12,000 USD
Company Partnership Plans:
These plans are designed for companies wishing to promote FairwayProperties.com
to its agents in exchange for the following:
(1) $10 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, REGULATION AND TAXATION
COMPETITION.
We plan to 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. (COMMENT #7)
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.
-11-
GOLFCOURSEHOME.NET
This site is our largest competitor. It is more than just a single website; it
is a network of 26 member sites which all have some connection to the golf
community niche. This `network' allows them to generate traffic and spread their
reach across localized markets. Effectively, they are taking the `niche' concept
a step further by looking at golf communities within the general golf niche. On
its primary site, GolfCourseHome.net, an agent, brokerage, or homebuilder can
list a community for $3,425 and get his/her/its community listed on all of the
pertinent member sites. The listing entity receives the leads generated from its
community listings.
GOLFCOURSEREALTY.COM
This is a website featuring searches for golf homes, communities, and condos.
The site generates traffic by supplying content from a large golf syndicating
platform (Golf Publishers). A user can create a free account and list a
property. The site generates revenue by selling Google AdSense ads and upgraded
listing packages.
GOLFHOMECONNECT.COM
This site has similar navigation to GolfCourseRealty.com. It also generates
revenue through Google AdSense. It recently shifted its business model from a
free listing service to a pay-for listing service. It generates revenue through
three listings packages. Higher priced listing packages offer more features and
benefits.
GOLFHOMES.COM
GolfHomes.com was recently acquired by the Dream Home Network, owned and
operated by LakeHouse.com. The company is similar to Niche Properties in that
they operate niche focused real estate websites. Their two websites are
GolfHomes.com and LakeHouse.com. Following the acquisition, the GolfHomes.com
website and model changed to reflect the one being used on LakeHouse.com. It
shifted from a site that earned revenue from referral fees to a site with a
pay-for listing model.
COMPETITION AND ADVANTAGE (COMMENT #6)
Two of our four competitors recently shifted from a free listing service (using
Google AdSense and referral commissions) to a pay-for listing model. We believe
this shift validates our model, but may pose a competitive threat. To defend
against this threat and create an advantage we've done several things.
FairwayProperties can be self service for agents to purchase and list
properties. We've integrated a PayPal checkout feature into
FairwayProperties.com to make it easy, safe and secure for customers to purchase
and list properties. Of our competitors only GolfHomeConnect.com uses PayPal.
This feature provides real estate professionals the ability to purchase a
listing directly on the website. We do not have to call or invoice a customer to
transact a payment. Our model is more efficient since we can allocate our sales
resources to calling top customers (companies) while we can continually monetize
individual real estate professionals directly on the Website.
-12-
FairwayProperties.com also distinguishes itself by providing real estate
professionals and companies a do-it-yourself listing option. Two of our
competitors recently shifted to this model (GolfHomeConnect.com and
GolfHomes.com) because it is more efficient and effective to list properties.
This feature allows individuals and companies the ability to list their property
on the Website. They do not need to mail or email their information to us to get
their property listed on the Website. We do provide customer service if they
need help listing their property, but we've found many individual real estate
professionals prefer to customize their listings on their own.
We also distinguish our service based on our range of features and pricing
flexibility. Our entry level package (1 listing for 3 months - $9.98/month) is
similar to GofHomes.com. However, our listing service provides more
customizations to the property including unlimited pictures, text, links and an
agent profile page. Our top end product is geared to real estate companies and
offers greater benefit than any of our competitors can offer. By purchasing a
Company Listing Pan, our clients can syndicate listings to every suitable site
in the Niche Properties Network. This provides greater advertising and marketing
value for our clients, something the competition can not offer.
We believe our target audience will pay to list on our site because we've seen
the model work on two other niche websites in the Niche Properties Network,
LuxuryProperty.com and HistoricalProperties.com. It is a proven model. We
attract and convert customers using search engine marketing (primarily Google
Adwords), search engine optimization (increasing search result rankings for top
keywords) and through analytics with Omniture SiteCatalyst. None of our
competitors use Omniture SiteCatalyst. We believe using Omniture SiteCatalyst is
our greatest competitive advantage. It requires signficant technical knowledge
and time to implement provided by Omniture. It helps us increase sales
conversions by tracking what visitors are doing on the website. We know exactly
where they click, where they go on the website and when they leave. This helps
us know what is working and what isn't. With this information we optimize pages
that help create the best return on the advertising and marketing money we spend
to attract visitors to the site. None of our competitors have access to this
sort of information on their website and will not be able to compete with our
ability to drive on-site customer conversions.
Our management team has a proven track record building real estate websites that
generate revenue. During the last two years, they have successfully built and
monetized LuxuryProperty.com and HistoricalProperties.com. These website are
operated by Niche Properties. Both websites operate a similar business model to
FairwayProperties.com. We believe our management's success with these other
sites is evidence of the viability of our business model. We also believe it
shows our management team's ability to generate revenue in the real estate
marketing and advertising industry. However, we can provide no assurance that we
will continue to have similar success with FairwayProperties.com and be able to
successfully market a commercially viable product or compete in the golf real
estate vertical.
MARKETS.
Our target market consists of real estate agents, for-sale-by-owner sellers,
brokerages, golf communities, home builders, and resorts that may require
marketing and advertising services for properties on or near golf courses
worldwide. In North America alone there are approximately 7,955 public courses,
-13-
995 resort courses, 4,256 private courses, 3,541 semi-private courses, and 197
military courses (Source: GOLF MAGAZINE - Golf Course Guide).
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.
HOME BUILDERS
Home builders are companies/individuals interested in listing their new
construction listings on the site. Their company information and listings will
be displayed on a profile page if they upgrade to a premium or featured account.
Home builders represent a section of the market frequently overlooked by real
estate websites.
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.
RESORTS
Resorts encompass any type of rental or non-ownership accommodation associated
within this niche market. A resort will be able to enter company information on
its profile page. This is a way for resorts to target prospective travelers
interested in staying on or around golf courses when they travel.
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. (COMMENT #8)
-14-
GOVERNMENTAL REGULATION
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;
* 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 Properties ability to develop and our ability to
market the website application in accordance with our business plan.
NUMBER OF PERSONS EMPLOYED
As of March 31, 2010, we had no full-time employees. Officers and Directors work
on an as needed part-time basis up to 10 hours per week. We do not currently
plan to hire any employees. We outsource all website administration and support
to our vendors.
PLAN OF OPERATIONS
We had no operations prior to and we did not have any revenues during the fiscal
years ended December 31, 2008 and 2009. We have minimal capital, minimal cash,
and our intangible assets consist only of our business plan, relationships, and
contacts. 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. Since the
website launched, we have been focused on hiring salespeople, amassing prospect
lists, preparing email marketing campaigns, and optimizing our search engine
rankings. Using this revenue generating strategy, Niche Properties has generated
revenue for two of its related niche lifestyle websites (LuxuryProperty.com and
HistoricalProperties.com).
-15-
IN FURTHERANCE OF OUR BUSINESS MODEL:
On October 26, 2007, we entered into a licensing agreement with Niche Properties
to secure use of its Niche Properties web application and the
fairwayproperties.com domain name. We agreed with Niche Properties to amend this
licensing agreement on March 5, 2010, to change the Minimum Guaranteed Royalty
rate and allow us to resell the services offered through the Niche Properties
Network.
The projected time to complete each of the elements of our plan of operations
and its anticipated cost are discussed below: (COMMENT #9)
PLAN OF OPERATIONS
- -------------------------------------- -----------------------------------------------------------------------------
2nd Quarter 2010 o Completion of Registration Statement ($10,000).
o Pay-per-click and email marketing campaigns to generate revenue
and solicit feedback from customers ($500).
o Phone sales via 3rd party outbound call consultants ($500).
- ------------------------------------- -----------------------------------------------------------------------------
3rd Quarter 2010 o Marketing and selling via email and SEM of golf-centric real
estate website and building awareness and interest in the real
estate industry regarding the advantages and effectiveness of the
Company's solution to the golf real estate niche ($500).
o Selling of listing packages on the Website via 3rd party phone
call consultants ($500)
- -------------------------------------- -----------------------------------------------------------------------------
4th Quarter 2010 o Send additional email marketing messages to prospects ($500).
o Continue phone sales ($500).
o Partner with golf-related companies to promote advertising on the
Website ($0).
o Further strengthen our search engine optimization to drive online
conversions ($0).
- -------------------------------------- -----------------------------------------------------------------------------
1st Quarter 2011 o Email/SEM/phone calls same as Q4 2010 ($1,000).
o Cross promote the Website through other niche real estate
websites and find banner advertisers interested in targeting
property searchers on our website ($500).
- -------------------------------------- -----------------------------------------------------------------------------
-16-
Our Budget for operations in next twelve months is as follows:
MAXIMUM
----------------------------
Legal Fees (Registration Statement) $10,000
Legal Fees (Other) $5,000
Blue Sky Fees $3,000
Accounting $5,000
Transfer Agent Fees $1,000
Email and SEM Campaigns $2,000
3rd Party Phone Sales $2,000
Cross Promotion Advertising $500
Guaranteed Minimum Royalties $5,000
General and administrative expenses $500
----------------------------
$34,000
----------------------------
Based on our current cash reserves of $35,000, we have an operational budget of
one year. We have begun generating revenue and expect that our monthly sales
will cover our monthly operational costs sometime during late 2010. This
expectation is based on (1) the ability of other websites in the Niche
Properties Network, specifically LuxuryProperty.com and
HistoricalProperties.com, to generate revenue and positive ROI and (2) an
amendment to our Technology Licensing Agreement with Niche Properties that
reduces our minimum technology licensing fee. This should enable us to continue
forward without raising money through additional offering of shares. (COMMENT
#3). However, if we are unable to generate enough revenue to cover our
operational costs, we will need to seek additional sources of funds. Currently,
we have NO committed source for any funds as of date hereof. No representation
is made that any funds will be available when needed. In the event funds cannot
be raised if and when needed, we may not be able to carry out our business plan
and could fail in business as a result of these uncertainties. (COMMENT #10)
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009, 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. (COMMENT #3)
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
-17-
ITEM 1A. RISK FACTORS
- ----------------------
FORWARD LOOKING STATEMENTS
This registration statement 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 registration statement 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
(COMMENT #11) 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
DOWNTURN, AMIDST POOR GENERAL ECONOMIC CONDITIONS.
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.
OUR BUSINESS IS A DEVELOPMENT STAGE COMPANY AND UNPROVEN AND THEREFORE RISKY.
We have only very recently adopted the business plan described herein-above.
Potential investors should be made aware of the risk and difficulties
encountered by a new enterprise in the internet marketing business, especially
in view of the intense competition from existing businesses in the industry.
WE HAVE A LACK OF REVENUE HISTORY AND INVESTORS CANNOT VIEW OUR PAST PERFORMANCE
SINCE WE ARE A START-UP 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,
-18-
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 nomincal revenues since incorporation. 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 TO OUR INVESTORS.
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
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 Properties for a website and domain names, and to fund the costs
and fees associated with the filing of this Registration Statement and could
exceed $32,000 in the next twelve months. We have cash as of the date of this
Registration Statement of approximately $35,000.
We have no operating history and no revenues and it may be unlikely that we will
raise that additional working capital from this Registration.
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. See "Directors and Executive
Officers" (page 31), and "Conflicts of Interest" (page 33). Our officers are
spending part-time in this business - up to 10 hours per week.
WE MIGHT NEED ADDITIONAL FINANCING FOR WHICH WE HAVE NO COMMITMENTS, AND THIS
MAY JEOPARDIZE EXECUTION OF OUR BUSINESS PLAN.
We have limited funds, and such funds may not be adequate to carryout the
business plan in the internet marketing industry. 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.
-19-
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.
WE HAVE A MINIMAL OPERATING HISTORY, SO INVESTORS HAVE NO WAY TO GAUGE OUR LONG
TERM PERFORMANCE.
We were formed on September 10, 2007 and only recently adopted a business plan
in the golf internet marketing industry. As evidenced by the financial reports
we have had no revenue. We must be regarded as a new or development venture with
all of the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject. Our venture must be considered highly speculative.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
Because of the limited financial resources that we have, it is unlikely that we
will be able to diversify our operations. Our probable inability to diversify
our activities into more than one area will subject us to economic fluctuations
within the internet marketing industry and therefore increase the risks
associated with our operations due to lack of diversification.
WE WILL DEPEND UPON MANAGEMENT BUT WE WILL HAVE LIMITED PARTICIPATION OF
MANAGEMENT.
We currently have four individuals who are serving as our officers and
directors, each up to 10 hours total per week and each on a part-time basis. Our
directors are also acting as our officers. We will be heavily dependent upon
their skills, talents, and abilities, as well as several consultants to us, to
implement our business plan, and may, from time to time, find that the inability
of the officers, directors and consultants to devote their full-time attention
to our business results in a delay in progress toward implementing our business
plan. (COMMENT #11) See "Management." Because investors will not be able to
manage our business, they should critically assess all of the information
concerning our officers and directors.
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. (See "Executive Team")
-20-
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. (See "Conflicts of Interest" at page 33)
RISK FACTORS RELATING TO OUR COMPANY AND OUR BUSINESS
(COMMENT #11)
WE HAVE LIMITED OPERATING HISTORY AND THERE IS VERY LITTLE INFORMATION ON OUR
COMPANY WHICH LIMITS YOUR ABILITY TO EVALUATE OUR COMPANY.
We are a development-stage company with limited prior business operations and no
revenues to date. We commenced our operations on September 13, 2007. We are
presently engaged in development of an internet marketing service to real estate
professional and real estate buyers/sellers throughout the world. Unless we are
able to secure adequate funding, we may not be able to successfully continue
development and market our products and our business will most likely fail.
Because of our limited operating history, you may not have adequate information
on which you can base an evaluation of our business and prospects. To date, we
need to accomplish the following in order to establish ourselves and our
internet platform in the market:
o rely on Niche Properties to further refine the
FairwayProperties.com website;
o generate high quality traffic to the FairwayProperties.com
website; and
o build relationships with potential clients wishing to list
properties on the website.
Failure to obtain funding for continued development and marketing would result
in us having difficulty growing our revenue or achieving profitability. You
should be aware of the increased risks, uncertainties, difficulties and expenses
we face as a development stage company and our business may fail and you may
lose your entire investment.
WE ARE DEPENDENT ON THE WEB APPLICATION PROVIDED BY NICHE PROPERTIES, TO PROVIDE
THE FUNCTIONALITY FOR OUR WEBSITE. IF THE NICHE PROPERTIES 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 Properties web application. There is a risk that the system
integration and software programming that we receive from Niche Properties will
contain errors and defects including errors and defects in the system's security
-21-
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 Properties, 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 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
Properties for our website. If Niche Properties 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 PROPERTIES 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 RELY ON MR. SEAN MURPHY, OUR PRESIDENT, AND MR. MICHAEL D. MURPHY, OUR CEO,
WHO DO NOT DEVOTE THEIR FULL BUSINESS TIME TO OUR BUSINESS.
We rely principally on Mr. Sean Murphy and Mr. Michael D. Murphy for their
entrepreneurial skills and experience to implement our business plan. Presently
Messrs. Murphy and Murphy do not devote their full time and attention to our
affairs which could result in delays in implementing our business plan. Our
success depends to a critical extent on the continued efforts of services of our
President and Chief Executive Officer.
If we were to lose Messrs. Murphy and Murphy, we would be forced to expend
significant time and money in the pursuit of a replacement, which would result
in both a delay in the implementation of our business plan and the diversion of
limited working capital. We can give you no assurance that we can find
satisfactory replacements for these key executive officers at all, or on terms
that are not unduly expensive or burdensome to our company. We do not currently
carry a key-man life insurance policy on Mr. Michael D. Murphy or Mr. Sean
Murphy, which would assist us in recouping our costs in the event of the loss of
either of these officers. Moreover, we do not have an employment agreement with
any of our directors or officers including Messrs. Murphy and Murphy.
Accordingly, if Messrs. Murphy and Murphy do not continue to manage our affairs,
or devote sufficient amounts of their business time to enable us to implement
our business plan, our business would likely fail and you may lose your entire
investment.
-22-
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. Robert
Murphy is their uncle. Together, Michael, Sean, Darren and Robert Murphy are
majority shareholders of Niche Properties, 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 fourth Director, Ed
Sigmond, is not related to the Murphy family.
SOME OF OUR BUSINESS ASSOCIATES HAVE NOT SIGNED A CONFIDENTIALITY AGREEMENT. AS
SUCH THERE IS THE RISK THAT INFORMATION COULD BE DISCLOSED TO OTHER PARTIES AND
USED BY OTHER PARTIES CAUSING IRREPARABLE HARM TO OUR BUSINESS OR POTENTIALLY
BUSINESS FAILURE.
Even though our confidentiality agreement provides protection for us to a
certain degree, some of the Company's business associates have not executed a
confidentiality agreement. These business associates could disclose pertinent
information to another party and the information could be used by the party.
This could cause irreparable harm to our Company and may cause our business to
fail.
(COMMENT #12)
WE ARE SUBJECT TO CERTAIN ANTI-TAKEOVER PROVISIONS UNDER NEVADA LAW, WHICH COULD
DISCOURAGE OR PREVENT A POTENTIAL TAKEOVER OF OUR COMPANY THAT MIGHT OTHERWISE
RESULT IN YOU RECEIVING A PREMIUM OVER THE MARKET PRICE FOR YOUR COMMON SHARES.
As a Nevada corporation, we are subject to certain provisions of the Nevada
General Corporation Law that anti-takeover effects and may inhibit a
non-negotiated merger or other business combination. These provisions are
intended to encourage any person interested in acquiring us to negotiate with,
and to obtain the approval of, our Board of Directors in connection with such a
transaction. However, certain of these provisions may discourage a future
acquisition of us, including an acquisition in which the shareholders might
otherwise receive a premium for their shares. As a result, shareholders who
might desire to participate in such a transaction may not have the opportunity
to do so.
WE WILL HAVE WORKING CAPITAL NEEDS FOR WHICH WE HAVE NO FUNDING COMMITMENTS.
Our working capital needs of consist primarily of marketing and sales costs for
an on-line golf course real estate sales tool, licensing fees from Niche
Technologies, Inc. d/b/a Niche Properties for a website and domain names, and
the costs and fees associated with the filing and administration of this
Registration Statement. These are estimated to total over $30,000 in the next
twelve months, none of which funds are committed. We have only $40,000 cash as
of the date of this prospectus.
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.
-23-
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 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.
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 ROBERT MURPHY, ONE OF OUR DIRECTORS,
CONTROL APPROXIMATELY 53% OF OUR OUTSTANDING COMMON STOCK, THEY WILL CONTROL AND
MAKE CORPORATE DECISIONS AND INVESTORS WILL HAVE LIMITED ABILITY TO AFFECT
CORPORATE DECISIONS.
Messrs. Michael D. Murphy and Robert Murphy control approximately 43% of the
outstanding shares of our common stock beneficially through Niche Properties,
our majority shareholder. This beneficial ownership, combined with their
individual holdings in the Company, gives them almost complete influence in
determining the outcome of all corporate transactions and business decisions.
The interests of Messrs. Murphy and Murphy may differ from the interests of the
other stockholders, and since they have the ability to control most decisions
through their control of our common stock, our investors will have limited
ability to affect decisions made by management.
-24-
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY
OF OUR SECURITIES.
We are a "penny stock" company. None of our securities currently trade in any
market and, if ever available for trading, will be 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.
-25-
NO PUBLIC MARKET EXISTS FOR OUR COMMON STOCK AT THIS TIME, AND THERE IS NO
ASSURANCE OF A FUTURE MARKET.
There is no public market for our common stock, and no assurance can be given
that a market will develop or that a shareholder ever will be able to liquidate
his investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Factors such as those discussed in
the "Risk Factors" section may have a significant impact upon the market price
of the shares offered hereby. Due to the low price of our securities, many
brokerage firms may not be willing to effect transactions in our securities.
Even if a purchaser finds a broker willing to effect a transaction in our
shares, the combination of brokerage commissions, state transfer taxes, if any,
and any other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of our shares as collateral for any loans.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
Shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. We are registering all of our outstanding shares so officers,
directors and affiliates will be able to sell their shares if this Registration
Statement becomes effective. Rule 144 provides in essence that a person who has
held restricted securities for six months, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
non-affiliate after the owner has held the restricted securities for a period of
two years. A sale under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of common stock of
present stockholders, may have a depressive effect upon the price of the common
stock in any market that may develop.
OUR INVESTORS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS
CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to our shareholders (COMMENT #11) as a result
of future decisions of the Board to issue shares without shareholder approval
for cash, services, or acquisitions.
OUR STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE
UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR
SHARES.
The shares of our common stock, if listed, may be thinly-traded on the OTC
Bulletin Board, meaning that the number of persons interested in purchasing our
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 we are 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 we came to
the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven, early stage company such as ours or purchase or
-26-
recommend the purchase of any of our Securities until such time as we became
more seasoned and viable. As a consequence, there may be periods of several days
or more when trading activity in our 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. We cannot give you any assurance that a broader or more
active public trading market for our common Securities will develop or be
sustained, or that any trading levels will be sustained. Due to these
conditions, we can give investors no assurance that they will be able to sell
their shares at or near ask prices or at all if they need money or otherwise
desire to liquidate their securities of our Company.
OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT
YOU MAY NOT BE ABLE TO SELL YOUR SECURITIES AT OR ABOVE THE PRICE THAT YOU MAY
PAY FOR THE SECURITY.
Because of the limited trading market expected to develop for our common stock
and because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
Securities in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our Securities may
suffer greater declines because of our price volatility.
The price of our common stock that will prevail in the market after this
offering may be higher or lower than the price you may pay. Certain factors,
some of which are beyond our control, that may cause our share price to
fluctuate significantly include, but are not limited to the following:
o Variations in our quarterly operating results;
o Loss of a key relationship or failure to complete significant
transactions;
o Additions or departures of key personnel; and
o Fluctuations in stock market price and volume.
Additionally, in recent years the stock market in general, and the
over-the-counter markets in particular, have experienced extreme price and
volume fluctuations. In some cases, these fluctuations are unrelated or
disproportionate to the operating performance of the underlying company. These
market and industry factors may materially and adversely affect our stock price,
regardless of our operating performance. In the past, class action litigation
often has been brought against companies following periods of volatility in the
market price of those companies common stock. If we become involved in this type
of litigation in the future, it could result in substantial costs and diversion
of management attention and resources, which could have a further negative
effect on your investment in our stock.
(COMMENT #11)
OUR BUSINESS IS HIGHLY SPECULATIVE AND THE INVESTMENT IS THEREFORE RISKY.
Due to the speculative nature of our business, it is probable that the
investment in shares offered hereby will result in a total loss to the investor.
Investors should be able to financially bear the loss of their entire
-27-
investment. Investment should, therefore, be limited to that portion of
discretionary funds not needed for normal living purposes or for reserves for
disability and retirement.
WE WILL BECOME A REPORTING COMPANY UPON THE FILING OF THIS REGISTRATION
STATEMENT, BUT OUR STOCK IS NOT PUBLICLY TRADED.
There is no trading market for our common stock. We will be subject to the
reporting requirements under the Securities and Exchange Act of 1934, Section
13a, pursuant to Section 15d of the Securities Act and we intend to be
registered under Section 12(g). As a result, shareholders will have access to
the information required to be reported by publicly held companies under the
Exchange Act and the regulations thereunder. We intend to provide our
shareholders with quarterly unaudited reports and annual reports containing
financial information prepared in accordance with generally accepted accounting
principles audited by independent certified public accountants and we intend to
be registered under the Securities Exchange Act, Section 12(g).
OUR PRESENT AND FUTURE SHAREHOLDERS WILL SUFFER DILUTION BY NEW ISSUANCES IN THE
FUTURE WHICH MAY OCCUR.
Upon the sales of Shares, there may be substantial dilution to our Security
holders. The sale price of our shares is substantially higher than the pro forma
current net tangible book value per share of our outstanding common stock. The
net tangible book value attributable to our shares as of December 31, 2009 and
December 31, 2008 was $0.03 per share. Net tangible book value per share of
common stock is determined by dividing the number of outstanding shares of
common stock into the net tangible book value attributable to our common stock,
which is our total tangible assets less our total liabilities.
ITEM 2. FINANCIAL INFORMATION
- ------------------------------
MANAGEMENTS' DISCUSSION AND ANALYSIS (COMMENT #14)
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. (COMMENT #13)
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.
-28-
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT ON THE COMPANY'S
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2009 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, 2009 COMPARED TO THE YEAR ENDED DECEMBER 31,
2008.
During the years ended December 31, 2009 and 2008, we did not recognize any
revenues from our operations. Operations during this period were focused on the
development our website and not on revenue generating activities.
During the year ended December 31, 2009, we incurred operational expenses of
$2,633 compared to $15,680 during the year ended December 31, 2008. The decrease
of $13,047 was a result of a $6,082 decrease in general and administrative
expenses, combined with the $6,965 decrease in legal expenses. The resulting
decrease in operational expenses was a result of the Company's focus on the beta
testing of its website, during the year, compared to the prior year.
During the year ended December 31, 2009, we incurred a net loss of $2,633
compared to a net loss of $16,640 during the year ended December 31, 2008. The
decrease of $14,007 was a result of the $13,047 decrease in operational
expenses, discussed above, offset by a $960 decrease in interest expense.
During the year ended December 31, 2009, we recognized a net loss per share of
$0.00, during the year ended December 31, 2008 net loss per share was $0.01.
LIQUIDITY
DURING THE YEARS ENDED DECEMBER 31, 2009 AND 2008
At December 31, 2009, we had total current assets of $38,775, consisting solely
of cash. At December 31, 2009, we had current liabilities of $713, consisting
solely of accrued interest. At December 31, 2009, we had working capital of
$39,488.
During the year ended December 31, 2009, we used $1,920 in our operating
activities. During the year ended December 31, 2009, net losses $2,630 which
were not adjusted for any non-cash items. During the year ended December 31,
2009, accrued interest increased by $713.
During the year ended December 31, 2008, we used $12,431 in our operating
activities. During the year ended December 31, 2008, net losses of $16,640 were
adjusted by the non-cash item of common stock issued for services of $4,949.
During the years ended December 31, 2009 and 2008, we did not use or receive
funds from any investing activities.
During the year ended December 31, 2009, we did not use or receive funds from
financing activities. During the year ended December 31, 2008, we received
-29-
$44,750 from our financing activities. During the year ended December 31, 2007,
we received $25,000 from a loan from a majority shareholder, which was repaid
during the year ended December 31, 2008.
During the year ended December 31, 2008, the Company issued 11,448 shares of its
restricted common stock to its directors. The shares were issued at par value of
$0.001 per share for a value of $11.
During the year ended December 31, 2008, the Company issued 279,000 shares of
its restricted common stock in exchange for cash of $69,750. The shares were
sold at a purchase price of $0.25 per share.
During the year ended December 31, 2008, the Company issued 19,750 shares of its
restricted common stock in exchange for services totaling $4,949. The shares had
a price of $0.25 per share.
On October 26, 2007, we entered into a Technology License Agreement ("License")
with Niche Technologies, Inc., d/b/a/ Niche Properties, our majority
shareholder. Niche Properties owns and operates a collection of lifestyle themed
real estate websites. 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 Niche Properties 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 Properties 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. (COMMENT #16)
SHORT TERM (COMMENT #17)
Based on our current cash reserves of $35,000, we have an operational budget of
one year. We have begun generating revenue and expect that our monthly sales
will cover our monthly operational costs sometime during late 2010. This
expectation is based on (1) the ability of other websites in the Niche
Properties Network, specifically LuxuryProperty.com and
HistoricalProperties.com, to generate revenue and positive ROI and (2) an
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amendment to our Technology Licensing Agreement with Niche Properties that
reduces our minimum technology licensing fee. This should enable us to continue
forward without raising money through additional offering of shares.
We expect to incur operational expenses as a result of becoming a public company
in order to meet the filing requirements of the SEC and the requirements of
FINRA. We may see an increase in our legal and accounting expenses as a result
of such requirements. It is likely that we will see an increase in such expenses
as a result of the requirement for smaller reporting companies to have an audit
performed of such internal controls. (COMMENT #15)
However, if we are unable to generate enough revenue to cover our operational
costs, we will need to seek additional sources of funds. Currently, we have NO
committed source for any funds as of date hereof. No representation is made that
any funds will be available when needed. In the event funds cannot be raised if
and when needed, we may not be able to carry out our business plan and could
fail in business as a result of these uncertainties.
Our assets were $38,775 and liabilities were $40,695as of December 31, 2009.
GOING CONCERN
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009, 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.(COMMENT #18).
NEED FOR ADDITIONAL FINANCING
If are sales efforts over the course of the next year are unsuccessful, we will
not have capital sufficient to meet our cash needs beyond 12 months. We will
have to seek loans or equity placements to cover such cash needs. Our majority
shareholder, Niche Technologies (d/b/a Niche Properties), will not be able to
provide additional funds. Consequently, we will have to look to other sources
for capital. At this time, no commitments to provide additional funds from any
party, including our management and stockholders, have been made. 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.
ITEM 3. PROPERTIES
- -------------------
Our executive offices were recently moved to 1357 Ocean Avenue, Suite 4, Santa
Monica, CA 90401. Prior to that they were located at 1614 15th St, Denver, CO
80202. The Company's telephone number is (866) 532-4792; and the fax number is
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(866) 789-4653. At this time Niche Properties allows Fairway to use its offices
for its operations without charge.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ----------------------------------------------------------------------
The following table sets forth information with respect to the beneficial
ownership of Fairway outstanding common stock by:
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, 2009.
There are currently 140,000,000 common shares authorized of which 1,404,000 are
outstanding.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
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TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF (COMMENT #19)
BENEFICIAL OWNER* PERCENT OF CLASS
- --------------------- ---------------------------------------- ------------------------ -------------------
Common shares Niche Technologies, Inc. (beneficially 600,000 42.73%
Robert Murphy Michael D. Murphy, Sean
Murphy and Darren Murphy)
1357 Ocean Avenue, Suite 4
Santa Monica, CA 90401
Common shares Robert Murphy, 72,000 5.13%
Chairman of the Board
1357 Ocean Avenue, Suite 4
Santa Monica, CA 90401
Common shares Michael D. Murphy, 72,000 5.13%
CEO/Treasurer and Director
1357 Ocean Avenue, Suite 4
Santa Monica, CA 90401
Common shares Sean Murphy, 72,000 5.13%
President and Director
1357 Ocean Avenue, Suite 4
Santa Monica, CA 90401
Common shares Darren Murphy, 0 0%
Secretary
1357 Ocean Avenue, Suite 4
Santa Monica, CA 90401
Common shares Edward Sigmond, Director 81,250 5.79%
2808 Cole Avenue
Dallas, TX 75204
Common shares Kestrel Holdings, Inc. 200,000 14.25%
(beneficially Edward Sigmond)
2808 Cole Avenue
Dallas, TX 75204
------------------------ -------------------
Officers and Directors (5 individuals) 1,097,250 78.15%
(COMMENT #20)
*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
-33-
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. Included in
this table are only those derivative securities with exercise prices that
Fairway believes have a reasonable likelihood of being "in the money" within the
next sixty days.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
- -----------------------------------------
The following table sets forth information as to persons who currently serve as
Fairway directors or executive officers, including their ages as of December 31,
2009.
- -------------------- ------------ --------------------------- ------------------
NAME AGE POSITION TERM
- -------------------- ------------ --------------------------- ------------------
Michael D. Murphy 28 Chief Executive Officer, Annual
Chief Financial Officer,
Treasurer and Director
- -------------------- ------------ --------------------------- ------------------
Sean Murphy 25 President, Secretary and Annual
Director
- -------------------- ------------ --------------------------- ------------------
Darren Murphy 24 Secretary Annual
- -------------------- ------------ --------------------------- ------------------
Robert Murphy 41 Chairman of the Board Annual
- -------------------- ------------ --------------------------- ------------------
Edward Sigmond 51 Director Annual
- -------------------- ------------ --------------------------- ------------------
Michael D. Murphy, Sean Murphy and Darren Murphy are brothers. Robert Murphy is
their uncle.
PRESENTLY, MESSRS. MURPHY, MURPHY, MURPHY, AND MURPHY ARE EMPLOYED BY AND
INVOLVED IN THE MANAGEMENT OF AND ARE OWNERS OF NICHE PROPERTIES. ADDITIONALLY,
NICHE PROPERTIES IS A MAJORITY SHAREHOLDER OF FAIRWAY PROPERTIES.
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
-34-
arrangement or understanding between the directors and officers of Fairway and
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 (COMMENT #21)
MICHAEL D. MURPHY, age 28, is Chief Executive Officer, Chief Financial 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, and
oversees all Niche Properties websites. 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. Michael 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 25, 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 inthe 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. and manages the Niche Properties websites.
Before oining 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 24, 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. Darren joined Niche Technologies, Inc. in 2008 and is currently
employed by the company. Darren 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 Darren was a full-time student.
ROBERT MURPHY, age 41, is Chairman of the Board of Fairway Properties, Inc.
Mr. Murphy's experience includes serving as Chairman of the Board for Luxurio
Inc., an online luxury company. He co-founded Luxurio Inc. in 2006 and Niche
Technologies, Inc. in 2007 with Michael Murphy. He is currently employed at
Niche Technologies, Inc. Before then he worked as a licensed real estate
professional in Chicago's north shore with Coldwell Banker (2001-2006). He's
-35-
worked with institutional investment portfolios at The University of Notre Dame,
Piper Jaffray, and Northern Trust Bank. He holds a Bachelor's Degree in Finance
from the University of Notre Dame and a Masters Degree in Secondary Education
from National Louis University.
EDWARD SIGMOND, age 51, 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.
CONFLICTS OF INTEREST - NICHE PROPERTIES - (COMMENT #22)
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. Robert
Murphy is their uncle. Together, Michael, Sean, Darren and Robert Murphy are
majority shareholders of Niche Properties, 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 fourth
Director, Ed Sigmond, is not related to the Murphy family.
Presently, Messrs. Murphy, Murphy, Murphy, and Murphy are employed by and
involved in the management of and are owners of Niche Properties.
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 corporation
opportunity, 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.
-36-
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
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.
PROJECTED STAFF
STAFFING
Currently, we have no employees aside from the Officers and Directors who are
part time. This lean staffing is possible in this phase because of our
determination to outsource all operating functions. Our staff positions will be
filled as budget allows and business demands require, and the positions may be
altered in response to business needs.
ANNUAL MEETING
The annual meeting of Fairway stockholders is expected to be held at a future
date as soon as practicable after the filing of this registration statement.
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.
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.
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ITEM 6. EXECUTIVE COMPENSATION
- -------------------------------
The following table sets forth the fact that no officer received a cash salary
during the last three fiscal years. The following table sets forth this
information by Fairway, including salary, bonus and certain other compensation
to the Company's Chief Executive Officer and named executive officers for the
past three fiscal years.
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.
COMPENSATION
The following table sets forth certain information concerning compensation of
the President and our most highly compensated executive officers for the years
ended December 31, 2009 and 2008 and the period of September 10, 2007
(Inception) through December 31, 2007 the ("Named Executive Officers"):
SUMMARY EXECUTIVES COMPENSATION TABLE
- ------------- ------ -------- ------- -------- --------- -------------- --------------- -------------- ------
NON-EQUITY NON-QUALIFIED
INCENTIVE DEFERRED
STOCK OPTION PLAN COMPENSATION ALL OTHER
NAME & SALARY BONUS AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
POSITION YEAR ($) ($) ($) ($) ($) ($) ($) ($)
- ------------- ------ -------- ------- -------- --------- -------------- --------------- -------------- ------
Michael D. 2009 0 0 $0 0 0 0 0 $0
Murphy, CEO
and
Treasurer 2008 0 0 $3 0 0 0 0 $3
(1) 2007 0 0 $68 0 0 0 0 $68
- ------------- ------ -------- ------- -------- --------- -------------- --------------- -------------- ------
Sean
Murphy, 2009 0 0 $0 0 0 0 0 $0
President 2008 0 0 $3 0 0 0 0 $3
(2) 2007 0 0 $68 0 0 0 0 $68
- ------------- ------ -------- ------- -------- --------- -------------- --------------- -------------- ------
(1) On September 17, 2007, Mr. Michael D. Murphy received 68,184
shares of our common stock valued at $0.001 for $68 for
services. During the year ended December 31, 2008, Mr. Michael
D. Murphy received 3,816 shares of common stock valued at
$0.001 for $3 for services.
(2) On September 17, 2007, Mr. Sean Murphy received 68,184 shares
of our common stock valued at $0.001 for $68 for services.
During the year ended December 31, 2008, Mr. Sean Murphy
received 3,816 shares of common stock valued at $0.001 for $3
for services.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Fairway does not have a stock option plan as of the date of this filing. There
was no grant of stock options to the Chief Executive Officer and other named
executive officers during the fiscal years ended December 31, 2008 and 2009.
-38-
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment contracts, compensatory plans or arrangements, including
payments to be received from us, with respect to any of our directors or
executive officers which would in any way result in payments to any such person
because of his or her resignation, retirement or other termination of employment
with us, any change in control of us, or a change in the person's
responsibilities following such a change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Fairway board of directors in its entirety acts as the compensation
committee for Fairway.
STOCK OPTION PLAN
The Company does not have or intend to develop a stock option plan at this time.
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to our directors for services as directors, but not including compensation for
services as officers reported in the "Summary Executives Compensation Table"
during the year ended December 31, 2009:
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
Non-qualified
Non-equity deferred
Fees incentive compensation All other
earned or Stock Option plan earnings compensation Total
Name paid in awards ($) awards ($) compensation ($) ($) ($)
cash ($)
($)
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
Robert $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Murphy (1)
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
Michael D. $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Murphy (2)
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
Sean Murphy $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
(3)
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
Edward $ -0- $0 $ -0- $ -0- $ -0- $ -0- $-0-
Sigmond (4)
- -------------- ------------ ----------- ------------ -------------- -------------- --------------- ----------
(1) On September 17, 2007, Mr. Robert Murphy received 68,184 shares of our
common stock valued at $0.001 for $68 for services. During the year ended
December 31, 2008, Mr. Robert Murphy received 3,816 shares of common stock
valued at $0.001 for $3 for services for a total of $71.
(2) On September 17, 2007, Mr. Michael D. Murphy received 68,184 shares of our
common stock valued at $0.001 for $68 for services. During the year ended
December 31, 2008, Mr. Michael D. Murphy received 3,816 shares of common
-39-
stock valued at $0.001 for $3 for services for a total of $71. Mr. Michael
D. Murphy serves as an officer of the Company and his stock awards are
reflected in the Executive Compensation Table.
(3) On September 17, 2007, Mr. Sean Murphy received 68,184 shares of our common
stock valued at $0.001 for $68 for services. During the year ended December
31, 2008, Mr. Sean Murphy received 3,816 shares of common stock valued at
$0.001 for $3 for services. Mr. Sean Murphy serves as an officer of the
Company and his stock awards are reflected in the Executive Compensation
Table.
(4) On September 17, 2007, Mr. Edmund Sigmond received 281,250 shares of our
common stock valued at $0.001 for $281 for services. Of the 281,250 shares,
200,000 were issued to Kestrel Holdings, Inc. of which Mr. Sigmond is a
beneficial owner.
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.
(COMMENT #23)
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
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,
-40-
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.
-41-
ITEM 7. 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.
Because of their present management positions with Fairway Properties and their
organizational efforts on behalf of and their percentage share ownership in our
company, Messrs. Michael Murphy, Sean Murphy and Robert Murphy may be deemed to
be a "promoter," as that term is defined in Rule 405 of the Securities Act of
1933. (COMMENT #24)
LICENSE AGREEMENTS
On October 26, 2007, we entered into a Technology License Agreement ("License")
with Niche Technologies, Inc., d/b/a/ Niche Properties, our majority
shareholder. Niche Properties owns and operates a collection of lifestyle themed
real estate websites. The websites feature all types of property in all areas of
the world. Niche Properties makes money from property listing fees and banner
advertising on its websites. Niche Properties is a Colorado company that is
owned and operated by Michael D. Murphy, Robert Murphy, Sean Murphy, and Darren
Murphy.
On March 5, 2010, we agreed to amend the License Agreement with Niche Properties
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.
LOANS
On September 13, 2007, the Company issued a 10% unsecured corporate promissory
note in exchange for $25,000 to its majority shareholder, Niche Technologies,
Inc. (dba "Niche Properties"). The promissory note has a term of one year.
During the year ended December 31, 2008, the Company paid the promissory note,
in full.
STOCK ISSUANCES
During the year ended December 31, 2008, the Company issued 11,448 shares of its
restricted common stock to its directors and officers. The shares were issued at
par value of $0.001 per share for a value of $11 and the amounts as set forth
below:
Michael D. Murphy 3,816 shares
Robert Murphy 3,816 shares
Sean Murphy 3,816 shares
-42-
During the period of September 10, 2007 (Inception) through December 31, 2007,
the Company issued 485,800 shares of its restricted common stock to the
directors and officers of the Company in return for their services as
directors/officers. The shares were valued at $0.001 per share for a total of
$486. The shares were issued to the individuals as set forth below:
Michael D. Murphy 68,184 shares
Robert Murphy 68,184 shares
Sean Murphy 68,184 shares
Ed Sigmond 281,250 shares *
*(200,000 shares were issued to Kestrel Holdings, Inc. beneficially owned by Mr.
Sigmond)
During the period of September 10, 2007 (Inception) through December 31, 2007,
the Company issued 600,000 of its restricted common shares to Niche Properties
in return for its consulting services. The shares were valued at $0.001 per
share for a total of $600.
ITEM 8. 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 registration
statement, 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 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
MARKET INFORMATION
Currently there is no public trading market for our stock, and we have not
applied to have the common stock quoted for trading in any venue. We intend to
apply to have the common stock quoted on the OTC Bulletin Board immediately
after this registration statement becomes effective. No trading symbol has yet
been assigned.
RULES GOVERNING LOW-PRICE STOCKS THAT MAY AFFECT OUR SHAREHOLDERS' ABILITY TO
RESELL SHARES OF OUR COMMON STOCK
Our stock currently is not traded on any stock exchange or quoted on any stock
quotation system. After filing of this registration statement on this Form 10,
we intend to solicit a broker to apply for quotation of common stock on the
FINRA's OTC/BB.
Quotations on the OTC/BB reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not reflect actual transactions. Our common stock
will be subject to certain rules adopted by the SEC that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks
-43-
generally are securities with a price of less than $5.00, other than securities
registered on certain national exchanges or quoted on the Nasdaq system,
provided that the exchange or system provides current price and volume
information with respect to transaction in such securities. The additional sales
practice and disclosure requirements imposed upon broker-dealers are and may
discourage broker-dealers from effecting transactions in our shares which could
severely limit the market liquidity of the shares and impede the sale of shares
in the secondary market.
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
HOLDERS
As of November 9, 2009, 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. (COMMENT #25)
DIVIDENDS
As of the filing of this registration statement, 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
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.
-44-
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
- -------------------------------------------------
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 as shown in the following table
(COMMENT #26):
NAME COMMON SHARES ($) PAID PER SECURITY DATE OF PURCHASE
- ---------------------------------------- ------------------------- -------------------------- --------------------------
Niche Properties, Inc. (5) 600,000 $0.001 9/17/07
Michael D. Murphy (2) 72,000 $0.001 9/17/07
Sean Murphy (1) 72,000 $0.001 9/17/07
Robert Murphy (3) 72,000 $0.001 9/17/07
Edward Sigmond (4) 81,250 $0.001 9/17/07
Kestrel Holdings, Inc. (beneficially 200,000 $0.001 9/17/07
Edward Sigmond) (4)
Kevin Schwartz 8,000 $0.001 12/14/2007
Michael O'Donnell 8,000 $.25 1/7/2008
Kevin Murphy 8,000 $.25 1/7/2008
Don Galles 8,000 $.25 1/7/2008
Daryl Martinson 8,000 $.25 1/28/2008
Judi Martinson 8,000 $.25 1/28/2008
Ryan Parker 19,750 $.25 2/11/2008
Carla Reed Trust 8,000 $.25 4/22/2008
James Hladky 8,000 $.25 4/22/2008
Judy Hladky 8,000 $.25 4/22/2008
Hladky Construction 8,000 $.25 4/22/2008
Lou Taubert, Jr. 8,000 $.25 4/22/2008
Susie Hladky 8,000 $.25 4/22/2008
Edward F. Murray, III 8,000 $.25 5/30/2008
Jeff and Danese Reed Living Trust 8,000 $.25 6/9/2008
William L. Simpson 8,000 $.25 6/23/2008
Thomas A. Ward, Jr. 8,000 $.25 6/23/2008
Robert W. Kirkwood 8,000 $.25 6/23/2008
Lex Madden 8,000 $.25 6/30/2008
Michael and Dalene Lockhart 8,000 $.25 6/30/2008
Tom and Laurie Reese Family Trust 8,000 $.25 7/9/2008
Robert R. Vignaroli 8,000 $.25 7/9/2008
W. Perry Dray 8,000 $.25 7/9/2008
Michael and Jane Sullivan Living Trust 8,000 $.25 7/28/2008
Peter I. Wold 8,000 $.25 7/28/2008
Jeremy D. Michaels 8,000 $.25 7/28/2008
John T. Bush 8,000 $.25 7/31/2008
Michael J. Neumiller 8,000 $.25 8/14/2008
Richard A. Jay 8,000 $.25 8/14/2008
Robert E. Pfister 8,000 $.25 8/14/2008
-45-
Lori L. Murphy 8,000 $.25 8/14/2008
Patrick J. Murphy 7,000 $.25 8/14/2008
Hampton K. O'Neill 8,000 $.25 8/26/2008
William J. Fortune 8,000 $.25 8/26/2008
Angela Fiore Interests, Inc. 8,000 $.25 8/26/2008
Gregory C. Dyekman Revocable Trust 8,000 $.25 9/15/2008
Mel Orchard 8,000 $.25 9/15/2008
- ------------------------------
MATERIAL RELATIONSHIPS
(1) President/Secretary/Director - brother to Michael D. Murphy and nephew to
Robert Murphy
(2) CEO/Treasurer/Director - brother to Sean Murphy and nephew to Robert Murphy
(3) Director- Robert Murphy is uncle to Michael D. Murphy and Sean Murphy.
(4) Director - Edward Sigmond is not related to any of the Murphys.
(5) Majority shareholder - Michael D. Murphy owns 37.5% of Niche Technologies.
Robert Murphy owns 37.5% of Niche Technologies. Sean Murphy owns 15.6% of
Niche Technologies.
None of the above listed shareholders are registered broker-dealers or are
associates of a registered broker-dealer.
EXEMPTION FROM REGISTRATION CLAIMED
All of the sales by Fairway of its unregistered securities were made by Fairway
in reliance upon Section 4(2) of the Act and/or under Rule 506 of Regulation D.
All of the individuals and/or entities listed above that purchased the
unregistered securities were all known to the Company and its management,
through pre-existing business relationships, as long standing business
associates, friends, and employees. All purchasers were provided access to all
material information, which they requested, and all information necessary to
verify such information and were afforded access to management of the Company in
connection with their purchases. All purchasers of the unregistered securities
acquired such securities for investment and not with a view toward distribution,
acknowledging such intent to the Company. All certificates or agreements
representing such securities that were issued contained restrictive legends,
prohibiting further transfer of the certificates or agreements representing such
securities, without such securities either being first registered or otherwise
exempt from registration in any further resale or disposition.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
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ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- -----------------------------------------------------------------
The Company's authorized capital stock consists of 140,000,000 shares of common
stock, $0.001 par value per share. As of December 31, 2009, 1,404,000 shares of
Fairway common stock were issued and outstanding. No preferred stock is
authorized.
COMMON STOCK
COMMON SHARES
All shares are equal to each other with respect to voting, liquidation, and
dividend rights. Special shareholders' meetings may be called by the officers or
director, or upon the request of holders of at least one-tenth (1/10th) of the
outstanding shares. Holders of shares are entitled to one vote at any
shareholders' meeting for each share they own as of the record date fixed by the
board of directors. There is no quorum requirement for shareholders' meetings.
Therefore, a vote of the majority of the shares represented at a meeting will
govern even if this is substantially less than a majority of the shares
outstanding. Holders of shares are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available therefore, and
upon liquidation are entitled to participate pro rata in a distribution of
assets available for such a distribution to shareholders. There are no
conversion, pre-emptive or other subscription rights or privileges with respect
to any shares. Reference is made to our Articles of Incorporation and our
By-Laws as well as to the applicable statutes of the State of Nevada for a more
complete description of the rights and liabilities of holders of shares. It
should be noted that the board of directors without notice to the shareholders
may amend the By-Laws. Our shares do not have cumulative voting rights, which
means that the holders of more than fifty percent (50%) of the shares voting for
election of directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining shares aggregating less than fifty
percent (50%) of the shares voting for election of directors may not be able to
elect any director.
PREFERRED STOCK
No preferred stock is authorized.
TRANSFER AGENT AND REGISTRAR
Upon the completion and effectiveness of this Registration Statement, the
transfer agent for our securities is Mountain Share Transfer, Inc., 1625 Abilene
Drive, Broomfield, Colorado 80020.
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and the bylaws.
Under the Nevada Revised Statutes, director immunity from liability to a company
or its shareholders for monetary liabilities applies automatically unless it is
specifically limited by a company's Articles of Incorporation. Our Articles of
Incorporation do not specifically limit the directors' immunity. Excepted from
that immunity are: (a) a willful failure to deal fairly with us or our
shareholders in connection with a matter in which the director has a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful; (c) a transaction from
which the director derived an improper personal profit; and (d) willful
misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent
not prohibited by Nevada law; provided, however, that we may modify the extent
of such indemnification by individual contracts with the directors and officers;
and, provided, further, that we shall not be required to indemnify any director
or officer in connection with any proceeding, or part thereof, initiated by such
person unless such indemnification: (a) is expressly required to be made by law,
(b) the proceeding was authorized by the board of directors, (c) is provided by
us, in sole discretion, pursuant to the powers vested under Nevada law or (d) is
required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of us, or is or was
serving at the request of us as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer except by
reason of the fact that such officer is or was our director in which event this
paragraph shall not apply, in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made: (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (b) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of us.
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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The audited financial statements of Fairway Properties, Inc. for the years ended
December 31, 2009 and 2008 appear as pages F-1 through F-9.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
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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, 2009 and 2008, 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, 2009. 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, 2009 and 2008, 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, 2009 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.
March 24, 2010 RONALD R. CHADWICK, P.C.
F-1
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2009 2008
--------------- ---------------
Assets
Current Assets:
Cash $ 38,775 $ 40,695
--------------- ---------------
Total Current Assets 38,775 40,695
--------------- ---------------
Total Assets $ 38,775 $ 40,695
=============== ===============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accrued interest $ 713 $ -
--------------- ---------------
Total Current Liabilities 713 -
--------------- ---------------
Stockholders' Equity (Deficit)
Common stock, $0.001 par value; 140,000,000 shares
authorized, 1,404,000and 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 (38,523) (35,890)
--------------- ---------------
Total Stockholders' Equity (Deficit) 38,062 40,695
--------------- ---------------
Total Liabilities and Stockholders' Equity (Deficit) $ 38,775 $ 40,695
=============== ===============
See the notes to these financial statements.
F-2
FAIRWAY PROPERTIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
September 10, 2007
Year Ended Year Ended (Inception) Through
December 31, December 31, December 31,
2009 2008 2009
--------------------- --------------- --------------------
(unaudited)
Revenue: $ - $ - $ -
--------------------- --------------- --------------------
Operational expenses:
General and administrative expenses 733 6,815 10,683
Professional fees 1,900 8,865 26,140
--------------------- --------------- --------------------
Total operational expenses (2,633) (15,680) (36,823)
--------------------- --------------- --------------------
Other income (expense):
Interest expense - (960) (1,700)
--------------------- --------------- --------------------
Net loss $ (2,633) $ (16,640) $ (38,523)
===================== =============== ====================
Per share information
Net loss per common share
Basic and fully diluted $ (0.00) $ (0.01)
===================== ===============
Weighted average number of common
stock outstanding 1,404,000 1,267,021
===================== ===============
See the notes to these financial statements.
F-3
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE PERIOD OF SEPTEMBER 10, 2007 THROUGH DECEMBER 31, 2009
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
================ ============== ============== ================= ============
See the notes to these financial statements.
F-4
FAIRWAY PROPERTIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Year Ended Year Ended September 30, 2007
December 31, December 31, (Inception) Through
2009 2008 December 31, 2009
--------------- ------------- -------------------
Cash Flows from Operating Activities:
Net Loss $ (2,633) $ (16,640) $ (38,523)
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued for services - 4,949 6,835
Increase in assets and liabilities:
Increase (decrease) in accounts payable
and accrued liabilities 713 (740) 713
--------------- ------------- -------------------
Net Cash Used by Operating Activities (1,920) (12,431) (30,975)
--------------- ------------- -------------------
Cash Flows from Financing Activities:
Proceeds from sale of common stock - 69,750 69,750
Proceeds from note payable, related party - - 25,000
Payment of note payable, related party - (25,000) (25,000)
--------------- ------------- -------------------
Net Cash Provided by Financing Activities - 44,750 69,750
--------------- ------------- -------------------
Net Increase in Cash (1,920) 32,319 38,775
Cash and Cash Equivalents - Beginning of Period 40,695 8,376 -
--------------- ------------- -------------------
Cash and Cash Equivalents - End of Period $ 38,775 $ 40,695 $ 38,775
=============== ============= ===================
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
None
SUPPLEMENTAL DISCLOSURE
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
See the notes to these financial statements.
F-5
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2009 and 2008
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
F-6
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2009 and 2008
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity.
INCOME TAXES
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable of deductive amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2009, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Codification ("ASC") 105, "Generally Accepted Accounting
Principals" (formerly Statement of Financial Accounting Standards ("SFAS") No.
168, "The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles"). ASC 105 establishes the FASB ASC as the single
source of authoritative nongovernmental U.S. GAAP. The standard is effective for
interim and annual periods ending after September 15, 2009. We adopted the
provisions of the standard on September 30, 2009, which did not have a material
impact on our financial statements.
There were various other accounting standards and interpretations issued in
2009, none of which are expected to have a material impact on the Company's
financial position, operations or cash flows.
NOTE 2 - GOING CONCERN AND MANAGEMENTS' PLAN
The Company's financial statements for the year ended December 31, 2009 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 $2,633 for the year ended December
31 2009and an accumulated deficit during the development stage of $38,623 as of
December 31, 2009. During the year ended December 31, 2009, the Company had no
revenues from its activities during the year ended December 31, 2009.
The Company's ability to continue as a going concern may be dependent on the
success of management's plan discussed below. The financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
To the extent the Company's operations are not sufficient to fund the Company's
capital requirements, the Company may attempt to enter into a revolving loan
agreement with financial institutions or attempt to raise capital through the
sale of additional capital stock or through the issuance of debt. At the present
time, the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
F-7
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2009 and 2008
NOTE 3 - NOTE PAYABLE - RELATED PARTY
On September 13, 2007, the Company issued a 10% unsecured corporate promissory
note in exchange for $25,000 to its majority shareholder, Niche Properties, Inc.
("Niche Properties"). The promissory note has a term of one year. During the
year ended December 31, 2008, the Company paid the promissory note, in full.
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, 2009, 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.
During the year ended December 31, 2009, the Company did not issue any shares of
its common stock.
During the year ended December 31, 2008, the Company issued 11,448 shares of its
restricted common stock to its directors. The shares were issued at par value of
$0.001 per share for a value of $11.
During the year ended December 31, 2008, the Company issued 279,000 shares of
its restricted common stock in exchange for cash of $69,750. The shares were
sold at a purchase price of $0.25 per share.
During the year ended December 31, 2008, the Company issued 19,750 shares of its
restricted common stock in exchange for services totaling $4,938. The shares had
a price of $0.25 per share.
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.
2009 2008
------------ -------------
Deferred tax assets
Net operating loss carryforwards $ 15,024 $ 13,997
Valuation allowance (15,024) (13,997)
------------ -------------
Net deferred tax assets $ 0 $ 0
============ =============
At December 31, 2009 and 2008, the Company had net operating loss carryforwards
of approximately $38,523 and $35,890, respectively, for federal income tax
purposes. These carryforwards, if not utilized to offset taxable income, will
begin to expire in 2027.
F-8
FAIRWAY PROPERTIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2009 and 2008
NOTE 6 - SUBSEQUENT EVENTS
The Company has evaluated it activities subsequent to the year ended December
31, 2009 through March 24, 2010 and found no reportable subsequent events.
F-9
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(a) Audited financial statements for years ended December 31, 2009 and 2008
(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
21.1 List of Subsidiaries of Fairway Properties, Inc. (1)
23.1 Consent of Independent Registered Public Accounting Firm
- ---------------- --------------
(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. A copy can be provided by
mail, free of charge, by sending a written request to Fairway Properties, Inc.,
1357 Ocean Avenue, Suite 4, Santa Monica, CA 90401.
-50-
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
FAIRWAY PROPERTIES, INC.
(COMMENT #30)
/s/Michael D. Murphy April 22, 2010
- -------------------------------------------------------------
Michael D. Murphy
(Principal Executive Officer / Principal Accounting Officer
/ CEO / CFO / Treasurer and Director)
/s/Sean Murphy April 22, 2010
- -------------------------------------------------------------
Sean Murphy, President, Secretary and Director
/s/Edward Sigmond April 22, 2010
- -------------------------------------------------------------
Edward Sigmond, Director
-51-
EXHIBIT 10.2
AMENDED TECHNOLOGY LICENSE AGREEMENT
AMENDMENT TO
TECHNOLOGY LICENSE AGREEMENT
BETWEEN
NICHE TECHNOLOGIES, INC. (DBA NICHE PROPERTIES)
AND
FAIRWAY PROPERTIES, INC.
DATED
MARCH 5, 2010
WHEREAS, Niche Technologies, Inc. ("Licensor") and Fairway Properties, Inc.
("Licensee") entered into the Technology License Agreement dated October 26th,
2007 (the "Agreement"); and
WHEREAS, Licensor and Licensee both desire to modify the terms of the Agreement
given recent economic conditions;
NOW, THEREFORE, in consideration of the promises and the mutual covenants of
this Amendment, the parties hereto agree to amend the Agreement as follows:
1. PAST ROYALTIES DUE
A. All prior Guaranteed Minimum Royalties owing from Licensee to
Licensor are hereby waived.
2. ROYALTY PROVISIONS
A. The Guaranteed Minimum Royalty per calendar year of ten
thousand US Dollars (USD 10,000.00) is eliminated. Licensee
shall pay Licensor a Guaranteed Minimum Royalty per month of
five hundred US Dollars (USD 500.00) beginning with the month
of March 2010. The Royalty Rate continues to be twenty five
percent (25%) of all membership and advertising revenues.
B. The Guaranteed Minimum Royalty per month shall be due and
payable on the first day of every month for the then current
month. Any Royalties owed in addition to the Guaranteed
Minimum Royalty for any particular month are due by the end of
the following month.
C. The Royalty owed Licensor shall be calculated on a monthly
calendar basis (Royalty Period). The Licensee's Net Sales
shall be processed through its own payment processor and
deposited into its bank account.
D. For each Royalty Period, Licensee shall provide Licensor with
a written royalty statement in a form acceptable to Licensor.
Such royalty statement shall be certified as accurate by a
duly authorized officer of Licensee and shall include
reportable sales for each applicable period. Such statements
shall be furnished to Licensor regardless of whether any sales
were made during the Royalty Period or whether any actual
Royalty was owed.
E. "Net Sales" shall mean Licensee's gross sales (the gross
invoice amount billed customers), less discounts and
allowances actually shown on the invoice (except cash
discounts that are not deductible in the calculation of
Royalty).
F. If Licensee sells any Products and Services to any affiliated
or related party at a price less than the regular price
charged to other parties, the Royalty shall be computed at the
regular price.
G. Upon expiration or termination of this Agreement, all Royalty
obligations shall be accelerated and shall immediately become
due and payable.
H. Late payment of the Guaranteed Minimum Royalty, if applicable,
shall incur interest at the rate of one and one-half percent
(1.5%) per month from the date such payments were originally
due.
3. AFFILIATE SALES
A. Licensee may resell all services provided by Licensor's Niche
Properties business unit. Licensee will remit to Licensor
seventy five percent (75%) of all revenue associated with
these services (the "Affiliate Fees") by the end of the
following month in which it received the revenue.
B. The Affiliate Fees owed Licensor shall be calculated on a
monthly calendar basis (Affiliate Fees Period).
C. For each Affiliate Fees Period, Licensee shall provide
Licensor with a written Affiliate Fees statement in a form
acceptable to Licensor. Such Affiliate Fees statement shall be
certified as accurate by a duly authorized officer of Licensee
and shall include reportable sales for each applicable period.
Such statements shall be furnished to Licensor regardless of
whether any sales were made during the Affiliate Period or
whether any actual Affiliate Fees was owed.
D. Upon expiration or termination of this Agreement, all
Affiliate Fees obligations shall be accelerated and shall
immediately become due and payable.
E. Late payment of the Affiliate Fees, if applicable, shall incur
interest at the rate of one and one-half percent (1.5%) per
month from the date such payments were originally due.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have each caused to be affixed hereto its or his/her hand and seal the day
indicated.
NICHE TECHNOLOGIES, INC. FAIRWAY PROPERTIES, INC.
By: Michael D. Murphy By: Sean P. Murphy
Title: President Title: President
Date: March 5, 2010 Date: March 5, 2010
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
I consent to the use in this Amended Registration Statement of Fairway
Properties, Inc. on Form 10/A, of my report dated March 24, 2010 on the
financial statements of Fairway Properties, Inc. for the years ended December
31, 2009 and 2008, and for the period from September 10, 2007 (inception)
through December 31, 2009.
In addition, I consent to the reference to me under the heading "Experts" in the
Registration Statement.
/s/ Ronald R. Chadwick, P.C.
- --------------------------------------
RONALD R. CHADWICK, P.C.
Aurora, Colorado
April 22, 2010