UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended May 31, 2000

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the transition period from                   to
                                    ------------------   --------------

                         Commission file number: 0-28627

                           PRAXIS PHARMACEUTICALS INC.
                 (Name of small business issuer in its charter)

           UTAH                                                 87-0393257
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

    595 HORNBY STREET, SUITE 600, VANCOUVER, BRITISH COLUMBIA V6C 1A4 CANADA
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (604) 646-5614

       Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:

                          COMMON STOCK, $.001 PAR VALUE
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.  Yes [X]     No [ ]

Check  if no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:  $-0-

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days: $2,345,774 AS OF SEPTEMBER 12, 2000

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 11,822,209

Transitional Small Business Disclosure Format (Check one):   Yes [ ];  No [X]


Exhibit index on page 16.                                    Page 1 of 32 pages


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         Praxis  Pharmaceuticals  Inc. ("Praxis" or the "Company") was formed in
response to an apparent market  opportunity in the  pharmaceutical  industry for
small  molecular  agents  capable  of  moderating  inflammatory  responses.  The
founding  individuals   recognized  several  significant  diseases,   which  are
inadequately served by current therapies, as providing this opportunity.  Praxis
is a startup company, which commenced operations in July 1997. Its mission is to
develop a unique  panel of  therapeutics  based on  carbohydrate  chemistry.  To
achieve  that  mission,  Praxis  plans  to  acquire  licenses  for  products  or
intellectual property from other organizations or companies when and if there is
sufficient  evidence  that this would  facilitate  the expansion of the range of
therapeutics  that Praxis has in its product line.  Praxis also plans to develop
new drugs  internally.  The  drugs are  intended  to be used in the  control  of
inflammation  in a range of  indications,  such as skin conditions to autoimmune
diseases.   The  technology   also  has   applicability   in  the  cosmetic  and
nutraceutical  markets and agents for  wrinkles and other  conditions  are being
developed for these markets.

         Effective  September 30, 1999,  Praxis  granted a worldwide,  exclusive
license to Fairchild  International Inc.  ("Fairchild"),  an affiliate,  for all
products and processes developed, and to be developed, relating to arthritis and
dermal wrinkles, in consideration for 2,600,000 shares of Fairchild common stock
(valued at $26,000) and royalty payments based upon revenues earned by Fairchild
from the sale of any developed products. In addition, a research and development
agreement was entered into whereby  Praxis was  contracted to conduct a research
program  to be  funded  by  Fairchild  for a total  amount  of  $250,000.  (This
agreement,  including  "Schedule  C", has been filed as Exhibit  10.1 to Praxis'
registration  statement on Form 10-SB.) A first  installment of $62,500 was paid
on October 1,  1999.  Quarterly  payments  of $50,000  are to be made  beginning
January  1, 2000,  with a final  payment of  $37,500  due  October 1, 2000.  The
January 1, 2000 and April 1, 2000  installments  have been paid.  The receipt of
the  remaining  $87,500 from  Fairchild is not  certain.  Fairchild's  financial
condition is  questionable.  The  independent  auditors'  report on  Fairchild's
financial   statements  for  the  year  ended  December  31,  1999  included  an
explanatory  paragraph  relating to the  uncertainty of  Fairchild's  ability to
continue as a going  concern.  The funds paid by Fairchild to Praxis can only be
used by Praxis for the conduct of the research projects and can only be expended
in  accordance  with the budget  included as part of "Schedule C", unless Praxis
obtains prior written  authorization from Fairchild.  Fairchild and Praxis will,
not less than once every  three  months,  review and  evaluate  progress  on the
research projects. Following such reviews, milestones as set out in "Schedule C"
may be revised as and when  needed by mutual  agreement  between  Fairchild  and
Praxis.  The  research  program is to be fully  funded by the funds  received by
Fairchild. The $250,000 budget for the research and development program includes
allowances for all associated overhead and costs to be expended by Praxis on the
program. No administrative  overhead will be expended that is not covered by the
funds received from Fairchild in relation to the research  program.  Praxis will
not incur either directly or indirectly any additional  expenses on the research
program.

         Under the exclusive  license,  Praxis is to be paid 35% of net revenue,
which is any  consideration  received by  Fairchild  from the sale of a licensed
product or the  granting of a  sublicense,  after  deduction  of the  following:
$250,000 to be paid by Fairchild plus any other development costs, manufacturing
and  production  costs,  marketing and selling costs,  and expenses  incurred by
Fairchild in connection  with obtaining  regulatory  approvals.  This means that
before any  royalties are paid to Praxis,  the  following are first  returned to
Fairchild:  (1) the $250,000 research expenditures and (2) any other development
costs,  manufacturing  and production  costs,  marketing and selling costs,  and
expenses   incurred  by  Fairchild  in  connection  with  obtaining   regulatory
approvals.  Further,  there is  nothing  in the  agreement  that  would  prevent
Fairchild from unilaterally  deciding to continue to spend money on research and
thereby,  perhaps,  use all  monies  that would  otherwise  be paid to Praxis as
royalties.  Accordingly,  it is not certain  when,  if, or to what extent Praxis
will receive any royalty  revenues  from this  licensing  arrangement.  Upon the
expiration of the last licensed  patent,  which includes any patents arising out
of  applications to be filed in the future,  Fairchild's  license shall become a
fully paid-up,  perpetual  license.  This date would be no sooner than 2016. The
settlement of any disputes  regarding  this  agreement with Fairchild will be by
binding  arbitration,  with the  arbitrators  to be  selected by the Company and
Fairchild.

         At the time Praxis  entered into the  agreement  with  Fairchild in May
1999,  David Stadnyk,  an officer,  director,  and principal  shareholder of the
Company, owned approximately 16.4% of the outstanding stock of Fairchild and was
a promoter of Fairchild.  In addition,  in March 1999 Fairchild paid Mr. Stadnyk
consulting


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<PAGE>

compensation of $25,000,  500,000 shares of Fairchild common stock, and one-year
options to purchase  1,000,000  shares of Fairchild  common  stock.  The options
expired without having been exercised.  See "Company Development" below and Item
12.  Certain  Relationships  and  Related  Transactions.   The  16.4%  ownership
disclosed  above  includes  the  500,000  shares  received  by  Mr.  Stadnyk  as
consulting compensation.

BACKGROUND AND CORPORATE STRUCTURE

         Praxis  Pharmaceuticals,  Inc. was  incorporated on June 20, 1997 under
the laws of the  State of  Nevada.  In June  1998,  Praxis-Nevada  engaged  in a
reverse acquisition  transaction with Micronetics,  Inc., a company incorporated
in Utah on December 31, 1981,  where the  shareholders of  Praxis-Nevada  gained
control  over   Micronetics.   Micronetics  then  changed  its  name  to  Praxis
Pharmaceuticals   Inc.   Praxis-Nevada   engaged  in  the  reverse   acquisition
transaction to achieve having its common stock quoted on the OTC Bulletin Board.
At the time of the  transaction,  the common stock of Micronetics  was quoted on
the OTC Bulletin Board under the symbol "MKRO" and had a shareholder base of 262
holders.  Praxis-Nevada  had a  shareholder  base of 13.  Immediately  after the
reverse  acquisition   transaction,   the  shareholders  of  Praxis-Nevada  held
approximately 98% of the outstanding shares of the Company.

         A wholly owned Australian subsidiary,  Praxis Pharmaceuticals Australia
Pty. Ltd. (ACN 082 811 630)  ("Praxis-Australia"),  was formed in June 1998 as a
private company.

         In October 1999 an equity  investment was made in  Praxis-Australia  by
Rothschild  Bioscience  Managers Ltd., which reduced Praxis' equity ownership to
35%.

PATENTS AND LICENSE RIGHTS

         The  Company  has  obtained  exclusive  licenses  to  exploit  and  use
intellectual  property  possessed by the Australian  National  University in the
area of phosphosugars and their analogues as anti-inflammatory  agents,  covered
by  the  University's  patents  (including  USA  5506210,  European  89909685.3,
International WO90/01938 and Australia PO3098/96).

         Anutech  Pty  Limited   ("Anutech"),   the  commercial   subsidiary  of
Australian National  University,  originally granted a license to the Company in
October  1997.  This earlier  agreement  was  superseded  by an agreement  dated
October 14, 1999. The Company's  exclusive worldwide license pertains to the use
of  phosphosugars  as  nutraceuticals  (foods that  provide  medicinal or health
benefits),  complementary  medicines,  or  cosmetics.  The license  specifically
excludes  the use of  phosphosugars  as  prescription  therapeutics  and topical
application  for wound care.  As  consideration  for the license,  Anutech is to
receive a 4% royalty on net sales of products,  50% of all royalty income on net
sales of products received from sublicensees, and 15% of all sublicense fees.

         Anutech  has also  granted  Praxis-Australia  the  exclusive  worldwide
license  to the  use of  phosphosugars  as  prescription  therapeutics,  and the
license  specifically  excludes the uses  granted to the Company.  Anutech is to
receive 2% of all amounts  received by  Praxis-Australia  or any  sublicensee in
connection with the licensed intellectual property or related products.

         In addition to the licenses  described  above,  Praxis owns two patents
that  relate to agents for use in  immunosuppression  and  transplant  rejection
(US5691346  and US  5837709).  Praxis  believes  that patent  protection  of its
technologies,  processes and products is important to its future operations. The
success of Praxis' proposed  products might depend,  in part, upon the Company's
ability to obtain  patent  protection.  Praxis  intends  to  enforce  its patent
position and  intellectual  property  rights  vigorously.  The cost of enforcing
Praxis' patent rights in lawsuits,  if necessary,  may be significant  and could
interfere with Praxis'  operations.  Although  Praxis intends to file additional
patent applications, as management believes appropriate, with respect to any new
products  or  technological  developments,  no  assurance  can be given that any
additional  patents will be issued or, if issued,  will be of commercial benefit
to Praxis. In addition,  it is impossible to anticipate the breadth or degree of
protection that any such patents may afford. To the extent that Praxis relies on
unpatented  proprietary  technology,  no assurance can be given that others will
not  independently  develop  or  obtain  substantially  equivalent  or  superior
technology  or  otherwise  gain  access  to  Praxis'  trade  secrets,  that  any
obligation  of  confidentiality  will be honored or that  Praxis

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<PAGE>

will be able to  effectively  protect  its  rights  to  proprietary  technology.
Further,  no assurance  can be given that any products  developed by Praxis will
not infringe patents held by third parties or that, in such case,  licenses from
such third parties would be available on  commercially  acceptable  terms, if at
all.

COMPANY DEVELOPMENT

         It is envisioned that the Company will develop in stages:

         o   Research and Development
         o   Clinical Trials
         o   Commercialization

         Praxis'  business plan envisions the first two stages taking place over
the next three-year period. The Company has engaged in private placements of its
stock  to fund  research  and  development  activities.  Additional  funding  of
approximately  $6,000,000 is being sought by the Company to enable it to develop
its  intellectual  property  portfolio and to engage in early clinical trials of
its proposed  products.  Clinical trial activities will be necessary to generate
evidence  of  efficacy  in order to attract  alliance  partners.  An alliance in
pharmaceutical terms is the joint effort of a major pharmaceutical company and a
smaller  "junior"  drug  developer  who has the idea and the  research,  but not
sufficient  capital  to  continue  this to the  next and  most  critical  phase.
Management  believes that the future  viability of Praxis relies  greatly on the
opportunity  to gain the  support,  for  mutual  benefit,  of one of the  larger
worldwide drug houses.  This may be particularly  appropriate to the development
of  formulations  for  topical or ocular  delivery  of Praxis  drugs.  Strategic
alliances with such companies  will be  investigated  as a matter of priority by
Praxis.

         The Company entered into a Research,  Development and Licence Agreement
with Fairchild International Inc., an affiliate, dated as of May 11, 1999, which
closed  September 30, 1999. This agreement has been filed as Exhibit 10.1 to the
Company's  registration  statement  on  Form  10-SB,  with  the  exception  of a
"Schedule  B"  referenced  in the  agreement  which was never made a part of the
agreement.  At the time Praxis  entered into the agreement,  David  Stadnyk,  an
officer, director, and principal shareholder of the Company, owned approximately
16.4% of the outstanding stock of Fairchild and was a promoter of Fairchild.  In
addition,  in March 1999 Fairchild paid Mr. Stadnyk  consulting  compensation of
$25,000,  500,000  shares of Fairchild  common  stock,  and one-year  options to
purchase 1,000,000 shares of Fairchild common stock. The options expired without
having  been  exercised.   See  Item  12.  Certain   Relationships  and  Related
Transactions.

         Under  that  agreement,  Fairchild  obtained  an  exclusive,  worldwide
license to make,  use,  and sell  products  and  processes  developed  by Praxis
relating to arthritis and dermal wrinkles in consideration  for 2,600,000 shares
of Fairchild  common stock  (valued at $26,000)  and a research  engagement  for
$250,000.  A first installment of $62,500 was paid on October 1, 1999. Quarterly
payments  of $50,000  are to be made  beginning  January  1, 2000,  with a final
payment of $37,500  due  October 1, 2000.  The January 1, 2000 and April 1, 2000
installments have been paid. The receipt of the remaining $87,500 from Fairchild
is not certain. Fairchild's financial condition is questionable. The independent
auditors' report on Fairchild's financial statements for the year ended December
31, 1998  included an  explanatory  paragraph  relating  to the  uncertainty  of
Fairchild's ability to continue as a going concern.

         Praxis agreed to conduct certain research projects  commencing  October
1, 1999. Any new intellectual property developed as a result of that research is
to be included as part of the licensed  technology  and  licensed to  Fairchild.
Fairchild is  authorized  to grant  sublicenses  and/or assign the license to an
affiliate.  Praxis is to be paid 35% of net revenue,  which is any consideration
received by Fairchild  from the sale of a licensed  product or the granting of a
sublicense,  less all of the  following:  the $250,000 paid by Fairchild and any
other  development  costs,  manufacturing  and production  costs,  marketing and
selling costs,  and expenses  incurred by Fairchild in connection with obtaining
regulatory  approvals.  While the net revenue  definition  used in the Fairchild
agreement is believed by  management  of the Company to be typical for this type
of licensing  agreement,  it is not certain  when,  if, or to what extent Praxis
will receive any revenues from this licensing  arrangement.  Upon the expiration
of  the  last  licensed  patent,  which  includes  any  patents  arising  out of
applications to be filed in the future, Fairchild's license shall become a fully
paid-up,  perpetual  license.  This  date  would be no  sooner  than  2016.  The
settlement of any disputes


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<PAGE>

regarding this agreement with Fairchild will be by binding arbitration, with the
arbitrators to be selected by the Company and Fairchild.

         Praxis  will  use  its  best   efforts  to  conduct  the  research  and
development  program  outlined in the agreement  with  Fairchild.  The agreement
provides for adjustment of milestones according to progress. If the research and
development project cannot be concluded  satisfactorily by Praxis, the licensing
component of the  agreement  is still in force  unless the two parties  mutually
negotiate  another  research  and  development  agreement  or  a  new  licensing
agreement. Royalties are still payable to Praxis even if Praxis does not perform
the research and development program to completion.  Royalties from Fairchild to
Praxis in the event of an  alliance  between  Fairchild  and a larger firm would
still be 35% of net revenue,  whether it is licensing  fees or royalty  payments
that  Fairchild  receives  from  the  larger  firm.  An  alliance  with a larger
pharmaceutical  firm would be on the basis of cash  flowing from the larger firm
to Praxis and Fairchild, so it would not result in a requirement of any payments
from Praxis to another party.

         In October  1999,  an  agreement  was entered  into  whereby the equity
investment made in Praxis-Australia would be reduced to 35% through research and
development  funding  invested by Rothschild  Bioscience  Managers  Limited,  of
Melbourne,  Victoria.  The  Rothschild  investment  is solely for the purpose of
research and development into  phosphosugar-based  anti-inflammatory  agents for
registered therapeutic use.

         It is expected that the  profitability  and financial  viability of the
Company will  ultimately  rest with the corporate  alliances that may be entered
into at this stage of fund raising.  As noted above, the benefits of a correctly
structured  alliance  can be enormous  for both  parties  involved.  The Company
expects  to incur  significant  operating  losses  over at least the next  three
years. There is every likelihood that these losses may increase in the future as
the research  and  development  and  clinical  trials  continue.  The  Company's
profitability  will ultimately  depend upon its ability to reach development and
obtain  regulatory  approval for its  products,  and to enter into  alliances to
develop,  manufacture  and market the products.  There is no guarantee  that the
Company will ever be profitable.

         Praxis'  near-term  goals are to raise the funds necessary for the next
five  years  of  company  research  and  development  activities  through  share
offerings  and cash flow  derived  from  sales and or  licensing  agreements  on
cosmetic products;  invest in a dedicated  research facility and personnel;  and
generate  pre-clinical and early clinical  results for the lead compounds.  Over
the  long-term,  its goal is to develop  strategic  alliances  with  established
pharmaceutical  companies in order to conduct large scale,  late stage  clinical
trials and to market approved therapeutics.

RESEARCH AND DEVELOPMENT

         During the fiscal years ended May 31, 2000,  1999 and 1998, the Company
incurred $86,604, $92,456 and $50,016 in research costs, respectively.

         In  general  terms  the  research  and  development   process  for  the
pharmaceutical  agents  is as  follows:

          o    Secure source of drug substance

          o    Development  of  validated   analytical  assays  for  purity  and
               stability

          o    Development of validated  analytical  assays for detection of the
               drug substance in plasma

          o    Formulation studies to provide a stable formulation for human use

          o    Full  toxicology  program in accord  with  current  international
               guidelines

          o    Preparation of clinical trial material

         This process is expected to cost  approximately  $1,000,000 to complete
and allows  commencement  of clinical  trials.  The Company intends to focus its
efforts on the following  conditions/diseases:  psoriasis,  surgical  adhesions,
ocular  inflammation,  rheumatoid  arthritis,  and wrinkles.  Specific strategic
commercial  targets  are as  follows:

          o    Psoriasis - Develop  optimal dermal  formulation  and enter early
               stage clinical trials by second quarter 2001. Following the early
               stage  trials  (early  Phase  II),  the  Company  plans to form a
               strategic alliance with large  pharmaceutical  company to advance
               clinical trials.

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          o    Surgical adhesions - Develop a data package which will be used to
               enter into an agreement with an appropriate large  pharmaceutical
               company to receive  milestone  and royalty  payments  for further
               development.  The goal is to have  such a data  package  by first
               quarter 2001.

          o    Ocular  inflammation  - Develop a data package which will be used
               to enter into an agreement with an appropriate  large  ophthalmic
               specialist   pharmaceutical  company  to  receive  milestone  and
               royalty  payments  for further  development.  The goal is to have
               such a data package by first quarter 2001.

          o    Rheumatoid arthritis - Develop optimal oral formulation and enter
               early stage clinical trials by first quarter 2002.  Following the
               early stage trials  (early Phase II), the Company plans to form a
               strategic alliance with a large pharmaceutical company to advance
               clinical trials.

          o    Wrinkles - A dermal  product is to be finalized by second quarter
               2000  and  initial  trials  will  begin  in  fourth  quarter.  An
               agreement has been entered into with a cosmetic marketing company
               that will be responsible  for production and sales of the product
               in early  2001.

          o    Acne - Clinical  trials of a potential acne  treatment  developed
               internally by Praxis  commenced in March 2000. If the results are
               favorable,  the filing of a new patent  will be  completed  and a
               suitable alliance partner will be sought for further  development
               and marketing.

         Although  several drugs have been  developed by various  pharmaceutical
companies to treat the diseases targeted by Praxis,  relatively limited research
has been  conducted in the  development  of  carbohydrate  based on M6P receptor
targeted   pharmaceutical   products.   Although  Praxis  has   demonstrated  in
pre-clinical studies that its carbohydrate compounds may have applicability in a
broad range of  diseases,  clinical  studies are yet to be  performed to confirm
these findings.  The Company's  proposed  products are in the early  development
stage, require significant further research, development, testing and regulatory
clearances,  and are subject to the risks of failure inherent in the development
of  products  based  on  innovative   technologies.   These  risks  include  the
possibilities  that  any or all of the  proposed  products  may be  found  to be
ineffective  or toxic,  or otherwise  may fail to receive  necessary  regulatory
clearances;  that the proposed products, although effective, may be uneconomical
to market; or that third parties may market superior or equivalent products. Due
to the extended testing and regulatory  review process required before marketing
clearance can be obtained, Praxis does not expect to be able to realize revenues
from the sale to consumers of any drugs within the next five years.

GOVERNMENT REGULATION

         The  production and marketing of Praxis's  pharmaceutical  products are
subject to  regulation  for  safety,  efficacy  and  quality.  The Food and Drug
Administration   (FDA)  approval  procedure   involves   completion  of  certain
pre-clinical  and  manufacturing/stability  studies  and the  submission  of the
results  of  these  studies  to the FDA in an  Investigational  New  Drug  (IND)
application  in support of  performing  clinical  trials.  IND allowance is then
followed by performance of human clinical trials and additional pre-clinical and
manufacturing   quality  control  studies   supporting   safety,   efficacy  and
manufacturing  quality  control.  The  information  developed  under  the IND is
compiled  into a New Drug  Application  and  submitted  to FDA for  approval  to
market. The sequence of events is as follows:

          o    PRE-CLINICAL  STUDIES  involve  laboratory  evaluation of product
               characteristics  and animal  studies to assess the  efficacy  and
               safety of the product.  These tests take on the average three and
               one-half years.
          o    AN IND IS FILED  with the FDA to begin  testing  the  product  on
               people.  The IND becomes effective if the FDA does not disapprove
               it within 30 days. However, any FDA comments or questions must be
               answered to the  satisfaction of the FDA before initial  clinical
               testing can begin. In some  instances,  this process could result
               in  substantial  delay and expense.
          o    PHASE I trials  consist  of  testing  of the  product  in a small
               number of normal volunteers,  primarily for safety.  These trials
               take on the  average  one year.
          o    In PHASE II, in addition to safety,  the  efficacy of the product
               is evaluated in a small patient population.  This typically takes
               about two years.

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<PAGE>
          o    PHASE III trials typically involve multicenter testing for safety
               and clinical  efficacy in an expanded  population  of patients at
               geographically   dispersed   test  sites.  A  clinical  plan,  or
               "protocol,"  accompanied  by the  approval  of  the  institutions
               participating  in the trials,  must be submitted to the FDA prior
               to  commencement  of each clinical  trial.  The FDA may order the
               temporary or permanent discontinuation of a clinical trial at any
               time if adverse  events that endanger  patients in the trials are
               observed.  These trials take on the average  three  years.
          o    NEW DRUG  APPLICATION  (NDA) is prepared  and filed with the FDA,
               containing  an analysis of the  results of the  pre-clinical  and
               clinical studies on the new drug. Following extensive review, the
               FDA may grant marketing  approval,  require additional testing or
               information or deny the application.  The average NDA review time
               for new  drugs is  roughly  two and  one-half  years.
          o    PHASE IV clinical  trials may be requested to be performed  after
               marketing approval to resolve any lingering questions.

         Continued compliance with all FDA requirements and the conditions in an
approved application,  including product  specifications,  manufacturing process
and labeling requirements, are necessary for all products. Failure to comply, or
the  occurrence of  unanticipated  adverse events during  commercial  marketing,
could  lead  to  the  need  for  labeling  changes,   product  recall,  seizure,
injunctions  against  distribution or other  FDA-initiated  action,  which could
delay further marketing until the products are brought into compliance.

         The NDA itself is a complicated and detailed  document and must include
the results of extensive animal,  clinical and other testing,  the cost of which
is substantial.  Although the FDA is required to review  applications within 180
days of filing,  in the process of  reviewing  applications  the FDA  frequently
requests  that  additional  information  be  submitted  and  starts  the 180 day
regulatory  review  period anew when the  requested  additional  information  is
submitted.   The  effect  of  such  requests  and  subsequent   submissions  can
significantly  extend  the  time  for the NDA  review  process.  Until an NDA is
actually approved,  no assurance can be given that the information requested and
submitted will be considered adequate by the FDA to justify approval.

         Whether or not FDA approval has been obtained, approval of a product by
a comparable  regulatory  authority  must be obtained in most foreign  countries
prior to the  commencement  of  marketing  of the product in that  country.  The
approval  procedure  varies from  country to country and may involve  additional
testing,  and the time  required may differ from that required for FDA approval.
Although  some  procedures  for  unified  filings  exist  for  certain  European
countries, in general each country has its own procedure and requirements,  many
of which are time consuming and expensive. Thus, substantial delays in obtaining
required approvals from foreign regulatory  authorities may be encountered after
the relevant applications are filed. After such approvals are obtained,  further
delays may be encountered before the products become commercially available.

         No assurance  can be given that any required FDA or other  governmental
approval  will be granted or, if granted,  will not be  withdrawn.  Governmental
regulation may prevent or substantially delay the marketing of Praxis's proposed
products  and cause Praxis to undertake  costly  procedures.  This may furnish a
competitive advantage to the more substantially capitalized companies with which
Praxis  plans to  compete.  In  addition,  the  extent  of  potentially  adverse
government  regulations  that may arise  from  future  administrative  action or
legislation cannot be predicted.

COMPETITION

         Praxis  faces  significant  competition  in the area of  pharmaceutical
research.  Due to the  Company's  small size, it can be assumed that most if not
all of its competitors have  significantly  greater  financial,  technical,  and
other resources. These competitors may be able to respond more quickly to new or
emerging  technologies  than Praxis can.  Also,  the Company's  competitors  and
potential  competitors  have greater name  recognition and ability to enter into
strategic  partnerships  to engage in new research and development  efforts.  To
compete,  Praxis may be forced to narrow its  research  and  development  focus,
reducing its likelihood for success.

EMPLOYEES

         As of May 31, 2000, the Company had 6 full-time  employees,  1 of which
was an officer of the Company, Dr. William Cowden.

                                       7
<PAGE>
         The Company's opportunity for success depends largely upon the efforts,
abilities,  and decision-making of its executive  officers.  The loss any of the
Company's key personnel could, to varying degrees, have an adverse effect on its
operations  and research and  development  efforts.  The loss of any one of them
would have a material adverse affect on the Company.

         The Company does not currently maintain "key-man" life insurance on any
of its  executive  officers,  and there is no contract in place  assuring  their
services  for any  length of time.  Within a  reasonable  period  of time  after
sufficient funds are available,  it is the Company's intention to develop a plan
to purchase key-man life insurance for one or more key persons, with the Company
designated as the beneficiary,  and enter into employment  contacts with its key
executives.  There is no assurance that the services of any member of management
will remain  available  to the Company for any period of time,  that the Company
will be able to enter into employment  contracts with any of its management,  or
that any of the Company's plans to reduce  dependency upon key personnel will be
successfully   implemented.   The  Company  plans  to  have  industry   standard
non-compete and non-disclosure agreements with all of its employees.


ITEM 2.  DESCRIPTION OF PROPERTY.

         The  Company  does not own real  property.  The Company  shares  office
facilities in Vancouver,  British Columbia,  for its executive  offices,  and is
charged for office and rent and  administrative  services on a proportional cost
basis  by  an  affiliate.   See  Item  12.  Certain  Relationships  and  Related
Transactions.

         Praxis accesses its research  facilities through academic  appointments
of the directors with the Australian  National  University and the payment of an
overhead fee to the university for the use of the facilities.  These  facilities
include  laboratory  and  animal  facilities,  which are  already in use for the
purpose of  producing  carbohydrate-based  therapeutic  compounds  to be used in
pre-clinical  and  clinical  trials  and  meet  all  the  necessary   regulatory
requirements.  Praxis also has access to purpose  built and equipped  laboratory
facilities,  which  are  dedicated  to all  aspects  of  carbohydrate  chemistry
including synthesis, purification and analysis of compounds. The facilities also
allow the performance of most other aspects of chemistry that might be required.
Animal research  facilities for all  pre-clinical  studies are available and are
being used by Praxis as a result of Dr.  Cowden's  appointment at the Australian
National  University.  These facilities meet all national standards for care and
use of laboratory  animals.  Animals and associated services are provided by the
University at a per animal charge which includes a component for  infrastructure
costs. Magnetic resonance imaging and mass spectroscopy are freely accessible. A
Silicon Graphics  workstation is operated and owned by Praxis.  Full information
technology  services are in place  enabling high speed  Internet  connection and
computerized  data  handling.  Other  John  Curtin  School of  Medical  Research
laboratories  and  scientists  are also  accessible  by  Praxis  in the event of
needing technology that is not directly available.


ITEM 3.  LEGAL PROCEEDINGS.

         None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.



                                       8
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Praxis' common stock was traded  over-the-counter from July 23, 1998 to
March 8, 2000 on the OTC  Bulletin  Board,  and since March 9, 2000 on the "Pink
Sheets" under the symbol  "PRXX".  The  following  table sets forth the range of
high and low bid  quotations  for each  fiscal  quarter  since the  stock  began
trading.  These quotations reflect  inter-dealer  prices without retail mark-up,
markdown, or commissions and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                            BID PRICES
1999 FISCAL YEAR                                   HIGH                   LOW
<S>                                               <C>                    <C>
Quarter ending 08/31/98                           $3.25                  $0.75
Quarter ending 11/30/98                           $0.88                  $0.06
Quarter ending 02/28/99                           $0.54                  $0.06
Quarter ending 05/31/99                           $1.70                  $0.19

2000 FISCAL YEAR

Quarter ending 08/31/99                           $1.84                  $0.39
Quarter ending 11/30/99                           $1.10                  $0.38
Quarter ending 02/29/00                           $1.00                  $0.30
Quarter ending 05/31/00                           $1.25                  $0.32
</TABLE>

         On September  12, 2000,  the closing bid price for the common stock was
$0.26. The number of record holders of the common stock as of December 10, 1999,
was 306 according to the Company's  transfer agent.  Holders of shares of common
stock are entitled to dividends when, and if, declared by the board of directors
out of funds legally available therefor.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         The  following  discussion  of the  financial  condition and results of
operations  for  Praxis  should  be read in  conjunction  with the  accompanying
financial statements and related footnotes.

GENERAL

         The Company's  business is the  development  and  commercialization  of
drugs and  nutraceuticals  designed to prevent  inflammation and their sequelae,
and the development of cosmetics for skin  conditions.  To date,  Praxis has not
generated any revenues from product sales,  royalties or license fees. Effective
September 30, 1999,  the Company  entered into a sublicensing  arrangement  with
Fairchild  International  Corp.  for  the  development  of a  nutraceutical  and
cosmetic  agent.  In  exchange  for this  sublicense,  the Company is to receive
$250,000 as  reimbursement  for research and  development  costs it shall incur.
This amount and other costs will be deducted in arriving at "net  revenues" upon
which Praxis' 35% royalty payment is based.  Praxis plans to develop novel drugs
and cosmetics,  and to  commercialize  these  products  through the formation of
partnerships, strategic alliances and license agreements with pharmaceutical and
cosmetic companies.

         It is expected that the  profitability  and financial  viability of the
Company will  ultimately  rest with the corporate  alliances it can obtain.  The
Company  expects to incur  significant  operating  losses over at least the next
three  years.  It is likely that these  losses may increase in the future as the
research  and   development  and  clinical   trials   continue.   The  Company's
profitability  will ultimately  depend upon its ability to reach development and
obtain  regulatory  approval for its  products,  and to enter into  alliances to
develop,  manufacture  and market the products.  There is no guarantee  that the
Company will ever be profitable.

                                       9
<PAGE>

         Praxis'  near-term  goals are to raise the funds necessary for the next
five  years  of  company  research  and  development  activities  through  share
offerings  and cash flow  derived  from  sales and or  licensing  agreements  on
cosmetic products;  invest in a dedicated  research facility and personnel;  and
generate  pre-clinical and early clinical  results for the lead compounds.  Over
the long  term,  its goal is to develop  strategic  alliances  with  established
pharmaceutical  companies in order to conduct large scale,  late stage  clinical
trials and to market approved therapeutics.

RESULTS OF OPERATIONS

         YEAR  ENDED MAY 31,  2000  COMPARED  TO YEAR  ENDED MAY 31,  1999.  The
Company  continues  to incur losses from  operations.  The net loss for the year
ended May 31, 2000 was  $203,175 as compared to $490,574  during the 1999 fiscal
year.  The decrease in the net loss is due primarily to the recovery of research
advances from Fairchild in the amount of $135,594. As a result, project expenses
were  $(9,452)  for the 2000 fiscal  year as  compared to $137,456  for the 1999
fiscal year.

         Administration  expenses  also  decreased  by  almost  40% for the 2000
fiscal year as compared to the 1999 fiscal year.  The decrease was due primarily
to a decrease in consulting  fees of $196,857.  Promotion and travel expenses in
2000  ($98,616)  increased  by  23.9%  over  1999  amounts  ($79,594),   as  did
professional  fees  ($54,942  in 2000  compared  to $24,337 in 1999) and related
party administration charges ($30,321 in 2000 compared to $14,874 in 1999).

         YEAR ENDED MAY 31, 1999 COMPARED TO PERIOD ENDED MAY 31, 1998.  For the
year ended May 31,  1999,  the net loss was  $490,574  as  compared to a loss of
$68,296 for the period from inception at June 20, 1997 to May 31, 1998.  Project
expenses  were  $52,836 in 1998 as  compared  to  $137,456  in 1999.  1999 costs
increased  due to the hiring of a director of research  and  development  and to
increased  pre-clinical  study  costs  and  internal  research  and  development
efforts.

         Administration  expenses  increased from $15,460 in 1998 to $353,118 in
1999.  The most  significant  component of these expenses in 1999 was consulting
fees of $213,358.  Most of these  consulting fees were paid through the issuance
of the Company's common stock for public relations and other services.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception,  the primary source of funding for Praxis'  operations
has been the private sale of its  securities.  For year ended May 31, 2000,  the
Company  issued  common  stock for cash of $150,000.  Through May 31, 1999,  the
Company  issued common stock for cash of $302,725 and services of $209,208,  and
sold $50,000 of convertible debentures.

         At May 31,  2000,  the  Company's  working  capital  was  $123,928,  as
compared to a deficiency of $16,397 at May 31, 1999 and a deficiency of $119,296
at May 31, 1998. Of the liabilities at May 31, 2000, $71,426 was owed to related
parties.  Of the liabilities at May 31, 1999, $113,082 was owed to Alexander Cox
& Co., an affiliate, for sums advanced for operations.

         At May 31, 2000,  the Company had received  subscriptions  of $220,500,
net of commissions payable of $24,500,  for the sale of 612,500 shares of common
stock and 612,500  common stock purchase  warrants.  Each warrant is exercisable
for one year to purchase one share at $0.50 per share.

         Until such time as the  Company  obtains  agreements  with  third-party
licensees or partners to provide funding for the Company's  anticipated research
and development activities, the Company will be dependent upon proceeds from the
sale of  securities.  Further,  substantial  funds will be  required  before the
Company is able to generate revenues sufficient to support its operations. There
is no assurance that the Company will be able to obtain such additional funds on
favorable  terms, if at all. The Company's  inability to raise  sufficient funds
could  require  it to  delay,  scale  back or  eliminate  certain  research  and
development programs.

         The  report of the  Company's  independent  auditors  on the  financial
statements for the year ended May 31, 2000,  includes an  explanatory  paragraph
relating  to the  uncertainty  of the  Company's  ability to continue as a going

                                       10
<PAGE>
concern.  Praxis  has  suffered  losses  from  operations,  requires  additional
financing, and needs to continue the development of its products. Ultimately the
Company  needs  to  generate   revenues  and  successfully   attain   profitable
operations. These factors raise substantial doubt about the Company's ability to
continue as a going  concern.  There can be no assurance that it will be able to
develop a commercially viable product.  Even if the Company were able to develop
a commercially  viable  product,  there is no assurance that it would be able to
attain profitable operations.

PLAN OF OPERATION

         Assuming that Fairchild pays its remaining installments of $87,500, the
Company  currently  has cash and cash  commitments  to support the  pre-clinical
research program into anti-inflammatory  drugs and anti-wrinkle compounds for at
least the next 15 months. Additional funds will be needed to support any further
operations  at that time.  In order to  increase  the value of the  intellectual
property to enhance the value of the Company,  further  funding will be required
in the next 12 months  to  increase  the size of the  research  and  development
operations and to conduct clinical trials. Pre-clinical research and development
can be  accomplished  without  an  injection  of  capital  in the next 12 months
assuming receipt of the Fairchild  funds.  Unless extra capital is raised in the
next 12 months  there  will be no change in the number of  employees  or rate of
research  and  development.  There  are no  anticipated  purchases  of  plant or
equipment or sale of same.

         The receipt of the Fairchild funds is not certain. As indicated in Item
1.   Description  of  Business  above,   Fairchild's   financial   condition  is
questionable.   The  independent   auditors'  report  on  Fairchild's  financial
statements  for the  year  ended  December  31,  1999  included  an  explanatory
paragraph  relating to the  uncertainty of Fairchild's  ability to continue as a
going concern.

         If  Fairchild  can obtain the capital  necessary  to fund the costs for
manufacturing,   production,   marketing,   selling,  and  obtaining  regulatory
approvals,  it is possible  that sales of products  for  arthritis  and wrinkles
could commence in one to two years.  This differs from  prescription  drugs, for
which  Praxis  does not expect to be able to realize  revenues  from the sale to
consumers  within the next five years due to  extended  testing  and  regulatory
review.  The  regulatory  requirements  are much less stringent for cosmetic and
nutraceutical  products than for prescription  drugs.  While there is nothing in
the  agreement  that would  prevent  Fairchild  from  unilaterally  deciding  to
continue to spend money on research  and thereby,  perhaps,  use all monies that
would  otherwise  be paid to Praxis  as  royalties,  doing so would not  benefit
Fairchild.  It would be in Fairchild's interest to commence sales of products to
generate revenues.

YEAR 2000 READINESS DISCLOSURE

         The Year 2000  issue  refers to the  inability  of  computer  and other
information technology systems to properly process date and time information due
to the  programming  of a two digit year rather than a four digit year. The risk
is that a system  will  recognize  the digits  "00" as 1900 rather than the year
2000, or that the system may not  recognize  "00" as a year at all. As a result,
computers  and  embedded  processing  systems may be at risk of  malfunctioning,
particularly during the transition from 1999 to 2000.

         The Company has  completed  its  assessment  of the impact of Year 2000
issues on its business operations. The Year 2000 issue may affect the Company in
four principal areas including: (1) computer systems such as personal computers,
operating  systems,   business  software,  and  application  software  including
accounting systems,  technical support software and administration software; (2)
field assets (primarily embedded systems) such as programmable logic controllers
and equipment control panels; (3) other systems such as telephones, photocopiers
and facsimile machines; and (4) third-party suppliers and service providers such
as banks and insurance companies.

         To date, the Company has implemented  and tested its computer  software
and hardware for Year 2000  compliance  and has concluded  that its hardware and
software is Year 2000 compliant.

         The  Company's  Year 2000  program is designed to reduce the  Company's
risk of  material  losses  due to the  Year  2000  issue.  Management  does  not
anticipate any material  adverse effect from the Year 2000 issue;  however,  the
Company cannot be certain that it will not suffer  material  adverse  effects in
the event that third  parties upon which the Company is dependent  are unable to
resolve their Year 2000 issues.

                                       11

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.

         See pages beginning with page F-1.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

         None.





                                       12
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>

NAME                      AGE  POSITION
<S>                       <C>  <C>
Dr. Brett Charlton        43   President, Medical Director, and director

Dr. William B. Cowden     45   Vice President, Scientific Director, and director

David Stadnyk             35   Secretary and director
</TABLE>


         The term of office of each director ends at the next annual  meeting of
Praxis' stockholders or when such director's successor is elected and qualifies.
The term of  office  of each  officer  ends at the next  annual  meeting  of the
Praxis' board of directors,  expected to take place  immediately  after the next
annual meeting of stockholders,  or when such officer's successor is elected and
qualifies.

         The last annual  meeting  was held on August 30,  1999,  in  Vancouver,
British Columbia.

         DR. BRETT CHARLTON,  President and a director of the Company since June
19, 1998, is also responsible for the institution and management of all clinical
trials as the medical  director of the Company.  He has basic clinical  training
and  clinical  involvement,  particularly  in  diabetes.  He has  held  academic
appointments  at the Walter and Eliza Hall  Institute  (January  1986 to January
1988) and Stanford  University  (February 1992 to January 1995), and has been at
the John Curtin School of Medical Research, Australian National University since
January 1995. Dr. Charlton has been the Medical Director of the Clinical Studies
Unit of the National Health Sciences Center since June 1997. The National Health
Sciences  Center,  located  in  Deakin,   Australian  Capital  Territory,  is  a
commercially funded non-profit organization that has government-based  principal
shareholders of the Australian National University,  the University of Canberra,
and the Australian  Capital  Territory.  Funding is derived from fee for service
conduct of clinical  trials and fee for service  provision  of graduate  courses
through the University of Canberra.  Revenues are used for funding of scientific
research  activities in the government  sector.  Dr.  Charlton spent three years
with Baxter  Healthcare  (January 1988 to January  1991),  as research  manager,
where he was involved with new  technology  assessment,  strategic  planning and
clinical  trial  management.  He has  been  consulting  for the  biomedical  and
pharmaceutical  industry  since 1984.  Dr.  Charlton has published  more than 50
scientific  papers in medical and biomedical  journals.  He is a graduate of the
University of New South Wales, Sydney,  Australia,  receiving his M.D. degree in
1979 and Ph.D. in 1985.

         DR.  WILLIAM B. COWDEN,  Vice  President  and a director of the Company
since  June 19,  1998,  is also chief  scientist  and  responsible  for all drug
development  programs and pre-clinical  testing. He has been the Senior Research
Fellow at the John Curtin School of Medical Research,  and Principal  Scientific
Advisor to ANUTech Pty Ltd., Canberra,  Australia,  since April 1994. Dr. Cowden
was previously Senior Scientist at Peptide  Technology Ltd., an  Australia-based
company,  from April 1994 to May 1998. As part of his work within the commercial
sector,  Dr.  Cowden has been  involved  in drug  development  studies  from the
earliest stages of  identification  of drug candidates,  including  pre-clinical
assessment,   up  to  the  early  clinical  trial  stage.  Major  pharmaceutical
companies, such as Johnson & Johnson Medical Corp., Cypros Pharmaceuticals Inc.,
and Progen  Industries  Inc.,  currently  license some agents  discovered in his
laboratory. He has published over 100 papers in peer-reviewed scientific medical
journals.  He is the inventor and co-inventor on seven patents. He is a graduate
of the University of  Queensland,  Brisbane,  Australia,  and received his Ph.D.
degree in 1979.

         DAVID  STADNYK,  Secretary  and a director of the Company from June 19,
1998 to September 21, 1999 and since December 21, 1999,  has diverse  experience
in corporate  management and finance. He has served as the Chairman,  President,
Secretary  and a director of Goanna  Resources,  Inc., a publicly  listed mining
company (now known as Fairchild  International  Inc.) from its inception in June
1997  to  March  1999.  He  was  the   President  and  CEO  of  Alexander   News
International, a publicly traded newspaper publishing chain in Canada, from July
1994 to


                                       13
<PAGE>
February  1997. Mr.  Stadnyk was also a licensed  stockbroker  with two national
investment houses in Canada. Since July 1997, Mr. Stadnyk has been the executive
director  of  Alexander  Cox & Co.  based in Sydney,  Australia  and  Vancouver,
British  Columbia,  which engages in financial  consulting  and venture  capital
funding. He is a graduate of the University of British Columbia.

         No other  directorships are held by each director in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any  company  registered  as an  investment  company,  under  the
Investment Company Act of 1940.

         Drs.  Charlton  and  Cowden  and  Mr.  Stadnyk  may  be  deemed  to  be
"promoters" and "control persons" of the Company, as that term in defined in the
Securities Act of 1933. There are no other control persons.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         During the fiscal year ended May 31, 2000, Drs. Charlton and Cowden and
Mr.  Stadnyk  failed to file  their  reports  on Form 3  (Initial  Statement  of
Beneficial Ownership of Securities) on a timely basis. There were no other known
failures to file a report  required by Section 16(a) of the Securities  Exchange
Act of 1934.


ITEM 10. EXECUTIVE COMPENSATION.

         The Company is not presently paying any executive  compensation  except
for  consulting  fees to Dr.  Cowden.  See Item 12.  Certain  Relationships  and
Related Transactions.  It has no long-term incentive plans. The Company does not
pay directors for their services as such nor does it pay any director's fees for
attendance at meetings.  Directors are reimbursed  for any expenses  incurred by
them in their performance as directors.

         There are no employment  agreements with any of the Company's executive
officers.

STOCK OPTION PLAN

         On August 30, 1999,  the  Company's  shareholders  adopted a 1999 Stock
Option Plan under which a total of 1,698,330 shares were reserved  initially for
grant to provide  incentive  compensation  to officers  and key  employees.  The
number of shares available for grant adjusts  annually,  commencing on the first
day of the next  fiscal  year to a number  equal to 15% of the  number of shares
outstanding on last day of the fiscal year just completed.

         The board of directors  administers the Stock Option Plan.  Options may
be granted for up to 10 years at not less than the fair market value at the time
of grant,  except  that the term may not exceed five years and the price must be
110% of fair market value for any person who at the time of grant owns more than
10% of the total voting power of the Company.  Unless otherwise  specified in an
optionee's   agreement,   options   granted   under   the   plan  to   officers,
officer/directors,  and employees will become vested with the optionee after six
months.  The Plan will remain in effect until the board of directors  terminates
it,  except that no  incentive  stock  option,  as defined in Section 422 of the
Internal Revenue Code, may be granted after July 8, 2009.

         Options may be  exercised  by payment of the option  price (i) in cash,
(ii) by tender of shares of Company  common stock which have a fair market value
equal to the option price, or (iii) by such other  consideration as the board of
directors may approve at the time the option is granted.

         As of May 31, 2000,  1,698,330  options had been granted under the plan
as follows:
<TABLE>
<CAPTION>

       OPTIONEE                      NUMBER OF OPTIONS             EXERCISE PRICE               EXPIRATION DATE
<S>                                  <C>                           <C>                          <C>
Dr. Brett Charlton                        566,110                       $0.41                     12/09/2004
Dr. William Cowden                        566,110                       $0.41                     12/09/2004
David Stadnyk                             566,110                       $0.41                     12/09/2004
</TABLE>


                                       14
<PAGE>
ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table provides certain information as to the officers and
directors  individually  and as a group,  and the holders of more than 5% of the
Company's common stock, as of May 31, 2000. Except as otherwise  indicated,  the
persons named in the table have sole voting and investing  power with respect to
all shares of common stock owned by them.

<TABLE>
<CAPTION>

            NAME AND ADDRESS OF OWNER                   NUMBER OF SHARES OWNED             PERCENT OF CLASS (1)
<S>                                                     <C>                                      <C>
Dr. Brett Charlton                                      1,666,110(2)<F2>(3)<F3>                  13.45%
24/1-9 Totterdell Street
Belconnen, 2617 Australia

Dr. William Cowden                                        1,566,110 (3)<F3>                      12.64%
56 Urambi Village
Darlington, NSW 2008 Australia

David Stadnyk                                             1,266,110 (3)<F3>                      10.22%
430 - 744 Hastings Street
Vancouver, BC V6C 1A5 Canada

Neysa Investments Pty. Ltd.                                   800,000                             6.77%
159 Victoria Road
Drummoyne, NSW 2047 Australia

Officers and directors as a group (3 persons)            4,498,330 (4)<F4>                       33.27%

------------
<FN>
(1)<F1>  Where persons listed on this table have the right to obtain  additional
         shares of common stock through the exercise of  outstanding  options or
         warrants or the  conversion of  convertible  securities  within 60 days
         from May 31, 2000, these additional shares are deemed to be outstanding
         for the purpose of computing  the  percentage  of common stock owned by
         such persons,  but are not deemed to be outstanding  for the purpose of
         computing the  percentage  owned by any other person.  Percentages  are
         based on 11,822,209 shares outstanding.

(2)<F2>  Includes  800,000 shares held in the name of Neysa  Investment  Ltd., a
         company owned and controlled by Dr. Charlton.

(3)<F3>  Includes  566,110 shares  issuable upon exercise of stock options.  See
         Item 10. Executive Compensation.

(4)<F4>  Includes 1,698,330 shares issuable upon exercise of stock options.  See
         Item 10. Executive Compensation.
</FN>
</TABLE>

CHANGES IN CONTROL

         We are not  aware of any  arrangements  that may  result in a change in
control of Praxis.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         ALEXANDER COX & CO. Alexander Cox & Co., a company owned and controlled
by David Stadnyk, has advanced sums to the Company from time to time for working
capital  needs.  At May 31, 1999 and 2000,  $113,082 and $71,426,  respectively,
were owed to Alexander Cox & Co. Cumulative  amounts owed to Alexander Cox & Co.
from the Company's inception to May 31, 2000,  totaling $143,696,  have been for
the following:  administration and office charges ($48,814) and expenses paid on
behalf  of  the   Company,   such  as  research   and   development   ($34,234);
reorganization  costs ($57,500);  and professional fees ($3,148).  As of May 31,
2000,  the  Company  had repaid  $72,270,  leaving  $71,426  owing at that date.
Interest  does not accrue and there is no date  established  for  repayment.  In
addition,  the Company shares office  facilities with Alexander Cox & Co. and is
charged for its proportional share

                                       15

<PAGE>

of rent and  administrative  services.  During the years  ended May 31, 1999 and
2000, $14,874 and $30,321, respectively, were paid for rent and services.

         FAIRCHILD  INTERNATIONAL  INC.  The  Company  entered  into a Research,
Development   and  Licence   Agreement   with   Fairchild   International   Inc.
("Fairchild"),  an affiliate,  dated as of May 11, 1999,  which closed September
30, 1999.  Under that  agreement,  Fairchild  obtained an  exclusive,  worldwide
license to make,  use,  and sell  products  and  processes  developed  by Praxis
relating to arthritis and dermal wrinkles in consideration  for 2,600,000 shares
of Fairchild  common stock  (valued at $26,000)  and a research  engagement  for
$250,000.  A first installment of $62,500 was paid on October 1, 1999. Quarterly
payments  of $50,000  are to be made  beginning  January  1, 2000,  with a final
payment of $37,500  due  October 1, 2000.  The January 1, 2000 and April 1, 2000
installments  have been paid. Praxis agreed to conduct certain research projects
commencing October 1, 1999. Any new intellectual  property developed as a result
of that  research  is to be  included  as part of the  licensed  technology  and
licensed to  Fairchild.  Fairchild is  authorized  to grant  sublicenses  and/or
assign  the  license  to  an  affiliate.  Praxis  is  to  be  paid  35%  of  any
consideration  received by Fairchild from the sale of a licensed  product or the
granting of a  sublicense,  less the $250,000 and any other  development  costs,
manufacturing and production costs, and marketing and selling costs. At the time
Praxis entered into the agreement with Fairchild in May 1999, David Stadnyk,  an
officer  and  director  of  the  Company,   owned  approximately  16.4%  of  the
outstanding shares of Fairchild and was a promoter of Fairchild. In addition, in
March 1999  Fairchild  paid Mr.  Stadnyk  consulting  compensation  of  $25,000,
500,000  shares of Fairchild  common  stock,  and  one-year  options to purchase
1,000,000  shares of Fairchild  common stock. The options expired without having
been  exercised.  The  2,600,000  shares  of  Fairchild  owned  by  the  Company
represented  approximately  24% of the outstanding  shares on the issuance date.
According to Fairchild's  amended Form 10-SB  registration  statement filed July
20, 2000,  Praxis and David Stadnyk were the largest  shareholders of Fairchild,
owning 23.7% and 19.8%,  respectively,  of the outstanding  shares as of January
25,  2000.  Winston  Cabell and David Lane were  reported  to own 6.7% and 6.9%,
respectively.

         Drs.  Charlton and Cowden negotiated the terms of the license agreement
on behalf of the Company and Byron Cox, the President of  Fairchild,  negotiated
on behalf of Fairchild. Since Fairchild's common stock is not widely traded, the
amount of Fairchild  shares sought by the Company was not determined by a dollar
value assigned to the stock. Also, the license was difficult to value.  Instead,
the Company sought to have a significant financial stake in Fairchild,  based on
the premise that if the Company's  research and development  efforts prove to be
successful,  the Company should benefit through the receipt of royalty  payments
and through an ownership interest in Fairchild.

         PAYMENTS TO OTHER RELATED PARTIES.  During the years ended May 31, 1999
and 2000, $14,869 and $50,463, respectively, were paid to Dr. William Cowden for
consulting fees for services rendered in connection with the scientific  conduct
of research and  development.  During the year ended May 31, 2000, the following
were also paid by the  Company for  services  rendered  in  connection  with the
scientific  conduct of research and development:  Dr. Brett Charlton (an officer
and  director)  - $7,331;  Neysa  Investments  Pty.  Ltd.  (a company  owned and
controlled  by Dr.  Charlton)  - $9,430;  and  Sciworks  (a company of which Dr.
Cowden is a director) - $14,104.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>

    REGULATION                                                                                        SEQUENTIAL
    S-B NUMBER                                EXHIBIT                                                 PAGE NUMBER
    <S>             <C>                                                                               <C>
       2.1          Stock Exchange Agreement with Micronetics, Inc. (1)<F1>                              N/A

       3.1          Articles of Incorporation, as amended and restated (1)<F1>                           N/A

       3.2          Bylaws (1)<F1>                                                                       N/A

       10.1         Research, Development and Licence Agreement dated May 11, 1999 between               N/A
                    Praxis Pharmaceuticals, Inc. and Fairchild International Inc.(1)<F1>(2)<F2>

       10.2         Exclusive Licence Agreement dated October 14, 1999 between Anutech Pty Ltd.          N/A
                    and Praxis Pharmaceuticals Australia Pty Ltd. (1)<F1>


                                       16
<PAGE>

    REGULATION                                                                                        SEQUENTIAL
    S-B NUMBER                                EXHIBIT                                                 PAGE NUMBER
    <S>             <C>                                                                               <C>
       10.3         Licence Agreement dated October 14, 1999 between Anutech Pty Ltd. and                N/A
                    Praxis Pharmaceuticals Inc. (1)<F1>

       10.4         Shareholders Agreement dated as of October 15, 1999, between Praxis                  N/A
                    Pharmaceuticals Australia Pty Ltd., Praxis Pharmaceuticals Inc., Perpetual
                    Trustees Nominees Limited, and Rothschild Bioscience Managers Limited (1)<F1>

       10.5         1999 Stock Option Plan (1)<F1>                                                       N/A

        21          Subsidiaries of the registrant (1)<F1>                                               N/A

        27          Financial Data Schedule                                                               31
----------------------
<FN>

(1)<F1>  Filed previously
(2)<F2>  Although a "Schedule B" was referenced in this document, it was never made
         a part of the document and therefore has not been filed.
</FN>
</TABLE>

          No  reports  on Form 8-K were  filed  during  the last  quarter of the
period covered by this report.



                                       17

<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                       PRAXIS PHARMACEUTICALS, INC.



Date:  September 13, 2000              By:/S/ BRETT CHARLTON
                                          --------------------------------------
                                          Dr. Brett Charlton, President

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                       TITLE                               DATE
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                   President, Medical Director and director
/s/ BRETT CHARLTON                 (Principal Executive Officer)                               9/13/00
-----------------------------                                                                  ------------------
Dr. Brett Charlton


                                   Vice President, Scientific Director and
/s/ WILLIAM B. COWDEN              director                                                    9/14/00
-----------------------------                                                                  ------------------
Dr. William B. Cowden


                                   Secretary and director
/s/ DAVID STADNYK                  (Principal Financial and Accounting                         9/13/00
-----------------------------      Officer)                                                    ------------------
David Stadnyk

</TABLE>

                                       18

<PAGE>
                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000


                           (EXPRESSED IN U.S. DOLLARS)






                                      F-1

<PAGE>


                           STEELE & CO.*
                   CHARTERED ACCOUNTANTS
*Representing incorporated professionals
                               SUITE 808      TELEPHONE:   (604) 687-8808
                808 WEST HASTINGS STREET      TELEFAX:     (604) 687-2702
         VANCOUVER, B.C., CANADA V6C 1C8      EMAIL:       EMAIL@STEELE-CO.BC.CA




                          INDEPENDENT AUDITORS' REPORT


TO THE SHAREHOLDERS OF
PRAXIS PHARMACEUTICALS INC.



We  have  audited  the  accompanying   consolidated  balance  sheets  of  Praxis
Pharmaceuticals  Inc. (a development  stage company) as of May 31, 2000 and 1999
and the related  consolidated  statements of operations and deficit,  changes in
stockholders' equity and cash flows for the periods ended May 31, 2000, 1999 and
1998  and  cumulative  to May  31,  2000.  These  financial  statements  are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the   financial   position  of  Praxis
Pharmaceuticals  Inc.  as of May  31,  2000  and  1999  and the  results  of its
operations  and its cash flows for each of the  periods in the three year period
then ended and,  cumulative to May 31, 2000, in conformity  with U.S.  generally
accepted accounting principles.

The accompanying  consolidated  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 and there
is no revenue stream from operations.  As a result,  there is uncertainty  about
its ability to continue as a going  concern.  The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.




Vancouver, Canada                                          "STEELE & CO."
August 16, 2000                                            CHARTERED ACCOUNTANTS


                                      F-2
<PAGE>
                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                              MAY 31, 2000 AND 1999
                           (EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                    2000                1999
                                                                    ----                ----
<S>                                                             <C>            <C>
ASSETS
  CURRENT
    CASH (NOTE 7)                                               $ 197,124      $ 103,513
    OTHER RECEIVABLE                                               48,748            -
                                                                ----------     ----------
                                                                  245,872        103,513
  INVESTMENTS (NOTE 3)                                             27,000            -
                                                                ----------     ----------
                                                                $ 272,872      $ 103,513
                                                                ==========     ==========
LIABILITIES
  CURRENT
    ACCOUNTS PAYABLE                                            $  50,518      $    6,828
    OWING TO RELATED PARTIES (NOTE 4)                              71,426         113,082
                                                                ----------     ----------
                                                                  121,944         119,910
                                                                ----------     ----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
  SHARE CAPITAL
    AUTHORIZED
      50,000,000 COMMON SHARES WITH A PAR VALUE OF
      $.001 PER SHARE

      10,000,000 PREFERRED SHARE WITH A PAR VALUE OF
      $.001 PER SHARE

    ISSUED AND PAID IN CAPITAL (NOTE 5)
      11,822,209 COMMON SHARES
      (1999 - 10,722,209 COMMON SHARES)                           817,473        637,473
  SHARE SUBSCRIPTIONS (NOTE 5)                                    220,500         30,000
  DEFICIT ACCUMULATED DURING
    THE DEVELOPMENT STAGE                                        (887,045)      (683,870)
                                                                ----------     ----------
  TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                         150,928        (16,397)
                                                                ----------     ----------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  272,872     $ 103,513
                                                                ==========     ==========
</TABLE>



APPROVED BY THE DIRECTORS


      "DAVID STADNYK"
-----------------------------------


      "BRETT CHARLTON"
-----------------------------------

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-3
<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                    FOR THE YEARS ENDED MAY 31, 2000 AND 1999
    AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION) TO MAY 31, 1998
                           (EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
                                          CUMULATIVE                                                     PERIOD
                                              TO                         YEARS ENDED                      ENDED
                                            MAY 31,                        MAY 31,                       MAY 31,
                                             2000                 2000                1999                1998
                                       -----------------   --------------------------------------  ------------------
<S>                                    <C>                      <C>                 <C>                  <C>
PROJECT EXPENSES
  RESEARCH AGREEMENT
    AMENDMENT                          $   45,000               $      -            $  45,000            $     -
  RESEARCH ADVANCES                       229,076                   86,604             92,456               50,016
  PATENT COSTS                              2,820                      -                  -                  2,820
  RECOVERED COSTS
    CASH                                 (135,594)                (135,594)               -                    -
    INVESTMENT
      CONSIDERATION                       (26,000)                 (26,000)               -                    -
  RELATED PARTY
    CONSULTING FEES                        65,538                   65,538                -                    -
                                       -----------              -----------         ----------           ----------
                                          180,840                   (9,452)           137,456               52,836
                                       -----------              -----------         ----------           ----------
ADMINISTRATION EXPENSES
  BANK CHARGES AND
    EXCHANGE                                3,355                      905              2,450                  -
  CONSULTING                              229,858                   16,500            213,358                  -
  OFFICE AND SECRETARIAL                   26,040                   11,343             11,005                3,692
  FINDERS FEES                              7,500                      -                7,500                  -
  PROMOTION AND TRAVEL                    178,210                   98,616             79,594                  -
  PROFESSIONAL FEES                        87,428                   54,942             24,337                8,149
  RELATED PARTY
    ADMINISTRATION
    CHARGES                                48,814                   30,321             14,874                3,619
                                       -----------              -----------         ----------           ----------
                                           581,205                 212,627            353,118               15,460
                                       -----------              -----------         ----------           ----------
NET LOSS FOR THE
  PERIOD (NOTE 6)                         762,045                  203,175            490,574               68,296
DEFICIT BEGINNING OF THE
  PERIOD                                      -                    683,870            193,296                  -
REORGANIZATION COSTS                      125,000                      -                  -                125,000
                                       -----------              -----------         ----------           ----------
DEFICIT END OF THE PERIOD              $  887,045               $  887,045          $ 683,870            $ 193,296
                                       ===========              ===========         ==========           ==========
BASIC LOSS PER SHARE                                            $      .02          $     .07            $     -
                                                                ===========         ==========           ==========
WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES
  OUTSTANDING                                                   11,555,542          7,158,594
                                                                ===========         ==========

</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-4

<PAGE>
                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                    FOR THE YEARS ENDED MAY 31, 2000 AND 1999
    AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION) TO MAY 31, 1998

                           (EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>

                                                                                                            TOTAL
                                        COMMON SHARES         CAPITAL IN       SHARE                        STOCK-
                                                              EXCESS OF      SUBSCRIP-                     HOLDERS'
                                     SHARES       AMOUNT      PAR VALUE        TIONS        DEFICIT         EQUITY
                                   ----------     -------     ----------     ---------     ----------     ----------
<S>                                <C>            <C>         <C>            <C>          <C>             <C>
Share subscriptions                       -       $   -       $     -        $  4,000      $     -        $  74,000
Net loss for the period                   -           -             -             -          (68,296)       (68,296)
Re-organization costs                     -           -             -             -         (125,000)      (125,000)
                                   ----------     -------     ----------     ---------     ----------     ----------
Stockholders' equity
  (deficiency) at May 31, 1998            -           -             -          74,000       (193,296)      (119,296)
Common shares
  Issued for cash
    @ $.001 per share               5,000,000       5,000           -          (5,000)           -              -
    @ $.05 per share                  800,000         800        39,200           -              -           40,000
    @ $.12 per share                  833,333         833        99,167           -              -          100,000
    @ $.20 per share                  250,000         250        49,750           -              -           50,000
    @ $.50 per share                  215,450         215       107,510       (69,000)           -           38,725
  Issued for services
    @ $.03 per share                1,400,000       1,400        40,600           -              -           42,000
    @ $.10 per share                  383,000         383        37,617           -              -           38,000
    @ $.25 per share                  516,832         517       128,691           -              -          129,208
  Issued for conversion of
    debentures
    @ $.03 per share                  325,926         326        10,674           -              -           11,000
    @ $.11 per share                  124,444         124        13,876           -              -           14,000
    @ $.14 per share                  106,667         107        14,893           -              -           15,000
    @ $.16 per share                   60,952          61         9,939           -              -           10,000
  Issued for reorganization
    costs @ $.10 per share            305,403         305        30,235           -              -           30,540
  Issued for research
    agreement amendment               300,000         300        44,700           -              -           45,000
  Acquired on reorganization
    acquisition                       100,202         100          (100)          -              -              -
Share subscriptions                       -           -             -          30,000            -           30,000
Net loss for the year                     -           -             -             -         (490,574)      (490,574)
                                   ----------     -------     ----------     ---------     ----------     ----------
Stockholders' equity
  (deficiency) at May 31, 1999     10,722,209     $10,721     $ 626,752      $ 30,000      $(683,870)     $ (16,397)
                                   ==========     =======     ==========     =========     ==========     ==========


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                      F-5

<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

                    FOR THE YEARS ENDED MAY 31, 2000 AND 1999
    AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION) TO MAY 31, 1998

                           (EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
                                                                                                            TOTAL
                                        COMMON SHARES         CAPITAL IN       SHARE                        STOCK-
                                                              EXCESS OF      SUBSCRIP-                     HOLDERS'
                                     SHARES       AMOUNT      PAR VALUE        TIONS        DEFICIT         EQUITY
                                   ----------     -------     ----------     ---------     ----------     ----------
<S>                                <C>            <C>         <C>            <C>          <C>             <C>
Stockholders' equity
(deficiency) at May 31, 1999       10,722,209     $10,721     $ 626,752      $ 30,000     $ (683,870)     $ (16,397)
Common shares
  Issued for cash
    @ $.05 per share                  600,000         600        29,400       (30,000)           -              -
    @ $.20 per share                  250,000         250        49,750           -              -           50,000
    @ $.40 per share                  250,000         250        99,750           -              -          100,000
Share subscriptions                       -           -             -         220,500            -          220,500
Net loss for the year                     -           -             -             -         (203,175)      (203,175)
                                   ----------     -------     ----------     ---------     ----------     ----------
Stockholders' equity
(deficiency) at MaY 31, 2000       11,822,209     $11,821     $ 805,652      $220,500      $(887,045)     $ 150,928
                                   ==========     =======     ==========     =========     ==========     ==========
</TABLE>








   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                      F-6
<PAGE>



                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE YEARS ENDED MAY 31, 2000 AND 1999
    AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION) TO MAY 31, 1998
                           (EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                          CUMULATIVE                                                     PERIOD
                                              TO                         YEARS ENDED                      ENDED
                                            MAY 31,                        MAY 31,                       MAY 31,
                                             2000                 2000                1999                1998
                                       -----------------   --------------------------------------  ------------------
<S>                                    <C>                      <C>                 <C>                  <C>
CASH PROVIDED (USED) BY
  OPERATING ACTIVITIES
    NET LOSS FOR THE
      PERIOD                           $ (762,045)              $ (203,175)         $ (490,574)          $(68,296)
    NON-CASH ITEMS
      INVESTMENT
        CONSIDERATION FOR
        RECOVERED COSTS                   (26,000)                 (26,000)                -                  -
      ISSUE OF SHARES FOR
        SERVICES                          209,208                      -               209,208                -
      RESEARCH AGREEMENT                   45,000                      -                45,000                -
    CHANGE IN NON-CASH
      OPERATING ITEM
        OTHER RECEIVABLE                  (48,748)                 (48,748)                -                  -
      ACCOUNTS PAYABLE                     50,518                   43,690               6,828                -
                                       -----------              -----------         -----------          ---------
                                         (532,067)                (234,233)           (229,538)           (68,296)
                                       -----------              -----------         -----------          ---------
  INVESTING ACTIVITIES
    INVESTMENT IN
      UNCONSOLIDATED AFFILIATE             (1,000)                  (1,000)                -                  -
                                       -----------              -----------         -----------          ---------
  FINANCING ACTIVITIES
    OWING TO RELATED PARTIES               71,426                  (41,656)             70,531             42,551
    SHARE CAPITAL ISSUED
      FOR CASH                            482,725                  180,000             302,725                -
      FOR CONVERSION OF
        DEBENTURES                         50,000                      -                50,000                -
    SHARE SUBSCRIPTIONS                   220,500                  190,500             (44,000)            74,000
    REORGANIZATION COSTS                  (94,460)                     -               (69,460)           (25,000)
                                       -----------              -----------         -----------          ---------
                                          730,191                  328,844             309,796             91,551
                                       -----------              -----------         -----------          ---------
CHANGE IN CASH FOR
  THE PERIOD                              197,124                   93,611              80,258             23,255
CASH BEGINNING OF
  THE PERIOD                                  -                    103,513              23,255                -
                                       -----------              -----------         -----------          ---------
CASH END OF THE PERIOD                 $  197,124               $  197,124          $  103,513           $ 23,255
                                       ==========               ===========         ===========          =========

</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-7
<PAGE>



                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000
                           (EXPRESSED IN U.S. DOLLARS)



1.   ACCOUNTING POLICIES

     a.   Investments and Basis of Presentation

          i.   These consolidated  financial  statements include the accounts of
               the   company   and   its   wholly-owned   subsidiaries,   Praxis
               Pharmaceuticals   International  Pty.  Ltd.,  a  private  company
               registered in Australia and Praxis Pharmaceuticals Inc. (a Nevada
               corporation).

          ii.  The Company accounts for its investment in Praxis Pharmaceuticals
               Australia  Pty.  Limited,   a  private  company,   and  Fairchild
               International  Corporation,  a  listed  company,  using  the cost
               method  of  accounting.  Effective  June  1,  1999,  the  Company
               discontinued  consolidation  of  these  investee  companies.  The
               investee companies are currently in the development stage and the
               equity in these  companies is  represented  by  unexpended  funds
               committed  for  research and  development.  The net assets of the
               investees  are  unlikely  to accrue  to the  Company  during  the
               development stage. Accordingly, management is of the opinion that
               recognition is not required or meaningful in the accounts for the
               Company's  equity  share of  earnings,  losses or change in share
               capital until the investees advance past the development stage.

     b.        Pharmaceutical Research and Development

          The  Company  is  engaged  in  the   research   and   development   of
          pharmaceutical  products  and  expenses  all costs  incurred as period
          costs. The underlying value of the pharmaceutical products is entirely
          dependent upon the development of marketable products,  the ability of
          the Company to obtain the necessary financing to complete  development
          and upon future profitable production.

     c.   Use of Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect the amounts  reported in the  financial
          statements and accompanying disclosures.  Although these estimates are
          based on management's best knowledge of current events and actions the
          Company may  undertake in the future,  actual  results may differ from
          the estimates.

      d.  Foreign Currency

          Transactions in foreign  currencies are translated at rates prevailing
          on the dates of the  transactions.  Monetary  assets  and  liabilities
          denominated  in  foreign  currencies  have been  translated  into U.S.
          dollars at a rate of exchange  prevailing at year end.  Exchange gains
          and losses from foreign currency translation  adjustments are included
          in current costs.


                                      F-8
<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000
                           (EXPRESSED IN U.S. DOLLARS)



1.   ACCOUNTING POLICIES (CONTINUED)

     e.   Income Taxes

          The Company has incurred  operating losses which are available for tax
          credit carry  forward.  No certainty  exists whether it is more likely
          than not that some  portion of these  amounts  will be  realized  by a
          reduction of future  taxes  payable and no deferred tax asset has been
          recognized.

     f.   Year 2000 Issue

          It is not  possible  to be certain  that all  aspects of the Year 2000
          Issue affecting the Company, including those related to the efforts of
          customers, suppliers, or other third parties, will be fully resolved.

2.   GOING CONCERN CONSIDERATIONS

     As at May 31, 2000, the Company had not reached a level of operations which
     would finance day to day activities.  These financial  statements have been
     prepared on the assumption that the Company is a going concern,  meaning it
     will continue in operation for the  foreseeable  future and will be able to
     realize  assets  and  discharge  liabilities  in  the  ordinary  course  of
     operations.  Different  basis  of  measurement  may be  appropriate  when a
     company is not expected to continue  operations for the foreseeable future.
     The Company's continuation as a going concern is dependent upon its ability
     to attain  profitable  operations and generate funds therefrom and/or raise
     equity  capital  or  borrowings  from third  parties  and  related  parties
     sufficient  to meet current and future  obligations.  The Company  suffered
     losses from  operations  of $203,175,  $490,574 and $68,296 for the periods
     ended May 31, 2000, 1999 and 1998.

3.   INVESTMENTS AND RESEARCH AND DEVELOPMENT

     a.   Praxis Pharmaceuticals Australia Pty. Limited - $1,000

          The Company's investment in 1,400,000 ordinary shares is recorded at a
          nominal amount and represents a potentially diluted interest of 73.7%,
          assuming the conversion of all issued preferred shares.

          The  Company's  ownership  interest  is  subject  to  a  shareholders'
          agreement  dated October 15, 1999. The agreement  prescribes the terms
          whereby  research  funding by the preferred  shareholder  and employee
          equity  participation will reduce the Company's  ownership interest to
          35%.  Subsequent to May 31, 2000, the preferred  shareholder  notified
          the Company of its intention to subscribe for an additional  1,500,000
          preferred  shares,  diluting  the  Company's  interest  to 41.2%.  The
          Company  expenses its share of research and  development  funding when
          advanced.


                                      F-9
<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000
                           (EXPRESSED IN U.S. DOLLARS)



3.   INVESTMENTS AND RESEARCH AND DEVELOPMENT (CONTINUED)

     b.   Fairchild International Corp. - $26,000

          The Company's  investment in 2,600,000  common shares is recorded at a
          nominal  amount and  represents an interest of 23.7%.  The Company has
          licensed  certain  rights to Fairchild  International  Corp., a listed
          company  with  common  shareholders  and, as  consideration,  received
          2,600,000  common  shares and a commitment  for the  reimbursement  of
          research and development funding at prescribed  intervals  aggregating
          $250,000  ($135,594  received) by October 1, 2000.  Reimbursements are
          recorded as a reduction of costs when received.

          Funding of $26,000  due at the year end and  $50,000  due July 1, 2000
          has not been received. Management is unable to determine the timing of
          payment and the balance has not been recorded as receivable. No notice
          of default under the agreement has been given.

4.   OWING TO RELATED PARTIES

     The  Company  shares  office  facilities  and  has  common  management  and
     directorships  with a  number  of  public  and  private  corporate  related
     parties.  The  Company is charged  for office  rentals  and  administrative
     services on a proportional cost basis. Management believes that the methods
     of cost  allocations  and  resultant  costs are  reasonable.  Accounts with
     companies  with  common  management  and   directorships,   management  and
     directors are unsecured with no fixed terms of interest or repayment.
<TABLE>
<CAPTION>
                                          CUMULATIVE
                                          TO MAY 31,                          PERIODS ENDED MAY 31,
                                             2000                 2000                1999                1998
                                       -----------------   ----------------------------------------------- ------
<S>                                        <C>                 <C>                 <C>                  <C>
Administration and
  office charges                           $ 48,814            $ 30,321            $ 14,874             $ 3,619
Payments on behalf of
  Reorganization costs                       57,500                 -                57,500                 -
  Professional fees                           3,148                 -                   -                 3,148
  Research and development
    advances                                 34,234                 -                   -                34,234
  Cash advances (repayments)                (72,270)            (71,977)             (1,843)              1,550
                                           ---------           ---------           ---------            -------
                                           $  71,426           $(41,656)           $ 70,531             $42,551
                                           ==========          =========           =========            ========
</TABLE>



                                      F-10
<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000
                           (EXPRESSED IN U.S. DOLLARS)



5.   SHARE CAPITAL

     a.   Authorized

          50,000,000 Common shares with a par value of $.001 per share
          10,000,000 Preferred shares with a par value of $.001 per share
<TABLE>
<CAPTION>
     b.   Common Shares Issued                                                    SHARES              CONSIDERATION
          <S>                                                                     <C>                   <C>
          Shares of Praxis Pharmaceuticals Inc. (a Nevada
          corporation) issued for cash and exchanged for
          shares of Micronetics, Inc.                                              5,000,000            $  5,000
          Outstanding shares of  Micronetics, Inc. at date of
          acquisition with a nominal value                                           100,202                   1
          For reorganization costs                                                   305,403              30,540
                                                                                  ----------            --------
          Balance at completion of business re-organization                        5,405,605              35,541
          For cash                                                                 1,298,783             257,725
          For services                                                             3,099,832             249,207
          For debenture conversion                                                   617,989              50,000
          For research agreement amendment                                           300,000              45,000
                                                                                  ----------            --------
          Balance at May 31, 1999                                                 10,722,209             637,473
          For cash                                                                 1,100,000             180,000
                                                                                  ----------            --------
          Balance at May 31, 2000                                                 11,822,209            $817,473
                                                                                  ==========            ========
</TABLE>

     c.   Share Issue Commitments

          The Company  has granted  stock  options to its  directors  to acquire
          1,698,330  shares at $.41 per share,  exercisable to December 9, 2004.
          The options  have fully  vested and, at the issue date,  the  exercise
          price exceeded the quoted market value of the shares.  Accordingly, no
          stock option  compensation  has been  recognized  in relation to these
          stock options in the financial statements.

     d.   Share Subscriptions

          As at May 31,  2000,  subscriptions  of $220,500  (net of  commissions
          payable of $24,500) were received to acquire 612,500 units at $.40 per
          unit.  Each unit  consists  of one common  share and one common  share
          purchase warrant. Each warrant is exercisable for one year to purchase
          one common share at $.50 per share.  The  warrants  commence to expire
          March 14, 2001.


                                      F-11
<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2000
                           (EXPRESSED IN U.S. DOLLARS)



6.   INCOME TAXES

     The Company has incurred operating losses which are available to reduce
     future years' taxable income. As at May 31, 2000, tax losses of
     approximately $750,000 were incurred. No future benefits have been
     recognized in the accounts.

7.   SEGMENTED INFORMATION

     a.   Cash

          The Company  maintains its cash balance in U.S. and other  currencies.
          At the year end, the U.S. dollar equivalents were as follows.
<TABLE>
<CAPTION>
                                                                  2000                1999
                                                                  ----                ----
          <S>                                                  <C>                  <C>
          U.S. dollars                                         $ 97,117             $ 13,339
          Australian dollars                                     99,995               90,174
          Canadian dollars                                           12                  -

                                                               $197,124             $103,513
                                                               ========             ========
</TABLE>


     b.   Geographic Segments

          The Company's  activities  are all in the one industry  segment of the
          research and development of pharmaceutical  products. The research and
          development is carried out in Australia.





                                      F-12