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

                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1

(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 initially,  but subsequently  written down to $1) 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

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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 "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

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<PAGE>

otherwise  gain  access  to  Praxis'  trade  secrets,  that  any  obligation  of
confidentiality  will be  honored  or that  Praxis  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 initially,  but subsequently written down to $1)
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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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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     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 $230,173 as compared to $535,241  during the 1999 fiscal year.  The
decrease  in the net  loss is due in  large  part 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 47% for the 2000 fiscal
year as compared to the 1999 fiscal year.  The  decrease was due  primarily to a
decrease in  consulting  fees of  $224,858.  Also,  the Company  during the 2000
fiscal year did not incur interest expenses on convertible  debentures ($16,667)
and finders  fees  ($7,500)  that were  incurred  during the 1999  fiscal  year.
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).


     The  decreased  loss from  operations  ($535,241  for 1999 as  compared  to
$203,175 for 2000) was offset only slightly by a loss of $26,998  resulting from
the  write-down  of  the  Company's  investment  in  the  Fairchild  shares  and
Praxis-Australia  to reflect the Company's  equity share of losses  sustained by
these entities.


     YEAR ENDED MAY 31, 1999 COMPARED TO PERIOD ENDED MAY 31, 1998. For the year
ended May 31,  1999,  the net loss was $535,241 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 $397,785 in 1999.
The most significant  component of these expenses in 1999 was consulting fees of
$241,358.  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 $180,000.  Through May 31, 1999,  the
Company  issued common stock for cash of $302,725 and services of $237,208,  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

                                       10
<PAGE>

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
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.


                                       11
<PAGE>

     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.


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 initially, but subsequently written
down to $1) 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 review,  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.


     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. 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 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.



     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.  The 16.4%  ownership  disclosed above includes the 500,000 shares
received by Mr. Stadnyk as consulting compensation.

     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

                                       16
<PAGE>
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>

       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:  October 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>
                                   President, Medical Director and director
/s/ BRETT CHARLTON                 (Principal Executive Officer)                               10/13/00
-----------------------------                                                                  ------------------
Dr. Brett Charlton


                                   Vice President, Scientific Director and
/s/ WILLIAM B. COWDEN              director                                                    10/13/00
-----------------------------                                                                  ------------------
Dr. William B. Cowden


                                   Secretary and director
/s/ DAVID STADNYK                  (Principal Financial and Accounting                         10/12/00
-----------------------------      Officer)                                                    ------------------
David Stadnyk



                                       18
</TABLE>

<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
ended May 31, 2000 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
August 16, 2000 (with amendments                           "STEELE & CO."
 to October 4, 2000 - Note 8)                              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)                                                                 2          -
                                                                               ----------   ----------
                                                                               $ 245,874    $ 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
      10,000,000PREFERRED SHARES 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)                                        862,140      682,140
  SHARE SUBSCRIPTIONS (NOTE 5)                                                   220,500       30,000
  DEFICIT ACCUMULATED DURING
    THE DEVELOPMENT STAGE (NOTE 8)                                              (958,710)    (728,537)
                                                                               ----------   ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                                          123,930      (16,397)
                                                                               ----------   ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $ 245,874    $ 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                             257,858         16,500        241,358            -
  FINDERS FEES                             7,500            -            7,500            -
  INTEREST ON CONVERTIBLE
   DEBENTURES                             16,667            -           16,667            -
  OFFICE AND SECRETARIAL                  26,040         11,343         11,005          3,692
  PROFESSIONAL FEES                       87,428         54,942         24,337          8,149
  PROMOTION AND TRAVEL                   178,210         98,616         79,594            -
  RELATED PARTY
   ADMINISTRATION
   CHARGES                                48,814         30,321         14,874          3,619
                                       ----------     ----------     ----------     ----------
                                         625,872        212,627        397,785         15,460
                                       ----------     ----------     ----------     ----------
LOSS FROM OPERATIONS                     806,712        203,175        535,241         68,296
EQUITY SHARE IN LOSS OF
  INVESTEES (NOTE 2)                      26,998         26,998            -              -
                                       ----------     ----------     ----------     ----------

NET LOSS FOR THE PERIOD
  (NOTES 6 AND 8)                        833,710        230,173        535,241         68,296
DEFICIT BEGINNING OF THE
  PERIOD                                     -          728,537        193,296            -
REORGANIZATION COSTS                     125,000            -              -          125,000
                                       ----------     ----------     ----------     ----------
DEFICIT END OF THE PERIOD              $ 958,710      $ 958,710      $ 728,537      $ 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                        -       $   -       $     -        $  74,000      $     -        $  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
    @ $.05 per share                 1,400,000       1,400        68,600            -              -           70,000
    @ $.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
  Additional paid in
   capital                                 -           -          16,667            -              -           16,667
  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                      -           -             -              -         (535,241)      (535,241)
                                    ----------     -------     ----------     ----------     ----------     ----------
Stockholders' equity
(deficiency) at May 31, 1999        10,722,209     $10,721     $ 671,419      $  30,000      $(728,537)     $ (16,397)
                                    ==========     =======     ==========     ==========     ==========     ==========
</TABLE>




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

                                      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     $ 671,419      $  30,000      $(728,537)     $ (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                      -           -             -              -         (230,173)      (230,173)
                                    ----------     -------     ----------     ----------     ----------     ----------
Stockholders' equity
(deficiency) at May 31, 2000        11,822,209     $11,821     $ 850,319      $ 220,500      $(958,710)     $ 123,930
                                    ==========     =======     ==========     ==========     ==========     ==========
</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                           $(833,710)     $(230,173)     $(535,241)     $ (68,296)
    NON-CASH ITEMS
      INVESTMENT
        CONSIDERATION FOR
        RECOVERED COSTS                  (26,000)       (26,000)           -              -
      ISSUE OF SHARES FOR
        SERVICES                         237,208            -          237,208            -
        RESEARCH AGREEMENT                45,000            -           45,000            -
      INTEREST ON
        CONVERTIBLE
        DEBENTURES                        16,667            -           16,667            -
      EQUITY SHARE IN LOSS OF
      INVESTEES                           26,998         26,998            -              -
    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 EQUITY
     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 equity
               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
               additional  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,  $535,241 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

          The  Company's  investment  in  1,400,000  ordinary  shares  has  been
          adjusted to reflect losses  sustained by the investee 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. - $1

          The Company's  investment in 2,600,000 common shares has been adjusted
          to reflect losses sustained by the investee 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>
                                                                                            PERIOD
                                           CUMULATIVE              YEARS ENDED               ENDED
                                           TO MAY 31,                MAY 31,                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               -
               For reorganization costs                                            305,403            30,540
                                                                                ----------          --------
               Balance at completion of business re-organization                 5,405,605            35,540
               For cash                                                          1,298,783           297,725
               For services                                                      3,099,832           237,208
               For debenture conversion                                            617,989            50,000
               Additional paid in capital                                              -              16,667
               For research agreement amendment                                    300,000            45,000
                                                                                ----------          --------
               Balance at May 31, 1999                                          10,722,209           682,140
               For cash                                                          1,100,000           180,000
                                                                                ----------          --------
               Balance at May 31, 2000                                          11,822,209          $862,140
                                                                                ==========          ========
</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   $778,000  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.

8.   AMENDMENTS

     These financial  statements have been amended for inclusion in filings with
     the  Securities  and  Exchange  Commission.  Amendments  to  the  financial
     statements include:

     a.   Year Ended May 31, 2000

          Reduction of $26,998 in the carrying value of investments in Fairchild
          International  Corporation and Praxis  Pharmaceuticals  Australia Pty.
          Limited  to  reflect  the  equity  share of  losses  sustained  by the
          investees. (Note 3)

     b.   Year Ended May 31, 1999

          Increase in interest  costs of $16,667 for the intrinsic  value of the
          embedded conversion benefit in convertible debentures.

          Increase in consulting  fees of $28,000 to reflect the market value of
          the shares issued for services.


                                      F-12
<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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



8.   AMENDMENTS (CONTINUED)

     b.   Year Ended May 31, 1999 (Continued)

          The impact of these  amendments on the May 31, 2000 and 1999 financial
          statements is as follows:
<TABLE>
<CAPTION>

                                             CONSOLIDATED BALANCE SHEETS

                                 AS REPORTED                          RESTATED       AS REPORTED                       RE-STATED
                                 MAY 31, 2000       ADJUSTMENT      MAY 31, 2000    MAY 31, 1999      ADJUSTMENT     MAY 31, 1999
                                 ------------       ----------      ------------    ------------      ----------     ------------
<S>                              <C>               <C>                <C>            <C>               <C>             <C>
Investments                      $  27,000         $ (26,998)         $       2      $     -           $    -          $     -
                                 ==========        ==========         ==========     ==========        =========       ==========
Total assets                     $ 272,872         $ (26,998)         $ 245,874      $ 103,513         $    -          $ 103,513
                                 ==========        ==========         ==========     ==========        =========       ==========
Issued and paid in capital       $ 817,473         $  44,667          $ 862,140      $ 637,473         $ 44,667        $ 682,140
                                 ==========        ==========         ==========     ==========        =========       ==========
Deficit accumulated
 during development stage        $(887,045)        $ (71,665)         $(958,710)     $(683,870)        $(44,667)       $(728,537)
                                 ==========        ==========         ==========     ==========        =========       ==========
Total stockholders' equity
 (deficiency)                    $ 150,928         $ (26,998)         $ 123,930      $ (16,937)        $    -          $ (16,937)
                                 ==========        ==========         ==========     ==========        =========       ==========
Total liabilities and
 stockholders' equity            $ 272,872         $ (26,998)         $ 245,874      $ 103,513         $    -          $ 103,513
                                 ==========        ==========         ==========     ==========        =========       ==========
</TABLE>




                               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

<TABLE>
<CAPTION>

                                                              CUMULATIVE TO                  YEARS ENDED
                                                              MAY 31, 2000        MAY 31, 2000        MAY 31, 1999
                                                              ------------        ------------        ------------
     <S>                                                        <C>                 <C>                 <C>
     Loss from operations as previously reported                $762,045            $203,175            $490,574
     Interest on conversion benefits                              16,667                 -                16,667
     Consulting fees for shares                                   28,000                 -                28,000
                                                                --------            --------            --------
     Loss from operations as restated                            806,712             203,175             535,241
     Equity share in loss of investees                            26,998              26,998                 -
                                                                --------            --------            --------
     Net loss for the period as restated                         833,710             230,173             535,241
     Deficit beginning of the period, as restated                    -               728,537             193,296
     Reorganization costs                                        125,000                 -                   -
                                                                --------            --------            --------
     Deficit end of the period, as restated                     $958,710            $958,710            $728,537
                                                                ========            ========            ========
</TABLE>
<PAGE>