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

                                   FORM 10-KSB

(Mark One)
 X   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     FOR THE FISCAL YEAR ENDED MAY 31, 2002

[ ]  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                                    98-0173610
   (State or other jurisdiction                   (I.R.S. Employer
 of incorporation or organization)               Identification No.)

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

                    Issuer's telephone number: (604) 688-6050

       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: $1,576,690 AS OF SEPTEMBER 4, 2002

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  13,362,069 AS OF SEPTEMBER 4, 2002

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

<PAGE>

                                     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  disease  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 conditions such
as skin wrinkles and surgical  adhesions.  The technology also has applicability
in the  cosmetic  and  nutraceutical  markets and agents for  wrinkles and other
conditions are being developed for these markets.

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. Immediately after the reverse acquisition transaction,  the
shareholders of Praxis-Nevada  held  approximately 98% of the outstanding shares
of the Company.  Praxis-Nevada  was merged into the Company  effective  June 30,
2002, thereby eliminating Praxis-Nevada as a subsidiary of the Company.

         A wholly owned Australian subsidiary,  Praxis Pharmaceuticals Australia
Pty.  Ltd.  (ACN 082 811 630) was formed in June 1998 as a private  company.  In
October 1999 an equity  investment  was made in this  subsidiary  by  Rothschild
Bioscience  Managers  Ltd.,  which  reduced  Praxis'  equity  ownership  to 35%.
Praxis-Australia  changed  its  name to  "Pharmaxis  Pty Ltd" in June  2002.  An
additional equity investment was made in Pharmaxis in August 2002, which reduced
Praxis' equity ownership to 19.6%

         A second wholly owned  Australian  subsidiary,  Praxis  Pharmaceuticals
International Pty. Ltd. (ACN 092 654 870)  ("Praxis-International"),  was formed
on May 2, 2000. Praxis-International is in the process of being dissolved.

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,  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.


                                       2
<PAGE>


         Anutech has also granted  Pharmaxis 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 Pharmaxis 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 has chosen not to develop this technology at
this time.

         A patent  application was filed in Australia January 2002 for agents in
the treatment of skin  wrinkles.  No further  action is required  until February
2003.

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

RESEARCH AND DEVELOPMENT

         During the fiscal years ended May 31, 2002, 2001, and 2000, the Company
incurred $26,807, $nil, and $86,604, in research costs, respectively.

         PRAXIS.  Due to the limited  availability  of funds and resources,  the
Company  intends  to focus its  efforts  on  treatments  for  wrinkles.  See the
discussion below under the heading "Praxis-International."

         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.  To date,  the  Company  has  engaged  in  private
placements of its stock to fund research and development activities. The Company
is now seeking 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.


                                       3
<PAGE>


         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 the Company's development. 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 working
capital  and to develop  strategic  alliances  with  established  pharmaceutical
companies  in  order  to  conduct   clinical   trials  and  to  market  approved
therapeutics.

         PHARMAXIS. As of August 31, 2002, Pharmaxis received private funding of
approximately  US$5.16 million,  thereby reducing the Company's equity ownership
to 19.6%. Pharmaxis is pursuing the development of proprietary therapeutics that
target  inflammatory  disorders,  such as cystic fibrosis,  chronic  obstructive
pulmonary disease (COPD),  asthma,  multiple  sclerosis,  rheumatoid  arthritis,
inflammatory bowel disease, and psoriasis. With the recently obtained financing,
Pharmaxis  proposes to
         o   complete Phase II trials for its cystic fibrosis and COPD
             therapeutics,
         o   complete Phase I clinical trials for its multiple sclerosis
             therapeutics,
         o   identify opportunities in other inflammatory  disorders,  and
         o   identify and bring in further compounds and research programs.

         PRAXIS-INTERNATIONAL.  In June 2001,  Praxis-International entered into
an agreement  with Clearcoll Pty Ltd. of Annandale,  New South Wales,  Australia
(CAN 076 764 013), to jointly  research and develop  materials for the treatment
of wrinkles by injection or topical  delivery of novel compounds  resulting from
the joint development program. Clearcoll has the right to negotiate a license to
market the materials under conditions to be determined after successful  product
development.  As  Praxis-International  no longer exists,  Praxis is negotiating
directly  with  Clearcoll  to permit  Clearcoll  to  develop  materials  for the
treatment  of  wrinkles.  It is  anticipated  that Praxis would retain a royalty
interest.  Praxis is also negotiating with other major pharmaceutical  companies
with which to joint venture and distribute the anticipated products.

GOVERNMENT REGULATION

         The  production  and  marketing  of Praxis'  anticipated  products  are
subject to  regulation  for safety,  efficacy and  quality.  If the product is a
cosmetic,  premarket approval by the Food and Drug  Administration  (FDA) is not
required.

         Over-the-counter (OTC) drugs (non-prescription drugs), which will be
the focus of Praxis' efforts, must conform to regulations specifying conditions
whereby they are generally recognized as safe and effective, and not misbranded.
The FDA has published monographs, or rules, for a number of OTC drug categories.
These monographs state requirements for categories of non-prescription drugs,
such as what ingredients may be used and for what intended use. The sequence of
events for an OTC drug monograph review process is as follows:

         o   Data  regarding  an  OTC  drug  monograph is submitted to the FDA's
             Center for Drug Evaluation and Research (CDER).

         o   CDER's  Division  of OTC Drug Products, conducts an initial review.
             When the data is  reviewed,  the drug  is  categorized  through the
             monograph rulemaking process as follows:

             o   CATEGORY I - generally recognized as safe and effective and not
                 misbranded.

             o   CATEGORY II - not generally recognized as safe and effective or
                 is misbranded.

             o   CATEGORY  III  -  insufficient   data   available   to   permit
                 classification. This category allows a



                                       4

<PAGE>

                 manufacturer  an opportunity to show that the  ingredients in a
                 product are effective,  and, if they are not, to reformulate or
                 appropriately relabel the product.

         o   When  the  initial  review  is complete, a "Feedback Letter" is
             prepared outlining CDER's recommendations. The recommendations will
             vary  depending  on the  type of data  submitted.  For  example,  a
             response  based on a  request  to  amend a  monograph  may  contain
             explanations approving or disapproving the amendment.

         o   If the  drug sponsor is not satisfied with the recommendations made
             by CDER, the sponsor may request a meeting to discuss any concerns.
             If CDER supports the  recommendation of the sponsor to either amend
             an existing  monograph  or to create a new  monograph,  a notice is
             published in the Federal  Register  (FR).  If CDER does not support
             the recommendation,  a letter is sent to the sponsor explaining the
             decision to not accept the petition.

         o   After the proposal is published in the Federal Register, the public
             has usually 30-90 days to respond to it. This  deadline  depends on
             the  controversial  nature of the notice and can be  extended  if a
             request to do so is made.

         o   After the public comments have been  reviewed, the final  monograph
             is prepared.  The final  monograph  is a kind of "recipe  book" and
             sets final standards that specify ingredients,  dosage, indications
             for use, and certain labeling.

         o   The  final  monograph  is  sent  out  for  clearance  through   the
             appropriate  channels,  such  as the  reviewing  division,  office,
             Center, Office of General Counsel,  Deputy Commissioner for Policy,
             Regulations Editorial Staff.

         o   Once  all  revisions  are  made  and  the package  receives all the
             appropriate  final  concurrences,  it is  published  in the Federal
             Register (FR). All final  monographs and amendments  that have been
             published in the Federal  Register are forwarded to the Regulations
             Editorial Staff for publication in the Code of Federal  Regulations
             (CFR).


         In addition to  compliance  with the  above-described  procedure,  drug
manufacturers  are also  subject to  extensive  FDA  regulations  pertaining  to
registration,  control of the manufacturing and distribution  process,  labeling
and  advertising  of the  product,  and  monitoring  and  reporting  of  adverse
experiences involving use of the product. The FDA, as well as state authorities,
has the right to conduct extensive on-site inspections of a company's facilities
and its records to determine compliance with requirements of applicable laws and
regulations.

         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' 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.

                                       5

<PAGE>


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  August  31,  2002,  the  Company  did  not  have  any  full-time
employees.

         The Company's opportunity for success depends largely upon the efforts,
abilities, and decision-making of its directors and 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.


 ITEM 3. LEGAL PROCEEDINGS.

         None.


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

         None.







                                       6
<PAGE>


                                     PART II

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

         Praxis'  common stock has been traded on the OTC  Bulletin  Board under
the symbol "PRXX" since November 21, 2000. It was traded  over-the-counter  from
July 23,  1998 to March 8,  2000 on the OTC  Bulletin  Board,  and on the  "Pink
Sheets" from March 9, 2000 to November 21, 2000. 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.

                                                 BID PRICES
                                                  ----------
2001 FISCAL YEAR                       HIGH                         LOW
----------------                       ----                         ---
Quarter ending 08/31/00               $0.50                        $0.26
Quarter ending 11/30/00               $0.36                        $0.18
Quarter ending 02/28/01               $0.52                        $0.13
Quarter ending 05/31/01               $0.20                        $0.10

2002 FISCAL YEAR
----------------

Quarter ending 08/31/01               $0.23                        $0.06
Quarter ending 11/30/01               $0.22                        $0.07
Quarter ending 02/28/02               $0.14                        $0.07
Quarter ending 05/31/02               $0.10                        $0.06

2003 FISCAL YEAR
----------------

Quarter ending 08/31/02               $0.17                        $0.03

         On  September  4, 2002,  the closing bid price for the common stock was
$0.14. The number of record holders of the common stock as of September 4, 2002,
was 328 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
non-prescription   therapeutics   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.  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



                                       7


<PAGE>

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 working
capital  and to develop  strategic  alliances  with  established  pharmaceutical
companies  in  order  to  conduct   clinical   trials  and  to  market  approved
therapeutics.

RESULTS OF OPERATIONS

         The Company incurred a net loss of $152,673,  as compared to net losses
of $185,064 and $230,173 for the 2001 and 2000 fiscal years,  respectively.  The
decrease in the net loss is due  primarily to  progressively  decreased  overall
levels of activity.  While project  expenses have increased with each year, from
$(9,452) in 2000 to $95,024 in 2002,  administration expenses have exhibited the
opposite trend and have decreased with each year.

         Administration  expenses decreased by almost 64%, from $159,986 in 2001
to $57,649 in 2002.  Most of the decrease was due to a gain on sale on Fairchild
stock of $93,734 in 2002.  Significant  decreases occurred with bank charges and
exchange  ($23,028),  professional  fees  ($13,360),  and  promotion  and travel
($48,227),  which were nearly  offset by an increase of $77,303 in related party
administration expenses.

         Administration  expenses  decreased by almost 25% from $212,627 in 2000
to $159,986 in 2001. The following  expenses  decreased:  consulting by $16,500,
office and  secretarial by $4,601,  professional  fees by $8,680,  promotion and
travel by $10,310, and related party administration by $30,321.  These decreases
were offset by an increase in bank charges and exchange costs of $17,771.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception,  the primary source of funding for Praxis'  operations
has been the private sale of its securities. From inception to May 31, 2002, the
Company had sold common stock for cash of $832,642  sold $50,000 of  convertible
debentures.  In addition,  the Company obtained $93,584 from the proceeds of the
sale of Fairchild  stock.  From inception to May 31, 2002,  operations have used
$837,085 of cash provided by these sources.

         At May 31,  2002,  the  Company's  working  capital  was a  deficit  of
$59,542, as compared to a positive balance of $18,281 at May 31, 2001.

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

         The  report of the  Company's  independent  auditors  on the  financial
statements for the year ended May 31, 2002,  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

         The Company  requires cash to support its  operations  for at least the
next 12  months.  The sale of  Fairchild  common  stock may  provide  additional
proceeds to fund operational costs. Praxis does not anticipate any change in the
number of  employees  or the  acquisition  of plant or  equipment in the next 12
months. It is the intention of


                                       8


<PAGE>

management  to  seek an alliance with a larger pharmaceutical company to provide
continued support  for the  development of  the Company's technology targeted at
wrinkles.


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.












                                       9
<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:

NAME                   AGE      POSITION
David Stadnyk           40       President, Secretary, Treasurer and director

Winston Cabell          30       Director


         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.

         DAVID  STADNYK  has  been the  President,  Secretary,  Treasurer  and a
director of Praxis since August 2002. He previously  served as the Secretary and
a director of the Company  from June 19, 1998 to October 20, 2000.  Mr.  Stadnyk
has diverse experience in corporate  management and finance. He currently serves
as the chairman of Grand Slam Radio which launched team 1040,  Vancouver's first
and only 24-hour sports radio station,  and chairman of Stadnyk Corporate Group,
a venture corporate finance and investment firm. Mr. Stadnyk was the chairman of
Starlight Sports & Entertainment,  a sports entertainment company that owned the
Vancouver  Whitecaps and Vancouver  Breakers,  professional  soccer teams,  from
October 1999 to May 2002. He was also the president of A.C. Global Capital Group
Corp., a CDNX-listed capital pool company,  from July 1999 to September 2002. 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 Corporation) 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  February  1997.  Mr.
Stadnyk  was also a licensed  stockbroker  with  Midland  Walwyn  Capital  Inc.,
Yorkton  Securities Inc., and Georgia Pacific Securities Corp. from 1988 to 1991
in Canada.  From July 1997 to September 2000, Mr. Stadnyk has been the executive
director  of  Alexander  Cox & Co.  based in Sydney,  Australia  and  Vancouver,
British  Columbia,  which engaged in financial  consulting  and venture  capital
funding. He is a graduate of the University of British Columbia.

         WINSTON  CABELL has been a director of Praxis since  August  2002.  Mr.
Cabell has been in the financial  services  industry since 1996.  Since then, he
has worked with various publicly traded companies. Duties have included investor
relations and securing major financing for these companies. Prior to joining the
financial services industry, Mr. Cabell spent 8 years on the professional squash
circuit. Mr. Cabell is currently a director of a private oil and gas exploration
company located in Canada.

         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.

         Messrs. Stadnyk and Cabell 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, 2002, Mr. Smart failed to file two
reports on Form 4 (Statement  of Changes in  Beneficial  Ownership)  on a timely
basis. These reports covered two sales transactions in June 2001 and



                                       10


<PAGE>

the  granting of  stock  options  in  November  2001.  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 Messrs.  Stadnyk and Cabell.  On August 16,  2002,  the
Company granted options to purchase 300,000 shares of common stock at $0.035 per
share to David Stadnyk and options to purchase 150,000 shares of common stock at
$0.035 per share to  Winston  Cabell.  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.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS.

         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 September 4, 2002. 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.

 NAME AND ADDRESS OF OWNER         NUMBER OF SHARES OWNED   PERCENT OF CLASS (1)

Dr. Brett Charlton                      1,100,000 (2)              8.2%
24/1-9 Totterdell Street
Belconnen, 2617 Australia

Dr. William Cowden                      1,000,000                  7.5%
56 Urambi Village
Darlington, NSW 2008 Australia

David Stadnyk                           1,050,000 (2)              7.3%
600 - 595 Hornby Street
Vancouver, BC  V6C 1A4 Canada

Winston Cabell                            300,000 (3)              2.2%
600 - 595 Hornby Street
Vancouver, BC V6C 1A4 Canada

Officers and directors as a group       1,350,000 (4)              9.2%
(2 persons)

------------
(1)   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  September  4,  2002,  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 13,362,069 shares outstanding.

(2)   Includes 1,050,000 shares issuable upon the exercise of stock options.

(3)   Includes 300,000 shares issuable upon exercise of stock options.  See Item
      10. Executive Compensation.

(4)   Includes 1,350,000 shares issuable  upon exercise  of stock  options.  See
      Item 10. Executive Compensation.



                                       11


<PAGE>


CHANGES IN CONTROL

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

EQUITY COMPENSATION PLAN INFORMATION

         The following table sets forth information as of the end of the most
recently completed fiscal year, May 31, 2002:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                Number of securities to be    Weighted average exercise
                                  issued upon exercise of       price of outstanding         Number of securities
                                   outstanding options,         options, warrants and       remaining available for
Plan category                       warrants and rights                rights                   future issuance
-------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                            <C>                         <C>
Equity compensation plans                1,332,220                      $0.15                       672,090
approved by security holders
-------------------------------------------------------------------------------------------------------------------
Equity compensation plans not            1,250,000                      $0.12                         -0-
approved by security holders
-------------------------------------------------------------------------------------------------------------------
Total                                    2,582,220                      $0.14                       672,090
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         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.

         Options have been granted under this plan as follows:

         Granted..............................................    1,698,330
         Exercised............................................            0
         Cancelled/expired....................................            0
                                                              -------------
         Balance, May 31, 2000................................    1,698,330
                                                              -------------
         Granted..............................................      350,000
         Exercised............................................     (366,110)
         Cancelled/expired/relinquished.......................     (350,000)
                                                              -------------
         Balance, May 31, 2001................................    1,332,220
                                                              -------------
         Granted..............................................            0
         Exercised............................................            0
         Cancelled/expired....................................            0
                                                              -------------
         Balance, May 31, 2002................................    1,332,220
                                                              =============


                                       12
<PAGE>

         Options have been granted outside the plan as follows:

         Granted..............................................      800,000
         Exercised............................................            0
         Cancelled/expired....................................            0
                                                              -------------
         Balance, May 31, 2001................................      800,000
         Granted..............................................      950,000
         Exercised............................................     (500,000)
         Cancelled/expired....................................            0
                                                              -------------
         Balance, May 31, 2002................................    1,250,000
                                                              =============


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         ALEXANDER COX & CO. AND DAVID  STADNYK.  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,  2000,  2001,  and  2002,
$71,426,  $11,558,  and $2,974,  respectively,  were owed to Alexander Cox & Co.
Cumulative  amounts owed to Alexander Cox & Co. from the Company's  inception to
May 31, 2002, 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, 2002, the Company had repaid $140,722,
leaving $2,974 owing at that date. Interest does not accrue and there is no date
established for repayment.

         In addition,  the Company has shared office  facilities  with Alexander
Cox & Co. and other entities  owned or controlled by David Stadnyk.  The Company
was  charged for its  proportional  share of rent and  administrative  services.
During the years ended May 31, 2000, 2001, and 2002, $nil, $30,321, and $77,303,
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  were 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 were paid.

         As of February 28, 2001, as a result of Fairchild's uncertain financial
condition and lateness in  achievement  of  milestones by Praxis,  Fairchild and
Praxis  agreed to terminate  the Research,  Development  and Licence  Agreement.
Praxis had received  only  $162,500 of the funding and  Fairchild  had expressed
doubt  about  its  ability  to  continue  the  funding.  Under  the  termination
agreement,  Praxis retained the 2,600,000 Fairchild shares and has agreed to pay
Fairchild  30% of the net  revenues  from sales of the two  applications  in the
field of use up to a maximum of  $250,000  over the first  three  years of sales
(the "Royalty  Obligation").  Fairchild and Praxis have amended the  termination
agreement  and have  agreed  that so long as Praxis  pays  Fairchild  a total of
$175,000 by May 31, 2003,  that amount will be deemed to be in full and complete
satisfaction of the Royalty Obligation.

         PAYMENTS TO OTHER RELATED PARTIES. During the years ended May 31, 2000,
2001, and 2002, $50,463, $nil, and $nil, 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 years ended May 31,
2000,  2001,  and 2002, 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  and  $nil;  Neysa
Investments Pty.


                                       13


<PAGE>

Ltd. (a company owned and  controlled  by Dr.  Charlton) - $9,430,  $9,723,  and
$13,124;  and Sciworks (a company of which Dr.  Cowden is a director) - $14,104,
$10,510, and $12,114. During the fiscal year ended May 31, 2002, Dr. Cowden also
provided  services  valued at  $25,000,  which will be paid by the  issuance  of
common shares, valued at their publicly traded price.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

--------------------------------------------------------------------------------
 REGULATION                                                           SEQUENTIAL
 S-B NUMBER                   EXHIBIT                                PAGE NUMBER
--------------------------------------------------------------------------------
    2.1        Stock Exchange Agreement with Micronetics, Inc. (1)       N/A
--------------------------------------------------------------------------------
    3.1        Articles of Incorporation, as amended and restated (1)    N/A
--------------------------------------------------------------------------------
    3.2        Bylaws (1)                                                N/A
--------------------------------------------------------------------------------
   10.1       Exclusive  Licence  Agreement dated October 14, 1999       N/A
              between Anutech Pty Ltd. and Praxis Pharmaceuticals
              Australia Pty Ltd. (1)
--------------------------------------------------------------------------------
   10.2       Licence Agreement dated October 14, 1999 between           N/A
              Anutech Pty Ltd. and Praxis Pharmaceuticals Inc (1)
--------------------------------------------------------------------------------
   10.3       Shareholders Agreement dated as of October 15, 1999,       N/A
              between Praxis Pharmaceuticals  Australia Pty Ltd.,
              Praxis Pharmaceuticals Inc., Perpetual Trustees
              Nominees Limited, and Rothschild Bioscience Managers
              Limited (1)
--------------------------------------------------------------------------------
   10.4       1999 Stock Option Plan (1)                                 N/A
--------------------------------------------------------------------------------
   10.5       Termination of License and Research & Development          N/A
              Agreement dated February 28, 2001 between Praxis
              Pharmaceuticals, Inc. and Fairchild International
              Inc. (2)
--------------------------------------------------------------------------------
   10.6       Agreement dated June 6, 2001 between Clearcoll Pty         N/A
              Ltd and Praxis Pharmaceuticals International Pty
              Ltd (3)
--------------------------------------------------------------------------------
   10.7       Amendment to Termination Agreement between Praxis
              Pharmaceuticals, Inc. and Fairchild International Inc.
--------------------------------------------------------------------------------
   10.8       Shareholders Agreement dated August 23, 2002 among
              Praxis Pharmaceuticals Inc., Perpetual Trustees
              Nominees Limited, Rothschild Bioscience Managers
              Limited, CM Capital Investments Pty Ltd, CIBC
              Australia VC Fund LLC, Mooroolbark Technology Pty
              Ltd, The Australian National University and Pharmaxis
              Pty Ltd, Dr. William Cowden and Dr. Brett Cowden
--------------------------------------------------------------------------------
    21        Subsidiaries of the registrant (1)                         N/A
--------------------------------------------------------------------------------
    99        Certification Pursuant to 18 U.S.C. Section 1350 as
              Adopted Pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002
--------------------------------------------------------------------------------

(1)  Incorporated by reference to the exhibits filed with the Registration
     Statement on Form 10-SB, file no. 0-28627.
(2)  Incorporated by reference to the exhibits filed to the registrant's current
     report on Form 8-K dated February 28, 2001.
(3)  Incorporated by reference to the exhibits filed to the registrant's annual
     report on Form 10-KSB for the fiscal year ended May 31, 2001.

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


                                       14

<PAGE>

ITEM 14. CONTROLS AND PROCEDURES.

         The  Company  has  recently  evaluated  its  internal  controls.  As of
September 10, 2002, there were no significant  corrective actions taken by us or
other changes made to these  internal  controls.  Management of the Company does
not believe there were changes in other factors that could significantly  affect
these controls subsequent to the date of the evaluation.


                                   SIGNATURES

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

                                       PRAXIS PHARMACEUTICALS, INC.



Date:  September 13, 2002              By:  /s/ DAVID STADNYK
                                          --------------------------------------
                                              David Stadnyk, 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, Secretary and director
/s/ DAVID STADNYK                           (Principal Executive, Financial, and        September 13, 2002
-------------------------------------       Accounting Officer)                         ------------------
David Stadnyk


/s/ WINSTON CABELL                          Director                                    September 13, 2002
-------------------------------------                                                   ------------------
Winston Cabell

</TABLE>








                                       15
<PAGE>


                                  CERTIFICATION

I, David Stadnyk, certify that:

1.       I have reviewed this annual report on Form 10-KSB of Praxis
         Pharmaceuticals Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    September 13, 2002
                                         /s/ DAVID STADNYK
                                        ----------------------------------------
                                        David Stadnyk, Principal Executive and
                                        Financial Officer






                                       16

<PAGE>










                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002


                           (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.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, 2002 and 2001
and the related  consolidated  statements of operations and deficit,  changes in
stockholders' equity and cash flows for the periods ended May 31, 2002, 2001 and
1999  and  cumulative  to May  31,  2002.  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,  2002  and  2001  and the  results  of its
operations  and its cash  flows for each of the years in the three  year  period
ended May 31, 2002 and  cumulative  to May 31,  2002,  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.



                                                           /s/ Steele & Co.
Vancouver, Canada                                         "STEELE & CO."
August 27, 2002                                           CHARTERED ACCOUNTANTS

                                       F-2

<PAGE>



                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEETS

                              MAY 31, 2002 AND 2001

                           (EXPRESSED IN U.S. DOLLARS)



<TABLE>
<CAPTION>

                                                                           2002              2001
                                                                           ----              ----
<S>                                                                   <C>               <C>
ASSETS

   CURRENT
      CASH (NOTE 7)                                                   $      46,655     $     100,779
      OTHER RECEIVABLE                                                        7,063             1,545
                                                                      --------------    --------------
                                                                             53,718           102,324
   INVESTMENTS (NOTE 3)                                                           2                 2
                                                                      --------------    --------------
                                                                      $      53,720     $     102,326
                                                                      ==============    ==============

LIABILITIES

   CURRENT
      ACCOUNTS PAYABLE                                                $     110,286     $      72,485
      OWING TO RELATED PARTIES (NOTE 4)                                       2,974            11,558
                                                                      --------------    --------------
                                                                            113,260            84,043
                                                                      --------------    --------------

STOCKHOLDERS' EQUITY (DEFICIENCY)

  SHARE CAPITAL (NOTE 5)
     AUTHORIZED
       10,000,000 PREFERRED SHARES WITH A PAR VALUE
                  OF $.001 PER SHARE
       50,000,000 COMMON SHARES WITH A PAR VALUE
                  OF $.001 PER SHARE
     ISSUED AND PAID IN CAPITAL
       13,362,069 COMMON SHARES
         (2001 - 12,862,069 COMMON SHARES)                                1,212,057         1,162,057

  SHARE SUBSCRIPTIONS                                                        25,000                 -

  DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                       (1,296,597)       (1,143,774)
                                                                      --------------    --------------
TOTAL STOCKHOLDERS' EQUITY                                                  (59,540)           18,283
                                                                      --------------    --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $      53,720     $     102,326
                                                                      ==============    ==============
</TABLE>

APPROVED BY THE DIRECTORS



-------------------------------


-------------------------------

    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, 2002, 2001 AND 2000

                           (EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                  CUMULATIVE
                                                  TO MAY 31,                      YEARS ENDED MAY 31,
                                                     2002              2002               2001              2000
                                                     ----              ----               ----              ----
<S>                                             <C>                <C>               <C>                <C>
PROJECT EXPENSES
       RESEARCH AGREEMENT
        AMENDMENT                               $      45,000      $           -     $           -      $          -
       RESEARCH COSTS                                 255,883             26,807                 -            86,604
       PATENT COSTS                                     8,710              1,045             4,845                 -
       RECOVERED COSTS
         CASH                                        (135,594)                 -                 -          (135,594)
         INVESTMENT CONSIDERATION                     (26,000)                 -                 -           (26,000)
       RELATED PARTY CONSULTING FEES                  136,009             50,238            20,233            65,538
       ROYALTIES                                       16,934             16,934                 -                 -
                                                --------------     --------------    --------------     -------------
                                                      300,942             95,024            25,078            (9,452)
                                                --------------     --------------    --------------     -------------

ADMINISTRATION EXPENSES
       BANK CHARGES AND EXCHANGE                       17,679             (4,352)           18,676               905
       CONSULTING                                     257,858                  -                 -            16,500
       FINDERS FEES                                     7,500                  -                 -                 -
       INTEREST ON CONVERTIBLE
        DEBENTURES                                     16,667                  -                 -                 -
       OFFICE AND SECRETARIAL                          43,233             10,451             6,742            11,343
       PROFESSIONAL FEES                              161,592             27,902            46,262            54,942
       PROMOTION AND TRAVEL                           306,595             40,079            88,306            98,616
       RELATED PARTY ADMINISTRATION                   126,117             77,303                 -            30,321
       GAIN ON SALE OF INVESTMENTS                    (93,734)           (93,734)                -                 -
                                                --------------     --------------    --------------     -------------
                                                      843,507             57,649           159,986           212,627
                                                --------------     --------------    --------------     -------------

LOSS FROM OPERATIONS                                1,144,449            152,673           185,064           203,175
EQUITY SHARE IN LOSS OF
 INVESTEES (NOTE 2)                                    26,998                  -                 -            26,998
                                                --------------     --------------    --------------     -------------
NET LOSS FOR THE PERIOD                             1,171,447            152,673           185,064           230,173
DEFICIT BEGINNING OF THE PERIOD                             -          1,143,774           958,710           728,537
RE-ORGANIZATION COSTS                                 125,000                  -                 -                 -
LOSS ON SALE OF TREASURY SHARES                           150                150                 -                 -
                                                --------------     --------------    --------------     -------------
DEFICIT END OF THE PERIOD                       $   1,296,597      $   1,296,597     $   1,143,774      $    958,710
                                                ==============     ==============    ==============     =============


BASIC LOSS PER SHARE                                               $         .01     $         .01      $        .02
                                                                   ==============    ==============     =============

WEIGHTED AVERAGE NUMBER OF
OUTSTANDING COMMON SHARES                                             13,278,735        12,587,486        11,555,542
                                                                   ==============    ==============     =============

</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, 2002, 2001 AND 2000

                           (EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                CAPITAL IN                                                  TOTAL
                                      COMMON SHARES              EXCESS OF             SHARE                                STOCK-
                                                                    PAR               SUBSCRIP-                            HOLDERS'
                                 SHARES           AMOUNT           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

Common shares
 Issued for cash
    @ $.40 per share              612,500             612          244,388            (220,500)                  -           24,500
    @ $.15 per share              366,110             366           54,551                   -                   -           54,917

    Finders fee                         -               -          (24,500)                  -                   -          (24,500)

 Issued for finders fee            61,250              61           24,439                   -                   -           24,500
Net loss for the year                   -               -                -                   -            (185,064)        (185,064)
                             -------------     -----------    -------------     ---------------       -------------    -------------

Stockholders' equity
(deficiency) at May 31,
2001                           12,862,069          12,860        1,149,197                   -          (1,143,774)          18,283

Common shares
 Issued for cash
    @ $.10 per share              500,000             500           49,500                   -                   -           50,000
Share subscriptions                     -               -                -              25,000                   -           25,000

Net loss for the year                   -               -                -                   -            (152,673)        (152,673)

Loss on sale of treasury
shares                                  -               -                -                   -                (150)            (150)
                             -------------     -----------    -------------     ---------------       -------------    -------------
Stockholders' equity
(deficiency) at May 31,
2002                           13,362,069      $   13,360     $  1,198,697      $       25,000        $ (1,296,597)    $    (59,540)
                             =============     ===========    =============     ===============       =============    =============

</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 CASH FLOWS

                 FOR THE YEARS ENDED MAY 31, 2002, 2001 AND 2000

                           (EXPRESSED IN U.S. DOLLARS)



<TABLE>
<CAPTION>
                                                         CUMULATIVE
                                                         TO MAY 31,                      YEARS ENDED MAY 31,
                                                            2002                2002             2001              2000
                                                            ----                ----             ----              ----
<S>                                                  <C>                  <C>               <C>               <C>
CASH PROVIDED (USED) BY

  OPERATING ACTIVITIES
    NET LOSS FOR THE PERIOD                          $    (1,171,447)     $    (152,673)    $    (185,064)    $    (230,173)
    NON-CASH ITEMS
      GAIN ON SALE OF INVESTMENTS                            (93,734)           (93,734)                -                 -
      INVESTMENT
       CONSIDERATION FOR
        RECOVERED COSTS                                      (26,000)                 -                 -           (26,000)
      ISSUE OF SHARES FOR
        SERVICES                                             262,208             25,000                 -                 -
        RESEARCH AGREEMENT                                    45,000                  -                 -                 -
      INTEREST ON CONVERTIBLE
       DEBENTURES                                             16,667                  -                 -                 -
      EQUITY SHARE IN LOSS OF
       INVESTEES                                              26,998                  -                 -            26,998
    CHANGE IN NON-CASH
     OPERATING ITEM
      OTHER RECEIVABLE                                        (7,063)            (5,518)           47,203           (48,748)
      ACCOUNTS PAYABLE                                       110,286             37,801            21,967            43,690
                                                     ----------------     --------------    --------------    --------------
                                                            (837,085)          (189,124)         (115,894)         (234,233)
                                                     ----------------     --------------    --------------    --------------
  INVESTING ACTIVITIES
    PROCEEDS ON SALE OF INVESTMENTS
     AND TREASURY SHARES                                      93,584             93,584                 -                 -
    INVESTMENT IN EQUITY AFFILIATE                            (1,000)                 -                 -            (1,000)
                                                     ----------------     --------------    --------------    --------------
                                                              92,584             93,584                 -            (1,000)
                                                     ----------------     --------------    --------------    --------------
  FINANCING ACTIVITIES
    OWING TO RELATED PARTIES                                   2,974             (8,584)          (59,868)          (41,656)
    SHARE CAPITAL ISSUED
      FOR CASH                                               832,642             50,000           299,917           180,000
      FOR CONVERSION OF DEBENTURES                            50,000                  -                 -                 -
    SHARE SUBSCRIPTIONS                                            -                  -          (220,500)          190,500
    RE-ORGANIZATION COSTS                                    (94,460)                 -                 -                 -
                                                     ----------------     --------------    --------------    --------------
                                                             791,156             41,416            19,549           328,844
                                                     ----------------     --------------    --------------    --------------
CHANGE IN CASH FOR THE PERIOD                                 46,655            (54,124)          (96,345)           93,611

CASH BEGINNING OF THE PERIOD                                       -            100,779           197,124           103,513
                                                     ----------------     --------------    --------------    --------------
CASH END OF THE PERIOD                               $        46,655      $      46,655     $     100,779     $     197,124
                                                     ================     ==============    ==============    ===============

</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                       F-6

<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002
                           (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     subsidiary,    Praxis
              Pharmaceuticals   International   Pty.  Ltd.,  a  private  company
              registered in  Australia.  Praxis  Pharmaceuticals  Inc. (a Nevada
              corporation) has been merged with the Company.

         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,  2001,  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-7

<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002
                           (EXPRESSED IN U.S. DOLLARS)



1.   ACCOUNTING POLICIES (CONTINUED)

     e.  Income Taxes

         The Company  accounts  for income taxes  whereby the cost  (benefit) of
         current and future  income taxes is recognized as income tax expense in
         the  determination  of results of  operations  for the  period.  Future
         income tax liabilities  (assets) are the amount of income taxes arising
         from taxable temporary differences between the tax basis of an asset or
         liability  and its  carrying  amount in the balance  sheet.  Income tax
         liabilities  and assets are  recognized  when they are more likely than
         not to be realized and are measured using the income tax rates and laws
         that are expected to apply at the time of settlement or realization.

     f.  Incentive Stock Options

         The Company  grants to its directors and  consultants  incentive  stock
         options to acquire a fixed number of shares in the Company,  subject to
         regulatory guidelines.  The options are exercisable upon issue and have
         fixed  exercise  prices and expiry dates.  Compensation  expense is not
         recognized  unless  the  exercise  price of an  option is less than the
         quoted market value of the stock on the grant date.  Any  consideration
         received on the exercise of options is credited to share capital.

         The Company reduced the exercise price of options to acquire  1,332,220
         shares to $.15 per share (previously $.41 per share). As a result,  the
         provisions of FASB Interpretation  Bulletin No. 44 relating to variable
         accounting  will apply when the share public  trading price exceeds the
         revised  exercise price.  The Company will incur  compensation  expense
         measured in each accounting period for these options, calculated at the
         difference between the share price and the exercise price.

2.   GOING CONCERN CONSIDERATIONS

     As at May 31, 2002, 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  bases  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  sufficient  to  meet  current  and  future
     obligations.  The Company  suffered  losses from  operations  of  $152,673,
     $185,064 and $230,173 for the years ended May 31, 2002, 2001 and 2000.

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 less than 20%. The Company expenses its
         share of research and development funding when advanced.


                                       F-8

<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002
                           (EXPRESSED IN U.S. DOLLARS)


3.   INVESTMENTS AND RESEARCH AND DEVELOPMENT (CONTINUED)

     b.  Fairchild International Corp. - $1

         The Company's  investment in 2,120,000  common shares has been adjusted
         to reflect losses  sustained by the investee and represents an interest
         of 11%. The Company 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.  The  parties  terminated  the
         agreement in 2001. As consideration  for efforts made,  shares and cash
         received,  the Company is  obligated  to pay a 30% net revenue  royalty
         from licensed  production.  The royalty will be considered satisfied by
         the payment of two-thirds of the proceeds from the sale of these shares
         to a maximum of $175,000 by May 31, 2003.

4.   OWING TO RELATED PARTIES

     The  Company  shares  office  facilities  and  has  common  management  and
     directorships  with a  number  of  public  and  private  corporate  related
     parties.  The  Company is charged  for office  rentals  and  administrative
     services on a proportional cost basis. Management believes that the methods
     of cost  allocations  and  resultant  costs are  reasonable.  Accounts with
     companies  with  common  management  and   directorships,   management  and
     directors are unsecured with no fixed terms of interest or repayment.


<TABLE>
<CAPTION>
                                          CUMULATIVE
                                          TO MAY 31,                         YEARS ENDED MAY 31,
                                             2002                 2002                2001                2000
                                       -----------------   ----------------------------------------------------------
<S>                                    <C>                 <C>                  <C>                <C>
Administration and
 office charges                        $      48,814       $          -         $         -        $     30,321
Payments on behalf of
  Re-organization costs                       57,500                  -                   -                   -
  Professional fees                            3,148                  -                   -                   -
  Research and development
  advances                                    34,234                  -                   -                   -
  Cash repayments                           (140,722)            (8,584)             (59,868)           (71,977)
                                       --------------      -------------        -------------      -------------

                                       $       2,974       $     (8,584)        $    (59,868)      $    (41,656)
                                       ==============      =============        =============      =============
</TABLE>

5.   SHARE CAPITAL

     a.  Authorized

           50,000,Common shares with a par value of $.001 per share
           10,000,Preferred shares with a par value of $.001 per share



                                       F-9

<PAGE>

                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002
                           (EXPRESSED IN U.S. DOLLARS)




5.   SHARE CAPITAL (CONTINUED)

<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 re-organization 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

              For cash                                                              978,610           299,917
              For finders fees                                                       61,250                 -
                                                                                ------------    --------------

              Balance at May 31, 2001                                            12,862,069         1,162,057
              For cash                                                              500,000            50,000
                                                                                ------------    --------------

              Balance at May 31, 2002                                            13,362,069     $   1,212,057
                                                                                ============    ==============
</TABLE>

     c.  Share Subscriptions

         Services of $25,000 provided by a director will be paid by the issuance
         of common shares valued at their publicly traded price.

                                      F-10

<PAGE>


                           PRAXIS PHARMACEUTICALS INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002
                           (EXPRESSED IN U.S. DOLLARS)




5.   SHARE CAPITAL (CONTINUED)

     d.  Incentive Stock Options


<TABLE>
<CAPTION>
     BALANCE                                         BALANCE
     MAY 31,          ISSUED/                        MAY 31,        EXERCISE
      2001          (CANCELLED)      EXERCISED        2002            PRICE              EXPIRY DATE
  -----------     --------------   ------------   --------------  ------------     ------------------------
<S>               <C>              <C>            <C>             <C>              <C>
                                                                                   January 9, 2006
   1,332,200               -                -        1,332,220    $     .15        (subsequently cancelled)
     800,000               -         (500,000)         300,000    $     .10        May 24, 2006
           -         750,000                -          750,000    $     .14        November 1, 2004
           -         200,000                -          200,000    $     .08        April 2, 2005
  -----------     -----------      -----------    -------------

   2,132,200         950,000         (500,000)       2,582,220
  ===========     ===========      ===========    =============
</TABLE>

         Subsequent to the year end, the Company granted incentive stock options
         to acquire 1,550,000 shares at $.035 per share to August 16, 2005.

6.   INCOME TAXES

     The Company has incurred  operating  losses in multiple  tax  jurisdictions
     which are  available to reduce  future  years'  taxable  income.  No future
     benefits have been recognized in the accounts.

7.   SEGMENTED INFORMATION

     a.  Cash

         The Company  maintains its cash balance in various  currencies.  At the
         year end, the U.S. dollar equivalents were as follows.


                                                     2002                2001
                                                     ----                ----

            U.S. dollars                        $       12           $    1,420
            Australian dollars                      46,643               99,359
                                                -----------          -----------

                                                $   46,655           $  100,779
                                                ===========          ===========

     b.  Geographic Segments

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


                                      F-11