UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 13, 2000
-------------------------------
XAIBE, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 0-27647 76-0594907
----------------------------- -------------- ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification Number)
13100 N.W. Freeway, Suite 130, Houston, Texas 77040
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(Address of principal executive offices)(Zip Code)
(713) 690-9233
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(Registrant's telephone number, including area code)
2400 Loop 35, #1502, Alvin, Texas 77511
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(Former name and former address, if changed since last report)
<PAGE>
This amended Form 8-K relates to the transaction on October 27, 2000 pursuant to
which Xaibe, Inc. (the "Company") completed the acquisition of PolarShield, Inc.
("PolarShield"). As permitted, the original Form 8-K omitted certain financial
statements of PolarShield required by Form 8-K. This amendment is filed to
provide the September 30, 2000 financial statements of PolarShield.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
Balance Sheet as of September 30, 2000 (Unaudited)....... F-1
Statement of Income for the three and nine months
ended September 30, 2000 (Unaudited).................. F-3
Statement of Changes in Stockholders Equity for
the nine months ended September 30, 2000.............. F-4
Statement of Cash Flows for the nine months ended
September 30, 2000 (Unaudited) ...................... F-5
Notes to Financial Statements (Unaudited)................ F-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
XAIBE, INC.
Dated: January 10, 2001 By: /s/ Jimmy Farmer
-----------------------
Jimmy Farmer
President
<PAGE>
POLARSHEILD, INC. (A Development Stage Company)
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BALANCE SHEET (Unaudited)
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September 30, 2000
ASSETS
CURRENT ASSETS
Cash $ 17,126
Accounts receivable - net 102,134
Related party receivable 23,291
Inventory 25,700
---------
Total Current Assets 168,251
PLANT, PROPERTY AND EQUIPMENT, at cost
Equipment & machinery 269,744
Furniture & fixtures 191,155
---------
460,899
Less accumulated depreciation 69,877
---------
391,022
OTHER ASSETS
Licenses & agreements-net 1,354,513
Goodwill, patents & trademarks-net 505,835
Deferred tax benefit 545,024
Other 105,741
---------
2,511,113
---------
TOTAL ASSETS $ 3,070,387
=========
F-1
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 202,870
Accrued expenses 10,420
Related party payable 141,700
--------------
Total Current Liabilities 354,990
LONG-TERM LIABILITIES
Notes payable 153,695
Capital lease obligations 45,350
--------------
199,045
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value per share;
authorized 25,000,000 shares;
issued 5,674,797 shares - note 10 5,675
Preferred stock, $0.01 par value per share;
authorized 5,000,000 shares;
issued 1,574,550 shares - note 10 15,746
Paid-in capital 3,682,497
Deficit accumulated in the development stage (1,187,565)
--------------
2,516,353
--------------
TOTAL LIABILITIES AND STOCKHLODERS' EQUITY $ 3,070,387
==============
F-2
<PAGE>
POLARSHIELD, INC. (A Development Stage Company)
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STATEMENT OF INCOME (Unaudited)
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For the Three and Nine months Ended September 30, 2000
<TABLE>
Three months - Nine months -
September 30 September 30
-------------- --------------
<S> <C> <C>
SALES $ 284,786 $ 385,860
COST OF GOODS SOLD
Materials 13,704 14,121
Freight-in 81 493
Labor 5,430 18,322
-------------- --------------
Gross Profit 265,571 352,924
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling expenses 138,742 182,087
Consulting fees 201,096 505,367
General & administrative 486,487 891,936
Amortization expense 60,231 135,480
Depreciation 16,553 45,813
-------------- --------------
903,109 1,760,683
OTHER (INCOME)EXPENSE
Miscellaneous Income (0) (5,248)
Interest Income (520) (980)
Interest Expense 4,072 22,650
-------------- --------------
Total costs and expenses 906,660 1,777,104
-------------- --------------
LOSS BEFORE INCOME TAXES (641,088) (1,424,179)
INCOME TAXES
Deferred Tax Benefit 198,921 441,495
-------------- --------------
NET LOSS $ (442,167) $ (982,684)
============== ==============
(LOSS) PER COMMON SHARE:
Basic $ (0.0794) $ (0.1828)
============== ==============
Weighted Average Number of Common
Shares Outstanding 5,568,583 5,375,445
============== ==============
</TABLE>
F-3
<PAGE>
POLARSHIELD INC. (A Development Stage Company)
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STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
--------------------------------------------------------------------------------
For the Nine months Ended September 30, 2000
<TABLE>
Number of
Shares Amount
------------------ -------------
<S> <C> <C>
COMMON STOCK
Balance December 31, 1999 2,250,000 $ 2,250
Issued pursuant to option agreement - March 17 1,000,000 1,000
Issued pursuant to option agreement - April-28 250,000 250
Issued through direct subscription-various 2,174,797 2,175
------------------ -------------
Balance September 30, 2000 5,674,797 5,675
================== =============
PREFERRED STOCK
Balance December 31, 1999 823,400 8,234
Issued pursuant to option agreement - March 17 245,000 2,450
Cancelled per option agreement-various (22,000) (220)
Issued through direct subscription 528,150 5,282
------------------ -------------
Balance September 30, 2000 1,574,550 15,746
================== -------------
ACCUMULATED DEFICIT
Balance December 31, 1999 (204,881)
Net loss for the nine months ended September 30, 2000 (982,684)
-------------
Balance September 30, 2000 (1,187,565)
-------------
PAID-IN CAPITAL
Balance December 31, 1999 659,766
Issued pursuant to option agreement - March 17 1,241,550
Issued pursuant to option agreement - April-28 249,750
Cancelled per option agreement-various (21,780)
Issued through direct subscription-various 1,553,211
-------------
Balance September 30, 2000 3,682,497
-------------
Total Stockholders' Equity $2,516,353
=============
</TABLE>
F-4
<PAGE>
POLARSHIELD, INC. (A Development Stage Company)
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STATEMENT OF CASH FLOWS (Unaudited)
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For the Nine months Ended September 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (982,684)
Adjustment to reconcile Net Income (loss) to net cash
provided by (used in) Operating Activities:
Depreciation 45,813
Amortization 135,480
Deferred income tax benefit (441,495)
Changes in components of working capital -
(Increase) decrease in
Accounts Receivable (94,627)
Loans & Advances 142,595
Inventory (15,700)
Increase( decrease) in
Accounts Payable 166,616
Accrued Expenses (4,646)
Related party payable (40,750)
---------------
Net Cash Used by Operating Activities (1,089,398)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (177,780)
Acquisition of other assets (182,947)
---------------
Net Cash used by Investing Activities (360,727)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Stock 1,591,803
Cancellation of Preferred Stock (8,000)
Decrease in Long term liabilities (158,561)
---------------
Net Cash provided by Financing Activities 1,425,242
Increase (Decrease) in Cash (24,883)
Cash balance at beginning of period 42,009
---------------
Cash at End of the period $ 17,126
===============
F-5
<PAGE>
POLARSHIELD, INC. (A DEVELOPMENT STAGE COMPANY)
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NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 2000
1. ORGANIZATION
Polarshield, Inc., hereafter referred to as "Polarshield" or "the Company",
was organized in June 1999, as a State of Nevada Corporation. The primary
business of the Company is the manufacture and sale of polarized
refrigerant oil additives and related lubricants and metal treatments. The
headquarters of the Company is located in Houston, Harris County, Texas.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Revenue Recognition
-------------------
Polarshield utilizes the accrual method of accounting whereby revenue
is recognized when earned and expenses are recognized when incurred.
The Company sells its products direct to the customer, through
distributors and through retail outlets. Direct sales to customers
consist primarily of sales to commercial businesses. Sales to
residential customers are minor. Revenue is recognized when the
services are rendered, payments are due under the terms of the
Distributorship Agreements or when the product has been ordered and
set aside for the retail outlet customer.
B. Inventories
-----------
Inventories, consisting primarily of chemicals, mineral oil and
transmission fluids, are stated at the lower of cost or market, as
determined by the first-in, first-out (FIFO) method.
C. Plant, Property and Equipment
-----------------------------
Plant, property and equipment are carried at cost. Depreciation
expense for the nine months ended September 30, 2000 was $45,813.
Depreciation is calculated using the straight-line method over the
estimated useful lives as shown below:
Equipment & Machinery 5 years
Furniture & Fixtures 5 years
D. Other assets
------------
Other assets consist of advances, licenses, patents, trademarks and
goodwill. The licenses are amortized over the unexpired term of the
license and the goodwill is amortized over fifteen years. Amortization
expense for the nine months ended September 30, 2000, was $135,480.
E. Income Taxes
------------
The Company accounts for income taxes in accordance with the asset and
liability method of accounting for income taxes prescribed by
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Under the asset and liability method, deferred tax
assets and liabilities are recognized for future tax
F-6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Income Taxes (continued)
------------
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to the taxable income in the years
in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
F. Basis of Accounting
-------------------
The financial statements are prepared using the accrual basis of
accounting.
G. Use of Estimates
----------------
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
H. Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, cash on hand, deposits at
bank and petty cash are considered to be cash or cash equivalents.
I. Accounts Payable
----------------
Trade accounts payable, including accruals not yet billed, are
recognized when the Company becomes obligated to make future payments
as a result of a purchase of assets or services. Trade accounts
payable are generally settled within 30 days.
3. INCOME TAXES
The tax effects of the Company's loss ($1,424,179) at the statutory federal tax
rates (average rate of 31%) were $441,495 and were included in the deferred tax
balance of $545,026. There were no timing differences. Depreciation for tax
purposes approximated depreciation for financial statement accounting purposes.
The benefit of the tax losses will only be obtained if:
(i) The Company derives future assessable income of a nature and of an amount
sufficient to enable the benefit from the deduction s for the loss to be
realized: and
(ii) The Company continues to comply with the conditions for deductibility
imposed by federal income tax laws and regulations.
Deferred tax benefits are expected to be realized in future periods beyond the
subsequent twelve months. Therefore, the benefits were categorized as long-term.
F-7
<PAGE>
4. RECEIVABLES
Accounts Receivable
-------------------
The Company provides an allowance for doubtful accounts equal to the
estimated losses that will be incurred in collection of all receivables.
The estimated losses are based on historical collection experience coupled
with review of the current status of the then currently outstanding
accounts receivable. The allowance for doubtful accounts estimated at
September 30, 2000 was $20,000.
5. RELATED PARTY TRANSACTIONS
September 30, 2000
------------------
Related party payables $ 141,700
Related party receivables $ 23,291
Related party receivables and payables are current obligations from/to the
officers of the Company for advances made in the ordinary course of
business.
6. LEASE OBLIGATIONS
Lease obligations of the Company are for office space, furniture and
equipment. Capital lease obligations are amortized over the remaining term
of lease (i.e. thirty four months.). Operating lease agreements vary from
thirty two to sixty three months. . Minimum lease payments for the next
five years are as follows:
Year Amount
------ --------
2001 $ 87,664
2002 67,214
2003 4,977
2004 4,680
--------
$164,535
========
7. NON-CASH TRANSACTIONS
In March, 2000, the Company acquired the assets and liabilities of
Polarshield, LLC, for $1,500,000 in common and preferred stock. The value
of the assets and liabilities acquired were as follows:
License and goodwill $1,488,533
Equipment 50,853
Furniture 5,747
Bank note on equipment (29,133)
Shareholder loan (16,000)
-----------
Total $1,500,000
===========
F-8
<PAGE>
8. CONCENTRATION OF CREDIT RISK
The primary financial instruments, which potentially subject the Company to
concentrations of credit risk, are cash and accounts receivable. The
Company's cash balances are with a high quality financial institution and
are covered by FDIC insurance limits. The Company routinely assesses the
financial strength of its customers and, as a consequence, believes that
its trade accounts receivable credit risk exposure is limited. The maximum
potential loss does not exceed the amounts already recognized in the
balance sheet.
9. SEGMENT AND GEOGRAPHIC INFORMATION
Polarshield, Inc is a Developing Stage Enterprise and is in the initial
stages of Operation. The Company's raw material, chemicals and other goods
essential to the production of their products are easily available and the
Company does not expect any shortages in supply.
10. CAPITAL STOCK
Common Stock
------------
The Company has authorized 25,000,000 shares of common stock ($0.001 par
value), of which 5,674,797 shares were issued and outstanding at September
30, 2000.
Preferred Stock
---------------
The Company has authorized 5,000,000 shares of preferred stock ($0.01 par
value), of which 1,574,550 shares were issued and outstanding at September
30, 2000. The preferred shares of the Company carry a preference as to
liquidation and convertibility.
Liquidation Preference:
-----------------------
In the event of liquidation, the preferred shareholders are to be paid off
before the common stockholders get a return of their capital.
Conversion Preference:
----------------------
The preferred shares of the Company are convertible in the event the
Company goes public or is acquired by a publicly held company. The options
of the stockholders for conversion are through the election of one of the
following:
(i) One share of preferred stock for one share of common stock. After
conversion, the shares must be held for at least 18 months from the date of
conversion; or
(ii) The preferred share shall be valued at $1 per share and shall be converted
into common shares on an exchange basis on which, the common shares are
valued at 50% of the market bid price of the shares 30 days after the
initial trading of the company shares in a public market, or the merger of
the company with a publicly held company, and such shares shall be subject
to a holding period restriction of 12 months and shall be subject to Rule
144, or
F-9
<PAGE>
10. CAPITAL STOCK (continued)
(iii) Retain the preferred shares in the Company;
(iv) Request repayment of 115% of the amount of the subscription agreement,
payable by the Company within 30days of such written request.
EPS-Earnings (Loss) Per Share
-----------------------------
Earnings (Loss) per share of common stock outstanding were
computed as follows:
<TABLE>
Fiscal Year 2000
Cumulative Period Ended
3/31/00 6/30/00 9/30/00 12/31/00
----------------------------------------------------
<S> <C> <C> <C> <C>
Net Income (Loss) for
basic and diluted EPS ($191,816) ($540,517) ($982,684) -
----------------------------------------------------
----------------------------------------------------
Common share information
Average common shares outstanding for
basic EPS 2,405,556 2,918,113 5,568,583 -
----------------------------------------------------
Basic (Loss) per common share (0.0795) (0.1813) (0.1828) -
</TABLE>
11. LITIGATION AND CONTINGENCIES.
The Company is currently a party to various disputes arising from their
operations, which involve, or may involve, litigation. Management believes
that the outcome of these proceedings, individually and in the aggregate,
will have no material effect on the financial position or results of
operations of Polarshield, Inc.
12. SUBSEQUENT EVENTS
On October 19, 2000, the Company terminated its Sales and Marketing
Agreement with Synergy Partners, Inc for a final sum of $ 60,000 payable in
ten installments of $6,000 each beginning October, 2000.
On October 27, 2000, the Company completed an exchange agreement (the
"Exchange") with Xaibe, Inc. (Xaibe) whose common stock is listed on the
OTC Bulletin Board (OTCBB). Common stock, 97.9% of the outstanding common
stock of the Company, was exchanged for common stock of Xaibe on the basis
of one share of common stock for each share of Xaibe. A total of 5,559,705
shares of common stock were exchanged. As a result of the Exchange, the
Company became a subsidiary of Xaibe and the options and warrants attached
to all convertible preferred stock of the Company outstanding immediately
prior to the Exchange were assumed by Xaibe.
F-10
<PAGE>
12. SUBSEQUENT EVENTS (continued)
On December 28, 2000, (30 trading days following the first quote of common
stock of Xaibe), the preferred shareholders of the Company were offered a
right to convert their preferred stock into common stock of Xaibe, or
redeem their stock at $1.15 per share The election to convert or redeem the
preferred stock will expire on January 23, 2001.
Xaibe, Inc. (the holding company), was incorporated under the laws of the
State of Nevada in July, 1998. Since its inception, Xaibe has conducted no
business operations except for the acquisition of a license to distribute
and produce an oxygen enriched water product for fish farming, aquaculture,
mariculture, the husbandry of poultry, and for remediating animal waste
from dairies, feedlots of all kinds, and for other similar uses. For the
period from July, 1998 (inception), through September 30, 2000, Xaibe had
no income from operations, and accumulated losses aggregating $20,061.
F-11
