As filed with the Securities and Exchange Commission on November 3, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HYBRID FUELS, INC.
(Exact name of small business issuer in its charter)
NEVADA 2860 88-0384399
(State or other jurisdiction of (primary standard (I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
#214 - 2791 HIGHWAY 97 NORTH
KELOWNA, BRITISH COLUMBIA, CANADA V1X 4J8
(250) 764-0352, FAX (250) 764-0855
(Address and telephone number of principal executive offices)
AGENT FOR SERVICE: WITH A COPY TO:
CLAY LARSON, PRESIDENT TOLAN F. FURUSHO
HYBRID FUELS, INC. ATTORNEY AT LAW
#214 - 2791 HIGHWAY 97 NORTH 12729 NORTHUP AVENUE, SUITE 1A
KELOWNA, BRITISH COLUMBIA, CANADA V1X 4J8 BELLEVUE, WASHINGTON 98005
(250)764-0352 (425)452-8639
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
---------------- ------------ --------------- --------------- -------------
Maximum: $ 1,000,000.00
Class A 10,000,000 $ .10 $ 264.00
Common Stock Minimum 10,000.00
100,000 $ .10
---------------- ------------ --------------- --------------- -------------
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NOTE: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 ( 230.457 of
this chapter) relied upon, if the basis of the calculation is not otherwise
evident from the information presented in the table. If the filing fee is
calculated pursuant to Rule 457(o) under the Securities Act, only the title of
the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
needed to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
================================================================================
The registration hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. THE INFORMATION
IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION - [November 1, 2001]
PROSPECTUS
NOVEMBER 1, 2000
HYBRID FUELS, INC.
#214 - 2791 HIGHWAY 97 NORTH
KELOWNA, BRITISH COLUMBIA, CANADA V1X 4J8
(250) 764-0352
10,000,000 Shares of Common Stock
to be sold by Hybrid Fuels, Inc.
This is a secondary public financing of common stock of Hybrid Fuels, Inc.,
and there is a public market which currently exists on the OTC Pink Sheets for
shares of Hybrid Fuels, Inc.'s common stock. The price for the stock in this
offering will be fixed. Hybrid Fuels, Inc. has operating losses to date and is
still in the development stage. There may not be sufficient capital for the
Issuer to implement its business plan and there may not be a market for the
products it plans to sell.
This is not an underwritten offering, and Hybrid Fuels, Inc.'s stock is not
listed on any national securities exchange or the NASDAQ Stock Market, but is
listed and quoted on the National Quotation's Bureau, Pink Sheets, symbol
"HRID". Hybrid Fuels, Inc. intends to apply to have its shares traded on a
regional exchange or the OTC bulletin board under the symbol:
"HRID"
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE ___.
<PAGE>
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
You should rely only on the information contained in this document. Hybrid
Fuels, Inc. has not authorized anyone to provide you with information that is
different. This document may only be used where it is legal to sell these
securities. The information in this document may only be accurate on the date of
this document.
TABLE OF CONTENTS
PART I - PROSPECTUS Page
----
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc. Is In Its Earliest Stages of
Development and May Never Become Profitable. . . . . . . . . . . . . . . . .
Conflicts of Interest May Arise Between Companies
Managed by Common Officers and Directors . . . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc.'s Agreement with Blue Mountain Packers, Ltd.
As A "Non Arms Length" Transaction
Hybrid Fuels, Inc. May Not Be Able To Obtain Further Financing
Dependence on Use of Outside Factors for Product Sales . . . . . . . . . . .
Dependence on Government Regulations
Dependence on and Other Technology and Suppliers. . . . . . . . . . . . . .
Government Regulation of Agriculture and Fuels Could Adversely
Affect Hybrid Fuels, Inc.'s Profitability. . . . . . . . . . . . . . . . . .
Government Regulation of Products Could Adversely Affect
Viability of Hybrid Fuels, Inc.'s Sales and Profitability. . . . . . . . . .
Heavy Dependence on Key Management Which Could
Affect the Business of Hybrid Fuels, Inc.'s Business And Could
Result in Delays or Business Failure . . . . . . . . . . . . . . . . . . . .
<PAGE>
Heavy Dependence on Outside Management Consultants and
Technical Consultants in the Issuer's Line of Business . . . . . . . . . . .
Product Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of Unfavorable Publicity. . . . . . . . . . . . . . . . . . . . . . .
Ability to Manage Growth . . . . . . . . . . . . . . . . . . . . . . . . . .
Absence of Patent Protection . . . . . . . . . . . . . . . . . . . . . . . .
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
No Assurance of Future Industry Growth . . . . . . . . . . . . . . . . . . .
Potential Business Combinations Dilute Stockholder Value . . . . . . . . . .
Potential Business Combinations Could Be Difficult to
Integrate and Disrupt Business . . . . . . . . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc. May Enter Into New Line of
Business Which Investors Could Not Evaluate. . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc. Has Minimal Operating History and
Financial Results Are Uncertain. . . . . . . . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc. May Need Additional Financing
Which May Not Be Available or Which May Dilute the
Ownership Interests of Investors . . . . . . . . . . . . . . . . . . . . . .
Hybrid Fuels, Inc.'s Common Stock Has a Minimal Trading History
And Prices May Decline After the Offering. . . . . . . . . . . . . . . . . .
Investors May Face Significant Restrictions on the Resale of
Hybrid Fuels, Inc.'s Stock Due to State Blue Sky Laws. . . . . . . . . . . .
Investors May Face Significant Restrictions on the Resale
Of Hybrid Fuels, Inc.'s Stock Due to Federal Penny
Stock Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Determination of Offering Price. . . . . . . . . . . . . . . . . . . . . . . .
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors, Executive Officers, Promoters and Control Persons . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management . . . . . . . .
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest of Named Experts and Counsel. . . . . . . . . . . . . . . . . . . . .
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Description of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . .
Description of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions . . . . . . . . . . . . . . . .
Market for Common Equity and Related Stockholder Matters . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes In and Disagreements With Accountants on Accounting
And Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers. . . . . . . . . . . . . . . . . . .
Other Expenses of Issuance and Distribution. . . . . . . . . . . . . . . . . .
Recent Sales of Unregistered Securities. . . . . . . . . . . . . . . . . . . .
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
PART I - PROSPECTUS
----------------------
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and the Financial Statements and
notes thereto appearing elsewhere in this Prospectus.
HYBRID FUELS, INC.
Hybrid Fuels, Inc. is a corporation formed under the laws of the State of
Nevada, whose principal executive offices are located in Kelowna, British
Columbia, Canada.
The primary objective of the business is to build smaller scale, farm
ethanol facilities which involves a number proprietary technologies exclusively
owned by the Issuer by way of an acquisition of Hybrid Fuels (Canada), Inc. and
Hybrid Fuels, USA, Inc. on a share for share basis. This proprietary technology
permits the conversion of straw or other low-grade cellulositics to a high grade
food, with a food value equal to high-grade oats. Other proprietary technology
involves the design of a bio-gas burner which burns manure and bedding straw.
This technology eliminates ground and ground-water contamination and produces
most of the energy required for the facility by supplying heat for fermentation
and vaporization and for the operation of a greenhouse, if desired. Another
exclusive proprietary technology is a vegetable based formula which allows
diesel and ethanol to emulsify. This hybrid fuel reduces particulate emissions
without reduction in power when used in an unaltered diesel engine.
The Issuer has recently deposited funds, in a trust account, pursuant to an
agreement to purchase a beef processing plant in Salmon Arm, British Columbia,
Canada, owned by Mega Holdings, Ltd. The Issuer has an agreement to purchase the
beef processing facility, land, buildings and equipment for $3,000,000 Canadian
Dollars. The "non-operational" and "as is" value of the beef processing plant,
land, buildings and equipment, as per a 1996 real estate appraisal, was over
$4,990,000 Canadian Dollars. The Issuer has not completed the transaction to
purchase the facility, land, buildings equipment, but intends to do so in
accordance with the purchase agreement. Upon completion of this purchase, the
beef processing plant will be operated by Blue Mountain Packers, Ltd., a British
Columbia corporation. The Issuer intends that Blue Mountain Packers, Ltd. will
be a wholly owned subsidiary of the Issuer and will operate this beef processing
business. Blue Mountain Packers, Ltd. recently received certification by the
Canadian Food Inspection Agency of the Government of Canada, Department of
Agriculture, for the facility to engage in the processing of Canadian beef. The
Issuer may seek other potential investment opportunities in related or unrelated
businesses. See "Use of Proceeds"
In the acquisition of Hybrid Fuels (Canada), Inc., and Hybrid Fuels, USA,
Inc., Hybrid Fuels, Inc., the Issuer, acquired a number of proprietary
technologies including:
<PAGE>
(1) technology which promotes the conversion of straw and other low-grade
cellulositics to a high-grade food, with a food value equal to
high-grade oats for animal feed.
(2) a bio-gas burner which burns waste material including manure and straw
and has the capacity to supply the energy requirement of the full
ethanol operation;
(3) a formula which causes diesel fuel, wet ethanol and vegetable oil
residual compound to emulsify. This formula can be used effectively
and efficiently in an unaltered diesel engine.
(4) a fermentation process yielding full conversion in approximately 16
hours which involves grain preparation, simultaneous enzyme injection
with yeast inoculation at unusual temperatures in a water base. There
is substantial savings in plant costs due to reduced tankage volumes,
equipment needs, building costs and labor.
(5) the innovative use of multiple heat exchangers with resultant reduced
energy costs of production.
(6) a unique design of equipment which efficiently reduces the energy and
time costs of drying wet distillers grains to practical feed moisture
content.
(7) a separating column which yields 190 proof spirits in a single pass
which is very economical to manufacture and operate.
(8) a process of handling pig manure which involves screening and
separation of the liquids and solids, reduction of the solids in a
gasifier unit and sparging of the liquid portion and burning of the
odorous gasses of sparge to effect a virtually odorless pig farm
operation.
(9) A bifurcated root feeding system mainly for hydroponic greenhouse use
for tomatoes which results in greatly increased fruit yields.
The Issuer will use the proceeds from this offering to further its business
plan, establish banking liaisons and other financial partnerships, both
governmental and in the private sector, and possible joint ventures to operate a
full service beef processing plant combined with feedlot fuel facilities which
feed cattle and produce the hybrid fuels.
Should the Issuer sell all of the common shares of stock by way of this
registration statement and proposed financing, then the Issuer will devote a
substantial portion of its business efforts to obtain further financing in order
to complete the purchase of the beef processing facilities, land, buildings and
equipment currently owned by Mega Holdings, Ltd.
<PAGE>
BACKGROUND ON THE ISSUER AND DEVELOPER OF THE TECHNOLOGIES
The Issuer is a development stage company which originally incorporated in
the state of Florida on February 16, 1960. In May, 1998, the Issuer changed its
domicile to the state of Nevada and its corporate name to Hybrid Fuels, Inc. The
Issuer acquired all of the issued and outstanding shares of stock of Hybrid
Fuels (USA), Inc. and 330420 BC, Ltd., which changed its name to Hybrid Fuels
(Canada), Inc. In acquiring all of the issued and outstanding shares of stock of
Hybrid Fuels (Canada), Inc. and Hybrid Fuels, USA, Inc., the Issuer became
entitled to full ownership and use of all of the intellectual property including
the trade secrets and proprietary technology as described herein,
The Issuer is dependent upon this offering of common shares of stock to
begin the initial phase of its business plan and to further implement its plan
to further finance the Issuer so that the Issuer may seek additional financing
to complete the purchase of the beef processing facility, land, buildings and
equipment from Mega Holdings, for a purchase price of $3,000,000 Canadian
dollars. THERE IS NO ASSURANCE THAT THE ISSUER WILL BE ABLE TO OBTAIN ANY
FURTHER FINANCING WHATSOEVER OR WHETHER THE COMMON SHARE OF STOCK OFFERED HEREIN
WILL HAVE ANY VALUE. The Issuer intends to acquire the issued and outstanding
shares of Blue Mountain Packers, Ltd., the proposed operator of the beef
processing facility, and operate Blue Mountain Packers, Ltd. as a wholly owned
subsidiary. The Issuer and Blue Mountain Packers, Ltd., a British Columbia
corporation, will have similar Officers and Directors and must be considered as
a "non-arms length" transaction.
MARKET OPPORTUNITY
The Issuer believes that there is a large worldwide market for the Issuer's
alternate fuels and derivative products. This technology allows farm operations
to benefit substantially from the cost effective energy operations and the
proprietary technology for the enhancement of food values with a less expensive
feed for livestock. There are many other technologies provided by the Issuer for
the operation of farm facilities and equipment, as well as the recycling of
animal waste into energy used to create the hybrid fuel.
The conventional production of alcohol throughout history is well
established and all of the production costs and the yield of various grains and
sugars are well documented. The benefits of most of the byproducts in animal
feed programs are well proven and documented. The market for ethanol (alcohol)
for fuel use is firmly established and substantial.
Energy costs, aside from grain purchase, are a major obstacle against
ethanol. The phrase "Energy Balance" can be explained by stating it to be the
cost or energy expended to recover a given quantity of ethanol. This source of
energy is almost, without exception, non-renewable much in the same manner as
natural gas, coal, petroleum, etc. It is rare to find a distillery operating
with "plus energy balance". The innovative use of heat exchanging equipment is
one of the Issuer's technologies with a potential worldwide market, and gives
the hybrid fuels process a much more favorable energy balance..
<PAGE>
The Issuer has devised several systems of agriculture integration
procedures which provides cost effective operations for the facility.
NAME, ADDRESS, AND TELEPHONE NUMBER OF REGISTRANT
Hybrid Fuels, Inc.
#214-2791 Highway 97 North
Kelowna, British Columbia, Canada V1X 4J8
(250) 764-0352, fax (250) 764-0855
THE OFFERING
Hybrid Fuels, Inc. is offering up to 10,000,000 shares of its common stock
at $.10 per share. Hybrid Fuels, Inc.'s common shares of stock are currently
trading on the National Quotations Bureau's "Pink Sheets" and the Issuer will
apply to the OTC Bulletin Board and/or a regional stock exchange along with
filing with the SEC.
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the shares of common
stock of Hybrid Fuels, Inc. Investing in Hybrid Fuels, Inc.'s shares of common
stock involves a high degree of risk. Any of the following risks could adversely
affect Hybrid Fuels, Inc.'s business, financial condition and results of
operations and could result in a complete loss of your investment.
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. Prospective investors should not place undue
reliance on forward-looking statements, which apply only as of the date of this
prospectus. Hybrid Fuels, Inc.'s actual results could differ materially from
those anticipated in these forward-looking statements for many reasons,
including the risks faced by Hybrid Fuels, Inc. described in "Risk Factors" and
elsewhere in this prospectus.
RISKS RELATED TO HYBRID FUELS, INC.'S BUSINESS
Hybrid Fuels, Inc.'s successful implementation of its business plan is
dependent on a number of factors that should be considered by prospective
investors. Hybrid Fuels, Inc. has only recently acquired its principal asset,
that of proprietary technologies. It is a new business for this company and the
Issuer has no history of earnings or profit and there is no assurance that it
will operate profitably in the future. As such, there is no assurance that
Hybrid Fuels, Inc. will provide a return on investment in the future.
<PAGE>
Hybrid Fuels, Inc. Is In Its Earliest Stages Of Development And May Never
---------------------------------------------------------------------------
Become Profitable
-----------------
Hybrid Fuels, Inc. is in the extreme early stages of development and could
fail before implementing its business plan. It must be regarded as a "start up"
venture that may incur net losses for the foreseeable future. Hybrid Fuels,
Inc. has operating losses from the initial implementation of its business and
operations, and it faces unforeseen costs, expenses, problems and difficulties
that could easily prevent it from ever being profitable. Hybrid Fuels, Inc.'s
success is dependent on a number of factors that should be considered by
prospective investors. The Issuer has only recently acquired its principal
assets in the form of proprietary technologiesIt is a relatively new business
venture and has no history of earnings or profit and there is no assurance that
it will operate profitably in the future. As such, there is no assurance that
Hybrid Fuels, Inc. will provide a return on investment in the future.
Conflicts Of Interest May Arise Between Companies Managed By Common
---------------------------------------------------------------------------
Officers And Directors
-----------------------
Mr. Clay Larson, the President and Board Chairman of the Issuer, has
projected that the Issuer will acquire the issued and outstanding shares of Blue
Mountain Packers, Ltd., a British Columbia corporation, and operate that
corporation as a wholly owned subsidiary of the Issuer. It is proposed that
John Morrison, Chartered Accountant, shall be the Secretary and Chief Financial
Officer of Blue Mountain Packers, Ltd., as well as Secretary and Chief Financial
Officer of the Issuer. Although the share structure of Blue Mountain Packers,
Ltd. has yet to be determined, the Issuer intends that Blue Mountain Packers,
Ltd. will be a wholly owned subsidiary and the Issuer may have similar officers
and directors.
Hybrid Fuels, Inc.'s Agreement With Blue Mountain Packers, Ltd As A "Non
---------------------------------------------------------------------------
Arms Length" Transaction
-------------------------
Hybrid Fuels, Inc., the Issuer, intends to acquire the issued and
outstanding shares of Blue Mountain Packers, Ltd., a British Columbia
corporation, and operate that company as a wholly owned subsidiary of the
Issuer. At that time, Blue Mountain Packers, Ltd. will have the same Secretary
and Chief Financial Officer as the Issuer. That Secretary and Chief Financial
Officer will be John Morrison, Chartered Accountant. Therefore, any and all
transactions with Blue Mountain Packers, Ltd. must be considered as a "non arms
length" transaction. See "Conflicts of Interest May Arise Between Companies
Managed By Common Officers And Directors.
<PAGE>
Hybrid Fuels, Inc. May Not Be Able To Obtain Further Financing
------------------------------------------------------------------------
Hybrid Fuels, Inc. cannot complete its business plan even if all of its
common shares of stock are sold by way of this financing and registration
statement. The Issuer must obtain subsequent equity financings and/or loans from
outside sources to complete its first year's operations and to complete the
purchase of the beef processing plant, land, buildings and equipment owned by
Mega Holdings, Ltd. The Issuer can facilitate a share exchange for the
acquisition of all of the issued and outstanding shares of Blue Mountain
Packers, Ltd., of British Columbia, Canada, which appears to be a primary profit
center for the Issuer if the Issuer can complete the purchase of the beef
processing plant, land, buildings and equipment. FURTHER, HYBRID FUELS, INC.
NEEDS ADDITIONAL DEVELOPMENT CAPITAL TO ALLOW THE COMPANY TO IMPLEMENT ITS
BUSINESS OPERATIONS. Similarly, any dispute between the Issuer and Mega
Holdings, Ltd. and/or Blue Mountain Packers, Ltd. (or their successors, if any)
could impair the Issuer's ability to fully exploit its business plan and
purchase rights. Any termination or impairment of the Issuer's purchase rights
due to circumstances under the control of Mega Holdings, Ltd., or others with an
interest in the business or its products, could prevent Hybrid Fuels, Inc. from
implementing its business plan, thereby limiting its profitability and
decreasing the value of its stock.
Dependence On Use Of Outside Factors For Product Sales
--------------------------------------------------------------
If the use of alternate fuels and alternate fuel derivative products and
the growth of this specialized and segmented market for alternate fuels and fuel
derivative products does not continue, Hybrid Fuels, Inc. may not achieve the
customers necessary for sustaining revenues and achieving profitable operations.
Hybrid Fuels, Inc.'s future revenues and profits, if any, substantially depend
upon the widespread acceptance and use of these alternate fuels as an effective
energy source for agriculture applications and to their related businesses.
Rapid growth in the use of alternate fuels has occurred only recently. As a
result, acceptance and use may not continue to develop at historical rates, and
a sufficient number of consumers may not use the alternate fuels and alternate
fuel derivative as an energy source for agriculture and its related businesses.
Even if use of alternate fuels and alternate fuel derivative products continues
to increase, at a conservative or aggressive rate of growth, there is no
assurance that consumers would seek these products from Hybrid Fuels, Inc., the
Issuer. Alternate fuels or alternate fuel derivative products may not be a
viable long term commercial business. Hybrid Fuels, Inc. will need to overcome
the commercial and industrial acceptance of petroleum based fuels in the
worldwide marketplace. There can be no assurances that the Issuer will be able
to overcome the acceptance of petroleum based fuels in the marketplace and sell
the Issuer's products to any extent.
Dependence On Government Regulations
---------------------------------------
The market for alternate fuels and alternate fuel derivative products is
characterized by rapidly changing technology, evolving industry standards,
changes in users' needs and frequent new product introductions. Hybrid Fuels,
Inc.'s future success will depend, in part, on Hybrid Fuels, Inc.'s use of
leading technologies to provide products to its customer base. There can be no
assurance that Hybrid Fuels, Inc. will be successful in using new technologies
effectively, developing new products or enhancing existing products on a timely
basis. Many of these products are subject to government testing and the Issuer
could be adversely affected if the government subjects the alternate fuel
industry to testing and other restrictions.
<PAGE>
Hybrid Fuels, Inc.'s success also depends on continued use and expansion of
the alternate fuel and alternate fuel derivative products. The Issuer may not
be able to sustain the delivery of products by the projected and continuing
growth in the industry. The growth in volume of product sales may create
fulfillment instabilities. Such instabilities may have an adverse affect on
Hybrid Fuels, Inc.'s operations and business if they are not addressed. The
alternate fuel industry could also lose its viability due to delays in the
development or adoption of new standards and protocols enacted by governmental
agencies. This may affect the Issuer's activity, security, reliability, costs,
accessibility, and quality of operations. Hybrid Fuels, Inc.'s technology and
operations may be vulnerable to governmental rules and regulations pertaining to
the alternate fuel industry over which the Issuer has no control. These
regulations or industry problems, caused by governmental agencies or other third
parties, could lead to interruptions, delays or cessation of the business of
Hybrid Fuels, Inc., the Issuer.
Dependence On Other Technology Or Suppliers
------------------------------------------------
The Issuer is not dependent upon other technology or specialized suppliers
to operate its business. Hybrid Fuels, Inc. will rely upon normal channels of
suppliers to operate its business, The primary source of raw materials needed
to operate the Issuer's business is mainly comprised of materials which are
readily available. The Issuer believes that it will be able to secure
alternative suppliers, if needed and therefore will not significantly limit its
ability to service its existing customers. The Issuer believes that it is not
dependent on particular suppliers and therefore would not be limited in its
ability to expand to new markets. Therefore, the dependency on specific
supplier is not an issue, which could, in turn, have a material adverse effect
on its business, financial condition and results of operations.
Government Regulation Of Agriculture Could Adversely Affect Hybrid Fuels,
---------------------------------------------------------------------------
Inc's Corporation's Profitability
----------------------------------
Existing or future legislation could limit growth in the use of alternate
fuel products, which would curtail or eliminate Hybrid Fuels, Inc.'s revenue
growth. Statutes and regulations directly applicable to the energy and
agriculture industry are becoming more prevalent. The law remains largely
unsettled, however, even in areas where there has been legislative action. It
may take years to determine whether and how existing laws governing intellectual
property, proprietary technologies, alternate energy sources, and agriculture
affect the alternate fuel industry. In addition, the growth and development of
the alternate fuels and alternate fuels derivative products may prompt calls for
more stringent consumer protection laws, in the United States, Canada and
abroad. It is possible that the United States, Canada or other local or foreign
jurisdictions may seek to impose further regulations on the energy and
agriculture industry which may further cause regulatory obligations on Hybrid
Fuels, Inc. If one or more states or any foreign country successfully asserts
that Hybrid Fuels, Inc. should be regulated on its products, it could also
prevent Hybrid Fuels, Inc.'s business from growing as projected or expose it to
unanticipated liabilities.
<PAGE>
Any new regulation, testing requirement or taxation of Hybrid Fuels, Inc.'s
products or systems could damage Hybrid Fuels, Inc.'s business, affect the
profitability and perhaps the viability of its business plan, causing the price
of its common stock to decline. Such regulation or taxation could prove to be
burdensome, and impose significant additional costs on Hybrid Fuels, Inc.'s
business or subject it to additional liabilities. As the alternative fuels
industry and alternative fuels derivative products continues to evolve,
increasing regulation by federal, state, or foreign agencies becomes more
likely. Such regulation is likely to be in the areas of content, disclosure and
quality of products and services. Taxation of the alternate fuels and alternate
fuels derivative products imposed by government agencies could limit Hybrid
Fuels, Inc.'s sales, revenue growth and future profitability. In addition, any
regulation imposing taxes and testing criteria for the alternate fuels industry
could result in a decline in the use of alternate fuels and alternate fuels
products and services and the viability of alternate fuels use and sales, which
could have a material adverse effect on Hybrid Fuels, Inc.'s business, results
of operations, and financial condition.
Government Regulation Of Products Could Adversely Affect The Viability Of
---------------------------------------------------------------------------
Hybrid Fuels, Inc.'s Products Sales And Profitability
----------------------------------------------------------
In the United States and Canada, state, provincial and/or federal
government regulations may restrict the use and sale of alternate fuels
derivative products. The state, provincial and/or federal government regulations
of the alternate fuels and alternate fuels products and other related
technologies and products could result in the way Hybrid Fuels, Inc. markets and
sells its systems and products. This could result in restrictions on the
technology, the products and systems that Hybrid Fuels, Inc. offers its
customers with significant additional expense. The implementation of the systems
and the manufacturing and sale of the alternate fuels and alternate fuels
products of the Issuer 's could be affected by future legislation and
regulation. Additional expense to the Hybrid Fuels, Inc.'s systems and
product(s) could result in a decrease in its stock price. Hybrid Fuels, Inc.'s
efforts to comply with existing laws and regulations may be costly, may force it
to change its selling strategy and may not be successful. The Issuer, Hybrid
Fuels, Inc., cannot assure its investors that it will be able to comply with any
existing or future laws, regulations, interpretations or applications without
incurring significant costs or adjusting its business plan significantly.
Heavy Dependence On Key Management Which Could Affect The Business Of
---------------------------------------------------------------------------
Hybrid Fuels, Inc. And Could Result In Delays Or Business Failure
-----------------------------------------------------------------
Mr. Clay Larson is serving as Hybrid Fuels, Inc.'s President and Board
Chairman. Mr. John Morrison is serving as Hybrid Fuels, Inc.'s Secretary,
Director and Chief Financial Officer. The loss of Mr. Larson's and/or Mr.
Morrison's services may hamper Hybrid Fuels, Inc.'s ability to implement its
business plan, and could cause its stock to be worthless. Hybrid Fuels, Inc.
will be heavily dependent upon Mr. Larson's and Mr. Morrison's entrepreneurial
skills and experience to implement its business plan and may, from time to time,
find that their need to consult with outside technical consultants may result in
delay(s) in progress towards the completion of the Hybrid Fuels, Inc.'s systems
and product development and implementation of its business plan. Hybrid Fuels,
Inc. does not have employment agreements with all of their management and key
personnel and there is no assurance that management will continue to manage its
<PAGE>
affairs in the future. Hybrid Fuels, Inc. has not obtained a key man life
insurance policy on Mr. Larson, Mr. Morrison or other management. Hybrid Fuels,
Inc. could lose the services of Mr. Larson, Mr. Morrison or other personnel and
management which would have a significant adverse effect on its business and
could cause the price of its stock to decline or become worthless. The services
of Mr. Larson, Mr. Morrison and others would be difficult to replace. Because
investors will not necessarily be able to evaluate the merits of Hybrid Fuels,
Inc.'s business activity, investors should carefully and critically assess Mr.
Larson's and Mr. Morrison's background as well as other management's backgrounds
in addition to the technology. See "Directors and Executive Officers".
Heavy Dependence On Outside Management Consultants And Technical
---------------------------------------------------------------------------
Consultants In The Issuer's Line Of Business
---------------------------------------------
Mr. Clay Larson and other key management have no significant experience in
the marketing of alternate fuels and alternate fuels derivative products. Mr.
Clay Larson is a corporate lawyer by profession and is not a scientist, engineer
or energy specialist and must rely upon other consultants and professionals in
the alternate fuel industry for business decisions. As a result, Hybrid Fuels,
Inc. will likely need to continue to rely on others who understand the alternate
fuel technology and alternate fuels and alternate fuels product sales and
marketing. Because of lack of experience in this line of business, Hybrid
Fuels, Inc. may overestimate the marketability of the Hybrid Fuels, Inc.'s
alternate fuels system and products and may underestimate the costs and
difficulties associated with selling and distributing of the alternate fuels and
alternate fuels products. Any such unanticipated costs or difficulties could
prevent Hybrid Fuels, Inc. from implementing its business plan, thereby limiting
its profitability and decreasing the value of its stock.
Product Liability
------------------
Hybrid Fuels, Inc., like other alternate fuels technology suppliers, must
carry product liability insurance for the systems and alternate fuels products
which may be defective. Hybrid Fuels, Inc. may be subjected to various product
liability claims, including, among others, that its products include inadequate
instructions for use or inadequate warnings concerning possible reactions and
interactions with other products. Hybrid Fuels, Inc. relies on third party
suppliers for its components for finished alternate fuels. Hybrid fuels, Inc.
currently has no product liability insurance coverage. Although Hybrid Fuels,
Inc. warrants that the finished alternate fuels will be as described and
provides indemnification to the end-user for losses, claims, and expenses
arising from a breach of the product warranties, any such indemnification is
limited by its terms and, as a practical matter, is limited to the
credit-worthiness of the indemnifying party. In the event that Hybrid Fuels,
Inc. does not have adequate indemnification, product liabilities relating to its
products could have a material adverse effect on its business, financial
condition and results of operations. At the present time, Hybrid Fuels, Inc.
does not carry product liability insurance and the Issuer believes that there is
no significant need for product liability insurance at this time.
<PAGE>
Effect Of Unfavorable Publicity
----------------------------------
Hybrid Fuels, Inc. believes that the alternate fuels market is affected by
local and national media attention regarding the various components in the
energy industry. Future energy technology and technology research or publicity
may not be favorable to the energy industry, the alternate fuels industry or to
any related industry and may not be consistent with earlier favorable research
or publicity. Because of Hybrid Fuels, Inc.'s partial dependence associated on
consumer's perceptions of the energy and alternate fuels industry, any adverse
publicity associated with similar products distributed by other companies and
future reports of research that are perceived as less favorable or that question
earlier research could have a material adverse effect on Hybrid Fuels, Inc.'s
business, financial condition and results of operations. Hybrid Fuels, Inc. is
dependent upon consumers' perceptions of quality and energy-effective usefulness
of its products. Thus, the mere publication of reports asserting that such
alternate fuels systems or alternate fuels products may be non essential or not
energy proficient or questioning the efficacy of the technology could have a
material adverse effect on Hybrid Fuels, Inc.'s business, financial condition
and results of operations, regardless of whether such reports are scientifically
supported or whether the claimed inadequacies would be scientifically proven for
such systems or products.
Ability To Manage Growth
---------------------------
Hybrid Fuels, Inc.'s ability to manage growth depends, in part, upon its
ability to develop and expand operating, management, information and financial
systems, and production capacity, which may significantly increase its future
operating expenses. No assurance can be given that Hybrid Fuels, Inc.'s business
will grow in the future or that it will be able to effectively manage such
growth. Hybrid Fuels, Inc.'s inability to manage its growth successfully could
have a material adverse effect on its business, financial condition and results
of operations.
Absence Of Patent Protection
-------------------------------
The Hybrid Fuels, Inc. system and product technology are not protected by
patents and are currently proprietary. The Issuer does plan to investigate the
ability to patent certain systems within the total technology upon completion of
the research and development of the marketable Hybrid Fuels, Inc.'s system(s)
and products. Hybrid Fuels, Inc.'s believes that all of its products are safe
from piracy due to the uniqueness of the technology and that applying for patent
protection could possibly harm the Company instead of protecting it at this
stage of its development. Accordingly, there can be no assurance that Hybrid
Fuels, Inc.'s products, even with patent protection, will not be copied in some
fashion and used to compete with the Hybrid Fuels, Inc.'s proprietary
technologies. Any such unintended copying of products may result in significant
market competition, adverse publicity and/or product liability claims which
could have a material adverse effect on Hybrid Fuels, Inc.'s business, financial
condition and results of operations.
<PAGE>
Competition
-----------
The alternate fuels and alternate fuels products industry is new, rapidly
evolving and minimally competitive, and Hybrid Fuels, Inc. expects competition
to intensify in the future. Hybrid Fuels, Inc. believes that it has an
international market, with virtually little known competition however, if the
Issuer and the alternate fuels industry generally fails to attract and retain a
large customer base, then Hybrid Fuels, Inc. declines in its projected revenue
and a loss of market share. Hybrid Fuels, Inc. does not know of a direct
competitor in the industry. The alternate fuels and alternate fuels derivative
systems and products market is not very competitive and highly fragmented, with
no clear dominant leader and increasing public and commercial attention. Hybrid
Fuels, Inc. will compete with a variety of other companies, including
traditional suppliers products and services.
No Assurance Of Future Industry Growth
-------------------------------------------
There can be no assurance that the alternate fuels and alternate fuels
derivative products market is viable or that such projected growth will occur or
continue. Market data and projections such as those presented in this
prospectus are inherently uncertain, subject to change and often dated. In
addition, the underlying market conditions are subject to change based on
economic conditions, consumer preferences and other factors that are beyond
Hybrid Fuels, Inc.'s control. An adverse change in the size or growth rate of
the market for alternate fuels and alternate fuels derivative products is
likely to have a material adverse effect on Hybrid Fuels, Inc's business,
financial condition and results of operations.
Potential Business Combinations Dilute Stockholder Value
-------------------------------------------------------------
Because Hybrid Fuels, Inc. may not be successful in developing a viable
market for the alternate fuels and alternate fuels products and systems to
agricultural and business users, its management will spend a significant portion
of the time it devotes to evaluating other business opportunities that may be
available to Hybrid Fuels, Inc. In the event of a business combination, the
ownership interests of holders of existing shares of Hybrid Fuels, Inc.'s shares
of stock will be diluted. Due to its limited financial resources, the only way
Hybrid Fuels, Inc. will be able to diversify its activities, should its business
plan prove to be impractical, would be to enter into a business combination.
Any asset acquisition or business combination would likely include the
issuance of a significant amount of Hybrid Fuels, Inc.'s common shares of stock,
which would dilute the ownership interest of holders of existing shares of
stock, and may result in a majority of the voting power being transferred to new
investors. Depending on the nature of the transaction, Hybrid Fuels, Inc.'s
stockholders may not have an opportunity to vote on whether to approve it. For
example, Hybrid Fuels, Inc.'s Board of Directors may decide to issue a
significant amount of shares of stock to effect a share exchange with another
company. Such a transaction does not require shareholder approval, but Hybrid
Fuels, Inc.'s officers and directors must exercise their powers in good faith
and with a view to the interests of the corporation.
<PAGE>
Potential Business Combinations Could Be Difficult To Integrate And Disrupt
---------------------------------------------------------------------------
Business
--------
Any acquisition of or business combination with another company could
disrupt Hybrid Fuels, Inc.'s ongoing business, distract management and employees
and increase its expenses. If Hybrid Fuels, Inc. acquires a company, it could
face difficulties in assimilating that company's personnel and operations. In
addition, the key personnel of the acquired company may decide not to work for
Hybrid Fuels, Inc. Acquisitions also involve the need for integration into
existing administration, services, marketing, and support efforts. Any
amortization of goodwill or other assets, or other charges resulting from the
costs of these acquisitions, could limit Hybrid Fuels, Inc.'s profitability and
decrease the value of its shares of stock. In addition, Hybrid Fuel, Inc.'s
liquidity and capital resources may be diminished prior to, or as a result of,
consummation of a business combination and its capital may be further depleted
by the operating losses (if any) of the business entity which Hybrid Fuels, Inc.
may eventually acquire.
Hybrid Fuels, Inc. May Enter In To New Line Of Business Which Investors
---------------------------------------------------------------------------
Could Not Evaluate
------------------
In the event of a business combination, acquisition, or change in
shareholder control, Hybrid Fuels, Inc. may enter in to a new line of business
which an investor did not anticipate and in which that investor may not want to
participate. Hybrid Fuels, Inc. may make investments in or acquire
complementary products, technologies and businesses, or businesses completely
unrelated to its current business plan. Similarly, an asset acquisition or
business combination would likely include the issuance of a significant amount
of Hybrid Fuels, Inc.'s common shares of stock, which may result in a majority
of the voting power being transferred to new investors. New investors may
replace Hybrid Fuels, Inc.'s management. New management may decide not to
continue to implement Hybrid Fuel's, Inc.'s current business plan, and may
decide to enter into a business completely unrelated to the current business
plan which an investor did not anticipate and in which that investor may not
want to participate. In such case, an investor could lose its entire investment
on a business decision it did not get to evaluate at the time of investing in
Hybrid Fuels, Inc.
FINANCIAL RISKS
Hybrid Fuels, Inc. Has Minimal Operating History and Financial Results Are
---------------------------------------------------------------------------
Uncertain
---------
Hybrid Fuels, Inc. is a development stage company with no history of
earnings or profit and there is no assurance that it will operate profitably in
the future. Hybrid Fuels, Inc. faces all the risks of a new business. As a
result of Hybrid Fuels, Inc.'s limited operating history, it is difficult to
accurately forecast its potential revenue, and there is no meaningful historical
financial data upon which to base planned operating expenses. Its revenue and
income potential is unproven and its business model is still emerging. As such,
there is no assurance that Hybrid Fuels, Inc. will provide a return on
investment in the future. An investor in Hybrid Fuels, Inc.'s common shares of
stock must consider the challenges, risks and uncertainties frequently
encountered by development-stage companies using new and unproven business
models in new and rapidly evolving markets. These challenges include, but are
not limited to, the ability to:
<PAGE>
1. execute the Hybrid Fuels, Inc.'s business plan;
2. create significant sales of alternate fuels systems and derivative
products;
3. manage growth in Hybrid Fuel, Inc.'s operations;
4. create a customer base on a cost-effective basis;
5. retain customers;
6. access additional capital when required;
7. attract and retain key personnel.
Hybrid Fuels, Inc. cannot be certain that its business model will be
successful or that it will successfully address these and other challenges,
risks and uncertainties. Consumers of alternate fuels and alternate fuels
systems and products may not purchase products from the Issuer, which would
reduce the Issuer's revenues and prevent the Issuer from becoming profitable.
Hybrid Fuels, Inc. May Need Additional Financing Which May Not Be
---------------------------------------------------------------------------
Available, Or Which May Dilute The Ownership Interests Of Investors
--------------------------------------------------------------------
Hybrid Fuels, Inc.'s initial success and ability to initially implement its
business plan will depend on its ability to raise capital by way of this
Offering. No commitments to provide additional funds have been made by
management or other shareholders. Hybrid Fuels, Inc. has not investigated the
availability, source or terms that might govern the acquisition of additional
financing. When additional capital is needed, there is no assurance that funds
will be available from any source or, if available, that they can be obtained on
terms acceptable to Hybrid Fuels, Inc. If not available, Hybrid Fuels, Inc.'s
operations would be severely limited, and it would be unable to implement its
business plan.
RISKS RELATED TO THE SECURITIES MARKET
Hybrid Fuels, Inc.'s Common Stock Has A Minimal Trading History, And Prices
---------------------------------------------------------------------------
May Decline After The Offering
-----------------------------
There is a limited public market for Hybrid Fuels, Inc.'s common shares of
stock and no assurance can be given that a more substantial market will develop
or that any shareholder will be able to liquidate its investment without
considerable delay, if at all. The trading market price of Hybrid Fuels, Inc.'s
common stock may decline below the offering price. If a more viable market
should develop, the price may be highly volatile. In addition, an active public
<PAGE>
market for Hybrid Fuels, Inc.'s common shares of stock may not develop or be
sustained. Factors such as those discussed in this "Risk Factors" section may
have a significant impact on the market price of Hybrid Fuels, Inc.'s
securities. Owing to the low price of the securities, many brokerage firms may
not be willing to effect transactions in the securities. Even if a purchaser
finds a broker willing to effect a transaction in Hybrid Fuels, Inc.'s common
shares of stock, the combination of brokerage commissions, state transfer taxes,
if any, and other selling costs may exceed the selling price. Further, many
lending institutions will not permit the use of such securities as collateral
for loans. Thus, a purchaser may be unable to sell or otherwise realize the
value invested in Hybrid Fuels, Inc.
Investors May Face Significant Restrictions On The Resale Of Hybrid Fuels,
---------------------------------------------------------------------------
Inc.'s Stock Due To State Blue Sky Laws
Because Hybrid Fuels, Inc.'s securities have not been registered for resale
under the blue sky laws of any state, the holders of such shares of stock and
those persons desiring to purchase them in any trading market that may develop
in the future should be aware that there may be significant state blue sky law
restrictions on the ability of investors to sell and on purchasers to buy Hybrid
Fuels, Inc.'s securities. Each state has its own securities laws, often called
"blue sky laws", which limit sales of stock to a state's residents unless the
stock is registered in that state or qualifies for an exemption from
registration, and govern the reporting requirements for broker-dealers and stock
brokers doing business directly or indirectly in the state. Before a security
is sold in a state, there must be a registration in place to cover the
transaction, and the broker must be registered in that state, or otherwise be
exempt from registration. Hybrid Fuels, Inc. does not know whether its shares
of stock will be registered under the laws of any states. A determination
regarding registration will be made by the broker-dealers, if any, who agree to
serve as the market-makers for Hybrid Fuels, Inc.'s shares of stock.
Accordingly, investors should consider the secondary market for Hybrid
Fuels, Inc.'s securities to be a limited one. Investors may be unable to resell
their shares of stock, or may be unable to resell it without the significant
expense of state registration or qualification.
Investors May Face Significant Restrictions On The Resale Of Hybrid Fuels,
---------------------------------------------------------------------------
Inc.'s Stock Due To Federal Penny Stock Regulations
---------------------------------------------------
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange
Act of 1934, as amended. Because Hybrid Fuels, Inc's securities constitute a
"penny stock" within the meaning of the rules, the rules would apply to Hybrid
Fuels, Inc. and its securities. The rules may further affect the ability of
owners of Hybrid Fuels, Inc.'s shares of stock to sell their securities in any
market that may develop for them. There may be a limited market for penny
stocks, due to the regulatory burdens on broker-dealers. The market among
dealers may not be active. Investors in penny stock often are unable to sell
stock back to the dealer that sold them the stock. The mark ups or commissions
charged by the broker-dealers may be greater than any profit a seller may make.
Because of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock to
the investor. In some cases, the stock may fall quickly in value. Investors may
be unable to reap any profit from any sale of the stock, if they can sell it at
all.
<PAGE>
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
- control of the market for the security by one or a few broker-dealers that
are often related
- to the promoter or the Issuer;
- manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases;
- "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
- the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
USE OF PROCEEDS
The net proceeds to Hybrid Fuels, Inc. from the sale of the 10,000,000
shares of common stock offered by Hybrid Fuels, Inc. hereby at an assumed
initial public offering price of $.10 (ten cents) per share are estimated to be
$1,000,000. This Offering is a self-underwriting by the Issuer and the Issuer's
management is responsible for the sale of the common shares of stock offered
herein. As of the date of this Offering, Hybrid Fuels, Inc. does not have any
agreement with any broker/dealer to participate in the sale of common shares of
stock of the Issuer. IF ONLY THE MINIMUM AMOUNT OF 100,000 COMMON SHARES OF
STOCK ARE SOLD THEN THE ENTIRE AMOUNT OF $10,000 SHALL BE USED TO ADVANCE THE
DEVELOPMENT OF THE HYBRID FUELS, INC. SYSTEM AND PRODUCTS AND WORKING CAPITAL.
INVESTORS SHOULD BE AWARE THAT IF THE ISSUER IS ONLY ABLE TO SELL THE MINIMUM
AMOUNT OF SHARES REGISTERED FOR SALE IN THIS OFFERING THAT THERE IS NO ASSURANCE
THAT HYBRID FUELS, INC. WILL BE ABLE TO OBTAIN ANY ADDITIONAL FINANCING WHICH
WOULD POSSIBLY MAKE THE ISSUER'S SHARES DECREASE SUBSTANTIALLY OR TO BECOME
WORTHLESS. If the maximum amount of shares are sold by way of this Offering,
Hybrid Fuels, Inc. expects to use the net proceeds in the following manner:
<PAGE>
Net Proceeds if all shares are sold by the Issuer: $1,000,000
226,000 - Debt retirement
70,000 - Equipment Purchases
135,000 - Alternate Fuels Plant Construction
270,000 - Livestock Purchase (Cattle)
299,000 - Working Capital
Total Use of Proceeds: $1,000,000
Net Proceeds if only the minimum amount of shares are sold by the Issuer:
$10,000 These funds will be used for general corporate expenses and further
financing expense.
Hybrid Fuels, Inc. continually evaluates other business opportunities that
may be available to it, whether in the form of assets acquisitions or business
combinations. Hybrid Fuels, Inc. may use a portion of the proceeds for these
purposes. Hybrid Fuels, Inc. is currently a party to an agreement with Mega
Holdings, Ltd. pertaining to the purchase of a beef processing plant, land,
buildings and equipment for a purchase price of $3,000,000 Canadian Dollars.
Hybrid Fuels, Inc. is not a party to any, letters of intent, commitments or
agreements and is not currently engaged in active negotiations with respect to
any acquisitions other than that as described herein with Mega Holdings, Ltd.
Hybrid Fuels, Inc. has not yet determined the specific amounts of "net
proceeds" to be used specifically in the general categories as described herein.
Accordingly, Hybrid Fuels, Inc.'s management will have significant flexibility
in applying the net proceeds of the Offering.
DETERMINATION OF OFFERING PRICE
Hybrid Fuels, Inc. arbitrarily determined the price of the Common Shares of
Stock in this Offering. The offering price is not an indication of, and is not
based upon, the actual value of Hybrid Fuels, Inc. The offering price bears no
relationship to the book value, assets or earnings of Hybrid Fuels, Inc. or any
other recognized criteria of value. The offering price should not be regarded as
an indicator of the future market price of the securities.
SELLING SECURITY HOLDERS
There are no selling security holders.
<PAGE>
PLAN OF DISTRIBUTION
Hybrid Fuels, Inc. will sell a minimum of 100,000 shares and a maximum of
10,000,000 shares of its common stock to the public on a "best efforts" basis at
$.10 (ten cents) per share. There can be no assurance that any of these shares
will be sold. The gross proceeds to Hybrid Fuels, Inc. will be $1,000,000 if all
the shares offered are sold by the Issuer. The gross proceeds to Hybrid Fuels,
Inc. will be $10,000 if only the minimum amount of shares offered are sold by
the Issuer. In the event that the Issuer sells the shares in the Offering, no
commissions or other fees will be paid, directly or indirectly, by Hybrid Fuels,
Inc., or any of its principals, to any person or firm in connection with
solicitation of sales of the shares. A limited public market currently exists
for shares of Hybrid Fuels, Inc.'s common stock. Hybrid Fuels, Inc. intends to
apply to have its shares traded on a regional stock exchange and/ or the OTC
bulletin board under the symbol "HRID".
LEGAL PROCEEDINGS
Hybrid Fuels, Inc. is not a party to any pending legal proceeding or
litigation and none of its property is the subject of a pending legal
proceeding. Further, the officers and directors know of no legal proceedings
threatened or anticipated against Hybrid Fuels, Inc. or its property by any
entity or individual or any legal proceedings contemplated by any governmental
authority.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each director
and executive officer of Hybrid Fuels, Inc.:
NAME AGE POSITION
----------- --- --------------------------
Clay Larson 59 President, Board Chairman
Gordon Colledge 57 Vice-President, Director
John Morrison 66 Secretary, Director
THE ABOVE OFFICER AND DIRECTOR, JOHN MORRISON, IS AN OFFICER AND DIRECTOR
OF BLUE MOUNTAIN PACKERS, LTD, AND, AS SUCH, ALL TRANSACTIONS BETWEEN BLUE
MOUNTAIN PACKERS, LTD. AND THE ISSUER MUST BE CONSIDERED AS "NON ARMS LENGTH"
TRANSACTION AND MUST BE TAKEN INTO CONSIDERATION AS A POSSIBLE CONFLICT BY ALL
INVESTORS.
<PAGE>
On September 26, 2000, the Board of Directors was elected and installed.
These officers and directors of Hybrid Fuels, Inc. will serve for a term of 2
years unless otherwise notified by way of a Directors Meeting. Thereafter, the
directors will be elected for two-year terms at the annual shareholders'
meeting. Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement.
Clay Larson, President and Board Chairman
----------------------------------------------
Clay Larson is a graduate of the University of British Columbia (1972),
with an LLB degree. Mr. Larson is a corporate lawyer with 28 years experience in
corporate and business law. Clay Larson was elected President and Board Chairman
in June, 1999 and has served as the Issuer's President and Board Chairman since
that time. Mr. Larson has been the managing director of the Issuer and has
exchanged his management services for 1,200,000 restricted shares of stock in
the Company, and a salary of $6,000 USD per month.
Mr. Larson has over 25 years of "hand's on" experience in business and
business management in addition to his law practice and financial services.
Gordon Colledge, Vice-President and Director
------------------------------------------------
Gordon Colledge is a counselor and instructor in family studies at
Lethbridge Community College. Assigned to work with farm and ranch families, Mr.
Colledge knows the value of cost effective ranching and farming. It was in this
counseling capacity that Mr. Colledge became knowledgeable with the Issuer's
proprietary technology and the positive effect that these technologies have for
small to large farms and ranches. Gordon Colledge earned recognition on the
Premier's Council in Alberta for his support of Alberta families.
Mr. Colledge attended the University of Lethbridge and is currently a
student at the University of Great Falls in Montana. Gordon Colledge has worked
with dozens of towns and communities in Western Canada on community development
projects through WESTARC, an applied research group at the University of
Brandon, Manitoba. Mr. Colledge earned an international Teaching Excellence
Award from the University of Texas at Austin. Mr. Colledge will exchange his
services for restricted common shares of stock of the Issuer in an amount that
has yet to be determined.
John Morrison, Chartered Accountant, Secretary/Treasurer and Director
---------------------------------------------------------------------------
John Morrison is a Chartered Accountant and a graduate of University of
North Dakota (1966), with a degree in accounting. Mr. Morrison has over 30 years
of experience in accounting, financial and operational management. His main
expertise is in accounting, tax and advisory services.
Mr. Morrison was elected Secretary/Treasurer, Chief Financial Officer and
Director of the Issuer in September, 2000 and will exchange his services for
restricted common shares of stock in the Issuer, and a consulting fee of $150.
per hour (Cdn), plus restricted shares of stock of the Issuer. The amount of
shares of stock as compensation has yet to be determined and subject to the
amount of time necessary to implement the Issuer's business plan.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 1, 2000 the Issuer's
outstanding common stock owned of record or beneficially by each Executive
Officer and Director and by each person who owned of record, or was known by
Hybrid Fuels, Inc. to own beneficially, more than 5% of its common stock, and
the shareholdings of all Executive Officers and Directors as a group. Each
person has sole voting and investment power with respect to the shares shown.
Percentage of
Name Shares Owned Shares Owned
Clay Larson, President and Board Chairman
740 Westpoint Court
Kelowna, British Columbia, Canada V1Z 8H4 1,200,000 .0609%
Gordon Colledge
2213 27th Avenue South
Lethbridge, Alberta, Canada T1K 6K4 212,000 .0107%
John Morrison, Chartered Accountant
439 View Crest Road (To Be
Kelowna, British Columbia, Canada V1W 4K1 Determined)
Sir Donald Craig 1,850,000
.0939%
Killalow, Ltd. 2,000,000
.1016%
Auchengrey, Ltd. 2,000,000
.1016%
--------------- ------
ALL EXECUTIVE OFFICERS & DIRECTORS AS A 1,200,000 .0717%
GROUP
--------------- ------
<PAGE>
DESCRIPTION OF SECURITIES
The following description of Hybrid Fuels, Inc.'s capital shares of stock
is a summary of the material terms of its capital shares of stock. This summary
is subject to and qualified in its entirety by Hybrid Fuels, Inc.'s Articles of
Incorporation and Bylaws, which are included as exhibits to the registration
statement of which this prospectus forms a part, and by the applicable
provisions of Nevada law.
The authorized capital stock of Hybrid Fuels, Inc. consists of 50,000,000
shares of Common Stock having a par value of $0.001 per share. The Articles of
Incorporation do not permit cumulative voting for the election of directors, and
shareholders do not have any preemptive rights to purchase shares in any future
issuance of Hybrid Fuels, Inc.'s common stock.
The holders of shares of common stock of Hybrid Fuels, Inc. do not have
cumulative voting rights in connection with the election of the Board of
Directors, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of Hybrid Fuels, Inc.'s directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available therefor, when and as declared by the Board of
Directors. The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. Each outstanding share of common
stock entitles the holder thereof to one vote per share on all matters. The
holders of the shares of common stock have no preemptive or subscription rights.
In the event of liquidation, dissolution or winding up of the affairs of Hybrid
Fuels, Inc., the shareholders are entitled to receive, ratably, the net assets
of Hybrid Fuels, Inc. available to shareholders after payment of all creditors.
All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent that
additional shares of Hybrid Fuels, Inc.'s common stock are issued, the relative
interests of existing shareholders may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
Tolan S. Furusho, Attorney at Law, was employed on a contingent basis in
connection with the registration or offering of Hybrid Fuels, Inc.'s common
stock.
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Hybrid Fuels, Inc.'s Articles of Incorporation, filed herewith as Exhibit
1.1, provide that it will indemnify its officers and directors to the full
extent permitted by Nevada state law. Hybrid Fuels, Inc.'s Bylaws, filed
herewith as Exhibit 1.3, provide that it will indemnify and hold harmless each
person who was, is or is threatened to be made a party to or is otherwise
involved in any threatened proceedings by reason of the fact that he or she is
or was a director or officer of Hybrid Fuels, Inc. or is or was serving at the
request of Hybrid Fuels, Inc. as a director, officer, partner, trustee,
employee, or agent of another entity, against all losses, claims, damages,
liabilities and expenses actually and reasonably incurred or suffered in
connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Hybrid Fuels, Inc. pursuant to the forgoing provisions or otherwise, Hybrid
Fuels, Inc. has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in that
Act and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
General
-------
Hybrid Fuels, Inc. was originally incorporated under the laws of the State
of Florida on February 26, 1960 as Fiberglass Industries Corp. of America, which
the changed its name to Rocket-Atlas Corp., Rocket Industries Corporation, Polo
Investment Corp. of Missouri, Medical Advanced Systems, Inc. The Issuer's
domicile was changed to Nevada as a result of a Plan of Reorganization and
Merger with Polo Equities, Inc. of Nevada, effective as of May 28, 1998 and
filed with the State of Nevada on June 10, 1998. The Issuer is in its early
developmental and promotional stages. To date, Hybrid Fuels, Inc.'s only
activities have been organizational, directed at acquiring its principal asset,
the proprietary technology which resulted from a share exchange with Hybrid
Fuels (Canada), Inc., Hybrid Fuels, USA, Inc., raising its initial capital and
developing its business plan. Hybrid Fuels, Inc. has not commenced commercial
operations. Hybrid Fuels, Inc. has one full time employee and owns no real
estate. Hybrid Fuels, Inc.'s business plan is to market the alternate fuels on a
worldwide basis, commencing in Western Canada. THERE IS NO ASSURANCE THAT THE
PRODUCTS WILL EVER BE COMPLETELY DEVELOPED AND MARKET READY.
Acquisition Of The Proprietary Technology
---------------------------------------------
On May 28, 1998, Hybrid Fuels, Inc. entered into an Agreement to acquire
all of the issued and outstanding shares of Hybrid Fuels, USA, Inc. and 330420
B.C., Ltd., renamed Hybrid Fuels (Canada), Inc., on a share for share exchange.
This acquisition of these two corporations entitled the Issuer to all of the
proprietary technologies developed by the corporations and described herein.
<PAGE>
Marketing Background
---------------------
The business approach used by the Issuer in marketing alternate fuels and
alternate fuels derivative products is to focus on the development of
self-contained, integrated, high-yield farm based production facilities (Micro
Energy Food Factories) across North America and internationally which generate
three primary products:
1. ethanol to combat pollution
2. healthy animals, free of antibiotics, hormones and toxins
3. ancillary greenhouse products by surplus energy from the system.
The Issuer recognized the marketability of such alternative fuels system on
a worldwide basis. Hybrid Fuels, Inc. believes it has the proprietary edge over
competition in the alternate fuels industry, an industry which is in the
developmental stage and relatively new to the marketplace. There appears to be
a significant amount of opposition from the mainstream energy industry which is
well-established.
Regulation Of The Energy Industry.
----------------------------------
In general, existing laws and regulations apply to transactions and other
activity within the energy industry; however, the precise applicability of these
laws and regulations to the alternate fuels and alternate fuels products is
uncertain. The vast majority of such laws were adopted prior to the advent of
the alternate fuels industry and, as a result, do not contemplate or address the
unique issues of the alternate fuels industry or the alternate fuels products
commerce. Nevertheless, numerous federal and state government agencies have
already demonstrated significant activity in promoting consumer protection and
enforcing other regulatory and disclosure statutes within the energy industry.
Additionally, due to the increasing use of the alternate fuels and alternate
fuels products, it is possible that new laws and regulations may be enacted with
respect to alternate fuels and alternate fuels products and covering issues such
as user safety, environmental issues, advertising, pricing, content and quality
of products and services, taxation, intellectual property rights and information
security. The adoption of such laws or regulations and the applicability of
existing laws and regulations to the alternate fuels industry and may impair the
growth of the alternate fuels market and result in a decline in Hybrid Fuels,
Inc,'s sales.
A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes on
the sale of products and services in the energy industry, and certain states
have taken measures to tax alternate fuels-and alternate fuels related products
and systems. Such legislation or other attempts at regulating commerce in the
alternate fuels industry may substantially impair the growth of the alternate
fuels industry and, as a result, adversely affect Hybrid Fuels, Inc.'s
opportunity to derive financial benefit.
<PAGE>
Employees
---------
Hybrid Fuels, Inc. is a development stage company and currently has no
employees except for Clay Larson. Hybrid Fuels, Inc. is currently managed by
Clay Larson, its President and Board Chairman and John Morrison,
Secretary/Treasurer, Chief Financial Officer and Director and the Board of
Directors. Hybrid Fuels, Inc. looks to the Board of Directors and Officers for
their technical and entrepreneurial skills and talents. For a complete
discussion of the Officer and Director's experience, See "Directors and
Executive Officers." Management plans to use consultants, attorneys and
accountants as necessary and does not plan to engage any full-time employees in
the near future. Hybrid Fuels, Inc. may hire marketing employees based on the
projected size of the market and the compensation necessary to retain qualified
sales employees. A portion of any employee compensation likely would include the
right to acquire stock in Hybrid Fuels, Inc., which would dilute the ownership
interest of holders of existing shares of its common stock.
Available Information And Reports To Securities Holders
-------------------------------------------------------------
Hybrid Fuels, Inc. has filed with the Securities and Exchange Commission a
registration statement on Form SB-2 with respect to the common shares of stock
offered by this prospectus. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in the
registration statement or the exhibits and schedules which are part of the
registration statement. For further information with respect to Hybrid Fuels,
Inc. and its common stock, see the registration statement and the exhibits and
schedules thereto. Any document Hybrid Fuels, Inc.'s files may be read and
copied at the Commission's Public Reference Room located at 450 Fifth Street
N.W., Washington D.C. 20549, and the public reference rooms in New York, New
York, and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Hybrid Fuels, Inc.'s
filings with the Commission are also available to the public from the
Commission's website at http://www.sec.gov.
Upon completion of this offering, Hybrid Fuels, Inc. will become subject to
the information and periodic reporting requirements of the Securities Exchange
Act and, accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission referred
to above.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of Hybrid Fuels, Inc.'s financial
condition and results of operations should be read in conjunction with the
Financial Statements and accompanying notes and the other financial information
appearing elsewhere in this Prospectus.
<PAGE>
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. Words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions are used to
identify forward-looking statements. This prospectus also contains
forward-looking statements attributed to certain third parties relating to their
estimates regarding the potential markets for Hybrid Fuels, Inc.'s products.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Hybrid Fuels,
Inc.'s actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by Hybrid
Fuels, Inc. described in "Risk Factors" and elsewhere in this prospectus. The
following discussion and analysis should be read in conjunction with Hybrid
Fuels, Inc.'s Financial Statements and Notes thereto and other financial
information included elsewhere in this prospectus.
Results Of Operations
-----------------------
During the period from May, 1998 through October 31, 2000, Hybrid Fuels,
Inc. has engaged in no significant operations other than organizational
activities, the acquisition of the proprietary technology through the
acquisition of Hybrid Fuels USA, Inc. and 330420 B.C., Ltd., renamed Hybrid
Fuels (Canada), Inc. on a share for share exchange and the preparation for
registration of its securities under the Securities Act of 1933, as amended. No
revenues were received by Hybrid Fuels, Inc. during this period.
For the current fiscal year, Hybrid Fuels, Inc. anticipates incurring a
loss as a result of organizational expenses, expenses associated with
registration under the Securities Act of 1933, and expenses associated with
setting up a company structure to begin implementing its business plan. Hybrid
Fuels, Inc. anticipates that until these procedures are completed, it will not
generate revenues, and may continue to operate at a loss thereafter, depending
upon the performance of the business.
Hybrid Fuels, Inc.'s business plan is to complete the development of an
alternate fuels plant, using the proprietary technology acquired by way of the
acquisition of Hybrid Fuels, USA, Inc. and 330420 B.C., Ltd. renamed Hybrid
Fuels (Canada), Inc., and to operate its business through these two
subsidiaries. The Issuer also intends to procure further equity financing and/or
a loan to complete the purchase of the beef processing plant, land, buildings
and equipment from Mega Holdings, Ltd. Hybrid Fuels, Inc. will then determine
the feasibility of marketing the alternate fuels and alternate fuels systems and
products in various markets, or to center its activities on the beef processing
business with the alternate fuels being part of that operation.
Liquidity And Capital Resources
----------------------------------
Hybrid Fuels, Inc. remains in the development stage and, since inception,
has experienced no significant change in liquidity or capital resources.
Consequently, Hybrid Fuels, Inc.'s balance sheet as of June 30, 2000, reflects
total assets of $321,046, in the form of the acquisition of two corporations
which owned the proprietary technologies, a deposit on the beef processing
plant, land, buildings and equipment and capitalized organizational costs.
<PAGE>
Hybrid Fuels, Inc. expects to carry out its plan of business as discussed
above. Hybrid Fuels, Inc. has no immediate expenses, however the Issuer does
have accounts payable of $226,000. Mr. Clay Larson and the Officers and Board of
Directors will serve in their capacities with deferred compensation until
financial resources are available and a market is developed for the alternate
fuels and the Issuer's products.
In addition, Hybrid Fuels, Inc. may engage in a combination with another
business. Hybrid Fuels, Inc. cannot predict the extent to which its liquidity
and capital resources will be diminished prior to the consummation of a business
combination or whether its capital will be further depleted by the operating
losses (if any) of the business entity with which Hybrid Fuels, Inc. may
eventually combine, if ever. Hybrid Fuels, Inc. has an agreement to purchase a
beef processing plant, land, buildings and equipment for $3,000,000 Canadian
Dollars. Hybrid Fuels, Inc. has engaged in discussions concerning potential
business combinations, but has not entered into any agreement for such a
combination.
Hybrid Fuels, Inc. will need additional capital to carry out its business
plan or to engage in a business combination if the majority of the shares
offered by way of this Prospectus are not sold. No commitments to provide
additional funds have been made by management or other shareholders.
Accordingly, there can be no assurance that any additional funds will be
available on terms acceptable to Hybrid Fuels, Inc. or at all.
DESCRIPTION OF PROPERTY
Hybrid Fuels, Inc. currently maintains office space in Kelowna, British
Columbia, Canada and Calgary, Alberta. The Issuer does not pay rent, at either
location, at this time and the office space in Calgary is shared with other
businesses. The Kelowna office is paid by a major shareholder, Sir Donald
Craig. The Calgary office is supplied at no cost to the company by a group of
potential customers of the Issuer's technologies. The Issuer does not intend to
pay rent until this offering is completed. The Canadian addresses are:
#214 - 2791 Highway 97 North
Kelowna, British Columbia, Canada V1X 4J8
#302 - 855 8th Avenue SW
Calgary, Alberta, Canada T2P 3P1
Hybrid Fuels, Inc. does not believe that it will need to obtain additional
office space at any time in the foreseeable future until its business plan is
more fully implemented.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of
Hybrid Fuels, Inc., and no owner of five percent or more of Hybrid Fuels, Inc.'s
outstanding shares or any member of their immediate family has entered into or
proposed any transaction in which the amount involved exceeds $10,000.
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is a limited established public trading market which exists on the
National Quotations Bureau's "Pink Sheets" for Hybrid Fuels, Inc.'s securities.
Hybrid Fuels, Inc. has no common equity subject to outstanding purchase options
or warrants. Hybrid Fuels, Inc. has no securities convertible into its common
equity. There is common equity that could be sold pursuant to Rule 144 under the
Securities Act. Hybrid Fuels, Inc. has not agreed to register any existing
securities under the Securities Act for sale by shareholders. Except for this
offering, there is no common equity that is being, or has been publicly proposed
to be, publicly offered by Hybrid Fuels, Inc
As of November, 1, 2000, there were 19,687,620 shares of common stock
outstanding, held by 253 shareholder of record. Upon effectiveness of the
registration statement that includes this prospectus, a portion of Hybrid Fuels,
Inc.'s outstanding shares will be eligible for sale.
To date has not paid any dividends on its common stock and does not expect
to declare or pay any dividends on its common stock in the foreseeable future.
Payment of any dividends will depend upon Hybrid Fuels, Inc.'s future earnings,
if any, its financial condition, and other factors as deemed relevant by the
Board of Directors.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Hybrid Fuels,
Inc. Although there is no current plan in existence, it is possible that Hybrid
Fuels, Inc. will adopt a plan to pay or accrue compensation to its officers and
directors for services related to the implementation of Hybrid Fuels, Inc.'s
business plan. Hybrid Fuels, Inc. has no stock option, retirement, incentive,
defined benefit, actuarial, pension or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future. Hybrid Fuels,
Inc. has employment contracts with key personnel but has no compensatory plan or
arrangement with any executive officer of Hybrid Fuels, Inc. The Officers and
Directors currently do not receive any cash compensation from Hybrid Fuels, Inc.
and for their services as a members of the Board of Directors. There is no
compensation committee, and no compensation policies have been adopted. See
"Certain Relationships and Related Transactions."
<PAGE>
FINANCIAL STATEMENTS
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
-------------------------------------------------------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Hybrid Fuels, Inc.'s Articles of Incorporation provide that it must
indemnify its directors and officers to the fullest extent permitted under
Nevada law against all liabilities incurred by reason of the fact that the
person is or was a director or officer of Hybrid Fuels, Inc. or a fiduciary of
an employee benefit plan, or is or was serving at the request of Hybrid Fuels,
Inc. as a director or officer, or fiduciary of an employee benefit plan, of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
The effect of these provisions is potentially to indemnify Hybrid Fuels,
Inc.s Directors and Officers from all costs and expenses of liability incurred
by them in connection with any action, suit or proceeding in which they are
involved by reason of their affiliation with Hybrid Fuels, Inc. Pursuant to
Nevada law, a corporation may indemnify a director, provided that such indemnity
shall not apply on account of: (a) acts or omissions of the director finally
adjudged to be intentional misconduct or a knowing violation of law; (b)
unlawful distributions; or (c) any transaction with respect to which it was
finally adjudged that such director personally received a benefit in money,
property, or services to which the director was not legally entitled.
The Bylaws of Hybrid Fuels, Inc., filed as Exhibit 1.3, provide that it
will indemnify its officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Hybrid Fuels,
Inc., absent a finding of negligence or misconduct in office. Hybrid Fuels,
Inc.'s Bylaws also permit it to maintain insurance on behalf of its officers,
directors, employees and agents against any liability asserted against and
incurred by that person whether or not Hybrid Fuels, Inc. has the power to
indemnify such person against liability for any of those acts.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The securities are being registered for the account of selling
shareholders, and all of the following expenses will be borne by such
shareholders. The amounts set forth are estimates except for the SEC
registration fee:
SEC registration fee. . . . . . . . . . . . . . . . . . . . . .$264.00
Printing and engraving expenses. . . . . . . . . . . . . . . . 750.00
Attorneys' fees and expenses . . . . . . . . . . . . . . . .$5,000.00
Accountants' fees and expenses . . . . . . . . . . . . . .$15,0000.00
Transfer agent's and registrar's fees and expenses. . . .$1,200.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . .$1,500.00
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,714.00
The Registrant will bear all expenses shown above.
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of Hybrid
Fuels, Inc.'s securities without registration since its formation. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
In June, 2000, 1,500,000 common shares of stock were sold at a price of
$.10 (ten cents) per share under Rule 504D Exemption provision of the Securities
Act of 1933, as amended and was registered in the State of Colorado.
EXHIBITS
The following exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
1.0 Certificate of Incorporation
1.1 Articles of Incorporation
1.2 Articles of Merger
1.3 Bylaws
2.1 Specimen Stock Certificate
2.2 Stock Subscription Agreement
3.1 Opinion re: legality
3.2 Consent of Legal Counsel
3.3 Consent of Independent Auditors
4.1 Financial Statements
<PAGE>
UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the Offering of the securities of the securities at that time to be
the initial bona fide Offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.
(4) Provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriters to permit prompt delivery to each
purchaser.
(5) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this registration statement as of the time
the Commission declared it effective.
(6) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and the offering of the securities at that time as the initial bona fide
offering of those securities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kelowna, British Columbia, Canada, on November 1,
2000.
HYBRID FUELS, INC.
By:
------------------------------------------
Clay Larson, President and Board Chairman
In accordance with the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates stated.
November 1, 2000
---------------------------------------------
Clay Larson President, Board Chairman
---------------------------------------------
John Morrison Secretary, Director
<PAGE>
