HYBRID FUELS INC.
(Formerly Polo Equities, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
June 30. 2000, 1999 AND 1998
WILLIAM J BUTCHER, CPA P.S.
----------Certified Public accountant-----------
1620 3rd Street
Marysville, WA 98205
Phone (360) 658-8347
FAX - (360) 658-1165
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TABLE OF CONTENTS
Accountant's Report 1
Financial Statements
Balance Sheet 2
Statement's of Loss and Accumulated Deficit 3
Statements of Cash Flows 4
Statements of Changes in Stockholders' Equity 5
Notes to Financial Statements 6-8
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<CAPTION>
Hybrid Fuels, Inc.
(Formerly Polo Equities, Inc.)
(A Development Stage Company)
Statement of Financial Position
for the years ended June 30, 2000, 1999 and 1998
ASSETS
------
CURRENT ASSETS June 30, 2000 June 30, 1999 June 30, 1998
-------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Cash $ 485 $ 0 $ 56,976
--------------- --------------- ---------------
Total Current Assets 485 0 56,976
OTHER ASSETS
------------
Deposit on Plant (Note 5) 170,561 0 0
Stockholder Note Receivable (Note 6) 150,000 0 0
--------------- --------------- ---------------
Total Other Assets 320,561 0 0
TOTAL ASSETS 321,046 0 56,976
============== =============== ================
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
CURRENT LIABILITIES
-------------------
Accounts Payable 39 0 0
Stockholder Payable (Note 7) 266,144 293,183 150,580
--------------- --------------- ---------------
Total Current Liabilities 266,144 293,183 150,580
STOCKHOLDERS' EQUITY
--------------------
Common Stock 001 par value
50,000,000 shares authorized; is, 103,420
shares issued and outstanding at June 30,
2000,16,923,600 shares issued and
outstanding at June 30, 1999, 15,000,000
shares issued and outstanding at June 30,
1998. (Note 8) 18,103 16,924 15,000
Additional Paid in Capital 362,074 15,074 3,398
Deficit accumulated. (325,275) (325,181) (112,002)
--------------- --------------- ---------------
Total Stockholders' Equity 54,902 (293,183) (93,604)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 321,046 $ 0 $ 56,976
============== =============== ================
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The accompanying notes are an integral part of these financial statements.
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<CAPTION>
Hybrid Fuels, Inc
(Formerly Polo Equities, Inc.)
(A Development Stage Company)
Statement of Losses and Accumulated Deficit
for the years ended June 30, 2000, 1999 and 1998 and Inception to June 30, 2000
Inception
February 26, 1960
through
June 30, 2000 June 30, 1999 June 30, 1999 June 30, 2000
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
REVENUE $ $ $ $
Sales 0 0 0 0
Cost of Sales 0 0 0 0
--------------- --------------- --------------- -----------------
Gross Profit 0 0 0 0
EXPENSES
Accounting Fees 0 13,650 0 13,650
Advertising 0 147 0 147
Automobile 0 0 545 545
Banking 55 119 261 435
Commissions 0 3,307 0 3,307
Contract Labor 0 1,961 0 1,961
Executive Compensation 0 62,818 55,757 118,575
Filing & Registration fees 0 0 5.000 5,000
General & Administration 0 0 0 18,398
Insurance 0 450 2,635 3,085
Legal Fees 0 8,500 0 8,500
License & Permits 0 125 0 125
Marketing 0 2,664 2,923 5,587
Miscellaneous 0 749 400 1,149
Office Expense 39 3.114 468 3,621
Postage & Delivery 0 6,241 431 6,671
Printing & Reproduction 0 11,004 6,566 17,570
Professional Fees 0 70,755 12,459 83,214
Rent 0 13,457 1,793 15,249
Security 0 1,142 106 1,248
Telephone 0 11,694 1,746 13,440
Travel & Entertainment 0 1,284 2,515 3,799
--------------- --------------- --------------- -----------------
Total operating Expenses 94 213,180 93,604 325,275
--------------- --------------- --------------- -----------------
Net (Loss) (94) (213,180) (93,604) $ (325,275)
=================
Accumulated Deficit beginning of period (325,181) (112,002) (18,398)
Accumulated Deficit end of period $ (325,275) $ 325,181 $ (112,002)
=============== =============== ===============
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The accompanying Dotes arc an integral part of these financial statements.
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<CAPTION>
Hybrid Fuels, Inc.
(Formerly Polo Equities. Inc.)
(A Development Stage Company)
Statement of Cash Flows for the
years ended June 30, 2000, 1999, arid 1998 and Inception to June 30, 2000
Inception
February 26, 1960
through
June 30, 2000 June 30, 1999 June 30, 1998 June 30, 2000
------------------ ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
CASH FLOWS PROM OPERATING ACTIVITIES (94) $ (213,180) $ (93,604) $ (325,275)
Net Loss
Adjustments to reconcile net loss to cash
used in operating activities
Changes in assets and liabilities
Accounts Payable 39 0 0 39
Net cash used in operating activities (55) (213,180) (93.604) (325,236)
CASH FLOWS FROM IN VESTING ACTIVITIES
Loan to Blue Mountain 61 0 0 (170,56l)
Net cash provided (used) by investing activities (170,561) 0 0 (170,561)
------------------ ---------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder Note Receivable (150,000) 0 0 (150,000)
Shareholder Loans Payable (27,078) 142,603 150,580 277,602
Sale of common stock 348,179 13.600 0 368,680
------------------ ---------------- --------------- ---------------
Net cash provided (used) by financing activities 171,101 156,203 150,580 496,282
NET INCREASE (DECREASE) IN CASH 485 (56,976) 56,976 485
CASH AT BEGINNING OF PERIOD 0 56,976 0 0
------------------ ---------------- --------------- ---------------
CASH AT END OF PERIOD $ 485 0 56,976 $ 485
================== ================ =============== ===============
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The accompanying notes are an integral part of these financial statements.
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<CAPTION>
Hybrid Fuels, Inc.
(Formerly Polo Equities, mc,)
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
for the years ended June 30, 2000, 1999 and 1998
Common Stock Deficit
--------------------------- Accumulated
Additional during the
Par Value Paid-in development
Shares Amount Capital stage Total
------------- ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Balance at June 30,1997 $ 15,000,000 15,000 3,398 (18,398) 0
============ =========== ============ ========= ==========
Net loss June 30. 1997 (93,604) (93,604)
--------- ---------
Balance at June 30, 1998 15,000.000 15,000 3,398 (112,002) (93,604)
============ =========== ============ ========= ==========
Issuance of 1,000,000 shares common stock on
Aug 4,1998, (Note 8) 1,000,000 1,000 (1,000) 0 0
Issuance of 2,400 shares common stock on Sept.
19, 1998 for cash. 2,400 3 3,597 0 3600
Issuance of 21,200 shares common stock on Nov
24, 1998 for cash 21,200 21 9,979 0 10,000
Issuance of 900,000 shares common stock on
March 23, 1999, (Note 8) 900,000 900 (900) 0 0
Net loss June 30. 1999 0 (213,180) (213,180)
------------- ----------- ------------ --------- ---------
Balance at June 30, 1999 16,923,600 16,924 15,074 (325,181) (293,183)
============ =========== ============ ========= ==========
Issuance of 5,000 shares common stock on Sept 1,
1999 for cash 5,000 5 2,495 0 2,500
Issuance of 15,000 shares common stock on Oct 8,
1999 for cash 15,000 15 7,485 0 7,500
Cancellation of August 4, 1998 1,000,000 share
issuance and March 23, 1999 900,000 share
issuance (Note 8) (1,900,000) (1,900) 1,900 0 0
Issuance of 29,050 shares common stock on Jan 6,
2000 for cash 29,050 29 16,971 0 1,700
Issuance of 17.730 shares common stock on Feb 7,
2000 for cash 17,730 18 12,662 0 12,680
Issuance of 13.040 shams common stock on March
17, 2000 for cash 13,040 13 8,487 0 8,500
Issuance of 1,500,000 shares common stock on
February 17. 2000 pursuant to subscription
agreement 1,500,000 1,500 148,500 0 150,000
Issuance of 1,500,000 shares common stock on
February 17, 2000 pursuant to subscription
agreement 1,500,000 1,500 148,500 0 150,000
Net loss June 30, 2000 - - 0 (94) (94)
------------- ----------- ------------ --------- ---------
Balance at June 30,2000 18,103,420 18,103 362,074 325,275 54,902
============ =========== ============ ========= ==========
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The accompanying notes are an integral part of these financial statements.
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HYBRID FUELS, INC.
(Formerly Polo Equities, Inc.)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1. THE COMPANY
----------------------
The Company was originally incorporated in the state of Florida on February 16,
1960 as Fiberglass industries Corporation of America. On August 29, 1966, the
Company changed its name to Rocket-Atlas Corp. and again changed its name on
November 21, 1966 to Rocket Industries, Corporation. On January 27, 1984, the
Company changed it's name to Polo Investment Corp. of Missouri, Inc. On August
2, 1985 the name was changed to Medical Advanced Systems, Inc. and on June 3,
1993 the Company changed its name to Polo Equities, Inc
In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo Equities, Inc., (a Nevada corporation), (Polo) with authorized capital of
50,000,000 shares of $.001 par value common stock. The Company then merged with
Polo pursuant to Articles of Merger adopted May 28, 1998 and filed with the
State of Nevada on June 10, 1998, which changed its domicile to Nevada.
On May 29, 1998 the Company changed its name to Hybrid Fuels, Inc., the current
name.
In May of 1998, in a stock for stock exchange, the Company acquired Hybrid
Fuels, USA, Inc. and 330420 B.C. Ltd., which changed its name to Hybrid Fuels
(Canada) Inc., As part of the acquisition, the Company acquired the technology
necessary for the Company's current operations. The Company operates through its
wholly owned subsidiaries, Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc.
Prior to the acquisition of Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc. the Company had no significant operations and was seeking a business
opportunity.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------
This summary of significant accounting policies of Hybrid Fuels, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
NATURE OF OPERATIONS
----------------------
See The Company above
CASH AND CASH EQUIVALENTS
----------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
PROPERTY AND EQUIPMENT
------------------------
Property and equipment are stated at the lower of cost or fair market value.
Depreciation is computed for financial statement purposes as well as for federal
income tax purposes using the MACRS (Modified Accelerated Cost Recovery System)
method of depreciation. Equipment is depreciated over five years. Software is
amortized over five years.
INCOME TAXES
-------------
The Company has not filed any tax returns. It is anticipated that if tax returns
were filed, the company would have net operating losses. The current deficit of
$325,275 at June 30, 2000 would potentially create a similar net operating loss,
which could begin expiring for tax purposes in 2004.
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HYBRID FUELS, INC.
(Formerly Polo Equities, Inc.)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
USE OF ESTIMATES
------------------
The preparation of financial statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
FOREIGN EXCHANGE
-----------------
Some financial activity was based on Canadian dollars and translated on June 30.
2000 using the rate of (C$/US$) 1.468 or a multiplier of .6812.
NOTE 3. GOING CONCERN
------------------------
Because of a deficiency in working capital and significant operating losses,
there is doubt about the ability of the Company to continue in existence unless
additional working capital is obtained. The Company currently has plans to raise
sufficient working capital through equity financing and through the acquisition
of companies having sufficient assets and cash flow to enable the Company to be
self-sufficient and profitable. The Company has acquired an option to purchase a
Beef Packing Plant which it anticipates will begin operations about the
beginning of November, 2000. See NOTE 5
NOTE 4. COMPANY FACILITIES
-----------------------------
The Company currently uses office space at #214-2791 Hwy 97 N, Kelowna, B.C.,
VIX4J8, which is provided by a shareholder at no cost to the Company. The
President also maintains an office in his home at no cost to the Company.
NOTE 5. DEPOSIT
-----------------
The Company deposited $250,000 Canadian Dollars ($170,561 USD), to Mega
Holdings, Ltd., pursuant to an agreement to purchase a beef processing plant
owned by Mega Holdings, Ltd. The Company has agreed to purchase the beef
processing plant facility including land, buildings and equipment for $3,000,000
Canadian Dollars. The property, buildings and related equipment were appraised
in 1996 at a replacement value of $4,990,000 Canadian Dollars, during a time in
which the plant was dormant and in need of repair. The purchase agreement
requires an additional payment of $150,000 Canadian Dollars within 45 days of
acceptance, which made it due on June 24, 2000, the parties have agreed to
extend the deadline for the payment. Upon completion of the purchase this beef
processing plant will be operated by Blue Mountain Packers, Ltd., The Company
intends to acquire the issued and outstanding shares of stock of Blue Mountain
Packers, Ltd. and operate this corporation as a wholly owned subsidiary. Blue
Mountain Packers, Ltd. recently received certification by the Canadian Food
Inspection Agency of the Government of Canada, Department of Agriculture for the
processing of Canadian beef.
NOTE 6. STOCKHOLDERS LOAN RECEIVABLE
----------------------------------------
On February 17, 2000 the Company executed a subscription agreement and note
whereby the Company would receive $150,000 for 1,500,000 shares common stock.
The note was interest free and is to be received within one (1) week of the
Company being re-listed on the OTC:BB or other suitable exchange.
NOTE 7. NOTE RECEIVABLE BLUE MOUNTAIN
------------------------------------------
On September 15, 2000, the Company issued a note to Douglas Dickie dba Deelay
Holdings for $33,638 USD due and payable on or before September 15, 2001 plus
interest in the amount of $2,691 USD and passed this loan through to Blue
Mountain Pakers Ltd., which executed a note at the same terms.
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HYBRID FUELS, INC.
(Formerly Polo Equities, Inc.)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 8. STOCKHOLDERS LOAN PAYABLE
-------------------------------------
Advanced by the controlling shareholder of the Company; The money was advanced
to the Company with no specific term of repayment.
NOTE 9. DIRECTOR PAYABLE
---------------------------
The President and Director Clay Larson, has paid office and related expenses for
the Company, from his personal funds in the amount of $2,187 USD. The Company
has agreed to reimburse him for these expenses.
NOTE 10. STOCKHOLDERS EQUITY
-------------------------------
The issuer was originally incorporated in Florida as Fiberglass Industries Corp
of America in February, 1960 with authorized capital of 500,000 shares with a
par value of $.10 per share.
In October, 1964, the Company changed its authorized capital to 1,500,000 shares
of common stock with a par value of $.10 per share
On November 21, 1966, the Company changed its name to Rocket Industries,
Corporation. and at that time authorized capital was increased to 3,000,000
shares and par value was changed to $.05 per share.
On January 27, 1984, the Company changed its name to Polo Investment Corp of
Missouri Inc. and increased its authorized capital to 30,000,000 shares.
On June 3, 1993, the Company changed its name to Polo Equities, Inc. and
increased its authorized capital to 50,000,000 shares common stock with a par
value of $.001 per share.
In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo Equities, Inc., ( a Nevada corporation), with authorized capital of
50,000,000 shares of $.001 par value common stock. The Company then merged with
Polo pursuant to Articles of Merger adopted May 28, 1998 and filed with the
State of Nevada on June 10, 1998, which changed its domicile to Nevada.
On May 29, 1998, the Company changed its name to Hybrid Fuels, Inc., the current
name.
In accordance with the terms of an acquisition agreement, 12,000,000 of the
15,000,000 shares outstanding at the time, were canceled and 12,000,000 treasury
shares were issued in a share for share exchange by which the issuer became the
owner of all of the issued and outstanding shares of Hybrid Fuels, USA Inc. and
330420 B.C. LTD. That Company changed it's name to Hybrid Fuels (Canada) Inc.
By acquiring control of that company, this Company gained control of the
intellectual property.
On August 4, 1998, the Company 's Board of Directors authorized the issuance of
1,000,000 shares common stock to individuals without consideration. On March
23, 1999, the Company's Board of Directors issued an additional 900,000 shares
common stock, also without consideration. On August 21, 1999, the Board of
Directors resolved that share certificates numbered 10166 through 10174 totaling
1,000,000 shares common stock and certificates numbered 10212 through 10220
totaling 900,00 shares common stock were issued without adequate consideration
being paid to the Company and were therefore not fully paid and non-assessable.
The Company cancelled the share certificates and indemnified the transfer agent,
Standard Registrar and Transfer Company Inc., for any costs or liability it may
incur in any way arising out of the cancellation of such shares and the transfer
agent removed the 1,900,000 shares from the stockholder list effectively
reversing the issuance. Six of the canceled certificates, totaling 550,000
shares, have been endorsed and returned to the Company for cancellation.
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HYBRID FUELS, INC.
(Formerly Polo Equities, Inc.)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 11. U.S.A. SECURITIES AND EXCHANGE COMMISSION
------------------------------------------------------
On November 7, 2000, the Company filled a Form SB-2 Registration Statement under
The Securities Act of 1933 with the Securities and Exchange Commission.
Registration File Number 333-49424. The Company has been advised by the
Securities and Exchange Commission that the June 30, 2000, Financial Statements
needed to be updated and resubmitted as an amended submission.
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