As filed with the Securities and Exchange Commission on December 19, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM SB-2/A
AMENDMENT NUMBER THREE
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.
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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 - [December 31, 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.,
(Hybrid) and there is a public market which currently exists on the OTC Pink
Sheets for shares of Hybrid's common stock. The price for the stock in this
offering will be fixed. Hybrid has operating losses to date and is still in the
development stage. There may not be sufficient capital for Hybrid 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'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
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 10.
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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
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Hybrid Fuels, Inc. Is In Its Earliest Stages of
Development and May Never Become Profitable. . . . . . . . . . . . . . . .11
Conflicts of Interest May Arise Between Companies
Managed by Common Officers and Directors . . . . . . . . . . . . . . . . .11
Hybrid Fuels, Inc.'s Agreement with Blue Mountain Packers, Ltd.
As A "Non Arms Length" Transaction. . . . . . . . . . . . . . . . . . . . 11
Hybrid Fuels, Inc. May Not Be Able To Obtain Further Financing . . . . . .12
Dependence on Use of Outside Factors for Product Sales . . . . . . . . . .12
Dependence on Government Regulations. . . . . . . . . . . . . . . . . . . 12
Dependence on and Other Technology and Supplier . . . . . . . . . . . . .13
Government Regulation of Agriculture and Fuels Could Adversely
Affect Hybrid Fuels, Inc.'s Profitability. . . . . . . . . . . . . . . . .13
Government Regulation of Products Could Adversely Affect
Viability of Hybrid Fuels, Inc.'s Sales and Profitability. . . . . . . . .13
Heavy Dependence on Key Management Which Could
Affect the Business of Hybrid Fuels, Inc.'s Business And Could
Result in Delays or Business Failure . . . . . . . . . . . . . . . . . . .14
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Heavy Dependence on Outside Management Consultants and
Technical Consultants in the Issuer's Line of Business . . . . . . . . . .15
Product Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Effect of Unfavorable Publicity. . . . . . . . . . . . . . . . . . . . . .16
Ability to Manage Growth . . . . . . . . . . . . . . . . . . . . . . . . .16
Absence of Patent Protection . . . . . . . . . . . . . . . . . . . . . . .16
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
No Assurance of Future Industry Growth . . . . . . . . . . . . . . . . . .17
Potential Business Combinations Dilute Stockholder Value . . . . . . . . .17
Potential Business Combinations Could Be Difficult to
Integrate and Disrupt Business . . . . . . . . . . . . . . . . . . . . . .18
Hybrid Fuels, Inc. May Enter Into New Line of
Business Which Investors Could Not Evaluate. . . . . . . . . . . . . . . .18
Hybrid Fuels, Inc. Has Minimal Operating History and
Financial Results Are Uncertain. . . . . . . . . . . . . . . . . . . . . .18
Hybrid Fuels, Inc. May Need Additional Financing
Which May Not Be Available or Which May Dilute the
Ownership Interests of Investors . . . . . . . . . . . . . . . . . . . . .19
Hybrid Fuels, Inc.'s Common Stock Has a Minimal Trading History
And Prices May Decline After the Offering. . . . . . . . . . . . . . . . .19
Investors May Face Significant Restrictions on the Resale of
Hybrid Fuels, Inc.'s Stock Due to State Blue Sky Laws. . . . . . . . . . .20
Investors May Face Significant Restrictions on the Resale
Of Hybrid Fuels, Inc.'s Stock Due to Federal Penny
Stock Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Determination of Offering Price. . . . . . . . . . . . . . . . . . . . . . .22
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
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Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . .22
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Directors, Executive Officers, Promoters and Control Persons . . . . . . . .23
Security Ownership of Certain Beneficial Owners and Management . . . . . . .25
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . .26
Interest of Named Experts and Counsel. . . . . . . . . . . . . . . . . . . .26
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . .27
Description of Business. . . . . . . . . . . . . . . . . . . . . . . . . . .27
Management's Discussion and Analysis or Plan of Operation. . . . . . . . . .29
Description of Property. . . . . . . . . . . . . . . . . . . . . . . . . . .31
Certain Relationships and Related Transactions . . . . . . . . . . . . . . .31
Market for Common Equity and Related Stockholder Matters . . . . . . . . . .32
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Changes In and Disagreements With Accountants on Accounting
And Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .33
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers. . . . . . . . . . . . . . . . . .33
Other Expenses of Issuance and Distribution. . . . . . . . . . . . . . . . .33
Recent Sales of Unregistered Securities. . . . . . . . . . . . . . . . . . .34
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
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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., (Hybrid) 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 small scale, farm
ethanol facilities which involves a number proprietary technologies exclusively
owned by Hybrid 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.
Hybrid has recently deposited $170,561.00 on a beef processing plant
pursuant to an agreement to purchase the beef processing plant in Salmon Arm,
British Columbia, Canada, owned by Mega Holdings, Ltd. Hybrid 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. Hybrid has not completed the
transaction to purchase the facility, land, buildings equipment, but intends to
do so in accordance with the purchase agreement. If Hybrid completes this
purchase, the beef processing plant will be operated by Blue Mountain Packers,
Ltd., a British Columbia corporation. Hybrid intends that Blue Mountain Packers,
Ltd. will be a wholly owned subsidiary of Hybrid 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.
Hybrid 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 acquired a number of proprietary technologies including:
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(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 root feeding system mainly for hydroponic greenhouse use for
tomatoes which results in greatly increased fruit yields.
Hybrid 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 Hybrid sell all of the common shares of stock by way of this
registration statement and proposed financing, then Hybrid will devote a
substantial portion of its business efforts to obtain further financing and/or
government grants and/or government financing in order to complete the purchase
of the beef processing facilities, land, buildings and equipment currently owned
by Mega Holdings, Ltd.
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BACKGROUND ON HYBRID FUELS, INC. AND DEVELOPMENT OF THE TECHNOLOGIES
Hybrid is a development stage company which originally incorporated in the
state of Florida on February 16, 1960. In May, 1998, Hybrid changed its domicile
to the state of Nevada and its corporate name to Hybrid Fuels, Inc. Hybrid
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., Hybrid became entitled
to full ownership and use of all of the intellectual property including the
trade secrets and proprietary technology as described herein,
Hybrid 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 Hybrid so that Hybrid 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. Hybrid 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. Hybrid 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
Hybrid believes that there is a large worldwide market for Hybrid'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 to be provided by Hybrid
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..
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Hybrid 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's common shares of stock are currently trading on the
National Quotations Bureau's "Pink Sheets" and Hybrid will apply to list its
common shares of stock on 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's shares of common stock
involves a high degree of risk. Any of the following risks could adversely
affect Hybrid'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's actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by Hybrid described in "Risk Factors" and elsewhere in this
prospectus.
RISKS RELATED TO HYBRID FUELS, INC.'S BUSINESS
Hybrid's successful implementation of its business plan is dependent on a
number of factors that should be considered by prospective investors. Hybrid has
only recently acquired its principal asset, that of proprietary technologies. It
is a new business for this company and Hybrid 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 will provide a return on investment
in the future.
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Hybrid Fuels, Inc. Is In Its Earliest Stages Of Development And May Never
---------------------------------------------------------------------------
Become Profitable
-----------------
Hybrid 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 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's success is dependent on a
number of factors which should be considered by prospective investors. Hybrid
has only recently acquired its principal assets in the form of proprietary
technologies. It 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 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 Hybrid, has projected
that Hybrid 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 Hybrid. 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 Hybrid.
Although the share structure of Blue Mountain Packers, Ltd. has yet to be
determined, Hybrid intends that Blue Mountain Packers, Ltd. will be a wholly
owned subsidiary and Hybrid may have similar officers and directors.
Hybrid Fuels, Inc.'s Agreement With Blue Mountain Packers, Ltd As A "Non
---------------------------------------------------------------------------
Arms Length" Transaction
-------------------------
Hybrid 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 Hybrid. If the acquisition occurs, Blue Mountain
Packers, Ltd. will have the same Secretary and Chief Financial Officer as
Hybrid. The proposed Secretary and Chief Financial Officer is John Morrison,
Chartered Accountant. Therefore, any and all transactions between Hybrid and
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.
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Hybrid Fuels, Inc. May Not Be Able To Obtain Further Financing
------------------------------------------------------------------------
Hybrid cannot complete its business plan even if all of its common shares
of stock are sold by way of this financing and registration statement. Hybrid
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.
Hybrid 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 potential primary operations entity for Hybrid
when and if Hybrid can complete the purchase of the beef processing plant, land,
buildings and equipment. FURTHER, HYBRID NEEDS ADDITIONAL DEVELOPMENT CAPITAL TO
ALLOW THE COMPANY TO IMPLEMENT ITS BUSINESS OPERATIONS. Similarly, any dispute
between Hybrid and Mega Holdings, Ltd. and/or Blue Mountain Packers, Ltd. (or
their successors, if any) could impair Hybrid's ability to fully implement its
business plan and purchase rights. Any termination or impairment of Hybrid'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
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 may not achieve the customers
necessary for sustaining revenues and achieving profitable operations. Hybrid'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 derivatives 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. Alternate fuels or alternate
fuel derivative products may not be a viable long term commercial business.
Hybrid will need to overcome the commercial and industrial acceptance of
petroleum based fuels in the worldwide marketplace. There can be no assurances
that Hybrid will be able to overcome the acceptance of petroleum based fuels in
the marketplace and sell Hybrid'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's future
business will depend, in part, on Hybrid's use of leading technologies to
provide products to its customer base. There can be no assurance that Hybrid
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 Hybrid could be adversely
affected if the government subjects the alternate fuel industry to testing and
other restrictions.
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Hybrid's business operations also depends on continued use and expansion of
the alternate fuel and alternate fuel derivative products. Hybrid 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'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
Hybrid's activity, security, reliability, costs, accessibility, and quality of
operations. Hybrid's technology and operations may be vulnerable to governmental
rules and regulations pertaining to the alternate fuel industry over which
Hybrid 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.
Dependence On Other Technology Or Suppliers
------------------------------------------------
Hybrid is not primarily dependent upon other technology or specialized
suppliers to operate its business. Hybrid does rely upon normal channels of
suppliers to operate its business, The primary source of raw materials needed to
operate Hybrid's business is mainly comprised of materials which are readily
available, however the continuing availability of such supplies cannot be
determined. Management of Hybrid 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. Hybrid believes that it is not
primarily dependent upon any particular supplier and therefore would not be
limited in its ability to expand to new markets. However, the dependency on
general supplier is 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'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.
If one or more states or any foreign country successfully asserts that Hybrid
should be regulated on its products, it could also prevent Hybrid's business
from growing as projected or expose it to unanticipated liabilities.
13
<PAGE>
Any new regulation, testing requirement or taxation of Hybrid's products or
systems could damage Hybrid'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'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'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'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 markets and sells its
systems and products. This could result in restrictions on the technology, the
products and systems that Hybrid 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 Hybrid could be
affected by future legislation and regulation. Additional expense to the
Hybrid's systems and product(s) could result in a decrease in its stock price.
Hybrid'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. Hybrid 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's President and Board Chairman. Mr.
John Morrison is serving as Hybrid's Secretary, Director and Chief Financial
Officer. The loss of Mr. Larson's and/or Mr. Morrison's services would
probably hamper Hybrid's ability to implement its business plan, and could cause
its stock to be worthless. Hybrid 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's systems and product development and implementation of
its business plan. Hybrid 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 affairs in the future. Hybrid has not obtained a key man
life insurance policy on Mr. Larson, Mr. Morrison or other management. Hybrid
14
<PAGE>
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'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 Hybrid Fuels, Inc.'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 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 may overestimate
the marketability of the Hybrid'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 from implementing its
business plan, thereby limiting its profitability and decreasing the value of
its stock.
Product Liability
------------------
Hybrid, like other alternate fuels technology suppliers, are advised to
carry product liability insurance for the systems and alternate fuels products
which may be defective. Hybrid 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 or systems. Hybrid relies on third party
suppliers for its components for finished alternate fuels. Hybrid currently has
no product liability insurance coverage. Although Hybrid 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 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,
Management of Hybrid believes that there is no significant need for product
liability insurance at this time.
15
<PAGE>
Effect Of Unfavorable Publicity
----------------------------------
Management of Hybrid 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'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's business,
financial condition and results of operations. Hybrid 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'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'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's business will grow in the
future or that it will be able to effectively manage such growth. Hybrid'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 system and product technology are not protected by patents and
are currently proprietary. Hybrid 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's system(s) and products. Management of
Hybrid 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's products, even
with patent protection, will not be copied in some fashion and used to compete
with the Hybrid'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's
business, financial condition and results of operations.
16
<PAGE>
Competition
-----------
The alternate fuels and alternate fuels products industry is new, rapidly
evolving and minimally competitive, and Hybrid expects competition to intensify
in the future. Management of Hybrid believes that it has an international
market, with virtually little known competition, however, if Hybrid and the
alternate fuels industry generally fails to attract and retain a large customer
base, then Hybrid significantly declines in its projected revenue and a loss of
market share. Hybrid 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 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'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's business, financial condition and results of operations.
Potential Business Combinations Dilute Stockholder Value
-------------------------------------------------------------
Because Hybrid 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. In the event of a business combination, the ownership interests of
holders of existing shares of Hybrid's shares of stock will be diluted. Due to
its limited financial resources, the only way Hybrid 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'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's stockholders may not have
an opportunity to vote on whether to approve it. For example, Hybrid'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's officers and directors must exercise their
powers in good faith and with a view to the interests of the corporation.
17
<PAGE>
Potential Business Combinations Could Be Difficult To Integrate And Disrupt
---------------------------------------------------------------------------
Business
--------
Any acquisition of or business combination with another company could
disrupt Hybrid's ongoing business, distract management and employees and
increase its expenses. If Hybrid 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.
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's profitability and decrease the value of its shares of stock. In
addition, Hybrid'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 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 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 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'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's management. New management may
decide not to continue to implement Hybrid'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.
FINANCIAL RISKS
Hybrid Fuels, Inc. Has Minimal Operating History and Financial Results Are
---------------------------------------------------------------------------
Uncertain
---------
Hybrid 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
faces all the risks of a new business. As a result of Hybrid'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 will provide a return
on investment in the future. An investor in Hybrid'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:
18
<PAGE>
1. execute the Hybrid's business plan;
2. create significant sales of alternate fuels systems and derivative
products;
3. manage growth in Hybrid'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 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 Hybrid, which would reduce Hybrid's
revenues and prevent Hybrid 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's initial commencement of business 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 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. If not available, Hybrid'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'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'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 market for Hybrid'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
19
<PAGE>
market price of Hybrid'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'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.
Investors May Face Significant Restrictions On The Resale Of Hybrid Fuels,
---------------------------------------------------------------------------
Inc.'s Stock Due To State Blue Sky Laws
---------------------------------------------
Because Hybrid'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'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 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's shares of stock.
Accordingly, investors should consider the secondary market for Hybrid'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's securities constitute a "penny stock" within
the meaning of the rules, the rules would apply to Hybrid and its securities.
The rules may further affect the ability of owners of Hybrid'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.
20
<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 from the sale of the 10,000,000 shares of common
stock offered by Hybrid 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 Hybrid's management is responsible for the
sale of the common shares of stock offered herein. As of the date of this
Offering, Hybrid 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 SYSTEM AND
PRODUCTS AND WORKING CAPITAL. INVESTORS SHOULD BE AWARE THAT IF HYBRID IS ONLY
ABLE TO SELL THE MINIMUM AMOUNT OF SHARES REGISTERED FOR SALE IN THIS OFFERING
THAT THERE IS NO ASSURANCE THAT HYBRID WILL BE ABLE TO OBTAIN ANY ADDITIONAL
FINANCING WHICH WOULD POSSIBLY MAKE HYBRID'S SHARES DECREASE SUBSTANTIALLY OR TO
BECOME WORTHLESS. If the maximum amount of shares are sold by way of this
Offering, Hybrid expects to use the net proceeds in the following manner:
21
<PAGE>
Net Proceeds if all shares are sold by Hybrid: $1,000,000
239,900 - Debt retirement
70,000 - Equipment Purchases
135,000 - Alternate Fuels Plant Construction
70,000 - Livestock Purchase (Cattle)
370,100 - Working Capital
Total Use of Proceeds: $1,000,000
Net Proceeds if only the minimum amount of shares are sold by Hybrid:
$10,000 These funds will be used for general corporate expenses and further
financing expense.
Hybrid continually evaluates other business opportunities that may be
available to it, whether in the form of assets acquisitions or business
combinations. Hybrid may use a portion of the proceeds for these purposes.
Hybrid 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 is not a party to any
other, 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 has not yet determined the specific amounts of "net proceeds" to be
used specifically in the general categories as described herein. Accordingly,
Hybrid's management will have significant flexibility in applying the net
proceeds of the Offering.
DETERMINATION OF OFFERING PRICE
Hybrid 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 The offering price bears no relationship to the
book value, assets or earnings of Hybrid 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.
22
<PAGE>
PLAN OF DISTRIBUTION
Hybrid 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 will be $2,500,000 if all the shares offered
are sold by Hybrid. The gross proceeds to Hybrid will be $10,000 if only the
minimum amount of shares offered are sold by the Hybrid. In the event that
Hybrid sells the shares in the Offering, no commissions or other fees will be
paid, directly or indirectly, by Hybrid 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's common stock. Hybrid
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 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 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:
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.
23
<PAGE>
On August 6, 2000, John Morrison was appointed to the Board of Directors,
and on September 26, 2000, Gordon Colledge was appointed to the Board of
Directors. These officers and directors of Hybrid 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 which is deferred until the
company has the cash to pay it.
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, Chief Financial Officer and Director of
the Issuer in August, 2000 and will exchange his services for restricted common
shares of stock in the Issuer, and a consulting fee of $150 per hour (Cdn). The
amount of shares of stock as compensation has yet to be determined and is
subject to the amount of time necessary to implement the Issuer's business plan.
24
<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 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 6.09%
Gordon Colledge
2213 27th Avenue South
Lethbridge, Alberta, Canada T1K 6K4 212,000 1.07%
John Morrison, Chartered Accountant
439 View Crest Road (To Be
Kelowna, British Columbia, Canada V1W 4K1 Determined)
Sir Donald Craig 1,850,000
9.39%
Killalow, Ltd. 2,000,000
10.16%
Auchengrey, Ltd. 2,000,000
10.16%
--------------- ------
ALL EXECUTIVE OFFICERS & DIRECTORS AS A 1,412,000 7.17%
GROUP
--------------- ------
25
<PAGE>
DESCRIPTION OF SECURITIES
The following description of Hybrid'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'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 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's common stock.
The holders of shares of common stock of Hybrid 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's directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available therefore, 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,
the shareholders are entitled to receive, ratably, the net assets of Hybrid
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'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's common stock.
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<PAGE>
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Hybrid'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'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 or is or was serving at the request of Hybrid 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 pursuant to the forgoing provisions or otherwise, Hybrid 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 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. Hybrid'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. Hybrid is in its early developmental and
promotional stages. To date, Hybrid'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
has not commenced commercial operations. Hybrid has one full time employee and
owns no real estate. Hybrid'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 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 Hybrid to all of the proprietary
technologies developed by the corporations and described herein.
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Marketing Background
---------------------
The business approach used by Hybrid 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. Management of Hybrid 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'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's opportunity to derive
financial benefit.
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Employees
---------
Hybrid is a development stage company and currently has one Employee,
Mr. Clay Larson. Hybrid 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 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 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, which would dilute the ownership interest of holders
of existing shares of its common stock.
Available Information And Reports To Securities Holders
-------------------------------------------------------------
Hybrid 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 and its common stock,
see the registration statement and the exhibits and schedules thereto. Any
document Hybrid'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'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 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'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.
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<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'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's actual results
could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by Hybrid. described in
"Risk Factors" and elsewhere in this prospectus. The following discussion and
analysis should be read in conjunction with Hybrid'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 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 during this period.
For the current fiscal year, Hybrid 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 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'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. Hybrid 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 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 remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources.
Consequently, Hybrid's balance sheet as of September 30, 2000, reflects total
assets of $504,375.00 in the form of the acquisition of two corporations
which owned the proprietary technologies, and a deposit of $170,561.00 on the
beef processing plant, land, buildings and equipment and capitalized
organizational costs.
30
<PAGE>
Hybrid expects to carry out its plan of business as discussed above. Hybrid
has no immediate expenses, however Hybrid does have current liabilities of
$239,990.00. 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 Hybrid's
products.
In addition, Hybrid may engage in a combination with another business.
Hybrid 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 may eventually combine, if ever. Hybrid
has an agreement to purchase a beef processing plant, land, buildings and
equipment from $3,000,000 Canadian Dollars. Hybrid has engaged in discussions
concerning potential business combinations, but has not entered into any
agreement for such a combination.
Hybrid 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 or at all.
DESCRIPTION OF PROPERTY
Hybrid currently maintains office space in Kelowna, British Columbia,
Canada and Calgary, Alberta. Hybrid 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. Hybrid 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 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, and no owner of five percent or more of Hybrid's outstanding shares or
any member of their immediate family has entered into or proposed any
transaction in which the amount involved exceeds $35,000.
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<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's securities. Hybrid has
no common equity subject to outstanding purchase options or warrants. Hybrid 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 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.
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'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'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. Although
there is no current plan in existence, it is possible that Hybrid will adopt a
plan to pay or accrue compensation to its officers and directors for services
related to the implementation of Hybrid's business plan. Hybrid 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 has employment contracts with key personnel but
has no compensatory plan or arrangement with any executive officer of Hybrid.
The Officers and Directors currently do not receive any cash compensation from
Hybrid for their services as officers, nor do they receive any cash compensation
for their services as a member of the Board of Directors. There is no
compensation committee, and no compensation policies have been adopted. However,
the officers and directors will receive an amount of restricted shares of common
stock in exchange for their services, such amount has not been determined as of
the date of this filing. See "Certain Relationships and Related Transactions."
32
<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'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 or a fiduciary of an employee benefit plan, or is
or was serving at the request of Hybrid 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'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. 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, 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, absent a finding of
negligence or misconduct in office. Hybrid'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 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.
33
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of Hybrid'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.
On February 17, 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, to accredited investors resident of
Colorado.
Additionally on February 17, 2000, another 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, to accredited investors
resident of Colorado.
On February 18, 2000, another 1,500,000 common shares of stock were sold at
a price of $.10 (ten cents) per share under Rule 504D Exemption provision in the
State of Colorado however, due to circumstances beyond the control of Hybrid,
these share certificates were not issued until July 5, 2000 and thereby
reflected on Hybrid's financial statements as of July 5, 2000.
Between June 30, 2000 and September 30, 2000, 84,200 restricted common
Shares of stock were issued to reduce Stockholder Payables.
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
34
<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.
35
<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
36
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