8-K/A 1 subfm8ka91300.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 13, 2000 ------------------------------- XAIBE, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 0-27647 76-0594907 ----------------------------- -------------- ---------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) file number) Identification Number) 13100 N.W. Freeway, Suite 130, Houston, Texas 77040 ----------------------------------------------------- (Address of principal executive offices)(Zip Code) (713) 690-9233 ------------------------------------------------- (Registrant's telephone number, including area code) 2400 Loop 35, #1502, Alvin, Texas 77511 ------------------------------------------------------- (Former name and former address, if changed since last report) This amended Form 8-K relates to the transaction on October 27, 2000 pursuant to which Xaibe, Inc. (the "Company") completed the acquisition of PolarShield, Inc. ("PolarShield"). As permitted, the original Form 8-K omitted certain financial statements of PolarShield required by Form 8-K. This amendment is filed to provide the September 30, 2000 financial statements of PolarShield. Item 7. Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired Balance Sheet as of September 30, 2000 (Unaudited)....... F-1 Statement of Income for the three and nine months ended September 30, 2000 (Unaudited).................. F-3 Statement of Changes in Stockholders Equity for the nine months ended September 30, 2000.............. F-4 Statement of Cash Flows for the nine months ended September 30, 2000 (Unaudited) ...................... F-5 Notes to Financial Statements (Unaudited)................ F-6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. XAIBE, INC. Dated: January 10, 2001 By: /s/ Jimmy Farmer ----------------------- Jimmy Farmer President POLARSHEILD, INC. (A Development Stage Company) -------------------------------------------------------------------------------- BALANCE SHEET (Unaudited) -------------------------------------------------------------------------------- September 30, 2000 ASSETS CURRENT ASSETS Cash $ 17,126 Accounts receivable - net 102,134 Related party receivable 23,291 Inventory 25,700 --------- Total Current Assets 168,251 PLANT, PROPERTY AND EQUIPMENT, at cost Equipment & machinery 269,744 Furniture & fixtures 191,155 --------- 460,899 Less accumulated depreciation 69,877 --------- 391,022 OTHER ASSETS Licenses & agreements-net 1,354,513 Goodwill, patents & trademarks-net 505,835 Deferred tax benefit 545,024 Other 105,741 --------- 2,511,113 --------- TOTAL ASSETS $ 3,070,387 ========= F-1 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 202,870 Accrued expenses 10,420 Related party payable 141,700 -------------- Total Current Liabilities 354,990 LONG-TERM LIABILITIES Notes payable 153,695 Capital lease obligations 45,350 -------------- 199,045 STOCKHOLDERS' EQUITY Common stock, $0.001 par value per share; authorized 25,000,000 shares; issued 5,674,797 shares - note 10 5,675 Preferred stock, $0.01 par value per share; authorized 5,000,000 shares; issued 1,574,550 shares - note 10 15,746 Paid-in capital 3,682,497 Deficit accumulated in the development stage (1,187,565) -------------- 2,516,353 -------------- TOTAL LIABILITIES AND STOCKHLODERS' EQUITY $ 3,070,387 ============== F-2 POLARSHIELD, INC. (A Development Stage Company) -------------------------------------------------------------------------------- STATEMENT OF INCOME (Unaudited) -------------------------------------------------------------------------------- For the Three and Nine months Ended September 30, 2000 Three months - Nine months - September 30 September 30 -------------- -------------- SALES $ 284,786 $ 385,860 COST OF GOODS SOLD Materials 13,704 14,121 Freight-in 81 493 Labor 5,430 18,322 -------------- -------------- Gross Profit 265,571 352,924 SELLING, GENERAL AND ADMINISTRATIVE COSTS Selling expenses 138,742 182,087 Consulting fees 201,096 505,367 General & administrative 486,487 891,936 Amortization expense 60,231 135,480 Depreciation 16,553 45,813 -------------- -------------- 903,109 1,760,683 OTHER (INCOME)EXPENSE Miscellaneous Income (0) (5,248) Interest Income (520) (980) Interest Expense 4,072 22,650 -------------- -------------- Total costs and expenses 906,660 1,777,104 -------------- -------------- LOSS BEFORE INCOME TAXES (641,088) (1,424,179) INCOME TAXES Deferred Tax Benefit 198,921 441,495 -------------- -------------- NET LOSS $ (442,167) $ (982,684) ============== ============== (LOSS) PER COMMON SHARE: Basic $ (0.0794) $ (0.1828) ============== ============== Weighted Average Number of Common Shares Outstanding 5,568,583 5,375,445 ============== ==============

F-3 POLARSHIELD INC. (A Development Stage Company) -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) -------------------------------------------------------------------------------- For the Nine months Ended September 30, 2000 Number of Shares Amount ------------------ ------------- COMMON STOCK Balance December 31, 1999 2,250,000 $ 2,250 Issued pursuant to option agreement - March 17 1,000,000 1,000 Issued pursuant to option agreement - April-28 250,000 250 Issued through direct subscription-various 2,174,797 2,175 ------------------ ------------- Balance September 30, 2000 5,674,797 5,675 ================== ============= PREFERRED STOCK Balance December 31, 1999 823,400 8,234 Issued pursuant to option agreement - March 17 245,000 2,450 Cancelled per option agreement-various (22,000) (220) Issued through direct subscription 528,150 5,282 ------------------ ------------- Balance September 30, 2000 1,574,550 15,746 ================== ------------- ACCUMULATED DEFICIT Balance December 31, 1999 (204,881) Net loss for the nine months ended September 30, 2000 (982,684) ------------- Balance September 30, 2000 (1,187,565) ------------- PAID-IN CAPITAL Balance December 31, 1999 659,766 Issued pursuant to option agreement - March 17 1,241,550 Issued pursuant to option agreement - April-28 249,750 Cancelled per option agreement-various (21,780) Issued through direct subscription-various 1,553,211 ------------- Balance September 30, 2000 3,682,497 ------------- Total Stockholders' Equity $2,516,353 =============

F-4 POLARSHIELD, INC. (A Development Stage Company) -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS (Unaudited) -------------------------------------------------------------------------------- For the Nine months Ended September 30, 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (982,684) Adjustment to reconcile Net Income (loss) to net cash provided by (used in) Operating Activities: Depreciation 45,813 Amortization 135,480 Deferred income tax benefit (441,495) Changes in components of working capital - (Increase) decrease in Accounts Receivable (94,627) Loans & Advances 142,595 Inventory (15,700) Increase( decrease) in Accounts Payable 166,616 Accrued Expenses (4,646) Related party payable (40,750) --------------- Net Cash Used by Operating Activities (1,089,398) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (177,780) Acquisition of other assets (182,947) --------------- Net Cash used by Investing Activities (360,727) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of Stock 1,591,803 Cancellation of Preferred Stock (8,000) Decrease in Long term liabilities (158,561) --------------- Net Cash provided by Financing Activities 1,425,242 Increase (Decrease) in Cash (24,883) Cash balance at beginning of period 42,009 --------------- Cash at End of the period $ 17,126 =============== F-5 POLARSHIELD, INC. (A DEVELOPMENT STAGE COMPANY) -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- September 30, 2000 1. ORGANIZATION Polarshield, Inc., hereafter referred to as "Polarshield" or "the Company", was organized in June 1999, as a State of Nevada Corporation. The primary business of the Company is the manufacture and sale of polarized refrigerant oil additives and related lubricants and metal treatments. The headquarters of the Company is located in Houston, Harris County, Texas. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Revenue Recognition ------------------- Polarshield utilizes the accrual method of accounting whereby revenue is recognized when earned and expenses are recognized when incurred. The Company sells its products direct to the customer, through distributors and through retail outlets. Direct sales to customers consist primarily of sales to commercial businesses. Sales to residential customers are minor. Revenue is recognized when the services are rendered, payments are due under the terms of the Distributorship Agreements or when the product has been ordered and set aside for the retail outlet customer. B. Inventories ----------- Inventories, consisting primarily of chemicals, mineral oil and transmission fluids, are stated at the lower of cost or market, as determined by the first-in, first-out (FIFO) method. C. Plant, Property and Equipment ----------------------------- Plant, property and equipment are carried at cost. Depreciation expense for the nine months ended September 30, 2000 was $45,813. Depreciation is calculated using the straight-line method over the estimated useful lives as shown below: Equipment & Machinery 5 years Furniture & Fixtures 5 years D. Other assets ------------ Other assets consist of advances, licenses, patents, trademarks and goodwill. The licenses are amortized over the unexpired term of the license and the goodwill is amortized over fifteen years. Amortization expense for the nine months ended September 30, 2000, was $135,480. E. Income Taxes ------------ The Company accounts for income taxes in accordance with the asset and liability method of accounting for income taxes prescribed by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax F-6 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Income Taxes (continued) ------------ consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. F. Basis of Accounting ------------------- The financial statements are prepared using the accrual basis of accounting. G. Use of Estimates ---------------- The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. H. Cash and Cash Equivalents ------------------------- For purposes of the statement of cash flows, cash on hand, deposits at bank and petty cash are considered to be cash or cash equivalents. I. Accounts Payable ---------------- Trade accounts payable, including accruals not yet billed, are recognized when the Company becomes obligated to make future payments as a result of a purchase of assets or services. Trade accounts payable are generally settled within 30 days. 3. INCOME TAXES The tax effects of the Company's loss ($1,424,179) at the statutory federal tax rates (average rate of 31%) were $441,495 and were included in the deferred tax balance of $545,026. There were no timing differences. Depreciation for tax purposes approximated depreciation for financial statement accounting purposes. The benefit of the tax losses will only be obtained if: (i) The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction s for the loss to be realized: and (ii) The Company continues to comply with the conditions for deductibility imposed by federal income tax laws and regulations. Deferred tax benefits are expected to be realized in future periods beyond the subsequent twelve months. Therefore, the benefits were categorized as long-term. F-7 4. RECEIVABLES Accounts Receivable ------------------- The Company provides an allowance for doubtful accounts equal to the estimated losses that will be incurred in collection of all receivables. The estimated losses are based on historical collection experience coupled with review of the current status of the then currently outstanding accounts receivable. The allowance for doubtful accounts estimated at September 30, 2000 was $20,000. 5. RELATED PARTY TRANSACTIONS September 30, 2000 ------------------ Related party payables $ 141,700 Related party receivables $ 23,291 Related party receivables and payables are current obligations from/to the officers of the Company for advances made in the ordinary course of business. 6. LEASE OBLIGATIONS Lease obligations of the Company are for office space, furniture and equipment. Capital lease obligations are amortized over the remaining term of lease (i.e. thirty four months.). Operating lease agreements vary from thirty two to sixty three months. . Minimum lease payments for the next five years are as follows: Year Amount ------ -------- 2001 $ 87,664 2002 67,214 2003 4,977 2004 4,680 -------- $164,535 ======== 7. NON-CASH TRANSACTIONS In March, 2000, the Company acquired the assets and liabilities of Polarshield, LLC, for $1,500,000 in common and preferred stock. The value of the assets and liabilities acquired were as follows: License and goodwill $1,488,533 Equipment 50,853 Furniture 5,747 Bank note on equipment (29,133) Shareholder loan (16,000) ----------- Total $1,500,000 =========== F-8 8. CONCENTRATION OF CREDIT RISK The primary financial instruments, which potentially subject the Company to concentrations of credit risk, are cash and accounts receivable. The Company's cash balances are with a high quality financial institution and are covered by FDIC insurance limits. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its trade accounts receivable credit risk exposure is limited. The maximum potential loss does not exceed the amounts already recognized in the balance sheet. 9. SEGMENT AND GEOGRAPHIC INFORMATION Polarshield, Inc is a Developing Stage Enterprise and is in the initial stages of Operation. The Company's raw material, chemicals and other goods essential to the production of their products are easily available and the Company does not expect any shortages in supply. 10. CAPITAL STOCK Common Stock ------------ The Company has authorized 25,000,000 shares of common stock ($0.001 par value), of which 5,674,797 shares were issued and outstanding at September 30, 2000. Preferred Stock --------------- The Company has authorized 5,000,000 shares of preferred stock ($0.01 par value), of which 1,574,550 shares were issued and outstanding at September 30, 2000. The preferred shares of the Company carry a preference as to liquidation and convertibility. Liquidation Preference: ----------------------- In the event of liquidation, the preferred shareholders are to be paid off before the common stockholders get a return of their capital. Conversion Preference: ---------------------- The preferred shares of the Company are convertible in the event the Company goes public or is acquired by a publicly held company. The options of the stockholders for conversion are through the election of one of the following: (i) One share of preferred stock for one share of common stock. After conversion, the shares must be held for at least 18 months from the date of conversion; or (ii) The preferred share shall be valued at $1 per share and shall be converted into common shares on an exchange basis on which, the common shares are valued at 50% of the market bid price of the shares 30 days after the initial trading of the company shares in a public market, or the merger of the company with a publicly held company, and such shares shall be subject to a holding period restriction of 12 months and shall be subject to Rule 144, or F-9 10. CAPITAL STOCK (continued) (iii) Retain the preferred shares in the Company; (iv) Request repayment of 115% of the amount of the subscription agreement, payable by the Company within 30days of such written request. EPS-Earnings (Loss) Per Share ----------------------------- Earnings (Loss) per share of common stock outstanding were computed as follows: Fiscal Year 2000 Cumulative Period Ended 3/31/00 6/30/00 9/30/00 12/31/00 ---------------------------------------------------- Net Income (Loss) for basic and diluted EPS ($191,816) ($540,517) ($982,684) - ---------------------------------------------------- ---------------------------------------------------- Common share information Average common shares outstanding for basic EPS 2,405,556 2,918,113 5,568,583 - ---------------------------------------------------- Basic (Loss) per common share (0.0795) (0.1813) (0.1828) -

11. LITIGATION AND CONTINGENCIES. The Company is currently a party to various disputes arising from their operations, which involve, or may involve, litigation. Management believes that the outcome of these proceedings, individually and in the aggregate, will have no material effect on the financial position or results of operations of Polarshield, Inc. 12. SUBSEQUENT EVENTS On October 19, 2000, the Company terminated its Sales and Marketing Agreement with Synergy Partners, Inc for a final sum of $ 60,000 payable in ten installments of $6,000 each beginning October, 2000. On October 27, 2000, the Company completed an exchange agreement (the "Exchange") with Xaibe, Inc. (Xaibe) whose common stock is listed on the OTC Bulletin Board (OTCBB). Common stock, 97.9% of the outstanding common stock of the Company, was exchanged for common stock of Xaibe on the basis of one share of common stock for each share of Xaibe. A total of 5,559,705 shares of common stock were exchanged. As a result of the Exchange, the Company became a subsidiary of Xaibe and the options and warrants attached to all convertible preferred stock of the Company outstanding immediately prior to the Exchange were assumed by Xaibe. F-10 12. SUBSEQUENT EVENTS (continued) On December 28, 2000, (30 trading days following the first quote of common stock of Xaibe), the preferred shareholders of the Company were offered a right to convert their preferred stock into common stock of Xaibe, or redeem their stock at $1.15 per share The election to convert or redeem the preferred stock will expire on January 23, 2001. Xaibe, Inc. (the holding company), was incorporated under the laws of the State of Nevada in July, 1998. Since its inception, Xaibe has conducted no business operations except for the acquisition of a license to distribute and produce an oxygen enriched water product for fish farming, aquaculture, mariculture, the husbandry of poultry, and for remediating animal waste from dairies, feedlots of all kinds, and for other similar uses. For the period from July, 1998 (inception), through September 30, 2000, Xaibe had no income from operations, and accumulated losses aggregating $20,061. F-11

XAIBE INC 8-K/A