UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2007
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _______ to _______
Commission File Number 0-29351
NEVADA
(State or other jurisdiction of incorporation or organization)
88 0384399
(I.R.S. Employer Identification No.)
237 Main Street, Box 880, Niverville, Manitoba
(Address of principal executive offices)
R0A1E0
(Postal Code)
Registrant's telephone number, including area code: (888) 550-2333
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or shorter period that registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]
The number of issued and outstanding shares of the registrant's common stock as of May 18, 2007 was 30,052,933
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
TABLE OF CONTENTS
PART-I FINANCIAL INFORMATION PAGE
Item 1 Financial Statements................................................................... 3
Item 2 Plan of Operation...................................................................... 4
Item 3 Controls and Procedures................................................................ 9
PART-II OTHER INFORMATION PAGE
Item 1 Legal Proceedings...................................................................... 9
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds ........................... 9
Item 3 Defaults Upon Senior Securities........................................................ 9
Item 4 Submission of Matters to a Vote of Security Holders.................................... 9
Item 5 Other Information...................................................................... 9
Item 6 Exhibits and Reports on Form 8-K....................................................... 9
Signature............................................................................. 10
|
Hybrid Fuels, Inc.
(A Development Stage Company)
March 31, 2007
Index
Consolidated Balance Sheets.....................................................F-1
Consolidated Statements of Operations...........................................F-2
Consolidated Statements of Cash Flows...........................................F-3
Notes to the Consolidated Financial Statements..................................F-4
|
Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)
March 31,
2007 June 30,
$ 2006
(unaudited) $
ASSETS
Current Assets
Cash 2,070 3,533
Prepaid expenses - 25,500
---------------------------------------------------------------------------------------------------------------------
Total Current Assets 2,070 29,033
Property and Equipment (Note 4) 826,653 -
Intangible Assets (Note 5) 561,982 -
---------------------------------------------------------------------------------------------------------------------
Total Assets 1,390,705 29,033
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable 125,137 62,804
Accrued liabilities 28,033 28,874
Note payable and other advances (Note 6) 45,872 47,334
Due to related parties (Note 7) 226,321 209,371
Due to a former director (Note 8) 326,701 326,701
---------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 752,064 675,084
Redeemable and Restricted Common Shares (Note 9(b)) 222,767 222,767
---------------------------------------------------------------------------------------------------------------------
Total Liabilities 974,831 897,851
---------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 1 and 9)
Stockholders' Equity (Deficit)
Common Stock: $0.001 par value; 50,000,000 shares authorized;
30,052,933 and 26,332,933 shares issued and outstanding, respectively 30,053 26,333
Additional Paid-in Capital 2,416,847 1,006,967
Donated Capital 629,058 547,375
Deficit Accumulated During the Development Stage (2,660,084) (2,449,493)
---------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit) 415,874 (868,818)
---------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity (Deficit) 1,390,705 29,033
=====================================================================================================================
|
(The Accompanying Notes are an Integral Part of the Consolidated Financial Statements)
Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)
(unaudited)
Accumulated from For the For the
January 28, 1998 Three Months Nine Months
(Date of Inception) Ended Ended
to March 31, March 31, March 31,
2007 2007 2006 2007 2006
$ $ $ $ $
Revenue - - - - -
-------------------------------------------------------------------------------------------------------------------------
Expenses
Deposits and advances written-off 305,512 - - - -
Depreciation 24,965 20,998 - 24,965 -
Foreign exchange loss (gain) 16,947 (570) (77) (3,867) 2,875
General and administrative (Note 7(b)) 1,767,177 28,752 35,261 130,310 119,348
Imputed interest (Notes 7(a) and 8) 539,058 19,728 19,727 59,183 59,183
Research and development 16,925 - - - -
-------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 2,670,584 68,908 54,911 210,591 181,406
-------------------------------------------------------------------------------------------------------------------------
Operating Loss (2,670,584) (68,908) (54,911) (210,591) (181,406)
Other Income
Gain on settlement of debt 10,500 - - - 10,500
-------------------------------------------------------------------------------------------------------------------------
Net Loss (2,660,084) (68,908) (54,911) (210,591) (170,906)
=========================================================================================================================
Net Loss Per Share - Basic and Diluted - - - (0.01) (0.01)
=========================================================================================================================
Weighted Average Shares Outstanding 30,053,000 26,014,000 27,731,000 25,829,000
=========================================================================================================================
|
(The Accompanying Notes are an Integral Part of the Consolidated Financial Statements)
Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
For the Nine Months
Ended
March 31,
2007 2006
$ $
Operating Activities
Net loss (210,591) (170,906)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 24,965 -
Donated services 22,500 22,500
Gain on settlement of debt - (10,500)
Imputed interest 59,183 59,183
Stock-based compensation 25,500 39,750
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 61,492 21,508
Due to related parties 13,584 --
-------------------------------------------------------------------------------------------------------------------------
Net Cash Used In Operating Activities (3,367) (38,465)
-------------------------------------------------------------------------------------------------------------------------
Financing Activities
Advances from related parties 3,366 -
Repayments to related parties - (1,562)
Common stock subscribed -- 23,689
Proceeds from issuance of common stock - 27,594
-------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 3,366 49,721
-------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate on Changes on Cash (1,462) 2,257
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash (1,463) 13,513
Cash - Beginning of Period 3,533 946
-------------------------------------------------------------------------------------------------------------------------
Cash - End of Period 2,070 14,459
=========================================================================================================================
Non-cash Investing and Financing Activities
Common shares issued to settle debt - 82,500
Common shares issued to acquire property and equipment and
intangible assets 1,413,600 -
========================================================================================================================
Supplemental Disclosures
Interest paid - -
Income taxes paid - -
========================================================================================================================
|
(The Accompanying Notes are an Integral Part of the Consolidated Financial Statements)
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
1. Nature of Operations and Continuance of Business
In May 1998, the Company caused a Nevada corporation to be formed under the name Polo Equities, Inc. The two companies then merged pursuant to Articles of Merger adopted May 28, 1998 and filed with the State of Nevada on June 10, 1998.
On May 28, 1998, the Company acquired, by issuing 12,000,000 shares, Hybrid Fuels, USA, Inc., with an inception date of January 28, 1998, and 330420 B.C. Ltd., which changed its name to Hybrid Fuels (Canada) Inc. This acquisition was accounted for as a reverse merger whereby the shareholder of Hybrid Fuels, USA, Inc. and Hybrid Fuels (Canada) Inc. gained control of Polo Equities Inc., which changed its name to Hybrid Fuels, Inc. All historical financial statements are those of Hybrid Fuels, USA, Inc. and Hybrid Fuels (Canada) Inc. As part of the acquisition, three shareholders holding 12,000,000 previously issued shares returned their shares for cancellation. For accounting purposes, the acquisition was treated as a reverse merger business purchase of Polo Equities Inc. by Hybrid Fuels, USA, Inc. and Hybrid Fuels (Canada) Inc. No amount was allocated to the intellectual asset as it was acquired from a related party and the transfer had no cost basis associated with it. There was no public market for the shares of Polo Equities, Inc. at the time of the reverse merger.
On May 29, 1998 the Company changed its name to Hybrid Fuels, Inc., herein "the Company". The Company trades on the OTC Bulletin Board under the symbol HRID.
Pursuant to the above acquisition, the Company acquired a number of proprietary technologies with the primary objective of the business being to build small farm-scale ethanol facilities that involve a number of proprietary technologies exclusively owned by the Company. Other proprietary technology involves the use of a bio-gas burner that 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 that allows diesel and ethanol to emulsify. This hybrid fuel reduces particulate emissions without reduction in power when used in an unaltered diesel engine.
On December 14, 2006, the Company entered into an Asset Purchase Agreement ("Agreement") to acquire certain assets that includes a steel-construction cattle barn and ethanol plant, interior operating systems and equipment, a gasifier, facility designs and intellectual property at a total fair value of $1,413,600. Pursuant to the terms of the Agreement, the Company issued 3,720,000 shares of common stock at a fair value of $0.38 per share.
The Company is a development stage company with management devoting most of its activities in investigating business opportunities and further advancing its technologies. The ability of the Company to emerge from the development stage with respect to any planned principal business activity is dependent upon its successful efforts to raise additional equity financing and/or generate significant revenue. There is no guarantee that the Company will be able to complete any of the above objectives. As at March 31, 2007, the Company had a working capital deficit of $749,994 and has accumulated losses of $2,660,084 since inception. These factors, among others, cause substantial doubt about the continuance of the Company as a going concern.
The Company expects that future capital requirements for developing and expanding technologies will be met through stock offerings by way of private placements.
2. Summary of Significant Accounting Policies
(a) Consolidated Financial Statements and Basis of Presentation
These consolidated financial statements represent the consolidation of the Company and its wholly owned subsidiary, Hybrid Fuels (Canada)
Inc. The Company's subsidiary is currently inactive and has no assets, liabilities or operations. The Company's fiscal year end is June 30.
(b) Interim Financial Statements
The interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
(d) Use of Estimates
The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to valuation of long-lived assets, stock-base compensation, donated services and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(e) Basic and Diluted Net Income (Loss) per Share
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" which requires presentation of both basic and diluted earnings per shares (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
(f) Foreign Currency Translation
The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 "Foreign Currency Translation", using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
(g) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at March 31, 2007 and 2006, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
(h) Financial Instruments
The fair values of financial instruments, which include cash, accounts payable, accrued liabilities, notes and advances payable, due to related parties and due to a former director approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company's operations are in Canada which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(i) Income Taxes
The Company has adopted SFAS No. 109 "Accounting for Income Taxes" as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
(j) Stock-based Compensation
The Company records stock-based compensation in accordance with SFAS No. 123R "Share Based Payments", using the fair value method.
(k) Property and Equipment
Property and equipment are recorded at cost and consists of a cattle barn, an ethanol producing plant, a gasifier/burner and grain handling equipment, which are being amortized on a straight-line basis over their estimated lives of ten years.
(l) Intangible Assets
Intangible assets consist of intellectual property, including engineering and proprietary design of a hydroponics green grass growing system and are recorded at cost. Amortization of these costs will begin upon the commencement of revenue producing activities.
(m) Long-lived Assets
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
(n) Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115". This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, "Fair Value Measurements". The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative an qualitative factors. SAB No. 108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB No. 108 did not have a material effect on the Company's reported financial position or results of operations.
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(n) Recent Accounting Pronouncements (continued)
In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115". This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, "Fair Value Measurements". The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative an qualitative factors. SAB No. 108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB No. 108 did not have a material effect on the Company's reported financial position or results of operations.
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans
- an amendment of FASB Statements No. 87, 88, 106, and 132(R)". This
statement requires employers to recognize the overfunded or
underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement
of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive income of
a business entity or changes in unrestricted net assets of a
not-for-profit organization. This statement also requires an employer
to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. The
provisions of SFAS No. 158 are effective for employers with publicly
traded equity securities as of the end of the fiscal year ending after
December 15, 2006. The adoption of this statement is not expected to
have a material effect on the Company's future reported financial
position or results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on derecognition, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(n) Recent Accounting Pronouncements (continued)
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
3. Asset Purchase Agreement
On December 14, 2006, the Company entered into an Asset Purchase Agreement ("Agreement") to acquire certain assets that includes a steel-construction cattle barn and ethanol plant, interior operating systems and equipment, a gasifier, facility designs and intellectual property at a total fair value of $1,413,600. Pursuant to the terms of the Agreement, the Company issued 3,720,000 shares of common stock at a fair value of $0.38 per share. Of these issued shares a director of the Company and the President of the Company received a total of 1,860,000 shares and a shareholder received 1,193,333 shares.
4. Property and Equipment
March 31, June 30,
2007 2006
Accumulated Net Carrying Net Carrying
Cost Amortization Value Value
$ $ $ $
Buildings 765,160 22,431 742,729 -
Equipment 86,458 2,534 83,924 -
----------------------------------------------------------------------------------------------------------
851,618 24,965 826,653 -
==========================================================================================================
5. Intangible Assets
March 31, June 30,
2007 2006
Accumulated Net Carrying Net Carrying
Cost Amortization Value Value
$ $ $ $
Intellectual property rights 561,982 - 561,982 -
==========================================================================================================
|
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
6. Note Payable and Other Advances
(a) On September 15, 2000, the Company issued a note for Cdn$50,000 payable on or before September 15, 2001 plus 8% interest. The Company extended repayment of the note until the completion of a financing arrangement. The note payable was $43,275 after translation into U.S. dollars as at March 31, 2007 (June 30, 2006 - $44,655).
(b) As at March 31, 2007, cash advances totalling $2,597 (Cdn$3,000) (June 30, 2006 - $2,679) from unrelated parties are non-interest bearing, unsecured and due on demand.
7. Related Party Transactions
(a) A shareholder is owed $199,371 (June 30, 2006 - $199,371) for payment of rent, office expenses and professional fees on behalf of the Company. Imputed interest of $22,429 (2005 - $22,429), calculated at a rate of 15% per annum, was charged to operations and treated as donated capital. This amount owing is unsecured, non-interest bearing and due on demand. On December 14, 2006, the Company issued 1,193,333 shares of common stock to this shareholder at a fair value of $0.38 per share pursuant to an Asset Purchase Agreement (see Notes 3 and 10).
(b) During the nine month period ended March 31, 2007, the Company recognized a total of $22,500 (2006 - $22,500) for donated services provided by the President of the Company.
(c) At March 31, 2007, officers of the Company are owed $26,950 (June 30, 2006 - $10,000) for advances and expenses paid on behalf of the Company. This amount is unsecured, non-interest bearing and due on demand.
(d) On December 14, 2006, the Company issued a total of 1,860,000 shares of common stock to a director and to the President of the Company at a fair value of $0.38 per share pursuant to an Asset Purchase Agreement (see Notes 3 and 10).
8. Amounts Owing to a Former Director
The former President, who was also a director of the Company, is owed $326,701 as at March 31, 2007 (June 30, 2006 - $326,701). This amount is unsecured, non-interest bearing and due on demand. During the nine months ended March 31, 2007, imputed interest of $36,754 (2006 - $36,754), calculated at a rate of 15% per annum, was charged to operations and treated as donated capital.
9. Commitments and Contingencies
(a) Although the Company is not involved in any legal proceedings, several issues may eventually lead to the Company instituting legal action as follows:
i) On August 4, 1998 and March 23, 1999, the Company's former Board of Directors authorized the issuance of 1,000,000 and 900,000 shares respectively to individuals without consideration. On August 21, 1999, the current Board of Directors resolved that share certificates representing ownership of these 1,900,000 shares were issued without adequate consideration being paid to the Company and were therefore not fully paid and non-assessable. The Company cancelled the share certificates and indemnified the transfer agent, for any costs or liability that may incur arising out of the cancellation of such shares. The transfer agent removed the 1,900,000 shares from the stockholder list effectively reversing the issuance. Six of the cancelled certificates, totaling 550,000 shares, have been endorsed and returned to the Company for cancellation. The contingencies
Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)
9. Commitments and Contingencies (continued)
regarding the cancelled shares relate to anyone who may have subsequent holder rights, and possibly the individuals who were issued those shares who may claim that they were issued for due consideration. The Company has determined that there is no amount to be accrued for future liabilities associated with claims by subsequent shareholders. To date when these shares have been delivered to a broker for possible resale, the broker has informed the Company or the transfer agent and the shares are kept and cancelled. The Company will continue to monitor this issue. No other contingent liabilities have been included, as some of the previous directors have been informed verbally of the cancellation. No formal legal demand has been made as former management has failed to provide addresses despite a number of requests.
ii) Between October 1998 and June 1999, the management at that time sold a total of 361,120 common shares of the Company to 34 subscribers on the basis of an Offering Memorandum ("Offering") that contained a significant number of inaccuracies. A total of $223,000 was raised pursuant to this Offering. Management had concerns regarding possible misstatements, omissions and misleading statements. On the advice of legal counsel, the Company offered these 34 subscribers the option of receiving restricted stock as the Company did not and does not have the funds to repay these subscribers. Restricted shares must be owned and fully paid for at least one year. After the one-year holding period, the number of shares non-affiliates may sell during any three-month period cannot exceed 1% of the outstanding shares of the same class being sold. If the shares have been owned for two years or more, no volume restrictions apply to non-affiliates. Those who opted to receive restricted stock were also given an undertaking that they would receive a rescission offer when the Company was in a position to repay their money plus appropriate interest, in return for a return of the restricted stock, or they could elect to retain the stock. To date, 23 subscribers, have, pursuant to this offer received 232,753 shares, representing $158,000. The remaining 11 subscribers, who paid $65,000 for 128,367 shares, have not responded to the offer. These subscriptions are recorded as redeemable and restricted common shares until rescission rights have been revoked.
(b) On December 16, 2006, the Company, entered into a Joint Venture Agreement with a third party to develop two facilities that will utilize the Company's proprietary technology. The Company is obligated to contribute its proprietary technology and cash at an agreed upon value totaling $7,722,670 (Cdn$9,000,000).
10. Common Stock
On December 14, 2006, the Company issued 3,720,000 shares of common stock at a fair value of $1,413,600 pursuant to an Asset Purchase Agreement. See Note 3.
11. Subsequent Event
The Company accepted stock subscriptions for 58,800 shares of restricted common stock at $0.34 per share for proceeds of $20,000.
This Form 10-QSB contains forward-looking statements. The words "anticipate", "believe", "expect", "plan", "intend", "estimate", "project", "could", "may", "foresee", and other similar expressions identify forward-looking statements that involve risks and uncertainties. The reader should not place undue reliance on forward-looking statements in this Form 10-QSB because of their inherent uncertainty. The following discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto and other financial information included in this Form 10-QSB and our Form 10-KSB for the fiscal year ended June 30, 2006. Actual results could differ materially from the results discussed in the forward-looking statements. Hybrid Fuels Inc. ("the Company") assumes no responsibility to correct or update the forward-looking statements as circumstances change and therefore, the forward-looking statements should be assumed to speak only as at the date of the filing of this report.
Hybrid Fuels Inc. is a developmental stage company and has had no income since the acquisition of the `Hybrid Fuels' technology in June 1998. The Company is unlikely to have any significant cash flow until after the fiscal year ending June 30, 2007.
As at June 30, 2006, our independent auditors raised a substantial doubt about our ability to continue as a going concern because we have not generated any revenues and have conducted operations at a loss since inception. As of March 31, 2007, the Company has a working capital deficit of $(749,994).
Although the Company is in the developmental stages, the process behind Hybrid Fuels' intended business has been researched and developed for more than a decade. A facility that integrated the process described below was constructed and operated near Dalum, Alberta from 1994 to 1996. The Dalum facility was designed to prove the concepts and included all of the wet ethanol-producing and cattle-feeding features of a full-scale commercial operation. The Dalum project was also the source of the actual operating results that are referred to later in this report.
After the Dalum facility was closed in 1996, further research enabled us to modify the facility's material requirements, improve the building designs, select the latest equipment and refine the process.
The Company's intended principal business is to integrate cattle feeding and finishing with the production of wet ethanol and electrical power generation. The main source of revenue for the Company is expected to come from the sale of electrical power, finished cattle and denatured wet ethanol.
On December 14, 2006 the Company acquired a commercial-ready facility situated in Oyama, BC, Canada from a Hybrid Fuels Inc. shareholder consortium that financed its construction. This facility includes all equipment and infrastructure necessary to utilize the Company's proprietary technology including a cattle barn, ethanol-producing plant, gasifier/burner (manure/straw burning unit) and a hydroponics barley-grass growing system. The facility was acquired for total consideration of 3.72 million restricted common shares of Hybrid Fuels Inc. valued at $1,413,600.
The purpose of this facility is to demonstrate the economic feasibility of the `Hybrid Fuels' system. Once this first facility is operating, the intention is to use it for demonstration and training purposes and to earn revenue from its operation. Our projections indicate that the facility will show sufficient profitability to make it possible for us to get approval for financing subsequent facilities.
The cattle barn at the Oyama facility has been designed to accommodate 200 head of cattle and the hydroponics barley-grass growing system. Once the facility is operational, it is expected that the cattle will be fed starting with 50 head and adding another 50 approximately every four weeks until the barn is at full capacity. As we gain experience with the facility, we intend to operate the barn continuously at full capacity during the subsequent 100-day feeding cycles. At the end of each feeding cycle, the cattle will be sold at auction.
The cattle barn includes floor space for six individual pens - five occupied pens and one pen remaining empty and free of manure and bedding waste. Cattle are to be moved to a clean pen every five days on a rotational basis. The manure and bedding straw is removed from the pens and destroyed in the gasifier/burner that provides heat energy for the ethanol production and the hydroponics feed system.
In the ethanol plant, grains are fermented and then distilled to produce the wet ethanol. The heat is supplied from the burning of the used bedding straw and manure in the gasifier/burner. The ethanol production process also generates a high protein product, called "distillers mash" and a liquid byproduct called "stillage water." The mash and liquid is supplemented by barley grass and creates an excellent feed for the cattle. The expected weight gain is an average of four pounds a day per head during the planned 100-120 day feeding cycle.
Once the facility is operating at full capacity, we project that the ethanol production will be approximately 200 US gallons (800 litres) per day. It is intended that the wet ethanol will be blended with a proprietary emulsifier and diesel fuel. When this newly created fuel was tested in an unaltered diesel engine at the British Columbia Institute of Technology in June 1996, it reduced particulate emissions (black smoke) by over 62% and the smog-causing nitrogen oxide (NOx) emissions by more than 22%. Researchers also noted no measurable loss of engine power when testing this fuel blend.
The hydroponics barley-grass growing system is expected to produce a ration of 10-15 pounds per day of fresh grass per animal, year round, regardless of climate. We believe each grass unit represents approximately the equivalent of 400 acres of grass growing land.
The Company has no immediate funding source except through private sources and until one facility is fully operational and demonstrates cash flow Hybrid Fuels Inc., and our wholly-owned subsidiary Hybrid Fuels (Canada), expects to have limited access to banks, trust companies, and other traditional lending sources.
Estimated operating costs to June 30, 2007 total $280,000. This estimate includes $120,000 for cattle and feed, $90,000 for payables (excluding related party loans and accrued executive salaries), $40,000 for technical support and labor and $30,000 for contingencies and other operating expenses. These estimates are subject to change based on conditions outside of management's control and actual experience with operating the first facility.
Operations are expected to commence once the initial testing of the facility's gasifier/burner, air exchange and feed system are completed and ready for the first delivery of cattle. Management currently anticipates that this will be completed in the fiscal year ending June 30, 2007. However, it must be emphasized that any delay in the completion of these tasks will also delay commencement of operations. It is difficult to establish the start date of operations since the Company is relying on third parties to complete the
facility which includes work by testing consultants and timely provision of equipment and installation. Therefore, completion of these tasks is not entirely under our control.
The Oyama facility will not be run at full capacity until approximately four months have passed from the facility becoming operational. We believe that at the end of the fourth month of operations, when we sell the first group of finished cattle, we will have sufficient data from which to prepare information for purposes of estimating revenue streams and expenses from all sources to establish a more comprehensive business plan.
The Company expects to expand the size of the cattle barn in future facilities to accommodate 400 head of cattle for economy of scale. The Company believes the additional heat energy that will be generated as a result of this expansion makes it feasible to develop renewable energy generation systems. It is expected that each facility could produce approximately 400 US gallons (1,600 litres) of ethanol daily, generate up to one megawatt of power, finish up to 1,200 head of cattle annually and provide up to 5 full-time jobs. The hydroponics section of the barn is designed to have the grass growing capacity equivalent to approximately 800 acres of grassland.
It is intended that future facilities will be constructed for the Company by independent contractors on privately-owned farms after a written, contractual agreement is made between the Company and the operator(s).
On December 16, 2006 a formal agreement was signed between the Company's wholly-owned subsidiary Hybrid Fuels (Canada) Inc. and the A4 Bar Cattle Company Ltd., covering the joint venture between the two companies, known as the 'Siksika A4 Bar Farm Operations Project.' The site of the project is located approximately 60 miles east of Calgary, Alberta, Canada on the land of the Siksika First Nations.
The Project will initially consist of the construction of two facilities - each utilizing Hybrid Fuels' proprietary technology together with the industry expertise and cattle provided by A4 Bar Cattle Company Ltd. Construction is expected to start in the fourth quarter ending June 30, 2007.
The two facilities are expected to produce a combined daily volume of approximately 800 US gallons (3,200 litres) of ethanol per day, generate up to 2 megawatts of power, finish up to 2,400 head of cattle annually, and provide up to 10 full time jobs. The internal hydroponics barley grass growing system is designed to produce a 12-pound ration of grass per head of cattle per day.
The Company anticipates conducting further research and development with respect to the following:
1. Researching efficiencies in facility construction and operation;
2. Researching new technologies; consulting with various technical researchers
and agriculture officials.
Once we have a fully operational facility, and have proven the technology and processes, we intend that our subsidiary, Hybrid Fuels (Canada) Inc., will operate it and generate revenue from the sale of electrical power, finished cattle and denatured wet ethanol.
Efforts to improve every aspect of the whole operation continue with positive results. Management believes the overall Hybrid Fuels program involving progressive and environmental sensitivity towards cattle feeding, maintenance and processing will present a chemical-free product cycle which offers a world class benchmark for the industry.
The net loss for the present quarter is $(69,967) compared to $(54,911) for the comparable quarter last year. The difference is largely attributable to the quarterly amortization expense of $20,998 for the Oyama facility that was acquired in December 2006.
At the end of the quarter, the Company had cash of $2,070 compared to $3,533 at June 30, 2006. As at March 31, 2007, the Company had a working capital deficit of $(749,994) compared to $(646,051) as at June 30, 2006.
The President and CEO of the Company donated services in the amount of $7,500 in the current quarter.
Although we currently do not have significant cash reserves, related parties have indicated a willingness to provide operating capital in exchange for restricted common shares. These related parties are under no obligation and no assurances can be given that they will continue to do so.
The following factors have affected or could affect the Company's actual results and could cause such results to differ materially from those expressed in any forward-looking statements made by the Company. Investors should consider carefully the following risks and speculative factors inherent in and affecting the business of the Company and an investment in the Company's common stock.
1. Our cash reserves are not adequate to cover our costs of operations. To date, we have covered our operating losses by loans from shareholders or privately placing securities. We expect to fund our general operations and marketing activities in the near term with current cash plus cash that may be obtained from loans from shareholders and/or the sale of securities. However, our cost estimates may not include enough provisions for any contingency, unexpected expenses or increases in costs that may arise.
2. We will need to raise additional capital to develop operations and to pay ongoing expenses. If additional funds are raised through the issuance of equity, our shareholders' ownership will be diluted. There can be no assurance that additional financing will be available on terms favorable to us or at all. If funds are not available on terms acceptable to us, we may not be able to continue our business.
3. We have not sought protection of our intellectual property through any patents, but have elected to protect it through non-disclosure agreements. Our intended business may be adversely affected if we are unable to adequately protect our intellectual property. Because our intellectual property is not protected by patents, others may seek to discover and use our intellectual property. We cannot provide assurance that our intellectual property rights will not be invalidated, circumvented or challenged. If we are found to infringe on the intellectual property rights of others, we may not be able to continue to market our process, or we may have to enter into costly license or settlement agreements. Third parties may allege infringement by us with respect to past, current or future intellectual property rights. Any claim of infringement, regardless of merit, could be costly, time consuming and require us to develop non-infringing technology or enter into royalty, licensing or settlement agreements. These agreements could be on terms unfavorable or unacceptable to us and could significantly harm the development of our business. In the future, we may also have to enforce our intellectual property rights through litigation.
Any such enforcement could also result in additional costs and could materially affect our financial condition and our business.
4. We have a history of operating losses and an accumulated deficit, as of March 31, 2007, of $2,660,084.
5. Our ability to begin operations and to generate revenues and profits is subject to the risks and uncertainties encountered by development stage companies. Our future revenues and profitability are unpredictable. We currently have no operating activities that will produce revenue. Furthermore, we cannot provide assurance that we will be successful in raising the money necessary to begin or expand operations.
6. The production of ethanol is being strongly encouraged by governments and private parties as a way to reduce water and air pollution that could lead to rapidly changing technology. If we are unable to adapt to rapidly changing technologies, our intended business could be adversely affected.
7. We have no operating history which makes an evaluation of our future prospects very difficult. Once we succeed in completing the construction of the first operating facility, there can be no assurances that we will be able to develop operations that are profitable or will operate as intended. If the market for our facilities fails to develop, or develops more slowly than anticipated, we may not be able to meet our expenses and may not achieve profitable results.
8. Our common stock is not widely traded, and, as a result, the prices quoted for our stock may not reflect its fair market value. Because of the low volume of trading in our common stock, our stockholders may find it difficult to sell their shares.
9. We currently have no insurance covering our operations, potential products, services or directors and officers.
10. Future performance depends on the ability to attract, train, and retain management, technical and marketing personnel. In the future, loss of one or more key employees could negatively impact us, and there is no "key man" life insurance in force at this time. Competition for qualified personnel is intense, and there can be no assurance that we will attract or maintain key employees or other needed personnel.
11. The production of beef and fuel are both highly competitive. Large companies compete in both markets with significant competitive advantages. Many competitors of the Company have significantly greater resources and experience than the Company. Additionally, competitors of the Company may have better access to financial and marketing resources superior to those available to the Company. With the resources and name recognition that competitors possess, the Company may face severe adversity entering the markets it is pursuing. There is no assurance the Company will be able to overcome the competitive disadvantages it will face as a small, start-up company with limited capital.
12. The continual shift in supply and demand factors create volatility in cattle pricing that could result in a loss on cattle finishing.
13. Since May 2003, the Canadian beef market has suffered as a consequence of the United States limiting imports from Canada because of an isolated case of Bovine Spongiform Encephalopathy (BSE). A recurrence of BSE in Canada could
potentially have an adverse effect on the Company even though the age of finished cattle raised within our controlled facilities are planned to be under the current 30-month age restriction on beef imported into the U.S.
14. There are a number of technological challenges that must be successfully addressed to complete our development and commercialization efforts. Our inability to address such technological challenges could adversely affect our ability to acquire customers for our technology. Delays in development, as a result of technological challenges or other factors, may result in the introduction or commercial acceptance of our technology later than anticipated.
Based on an evaluation as of the end of the period, the Company's Principal Executive Officer and Principal Financial Officer has concluded that the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act 1934 (the "Exchange Act") are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weakness, and therefore there were no corrective actions taken.
No legal proceedings are threatened or pending against the Company or any of its officers or directors. Further, none of the Company's officers or directors or affiliates of the Company are parties against the Company or have any material interest in actions that are adverse to the Company's interests.
N/A
N/A
N/A
N/A
Exhibit 31.1 Principal Executive Officer Certification (section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 31.2 Principal Financial Officer Certification (section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.1 Principal Executive Officer Certification (section 906 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.2 Principal Financial Officer Certification (section 906 of the Sarbanes-Oxley Act of 2002)
In accordance with the requirements of the Securities Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HYBRID FUELS, INC.
By: /s/ Douglas Dickie ---------------------- Name: Douglas Dickie Title: President/CEO/CFO Dated: May 21, 2007 |
Exhibit 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas Dickie, certify that:
1. I have reviewed this report on Form 10-QSB of Hybrid Fuels Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: May 21, 2007 /s/ Douglas Dickie --------------------------------- Douglas Dickie Principal Executive Officer |
Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas Dickie, certify that:
1. I have reviewed this report on Form 10-QSB of Hybrid Fuels Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: May 21, 2007 /s/ Douglas Dickie -------------------------------- Douglas Dickie Principal Financial Officer |
Exhibit 32.1 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
By signing below, the Principal Executive Officer hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, (i) this report on Form 10-QSB fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Hybrid Fuels Inc.
Signed this 21st day of May 2007:
By: /s/ Douglas Dickie -------------------------------- Douglas Dickie Principal Executive Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hybrid Fuels Inc. and will be retained by Hybrid Fuels Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
By signing below, the Principal Financial Officer hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, (i) this report on Form 10-QSB fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Hybrid Fuels Inc.
Signed this 21st day of May 2007:
By: /s/ Douglas Dickie -------------------------------- Douglas Dickie Principal Financial Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hybrid Fuels Inc. and will be retained by Hybrid Fuels Inc. and furnished to the Securities and Exchange Commission or its staff upon request.