SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                     Annual Report Pursuant to Section 13 or
                        15(d) of the Securities Exchange
                         Act of 1934 for the Fiscal Year
                               Ended July 31, 2001

                        Commission File Number 000-30370

                           CYNTECH TECHNOLOGIES, INC.
                           --------------------------
             (Exact name of registrant as specified in its charter)

                  Utah                                          87-0443172
                  ----                                          ----------
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                        Identification No.)

          4305 Derbyshire Trace, SE
                 Conyers, GA                                       30094
                 -----------                                       -----
  (Address of principal executive offices)                      (Zip Code)

                                 (770) 760-8732
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class              Name of each exchange on which registered
     -------------------              -----------------------------------------
            None                                         None

Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, Par Value $0.001
                         ------------------------------
                                (Title of Class)

Check whether the issuer (1) 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 for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. As of November 9, 2001,
issuer has not had any revenues.

State the aggregate market value of the voting and nonvoting common equity held
by nonaffiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days. As of November 9, 2001, the aggregate
market value of the voting and nonvoting common equity held by nonaffiliates of
the issuer was $1,226,388.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of November 9, 2001, issuer had
36,614,780 shares of issued and outstanding common stock, par value $0.001.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

                           TABLE OF CONTENTS

Item                                    Description                         Page

         Special Note about Forward-Looking Information...................   ii

                                     Part I
Item 1   Description of Business..........................................    1
Item 2   Description of Property..........................................   18
Item 3   Legal Proceedings................................................   18
Item 4   Submission of Matters to a Vote of Security Holders..............   18

                                     Part II
Item 5   Market for Common Equity and Related Stockholder Matters.........   19
Item 6   Management's Discussion and Analysis or Plan of Operation........   22
Item 7   Financial Statements.............................................   25
Item 8   Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure............................   25

                                    Part III
Item 9   Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act..............   26
Item 10  Executive Compensation...........................................   28
Item 11  Security Ownership of Certain Beneficial Owners and Management...   31
Item 12  Certain Relationships and Related Transactions...................   32
Item 13  Exhibits and Reports on Form 8-K.................................   36

         Signatures.......................................................   38

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                 SPECIAL NOTE ABOUT FORWARD-LOOKING INFORMATION

         This report includes forward-looking statements based on management's
beliefs, assumptions and plans for the future, information currently available
to management, and other statements that are not historical in nature.
Forward-looking statements include statements in which words such as "expect,"
"anticipate," "intend," "plan," "believe," estimate," "consider" or similar
expressions are used. These forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and assumptions, including
among others: a general economic downturn, a downturn in the securities markets,
regulations that affect trading in the securities of "penny stocks," and other
risks and uncertainties.

         Our future results and stockholder values may differ materially from
those expressed in these forward-looking statements. Many of the factors that
will determine these results and values are beyond our ability to control or
predict. The forward-looking information is based on present circumstances and
on our predictions respecting events that have not occurred, which may not occur
or which may occur with different consequences from those now assumed or
anticipated. Actual events or results may differ materially from those discussed
in the forward-looking statements as a result of various factors, including the
risk factors detailed in this report. The forward-looking statements included in
this report are made only as of the date of this report. These statements
reflect management's current view of our future events and are subject to
certain risks, uncertainties, assumptions and risks as discussed in "Risk
Factors."

---------------------
         As used in this report, the terms "we," "us," "our" and "the Company"
refer to Cyntech Technologies, Inc., a corporation organized under Utah law, and
our wholly-owned subsidiaries, Cyntech Technologies, Inc., a Nevada corporation,
and Cyntech Fuels of Chambers County, LLC, a Texas limited liability corporation
(which we formed to conduct the activities formerly proposed to be conducted by
Cyntech of Chambers County, Inc.)

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<PAGE>

                                     PART I


                         ITEM 1. DESCRIPTION OF BUSINESS

General

         Cyntech Technologies, Inc. proposes to develop and operate plants using
proprietary technologies called the Windstar ThermReTec(tm) process to produce
marketable petrochemical fuel products and scrap steel through recycling
hydrocarbon-based products such as tires or plastics. We have not constructed a
plant to date, but intend to develop and finance an initial plant in Chambers
County, Texas.

Financial Condition and Ability To Continue as a Going Concern

         We are a development stage company, have had no revenue from
operations, and have no operations from which revenue will be generated in the
near future. For the fiscal years ended July 31, 2001, and July 31, 2000, we
incurred net losses of approximately $1,139,000 and $1,303,000, respectively. We
had an accumulated loss of $6,095,000 for the period December 31, 1997, date of
inception, through July 31, 2001. At July 31, 2001, and July 31, 2000, we had
net stockholders' deficits during the development stage of approximately
$685,000 and $2,361,000, respectively. Accordingly, the independent auditor's
report accompanying our audited financial statements as of July 31, 2001 and
2000, included in this report, raises substantial doubt about our ability to
continue as a going concern. See Consolidated Financial Statements.

History

         The Company was organized as a Utah corporation on February 5, 1986,
under the name Blythburg, Inc., and in 1987 completed its initial public
offering in reliance on the Regulation A exemption from registration under the
Securities Act. It changed its name to Wasatch Fiber Group, Inc. on March 24,
1988, and to Carbon Fiber Products, Inc. on December 17, 1992. On May 16, 1990,
it acquired Carbon Fiber Products, Inc., which manufactured and marketed a line
of carbon fiber, or graphite, golf club shafts and related products.

         Cyntech Technologies, Inc. was organized as a Nevada corporation in
December 1997 to exploit proprietary technologies to produce marketable
petrochemical fuel products and scrap steel through recycling hydrocarbon-based
products such as tires or plastics. In July 1998, this Nevada corporation
acquired preliminary planning and development concepts for a proposed plant to
use these technologies to be built in Chambers County, Texas.

         In December 1998, the Utah corporation, then named Carbon Fiber
Products, Inc., acquired the Nevada corporation named Cyntech Technologies, Inc.
in a so-called "reverse acquisition" and recapitalization. In this transaction,
Utah Carbon Fiber issued 25.9 million shares of common stock to the former
Nevada Cyntech stockholders, which constituted approximately 89.3% of the 29.0
million shares of Utah Carbon Fiber then outstanding.

         Immediately prior to the above transaction between Utah Carbon Fiber
and Nevada Cyntech, the stockholders of Utah Carbon Fiber effected a
16.5523-to-1 reverse stock split, which reduced the 51,312,152 shares
theretofore issued and outstanding to 3,100,000 shares immediately prior to
consummation of the merger with Nevada Cyntech. All share and per share amounts
in this report have been adjusted to reflect such reverse stock split, unless
stated to the contrary.

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<PAGE>

         Also prior to completing the above transaction, Utah Carbon Fiber
issued 1,143,345 shares of common stock (18,925,000 pre reverse split shares) in
consideration of services rendered and the cancellation of $996,254 owed in
principal and accrued interest. In addition, Utah Carbon Fiber also transferred
to an affiliated entity, H&P Investments, substantially all of its assets and
liabilities, excluding trade receivables and payables. In consideration of such
transfer, we cancelled $1,257,521 of indebtedness owed to H&P Investments, and
H&P Investments agreed to assume $1,413,736 of indebtedness owed by us to third
parties or to H&P Investments. See Part III. Item 12. Certain Relationships and
Related Transactions. In addition, the former officers and directors of Nevada
Cyntech became the officers and directors of Utah Carbon Fiber, which then
changed its name to Cyntech Technologies, Inc.

         As a "reverse acquisition," this transaction was accounted for as a
recapitalization of the Utah Carbon Fiber corporation, giving effect to the
acquisition of all of the issued and outstanding stock of the Nevada Cyntech
corporation. The surviving entity reflects the assets and liabilities of the
Utah and the Nevada corporations at their historical book value, and the issued
common stock and additional paid-in capital are that of the Utah Carbon Fiber
corporation. See Part III. Item 12. Certain Relationships and Related
Transactions, and Note 1 to Notes to Consolidated Financial Statements.

Proposed Business

         Petrochemicals are processed chemicals that originate from petroleum or
natural gas, including synthetic rubber and plastics, consisting chiefly of
compounds of the basic elements hydrogen and carbon. These compounds are also
called hydrocarbons. We propose to develop and operate plants using proprietary
technologies known as the Windstar ThermReTec(tm) process to produce marketable
petrochemical fuels, chemicals and gases, as well as scrap steel, through the
recycling of hydrocarbon-based products such as used tires and plastics.

         In developing these plants, we will need to:

         o        select and acquire proposed sites that we believe will enable
                  us to obtain required plant feedstock and a market for our
                  products;

         o        design plants suitable for the feedstock to be processed;

         o        obtain necessary financing for capital costs and initial
                  operating expenses;

         o        secure necessary environmental permits, zoning clearances and
                  other approvals; and

         o        complete construction.

         We expect that feedstock for Cyntech plants will consist of waste tires
and other rubber products or plastics, synthetic carpet and other hydrocarbon
waste products. Based upon our management's discussions with state officials and
tire-industry professionals, we believe that in the location of our first
intended facility, the Houston metropolitan area, these materials may be
obtained at no cost and that firms that generate or collect such items may pay
us to accept and the recycle such materials. Because we believe that the Houston
metropolitan area is representative of similar metropolitan areas nationally, we
anticipate that a supply of feedstock sufficient to operate a Cyntech plant will
likely be most available in industrial and commercial areas at no cost to us or
even with payments to us for accepting certain feedstock. Similarly, our
management's informal discussions with potential purchasers lead us to believe
that markets for the products that we recover may be available in such areas.

         Preliminarily, we have determined to locate our first Cyntech plant in
Chambers County, Texas, in the vicinity of the petrochemical industries of the

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City of Mount Belvieu. We are now seeking the initial equity capital needed to
begin development of a plant in Chambers County. As initial equity is obtained,
it will be necessary to complete the remainder of the development steps outlined
above. We previously signed a nonbinding engagement for project debt financing
for approximately 85% of the estimated $92 million cost of the Chambers County
plant, subject to a number of conditions. This engagement has now expired, and
we are in the initial stages of identifying potential alternative sources of
financing. As of the date of this filing, we have no commitment from any source
to provide financing. We intend to design the Chambers County plant initially to
process waste tires and other rubber products and plan later to add equipment to
process plastics and other hydrocarbon materials.

         We have recently begun to investigate the possibilities of developing a
smaller, more limited purpose, lower cost facility that would focus on the
processing of waste oils into diesel fuel. We currently have not determined
whether such a facility would be able to utilize the Windstar ThermReTec(tm)
process we have licensed from Windstar Research and Engineering, Ltd., or
whether we would be required to obtain rights to the technology from others. We
have no agreements relating to any such possible facility and cannot assure that
we will proceed with this investigation.

         As part of developing a Cyntech plant, we will need to enter into
commitments or arrangements to acquire plant feedstock and market products
recovered. We currently have no such commitments or arrangements. Based on the
familiarity of our management and consultants with the nature of the
petrochemical industry in the Chambers County area, we believe that feedstock
may be available and that products recovered may be marketable in the Chambers
County petrochemical and industrial area.

         Based upon several research missions to Europe, we believe that if we
are able to construct our initial plant successfully, we may eventually expand
our operations into Europe. Although we have made no commitments to engage in
any European efforts beyond indicating our interest in participating in the
e-car feasibility study discussed under the heading "The European Market" below,
we have engaged in informal preliminary discussions with a limited number of
local officials in Germany, France, Belgium and England regarding potential
sites and operations. We do not expect we will be able to expand into Europe for
several years, if at all.

         We have an agreement to license the Windstar ThermReTec(tm) process
under an Exclusive Option Agreement with Windstar Research and Engineering,
Ltd., a separate company with which certain of our directors, officers and
stockholders are affiliated. Therefore, this agreement was not the result of
arm's-length negotiations. Under this license agreement, we can license the
Windstar ThermReTec(tm) process for a plant by paying Windstar a one-time,
preconstruction fee of $1.0 million for each Cyntech plant plus an ongoing
royalty equal to 7% of gross operating plant revenues during the life of the
plant. We will pay an additional $500,000 license fee if a plant processing
either rubber or plastic is expanded to process both. We have the right to enter
into these licenses for Cyntech plants until February 1, 2011, with the right of
Windstar to extend the agreement for two successive 10-year periods. See Part
III. Item 12. Certain Relationships and Related Transactions: Windstar License
of Windstar ThermReTec(tm) Process.

         The Windstar ThermReTec(tm) process consists of proprietary
petrochemical engineering features designed to integrate selected commercially
available processes. The Windstar ThermReTec(tm) process includes features that
Windstar claims are unique and that are described in a patent application filed
on March 4, 1998, with the U.S. Patent and Trademark Office. No patent has been
issued to Windstar, we cannot assure that one will be issued, and we do not know
when to expect such a determination to be made.

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<PAGE>

Business Strategy

         Our strategy is to apply petrochemical engineering technological
solutions to producing marketable petrochemical fuel products and scrap steel
through the disposal and recycling of hydrocarbon waste products, including
tires. This involves the following key approaches:

         o        Identify Feedstock Sources. We believe it is crucial in
                  planning a plant to identify sources of feedstock for initial
                  plant operation. We expect that a portion of the feedstock
                  will consist of material that we are paid for removing and
                  recycling, such as rubber tires for which many communities
                  currently pay a disposal fee. We expect that some of the
                  feedstock will consist of material that can be obtained
                  without cost because the informal investigation conducted by
                  our management indicates that there currently is no readily
                  available market for certain materials such as some rubber
                  products and waste plastics. The terms under which we can
                  enter into long-term arrangements to acquire feedstock will
                  affect the possible financial return from a plant.

         o        Recover Marketable Products. We will select feedstock and
                  design plants to maximize the recovery of products for which
                  there appears to be well-established alternative markets with
                  competitive pricing at levels that we forecast will generate a
                  financial return.

         o        Market the Products Recovered. We will attempt to establish
                  long-term marketing relationships with customers that we
                  forecast will have an ongoing need for our products.

The Recycling Opportunity

         Based on management's familiarity with the industry, we believe that
substantial numbers of used tires, other rubber products, and plastics are
placed in aboveground and other dumpsites each year. These plastics typically
include synthetic carpeting and automobile fluff, which is the plastic and
nonmetal residue from automobiles. Management believes these plastics strain the
limited capacity of landfills because these rubber and plastic materials are not
readily biodegradable. Although governmental responses to this disposal problem
have currently been limited to the imposition of recycling fees upon the initial
sale of such products, such as automobile tires, our management believes, based
upon its informal inquiries and discussions with state and industry officials,
that such products may ultimately be barred from landfills and the costs of
disposal imposed upon tire manufacturers and others who manufacture products
containing significant quantities of rubber and plastics.

The Windstar ThermReTec(tm) Process

         The proprietary Windstar ThermReTec(tm) process is based on recognized
general principles of thermal vacuum distillation and thermal cracking processes
that produce gases that are then condensed into oils that are further distilled
to enhance the quality and economic value of the products. The technology
combines several currently available petrochemical processes linked together
with proprietary features. Principal equipment and process components used in
the process are widely used in refineries or chemical plants. The proprietary
features of the Windstar ThermReTec(tm) process relate to the design of the
system to integrate and monitor these components to significantly enhance the
yield when converting feedstock into useable, marketable products. The Windstar
ThermReTec(tm) process has been tested in a pilot plant, as discussed below, but
no full-scale plant has been constructed to date. The pilot-plant test
processing approximately 40 pounds per hour of waste tires shredded to a nominal
one-inch size resulted in the production of oil, gas and carbon black. We cannot
assure that this technology will recycle rubber or plastic feedstock efficiently
or economically in a full-scale plant in actual operation.

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<PAGE>

         The plant components and processes used to recycle rubber products and
plastics are different in several details. Therefore, a plant designed to
recycle rubber cannot recycle plastics and vice versa. Accordingly, if we were
to have a single plant process both rubber and plastics, we would be required to
build two separate process systems at such plant.

         Cyntech plants will be designed to produce the following products:

         o        liquefied petroleum gases, including propane, butane and
                  ethylene, among others;

         o        intermediate petrochemical feedstocks, which are gas oils used
                  to produce methanol, naphtha, kerosene, diesel and gasoline;
                  and

         o        residual process gases used for cogeneration of electricity,
                  steam boilers or as a general plant fuel.

         The quantity and proportion of the products actually produced will
depend principally on the feedstock for a particular plant. We expect that a
plant recycling rubber tires would produce the following proportions of
products: methanol 50%, gas oil 35%, and liquefied petroleum gas 10%. The
remaining 5% would be process gas, which remains after the other products are
recovered and is often considered waste and flared off in refineries and similar
operations. We believe that, based upon our testing, we may be able to use this
process gas for cogeneration of electricity or heating steam boilers in our
facility. We will also recover scrap steel from the tires we process.

         We have conducted testing of the Windstar ThermReTec(tm) process over
the last several years. The most recent testing was conducted in October 1999 at
a testing facility owned by the manufacturer of the thermal cracking unit that
we propose to use. The testing was conducted for 16 hours a day for three days
by our management and consultants, at a sustained predetermined rate where the
outflow process gas was measured and condensed to produce the gas oil component.
Both the process gas and the gas oil were collected and analyzed by an
independent and certified A.S.T.M., or American Society of Testing and
Materials, facility. The other end products were collected and transported to
other testing facilities.

         The results of the October 1999 testing were consistent with our more
limited previous testing. The available equipment allowed us to produce gas oils
(naphtha, kerosene and diesel), process gas (wet stream liquid propane, not
fractionated) and carbon black. The testing process did not include a gas stream
fractionating unit, but we had the gas stream analyzed by an independent
laboratory that confirmed the expected results. The proposed facility for
Chambers County has been designed based on the technology and equipment used in
that test.

Proposed Construction of Chambers County Plant

         We propose to develop and build a Cyntech plant to recycle used tires
and other rubber products in Chambers County, in the Mount Belvieu area,
approximately 15 miles east of Houston, Texas. We project the plant will have an
aggregate cost of approximately $92 million to develop, construct and place in
operation. The proposed project will require approximately 25 acres of land in
an industrial area, which we have budgeted at a cost of about $500,000, based
upon our informal survey of recent real estate transactions in the area,
although we have not selected any specific parcel or entered into any land
purchase agreement. The rubber recycling plant will include an approximately
60,000 square foot building for the plant and offices at a cost of approximately
$4 million. We have contacted manufacturers to acquire both off-the-shelf
equipment and custom-made Windstar ThermReTec(tm) process components based on
the Windstar ThermReTec(tm) process, with an estimated cost of approximately $74

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million to $77 million, depending on final design specifications. We estimate we
will spend $10.5 million in addition for planning and design, Windstar licensing
fees, financing costs, start-up expenses and related items.

         Initially, we are designing the Chambers County plant only with a
design capacity to process approximately 18 million pounds of scrap tires and
other waste rubber per month. We refer to this capacity as Phase I. After this
rubber recycling plant is operational, we may expand the plant by adding
equipment and processes to recycle approximately 20 million pounds of scrap
plastics, used carpeting and auto fluff per month. This plant expansion, which
we refer to as Phase II, would likely cost an additional approximately $18
million to $22 million and require the payment of an additional $500,000 license
fee to Windstar. See Part III. Item 12. Certain Relationships and Related
Transactions: Windstar License of the Windstar ThermReTec(tm) Process.

         To date, we have reviewed a number of potential sites, identified
potential general contractors, reviewed the qualification of possible contract
plant management for the facility, and completed the equipment and installation
engineering drawings. We are now preparing to apply for the air quality permit
from the Texas Natural Resources Conservation Commission. Based on our
management's discussions with that Texas agency, we believe that the typical
time for review and approval of an air quality permit is approximately 120 to
180 days. Issuance of a permit is required prior to commencing construction. We
anticipate that construction of Phase I could commence no earlier than early to
mid-2002, subject to financing and issuing of the air quality permit.

         We are dependent on obtaining all of the estimated $92 million in
equity and debt financing required to develop, construct and begin operation of
this plant. Based upon our discussions with potential general contractors and
potential plant management, we believe that Phase I construction would take
approximately one year from the commencement of construction to the time the
facility is ready for operation. If and when we decide to proceed with Phase II,
after initial operation of Phase I, we estimate that Phase II would take
approximately 12 months of construction before it would be ready for operation.
See Part II. Item 6. Management's Discussion and Analysis or Plan of Operation:
Capital Requirements.

         To date, we have not constructed any facility for processing rubber or
plastic feedstocks. All of the physical components we plan to include in Cyntech
plants are proven and in wide use in the petrochemical industry. However,
significant portions of the Windstar ThermReTec(tm) process are based on
specific applications of accepted engineering principles that we have tested
only on a limited basis in the laboratory and in our pilot-plant testing. The
Windstar ThermReTec(tm) process has not been used in full-scale plants and is
commercially unproven. Further, these Windstar ThermReTec(tm) processes, while
successfully tested in our pilot-plant test, have never been integrated with the
existing standard petrochemical refinery and gasification equipment and
processes to be used in any operating Cyntech plant on a large-scale, commercial
basis.

Plant Feedstock

         Feedstock for Cyntech plants will consist of waste tires and other
rubber products or plastics, synthetic carpet and other hydrocarbon waste
products. We expect that some of the feedstock will consist of material that can
be obtained without cost because there currently is no readily available market
for such materials, such as some rubber waste products and waste plastics.

         We also expect that a large portion of the feedstock will consist of
material that we are paid for removing and recycling, such as rubber tires for
which many communities currently must pay a disposal fee. Industrial facilities,
municipalities or others that generate, collect or dispose of materials, such as
used tires, that do not readily degrade in landfills frequently pay others to
dispose of such materials. The terms under which we can enter into long-term
arrangements to acquire feedstock will affect the possible financial return from
a plant. In addition to such feedstock supply commitments, we will seek to

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establish relationships and alternative sources of additional feedstock to
diversify our sources of supply. We currently have no commitments or
arrangements for feedstock for the Chambers County or any other proposed plant.

         If we have to pay for plant feedstock, it will have a material and
adverse effect on the financial return we expect, although management projects
that we could still operate profitably, we cannot assure that this would be the
case.

         We expect to obtain feedstock from a variety of sources. For Cyntech
plants processing rubber feedstock, possible sources of feedstock include tire
manufactures, retailers, independent used tire collectors and landfill
operators. For plants processing plastic feedstock, possible sources of
feedstock include refineries, consumer waste management facilities,
municipalities and counties. Although currently we have no commitment or
arrangement to obtain any feedstock for the plants we may develop, our
management has engaged in informal discussions with officials of the Texas
Natural Resources Conservation Commission and the Houston Tire Dealers'
Association regarding the potentially available feedstock, and based upon those
discussions, we believe that there are adequate potential supplies of feedstock
in the Houston metropolitan area and that we will not be required to pay for
such feedstock.

Products, Markets and Distribution of Products

         We plan to market the petrochemical fuel products and scrap steel we
produce to manufacturers, retailers and users of:

         o        gas oils for the production of diesel fuels;

         o        other gas oils for the production of methanol, naphtha and
                  kerosene;

         o        residual gases and liquids;

         o        marine diesel;

         o        residual gas for cogeneration of electricity for our facility;
                  and

         o        scrap steel.

         In our first planned plant in Chambers County, Texas, we intend to
market these products to refineries, petrochemical plants and others in the
Houston and Gulf Coast areas. Because our products will be standard
petrochemical commodities, we believe that they can be sold readily in the area.
We will seek to enter into long-term agreements for the sale of products that we
produce at prices that are tied to market indicators or at other prices that may
be negotiated. Within the past several months, we have contacted approximately
15 potential purchasers for products we intend to produce to discuss potential
demand, deliverability and prices. Based upon these initial contacts and their
informal expressions of interest, we expect that we may be able to enter into
agreements to sell some, if not all, of our products, before construction of the
Chambers County facility commences, but we have no agreements in place now and
cannot assure that we will be able to establish any marketing arrangement. We
expect to increase our product marketing efforts as our engineering, financing
and construction efforts increase. We expect that we may not be able to reach
agreements with potential purchasers of the products we produce until
construction and initial operation of a Cyntech plant. Therefore, we may have
invested significant amounts in the construction and initial operation of a
Cyntech plant before knowing whether we will be able to sell the products that
we produce. Our inability to establish firm price and long-term sales contracts
for the products we produce may adversely affect our ability to obtain required
project financing. Our inability to develop a customer base may adversely affect
our results of operations. We may operate at a loss. Based upon our preliminary

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informal discussions with potential purchasers, we believe that we will be able
to sell scrap steel to steel plants in the Gulf Coast market, but again we have
no arrangement to do so.

         We believe, based upon our pilot-plant test results and discussions
with our consulting engineers, that we may be able to use residual gas we
produce as fuel feedstock for a gas turbine unit to generate at least a portion
of the electricity needed for the Chambers County facility.

         While we believe, based upon our initial informal marketing contacts
and inquiries, that most of the products will be able to be sold within 10 to 25
miles of our Chambers County facility, we estimate that the maximum marketing
distance from one of our facilities would generally be approximately 50 miles.
Transportation costs will likely reduce the financial return or make it
uneconomical to deliver most of our products beyond that distance.

Additional Facility Proposals

         Although we have no commitments to construct any particular additional
facilities, our agreement with Windstar Research and Engineering requires that
we construct 45 facilities over the initial 10-year term of that agreement. We
are currently investigating preliminarily the possibilities of constructing
additional facilities in Tampa, Florida, and in the Corpus Christi and
Dallas-Fort Worth areas of Texas. We estimate, even if we are able to meet our
anticipated schedule for the Chambers County facility, that construction of our
next domestic facility could commence no earlier than mid-2002.

The European Market

         We propose to participate as one of a number of sponsors of a
feasibility study for e-car Europe, being conducted by Ernst & Young, LLP. In
order to participate, we will be required to pay a $50,000 sponsorship fee by
February 2002. The e-car Europe study, which is scheduled to be completed by
April 1, 2002, proposes to investigate a number of methods for recycling
automobiles and their component parts. If we are identified as a viable
participant in the European automobile recycling industry as a result of the
e-car Europe study, we may have an opportunity--but no obligation--to begin
development of a European facility.

         We have also considered the possibility of locating facilities in
Germany, France, Belgium and England. While our initial inquiries included
preliminary discussions with local governmental officials regarding potential
facility locations, we have not entered into any agreements to locate facilities
in any of those countries and do not intend to do so in the immediate future.

Competition within our Proposed Industry

         Although there are other entities that recycle automobile tires and
other feedstock similar to that we propose to use, we believe, based upon the
research and discussions with industry members conducted by our management, that
other participants in this industry currently produce crumb rubber products for
playgrounds and rubber mats and fuel for cement kilns. We estimate that the
prices we may receive for the products we produce will likely be higher than the
prices for crumb rubber, which may enhance our competitive position. Other
industry participants, however, are substantially ahead of our current state of
development, are likely to have significantly more resources at their disposal,
and may have entered into agreements to obtain feedstock in certain areas that
would make it difficult or impossible for us to compete successfully.

                                       8
<PAGE>

Risk Factors

         An investment in our common stock involves significant risks. In
addition to the negative implications of all information and financial data
included or referred to directly in this report, you should carefully consider
the following risk factors before you decide to buy our common stock. This
report contains forward-looking statements and information concerning our
business and its future prospects. Those forward-looking statements should be
read together with these risk factors, because these risk factors could cause
actual results to differ materially from those forward-looking statements.

Risks Related to our Capital Requirements

         We need additional funds in order to continue.

         We will need additional funds in order to continue. As of July 31,
2001, we had a working capital deficit of $626,000 and a stockholders' deficit
during the development stage of $785,000. We have no revenues from any source
and are completely dependent on the receipt of funds from external sources to be
able to continue. Currently, our recurring expenses are approximately $175,000
to $250,000 per quarter for general, administrative and other operating expenses
unrelated to the development of our proposed Cyntech plant in Chambers County,
Texas. The majority of this amount is related to consulting expense and related
party consulting expense on which we expect to be able to defer payment or
satisfy through the issuance of securities. Actual cash expenditures for
general, administrative and other operating expenses are expected to be
approximately $75,000 to $100,000 per quarter. We expect that our general,
administrative and other operating expenses will increase substantially as we
accelerate our efforts to develop our Chambers County plant, satisfy increased
reporting and stockholder communications obligations under the securities laws,
and seek needed additional capital required for our proposed business. We cannot
assure that we will be able to obtain funds required to continue. We will need
substantial amounts of additional equity capital in order to develop our
proposed Chambers County plant.

         We will require substantial amounts of debt project financing to
         develop our proposed Chambers County plant.

         We estimate that we will require approximately $77 million in project
financing in order to develop our proposed Chambers County facility. We
previously engaged an unrelated firm to provide project financing equal to 85%
of permitted plant costs, subject to a number of material conditions that we
were required to satisfy, including to:

         o        design and complete the engineering of the plant;

         o        execute contracts to obtain a site for the plant, construct
                  and manage the plant, obtain a supply of feedstock, sell our
                  products, and accomplish other tasks;

         o        obtain all required licenses and other approvals;

         o        obtain a financial bond to pay the loan balance plus related
                  costs if we default;

         o        provide a report to the lender from an independent engineer to
                  the effect that our financial forecasts relating to the
                  operation of the plant are accurate and will result in
                  adequate cash flow to repay the borrowings; and

         o        satisfy a number of other requirements.

         Our previous engagement with this firm expired before we were able to
obtain the initial equity needed to fund or meet the foregoing obligations.

                                       9
<PAGE>

Although the foregoing financing opportunity has expired, we expect that our
ability to obtain any project financing may be subject to similar conditions. We
cannot assure that we would be able to meet such conditions. If debt financing
cannot be obtained, we might be required to seek additional equity capital,
which may dilute the interest of all stockholders.

         We must obtain a substantial amount of equity capital before we
         complete project financing for our proposed Chambers County plant.

         We estimate that we will be required to obtain approximately $15 to $20
million or more in additional equity capital in order to qualify for project
financing for our proposed Chambers County plant. We anticipate that
substantially all of the needed equity capital must be raised in order to
satisfy the financial conditions for a minimum debt-to-equity ratio to qualify
for project financing for the Chambers County plant. Delays in obtaining our
required equity capital will correspondingly delay our satisfaction of the
conditions that may be required to arrange project financing and, in turn, the
construction of the Chambers County plant. Even if we are able to raise the
equity that we estimate we will need to qualify for project financing, we may
nevertheless be unable to obtain that financing, which may force us to seek even
more equity and potentially further dilute the interest of existing
stockholders. If we are unable to obtain required funding from debt and equity
sources, we may be unable to construct a plant, commence operations, or continue
in existence.

         We anticipate having substantial future capital needs.

         Even if we are able to fund construction of the Chambers County plant,
we estimate that our future capital needs, particularly for expansion of the
proposed Chambers County plant to process waste plastics as well as for
developing any additional plants that we may undertake in the future, will be
substantial. The extent of our future capital requirements will depend on many
factors, including our possible desire to develop additional plants, success in
developing additional plants, results of operations, the availability of funding
from third parties through strategic alliances, joint ventures or other
collaborative arrangements, and other factors not within our control. We cannot
estimate the extent of our future capital needs, and it is possible that our
estimates will be inaccurate to a significant degree. Based on our current
estimates, however, we anticipate that we will seek additional required funds
from the sale of securities, new borrowings or other external sources. If our
capital expenditures differ materially from our estimates, we may require
additional financing sooner than anticipated. We have no commitments for any
such additional capital that we may need. See Part II. Item 6. Management's
Discussion and Analysis or Plan of Operation: Capital Requirements.

         We cannot assure that we will be able to obtain required additional
funds on acceptable terms, if at all. In addition, our cash requirements may
vary materially from those now planned because of the results of process
testing, potential changes in the sources of feedstock and the terms on which it
can be obtained, competitive technologies, future research and development,
issues related to patent or other protection for proprietary technologies,
regulatory approvals, and other factors. If adequate funds are not available, we
may be required to delay, reduce the scope of, or cancel the proposed Chambers
County facility and be unable to commit to any other plant development projects.

         If we finance the Chambers County facility with secured project
         indebtedness, essentially all of our assets will be encumbered and
         subject to foreclosure if we are unable to make the required payments.

         If we construct the Chambers County facility with project indebtedness
secured by encumbrances on all of our facilities, substantially all of our
operations will have been financed and leveraged through such a financing
arrangement. Our investment in the Chambers County facility will only be
profitable if it generates cash flow sufficient to cover the principal and

                                       10
<PAGE>

interest payments due under the financing arrangement, if we are able to obtain
financing. Notwithstanding any results of operations or available cash, we would
be required to make payments of principal and interest on such a loan when due.
Such payments may leave us with insufficient cash to fund operations, which may
materially affect our ability to continue. Because essentially all of our
properties and assets would likely be encumbered to secure such a loan, failure
to make a payment could result in foreclosure on and loss of such properties and
assets. Additionally, because of such encumbrances, it may be difficult or
impossible for us to obtain alternative debt financing.

Risks Related to the Proposed Development and Operation of Cyntech Plants

         Our beliefs regarding the availability of feedstock have been based on
         limited information and if those beliefs are not well founded, we may
         not be able to operate Cyntech plants profitably.

         Our plan of operation for proposed Cyntech plants is based on our
belief, formed in reliance on our management's general experience in the
industry and informal conversations with operators of state and industry
facilities in the area of our first proposed plant, that the feedstock we need
will be available and that we may even receive a fee for accepting and disposing
of various materials, particularly used tires, that will represent a substantial
portion of the feedstock requirements for our plants. We have no commitment from
any storage, collection or disposal facility, or other source of used tires to
obtain any used tires or other feedstock for the Chambers County or any other
plant. We cannot assure that we will be able to enter into any agreement under
which we will be able to obtain the necessary feedstock or receive a fee for
recycling used tires or other feedstock. A number of firms have previously
attempted to operate various plants to recycle used tires and other feedstock,
but many have been financially unsuccessful and are no longer in operation,
perhaps because they were unable to obtain sufficient feedstock or fees for
accepting and recycling the materials used for feedstock. If we are unable to
obtain sufficient feedstock, if we are not paid to accept and recycle these
materials, or if we are required to pay for feedstock, our financial return from
operation of Cyntech plants would be substantially and adversely affected. We
cannot assure that any Cyntech plant will be profitable.

         The Windstar ThermReTec(tm) process is in its early stages of
         development and we face significant technological uncertainties.

         We are in the development stage and have not yet built a facility, used
the technology we have licensed in a full-scale plant, or produced any products.
We expect that we will require significant further development, testing and
process refinement before the first Cyntech plant will become operational. Our
efforts remain subject to all of the risks inherent in new product and process
development, including unanticipated technical, regulatory or other problems
that could result in material delays or significant cost increases. For the near
future, substantially all of our resources will continue to be dedicated to the
implementation and commercialization of the Windstar ThermReTec(tm) process. The
results of this implementation and commercialization of the Windstar
ThermReTec(tm) process may be inconclusive or may not be indicative of the
actual results of its full-scale commercial use. If we encounter unfavorable
development or test results, we may be forced to abandon the implementation of
specific processes or products that we might otherwise have believed to be
promising, in which case we may not be able to recover costs incurred in related
research and development efforts. We cannot assure that any Cyntech facility
will be built, that the technology will perform as laboratory tests have
indicated, or that we will ever produce any products.

         We are and will continue to be dependent on Windstar for the technology
         that is essential to our development and operations.

         We rely a great deal on the technical expertise of Windstar, a separate
company with which certain of our officers, directors and stockholders are

                                       11
<PAGE>

affiliated, and on the Exclusive Option Agreement we have entered into with
Windstar for the right to use the Windstar ThermReTec(tm) technology. At the
same time, however, we have little or no control over Windstar or how Windstar
conducts its business. If Windstar were to breach its agreement and refuse to
license the Windstar ThermReTec(tm) technology for our use, if Windstar were to
breach its agreement and refuse to provide us with design, engineering and
permitting assistance, if Windstar were to breach its agreement and license the
Windstar ThermReTec(tm) technology to our competitors, or if Windstar were to
allow its Windstar ThermReTec(tm) technology to become obsolete or outdated, it
would have a material adverse effect on our operations.

         Our Exclusive Option Agreement with Windstar imposes a number of
         requirements on us and if we fail to perform, we may lose access to the
         Windstar ThermReTec(tm) process.

         Under our agreement with Windstar, we were required to pay a $100,000
licensing fee for the Chambers County facility to Windstar by May 2, 2001, an
additional $250,000 licensing fee for the Chambers County facility by July 1,
2001, and the final $500,000 licensing fee for the Chambers County facility by
July 31, 2001. Windstar has granted our written request to extend the due dates
for the subsequent payments to August 1, 2003. Additional requirements imposed
upon us by the agreement include the requirements to commence building of new
facilities according to an aggressive schedule (one facility in 2003, two in
2004, three in 2005, four in 2006, five in 2007, and six in each year
thereafter), pay license fees of $1.0 million per facility, and pay monthly
operating fees based on gross income of any plants that become operational.

         If we fail to meet any of the requirements imposed on us by the
Exclusive Option Agreement, Windstar has the right to deliver to us a notice of
default that provides at least 180 days notice of termination and allows us 90
days to cure the default and thereby prevent termination of the agreement. If
Windstar delivers to us a notice of default and we are unable to cure that
default, Windstar may terminate the agreement with 180 days notice and we would
thereafter lose access to the Windstar ThermReTec(tm) process, in which case we
may be unable to continue.

         Our business is subject to substantial environmental regulation and our
         activities will carry certain inherent risks related to environmental,
         fire and public health issues.

         Our business will be subject to numerous laws and regulations
concerning the storage, use and discharge of materials into the environment, the
remediation of environmental impacts, and other matters relating to
environmental protection. These laws and regulations may impose costs on our
operations that make it impossible to operate in a cost-effective manner.
Initially, we need to obtain an air quality permit before we commence
construction of the Chambers County facility. Because Chambers County has been
designated as a "severe" nonattainment county for ozone and volatile organic
compounds under the Clean Air Act, additional state permits will be required if
it is determined that our facility will result in emissions of those materials
above certain levels. If we are unable to obtain the required air quality permit
and any additional permits that may be required, we will be unable to construct
and operate the Chambers County facility, which would have a material adverse
effect on the implementation of our business plan as we seek an alternate
location and essentially restart much of the development process. Further,
although we intend to comply with all applicable laws and regulations, we may
violate one or more of these laws and regulations, which could result in the
imposition of sanctions including the loss of certain permits or license, civil
sanctions or criminal penalties.

         Our operations may require us to stockpile certain feedstock, such as
tires, from time to time. When stockpiled above ground, tires create certain
fire, public health and environmental hazards ranging from fires, which generate
large and dense clouds of black smoke and are extremely difficult to extinguish,
to the creation of vast breeding grounds for mosquitoes and vermin. Finally, the

                                       12
<PAGE>

petrochemical products we intend to produce could create certain environmental
hazards if we fail to handle them properly or if we fail to contain them.

         We will be heavily dependent on our continuing relationships with third
         parties.

         We have acquired the right to use the Windstar ThermReTec(tm)
technology, which will form the basis for our operations, from Windstar, an
affiliated entity. If we were to become unable to utilize that technology, or if
the use of that technology were to prove not to be cost-effective, it would have
a substantial adverse effect on our development and our ability to commence and
continue operations.

         Additionally, our strategy for the development of our plants and
marketing our products requires us to enter into agreements with providers of
feedstock and customers for the products we intend to produce. Our commercial
success will be dependent upon these outside parties performing their respective
contractual responsibilities. Based on publicly available information, we
believe that the inability to obtain feedstock and be paid for accepting that
feedstock at a rate that makes production cost-effective may have substantially
reduced the economic return for other rubber and plastic recycling facilities.
There can be no assurance that we will be able to negotiate these agreements on
favorable terms or at all. Even if we are able to enter into the necessary
agreements, there can be no assurance that such parties will perform their
obligations as expected. Our prospects will be significantly affected by our
ability to successfully obtain agreements with suppliers of feedstock,
principally used tires and plastics, and sales contracts for the sale of
products to customers located within a reasonable distance from our facility.

Risks Related to our General Proposed Business

         We remain at an early stage of development, have not yet tested our
         processes in full-scale plants, and have no operating history, all of
         which makes it difficult for investors to determine whether we will
         accomplish our objectives.

         Because we only recently initiated our proposed business, we are still
at an early stage in the development of our proposed Cyntech plants. We have not
tested our processes in a full-scale plant. Therefore, we have no operating
history on which investors can base an evaluation of our business and prospects.
Accordingly, potential investors must consider the risks and difficulties we
face as an early stage company with no operating history proposing to enter into
an innovative and untested business. Our business objectives must be considered
speculative, and there is no assurance that we will satisfy those objectives. We
cannot be certain that our business strategy will be successful.

         We are heavily dependent on our executive officers.

         Our success depends on the continued contributions of our executive
officers, particularly R. Frank Meyer, our President, and Charles Tovey, Senior
Vice President for Engineering and Operations. Mr. Meyer is central to our
vision, development and growth and has been chiefly responsible for developing
all of our relationships with our other executives, directors and external
consulting entities. Charles Tovey has played a substantial role in the
development of our business plan and the industry relationships we have
developed, particularly in Texas. We currently do not have keyman life insurance
on any of our executives. Even if we continue to rely on consultants for various
engineering, design and other specialized services, we will need to recruit and
retain additional personnel, including technical advisors and management, and
develop additional management expertise. Our inability to acquire such services
or to develop such expertise could have a material adverse effect on our
operations. See Part III. Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act.

                                       13
<PAGE>

         Our officers and directors are subject to conflicts of interest.

         Our officers and directors and their affiliates have been, are and will
continue to be subject to significant conflicts of interest. Certain officers
and directors will be subject to competing demands for their time as they divide
their attention between our business and their other business and investment
interests. Certain of our directors, officers and stockholders have been or are
affiliated with Windstar, the licensor of the Windstar ThermReTec(tm)
technology. The Exclusive Option Agreement under which we will obtain technology
from Windstar was not the result of arm's-length negotiations. There can be no
assurance that any of the foregoing or other conflicts of interest will be
resolved in favor of our stockholders or us. We have adopted no policies
respecting the resolution of actual or potential conflicts of interest.

         If we are unable to protect our intellectual property, we may lose a
         valuable asset or incur costly litigation to protect our rights.

         Our success will depend, in part, upon our intellectual property
rights. We obtain rights to such intellectual property under our Exclusive
Option Agreement with Windstar. To date, Windstar has not been granted and does
not hold any patents. A patent application was made for certain proprietary
technology on March 4, 1998, and has been assigned to Windstar, a separate
company with which certain of our officers and stockholders are affiliated. That
patent application has not yet been approved, we cannot assure that any patent
will be granted, and we are unsure when such a determination will be made. We
also will rely on unpatented trade secrets and know-how to protect the Windstar
ThermReTec(tm) process. If the patent application assigned to Windstar is
denied, we will be forced to rely to a greater degree on trade secrets and
know-how and our ability to protect our intellectual property will be reduced to
some degree. Our inability to protect these secrets and know-how could have a
material adverse effect on our business and prospects. We intend to protect our
proprietary information by entering into confidentiality agreements with
employees, consultants and potential business partners. These agreements may be
breached or terminated, creating a potential or actual loss of our confidential
trade secrets and know-how. Litigation to enforce intellectual property rights
or to protect trade secrets could result in substantial costs and may not be
successful. Any inability to protect intellectual property rights could
seriously harm our business, operating results and financial condition. In
addition, the laws of certain foreign countries may not protect intellectual
property rights to the same extent as do the laws of the United States. Our
means of protecting our intellectual property rights in the United States or
abroad may not be adequate to fully protect those intellectual property rights.

         Third-party claims that we infringe upon their intellectual property
         rights could be costly to defend or settle.

         Litigation regarding intellectual property rights is common. We may,
from time to time, encounter disputes over rights and obligations concerning
intellectual property. Although we believe, based upon assurances from Windstar,
that our intellectual property rights in the Windstar ThermReTec(tm) technology
will be sufficient to allow us to operate and market our products without
incurring third-party liability, third parties may bring claims of infringement
against us. Windstar is contractually obligated to defend those claims, but we
cannot assure that Windstar will have the financial resources to do so. These
claims may or may not have merit. Any litigation to defend against claims of
infringement or invalidity could result in substantial costs and a diversion of
resources. Furthermore, a party making a claim could secure a judgment that
requires us to pay substantial damages. We may not be able to obtain
indemnification from Windstar, the owner of the Windstar ThermReTec(tm)
technology. Our business, operating results and financial condition could be
harmed if any of these events occurred.

                                       14
<PAGE>

         There are certain rules applicable to our common stock as a "penny
         stock," and those rules may limit the liquidity and the resale of our
         common stock.

         The Securities and Exchange Commission, or the SEC, has promulgated
rules governing over-the-counter trading in penny stocks, defined generally as
securities trading below $5 per share that are not quoted on a securities
exchange or Nasdaq or which do not meet other substantive criteria. Under these
rules, our common stock is currently classified as a penny stock. As a penny
stock, our common stock is currently subject to rules promulgated by the SEC
that impose additional sales practice requirements on broker-dealers that sell
such securities to persons other than established customers and institutional
accredited investors. For transactions covered by the rule, the broker-dealer
must make a special suitability determination for the purchaser and receive the
purchaser's written consent to the transaction prior to sale. Further, if the
price of the stock is below $5 per share and the issuer does not have $2.0
million or more net tangible assets or is not listed on a registered national
securities exchange or Nasdaq, sales of such stock in the secondary trading
market are subject to certain additional rules promulgated by the SEC. These
rules generally require, among other things, that brokers engaged in secondary
trading of penny stocks provide customers with written disclosure documents,
monthly statements of the market value of penny stocks, disclosure of the bid
and asked prices, and disclosure of the compensation to the broker-dealer and
the salesperson working for the broker-dealer in connection with the
transaction. These rules and regulations may affect the ability of
broker-dealers to sell our common stock, thereby effectively limiting the
liquidity of our common stock. These rules may also adversely affect the ability
of persons who acquire our common stock to resell their securities in any
trading market that may exist at the time of such intended sale.

         We have never paid any dividends and do not expect to do so in the
         future.

         We have not paid dividends in the past, and we do not plan to pay
dividends on such stock in the future, even if we were to become profitable.
Earnings, if any, are expected to be used to obtain license agreements and use
the Windstar ThermReTec(tm) technology in additional facilities and for general
corporate purposes, rather than for distributions to holders of common stock.

         There are substantial options outstanding that may limit our ability to
         obtain financing in the future and that may be exercised when the
         effect would be to depress the market price of the common stock.

         We have issued and outstanding options to purchase up to an additional
3,510,838 shares of common stock at a weighted average exercise price of $0.34
per share and options to purchase 3,000,000 shares of preferred stock at $0.50
per share. The existence of such options may prove to be a hindrance to future
financing, and the exercise of options may further dilute the interests of the
stockholders. The possible future resale of common stock issuable on the
exercise of such options could adversely affect the prevailing market price of
our common stock. Further, the holders of options and warrants may exercise them
at a time when we would otherwise be able to obtain additional equity capital on
terms more favorable to us.

         We may have incurred contingent liabilities in connection with our
         previous sales of common stock, in which we may have issued securities
         without an available exemption from registration under the Securities
         Act of 1933.

         We have issued an aggregate of approximately 5.8 million shares of
common stock since the reorganization between Nevada Cyntech and Utah Carbon
Fiber in December 1998 in reliance on exemptions from registration under the
Securities Act. Unless the sales of the shares qualify for an exemption from
registration, either pursuant to Regulation D promulgated under the Securities

                                       15
<PAGE>

Act or otherwise, the investors would have the right to rescind their purchase
of the common stock if they should desire to do so. Based on management's
understanding of the applicable requirements at the time we issued securities,
we then believed that our sales of common stock qualified for exemption from
registration. However, based on a subsequent further review and awareness of the
applicable technical requirements, we are now concerned that no exemption from
registration may have then been available for the issuance of 300,000 shares in
the Optima transaction, 225,000 shares to Oriental, 400,000 shares in the Oxford
transaction, and 300,000 shares to Messrs. Mallory and Reel in connection with
the Serengeti transaction. No investor has sought rescission or made a claim for
damages. Since compliance with exemptions from registration is highly technical
and quite difficult, it is possible that if an investor should seek rescission,
he or she would succeed. A similar situation prevails under state law in the
states where the common stock may have been offered without registration in
reliance on specific exemptions from registration that require compliance by us
with stringent filing requirements or other conditions, some of which must be
satisfied prior to making an offer in a specific state. If a number of investors
were successful in seeking rescission, we would face their financial demands,
which could have an adverse effect on the nonrescinding investors and us.
Inasmuch as the basis for relying on exemptions from registration is factual,
depending on our conduct and the conduct of persons contacting prospective
investors and making the offering, we have not received a legal opinion to the
effect that any offer and sale of securities has been exempt from registration
under any federal or state law. Instead, we have relied on the operative facts,
as documented by us, as our basis for such exemptions.

         We may also be subject to civil or other enforcement or remedial
actions by federal and state authorities that, upon review, may conclude that an
exemption from registration was not available for various transactions in which
we offered and sold securities. We have not been advised of any inquiry or
investigation by any federal or state securities agency, but we cannot assure
that such investigation may not be initiated in the future. If such inquiry or
investigation were to result in an agency determination that action should be
brought against us, we may incur costs of investigating and defending our
position. Any finding in an administrative action or court proceeding that we
have violated the law would impose on us the obligation to disclose such
violation and may impair our ability to seek financing in reliance on certain
exemptions from registration under applicable federal and state securities laws.

         If all investors to whom we have offered securities in reliance on
exemptions between the reorganization between Nevada Cyntech and Utah Carbon
Fiber in December 1998 and November 9, 2001, were to seek rescission, we would
be exposed to claims relating to an aggregate of 5,857,253 shares that were
issued in consideration of $2,881,698 in cash and $645,766 in services, for a
total of $3,527,464, or approximately $0.60 per share. We do not have the
financial resources to pay such a claim were it to be successfully asserted by
the investors to whom we have issued such shares. Further, the existence of
these contingencies could impair our ability to raise capital in the future.

         We may have materially breached the terms of our Exchange Agreement,
         which creates the risk of a stockholder action for injunctive relief,
         damages or both.

         Under the terms of section 5.02(c) of our exchange agreement relating
to the combination of Utah Carbon Fiber and Nevada Cyntech, we agreed to
"immediately undertake efforts" and "in no event raise less than $5 million"
through a private placement of securities. Additionally, section 5.02(c)
provided that "the failure to raise a minimum of equity capital . . . shall
constitute a material breach of this agreement, and that such action shall be
appropriate for injunctive relief . . . (as other remedies will probably be
inadequate)."

         Although we have undertaken efforts to do so, those efforts have, to
date, been unsuccessful and we have not raised the $5 million in equity capital.
Although section 5.02(c) does not impose a specific deadline by which we are
required to raise the $5 million, we may be subject to legal action by the
former stockholders of Carbon Fiber Products, Inc. for injunctive or other
relief. While no such litigation has been initiated or threatened as of the date

                                       16
<PAGE>

of this filing, we face the risk of such litigation until the statute of
limitations operates to bar such a claim or we have successfully raised the
required equity capital, if we are ever successful in doing so.

Governmental Approvals, Regulations and Environmental Laws

Environmental Regulations and Permits

         Before we can begin construction of the proposed Chambers County
facility, we will need to obtain a New Source Review permit from the Texas
Natural Resources Conservation Commission, or Texas NRCC. Because Chambers
County has been designated as a "severe" nonattainment county for ozone and
volatile organic compounds, additional state permits will be required if the
Texas NRCC determines that our proposed facility will result in emissions of
those materials above certain levels. We cannot assure that the additional state
permits will not be required, or that if they are required, we will be able to
obtain those permits. The costs associated with obtaining the New Source Review
permit have been included in our cost projections for construction of the
Chambers County facility. Although we have budgeted for estimated costs of
compliance with environmental requirements in the operation of our proposed
plant, we cannot assure that actual costs may not be greater than anticipated.
In addition, the failure to meet applicable requirements may result in business
interruptions, suspensions or other actions that can result in expense or
delays.

         In addition to the initial permitting process, our proposed activities
are subject to numerous laws and regulations concerning the storage, use and
discharge of materials into the environment, the remediation of environmental
impacts, and other matters relating to environmental protection, all of which
may adversely affect our operations and the costs of doing business. It is
possible that state and federal environmental laws and regulations will become
more stringent in the future, which might increase our projected construction or
operating costs.

Safety and Health Regulations

         We must also conduct our operations in accordance with various laws and
regulations concerning occupational safety and health. Currently, we do not
foresee expending material amounts to comply with these occupational safety and
health laws and regulations. However, since such laws and regulations are
frequently changed and amended, we are unable to predict the future effect of
these laws and regulations.

Employees and Consultants

         As of the date of this filing, we had no employees. Our President and
Chief Executive Officer, R. Frank Meyer, and our Senior Vice President, Charles
Tovey, are engaged under written consulting agreements. J. P. Herrin, our Vice
President of Engineering, currently serves on a limited-time basis without
compensation. Ike Yancy, our Executive Vice President, currently serves on a
part-time basis with compensation negotiated on a project-by-project basis. See
Part III. Item 10. Executive Compensation. We also engage other consultants from
time to time to provide required engineering, accounting and other professional
services.

         We have entered into a consulting agreement with Laska & Associates,
Inc., under which we obtain management, financing and accounting services,
principally through the efforts of John Laska, a certified public accountant and
principal of Laska & Associates. We have agreed to pay Laska & Associates a
monthly fee of $15,000, plus expenses, for the period December 31, 1997, through
September 30, 1999. We have agreed to pay Laska & Associates $150 per hour, with
a minimum of $5,000 per month, plus expenses, from October 1, 1999, through

                                       17
<PAGE>

December 31, 2007. We have also granted Laska & Associates options to purchase
1.0 million shares of common stock at $0.20 per share, expiring
December 31, 2007.

         Laska & Associates has agreed to defer payment of consulting fees due
it until we have received sufficient funds to pay current operating expenses due
others.


                         ITEM 2. DESCRIPTION OF PROPERTY

         Our corporate office at 4305 Derbyshire Trace, SE, Conyers, Georgia
30094, is located in a separate onsite building at the residence of our
President and Chief Executive Officer, R. Frank Meyer. We reimburse Mr. Meyer
$175 per month, plus operating expenses, for this office, on a month-to-month
basis.


                            ITEM 3. LEGAL PROCEEDINGS

         We are not a party to any material legal proceedings, and to our
knowledge, no such legal proceedings have been threatened against us.

         We were named as a defendant in an interpleader action filed with the
Third Judicial District Court, Salt Lake County, Utah, on January 24, 2001, by
our stock transfer agent, Atlas Stock Transfer Corporation, naming the Company,
The Challenge, Ltd. (misidentified in the Complaint as "The Challenger Ltd."),
and John Does 1 through 20 as defendants, entitled Atlas Stock Transfer
Corporation vs. Cyntech Technologies, Inc., et al. (Case No. 010900775). These
proceedings related to stop transfer instructions we placed with Atlas Stock
Transfer Corporation at the request of Tex-Oil Chemical Limited Partnership
against 1,500,000 shares that had been pledged by it as collateral for payments
on behalf of the Company to The Challenge, Ltd., pursuant to a consulting
agreement. The court's file indicates that this action was dismissed, without
prejudice, on October 31, 2001, because of the plaintiff's failure to serve any
of the defendants with the complaint. It is impossible for us to predict whether
this action will be refiled.


           ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

                                       18
<PAGE>

                                     PART II


                        ITEM 5. MARKET FOR COMMON EQUITY
                         AND RELATED STOCKHOLDER MATTERS

         Between January 21, 1999, and November 6, 1999, our common stock was
traded in the over-the-counter market and quoted on the Electronic Bulletin
Board. Before January 21, 1999, and since November 7, 1999, our common stock was
and has been traded in the Pink Sheets. The trading volume of the common stock
is limited. This limited trading volume creates the potential for significant
changes in the trading price of the common stock as a result of relatively minor
changes in the supply and demand. It is likely that trading prices and volumes
for the common stock will fluctuate in the future, without regard to our
business activities.

         The following table sets forth the high and low closing bid quotations
for our common stock as reported on the Electronic Bulletin Board and in the
Pink Sheets, as appropriate, for the periods indicated, based on interdealer bid
quotations, without markup, markdown, commissions or adjustments (which may not
reflect actual transactions):

                                                       High           Low
                                                   -----------     ---------
2002 Fiscal Year
    Quarter Ended October 31..................        $0.24          $0.14

2001 Fiscal Year
    Quarter Ending July 31, 2001..............        $0.40          $0.16
    Quarter Ended April 30....................         0.32           0.19
    Quarter Ended January 31..................         0.45           0.20
    Quarter Ended October 31..................         0.49           0.25

2000 Fiscal Year
    Quarter Ended July 31.....................        $0.60          $0.10
    Quarter Ended April 30....................         0.75           0.11
    Quarter Ended January 31..................         0.55           0.12
    Quarter Ended October 31, 1999............         0.625          0.312

         We estimate that as of the date of this filing, we had approximately
350 stockholders.

Penny Stock Regulations

         Our stock is presently regulated as a penny stock and broker-dealers
will be subject to such regulations that impose additional requirements on us
and on broker-dealers who want to publish quotations or make a market in our
common stock. See Part I. Item 1. Description of Business: Risk Factors: Risks
Related to our General Proposed Business--There are Certain Rules Applicable to
our Common Stock as a "Penny Stock" and those Rules May Limit the Liquidity and
the Resale of our Common Stock.

Dividend Policy

         We have never paid cash dividends on our common stock and do not
anticipate that we will pay dividends in the foreseeable future. We intend to
use any future earnings primarily for the expansion of our business.

                                       19
<PAGE>

Transfer Agent

         Our registrar and transfer agent is Atlas Stock Transfer, 5899 South
State Street, Murray, Utah 84107.

Recent Sales of Unregistered Securities

         In addition to those issuances disclosed on our quarterly report on
Form 10-QSB for the quarter ended April 30, 2001, we have issued securities
without registration under the Securities Act on the terms and circumstances
described in the following paragraphs.

Stock Issued for Services

         Between May 1, 2001, and November 9, 2001, we issued 68,000 shares of
restricted common stock to four persons in exchange for professional and
technical services. As of the dates of these transactions, the market price for
our common stock ranged from approximately $0.40 to $0.12 per share. Each of the
foregoing transactions was negotiated in discussions with our President and
Chief Executive Officer, R. Frank Meyer. Each such purchaser had the opportunity
to ask questions of and receive answers from our executive officers and was
provided with access to our documents and records in order to verify the
information provided. Such shares were restricted securities taken for
investment. The certificates for such shares bear a restrictive legend. The
securities issued in the transaction described above were issued in reliance on
the exemption from the registration and prospectus delivery requirements of the
Securities Act provided in ss. 4(2) thereof.

Stock Issued for Cash

         Between May 1, 2001, and July 31, 2001, we issued and sold an aggregate
of 300,000 shares of restricted common stock for cash of $105,000, an average of
$0.35 per share, to two accredited investors. As of the dates of these
transactions, the market price for our common stock ranged from approximately
$0.40 to $0.14 per share. The offering was limited to, and each of the persons
receiving stock in the foregoing transactions was, on of our directors or an
affiliate of one of our directors. Each of the foregoing transactions was
negotiated in discussions with our President and Chief Executive Officer, R.
Frank Meyer. Each such purchaser had the opportunity to ask questions of and
receive answers from our executive officers and was provided with access to our
documents and records in order to verify the information provided. Such shares
were restricted securities taken for investment. The certificates for such
shares bear a restrictive legend. The securities issued in the transaction
described above were issued in reliance on the exemption from the registration
and prospectus delivery requirements of the Securities Act provided in ss. 4(2)
thereof.

Option Exercises

         In May 2001, Tex-Oil Chemical Limited Partnership, L.P., an accredited
investor and an affiliate of R. Frank Meyer, our President and a director,
exercised options assigned to it by R. Frank Meyer to purchase 237,500 shares
for $47,500, or $0.20 per share, and 61,544 shares for $15,386, or $0.25 per
share. Such shares were restricted securities taken for investment. The
certificates for such shares bear a restrictive legend. The securities issued in
the transaction described above were issued in reliance on the exemption from
the registration and prospectus delivery requirements of the Securities Act
provided in ss. 4(2) thereof.

                                       20
<PAGE>

Stock Issued in Miscellaneous Transactions

         On July 31, 2001, we issued 3,557,540 shares of restricted common stock
to Windstar Research and Engineering, Ltd., an affiliate of ours, as
consideration for Windstar's agreement to assume $1,778,770 of our accounts
payable and long-term debt. On such date, the market price for our common stock
was approximately $0.24 per share.

         On July 31, 2001, we issued 735,714 shares of restricted common stock
to Tex-Oil Chemical Limited Partnership, L.P., an accredited investor and an
affiliate of R. Frank Meyer, our President and a director, upon Tex-Oil's
conversion of $258,312 owed by us to Tex-Oil under a convertible promissory note
and $109,545 owed by us to Century Caribbean, Ltd. under a convertible
promissory note that Century Caribbean had assigned to Tex-Oil. Also on July 31,
2001, we issued 600,000 shares of our common stock to Tex-Oil upon our election
to convert a $300,000 note to equity. On July 31, 2001, the market price for our
common stock was approximately $0.24 per share. See Part III, Item 12. Certain
Relationships and Related Transactions: Agreements with Tex-Oil: Tex-Oil's
Guarantee Related to Certain Consulting and Financing Arrangements.

         Each of the foregoing transactions was negotiated in face-to-face
discussions with our executives. We provided the purchaser with business,
technical and financial information. Each such purchaser had the opportunity to
ask questions of and receive answers from our executive officers and was
provided with access to our documents and records in order to verify the
information provided. Such shares were restricted securities taken for
investment. The certificates for such shares bear a restrictive legend. The
securities issued in the transaction described above were issued in reliance on
the exemption from the registration and prospectus delivery requirements of the
Securities Act provided in ss. 4(2) thereof.

Options Issued

         We issued options to purchase 7,693 shares of our restricted common
stock to each of our directors as compensation for their service as directors.
These options are immediately vested, have an exercise price of $0.25 per share,
and expire three years after the date of their issuance. In the fiscal year
ended July 31, 2001, we issued the following numbers of options to our
directors:

   Name                                                      Number of Options

R. Frank Meyer.....................................              92,316
William F. Meyer...................................              92,316
Michael Dumdie.....................................              30,722
J.W. Feighner Jr...................................              23,079
Brian Haas.........................................              23,079

         Effective July 31, 2001, we issued to R. Frank Meyer, our President,
Chief Executive Officer and director, options to purchase 3,000,000 shares of
restricted preferred stock. These options are immediately vested, have an
exercise price of $0.50 per share, and expire five years after the date of their
issuance. As consideration for the issuance of these options, Mr. Meyer has
agreed to waive any claim for compensation for hours worked but not compensated
under his employment agreement. These options may not be exercised unless and
until our articles of incorporation are amended to authorize the issuance of
preferred stock that is entitled to vote with our common stock as a single
class.

         In March 2001, we issued to an individual we employ as a consultant to
perform miscellaneous services on a regular basis options to purchase 100,000
shares of restricted common stock. These options are immediately vested, have an

                                       21
<PAGE>

exercise price of $0.50 per share, and expire five years after their date of
issuance. This issuance of options was negotiated in discussions with our
President and Chief Executive Officer, R. Frank Meyer. The consultant had the
opportunity to ask questions of and receive answers from our executive officers
and was provided with access to our documents and records in order to verify the
information provided. The recipient has agreed that the shares to be issued on
the exercise of the options will be restricted securities taken for investment.
The certificates for such shares will bear a restrictive legend. The securities
issued in the transaction described above were issued in reliance on the
exemption from the registration and prospectus delivery requirements of the
Securities Act provided in ss. 4(2) thereof.

                         ITEM 6. MANAGEMENT'S DISCUSSION
                        AND ANALYSIS OR PLAN OF OPERATION

         You should read the following discussion and analysis in conjunction
with our consolidated financial statements included in this filing. The
following information contains forward-looking statements. See Special Note
about Forward-Looking Information. Our activities are subject to significant
risks. See Part I. Item 1. Description of Business: Risk Factors.

Overview

         We propose to develop and operate plants using the Windstar
ThermReTec(tm) process to produce marketable petrochemical fuel products and
scrap steel through recycling waste tires, plastics, carpet and rubber products.

         We are a development stage company and have had no revenue from
operations through July 31, 2001. For the years ended July 31, 2001 and 2000, we
incurred net losses of approximately $1,239,000 and $1,303,000, respectively. At
July 31, 2001, and July 31, 2000, we had net stockholders' deficits during the
development stage of approximately $785,000 and $2,361,000, respectively.
Accordingly, the independent auditor's report accompanying our audited financial
statements as of July 31, 2001 and 2000, included in this filing, raises
substantial doubt about our ability to continue as a going concern.

         During the development period, we have experienced and continue to
experience severe shortages of cash. We have met our cash requirements
principally through borrowings from affiliates and others and the issuance of
common stock. Although we intend to continue to rely on borrowings from
affiliates in the future to meet ongoing general, administrative and other
operating costs, we have no agreements with any of our affiliates or any other
persons or entities to provide us funds to enable us to meet those costs. We
will also require substantial amounts of capital from other sources in order to
develop our proposed Chambers County plant. We cannot assure that we will be
able to obtain required funds.

         In December 1998, the Utah corporation, then named Carbon Fiber
Products, Inc., acquired the Nevada corporation named Cyntech Technologies, Inc.
in a so-called "reverse acquisition." In this transaction, Utah Carbon Fiber
issued 25.9 million shares of common stock to the former Nevada Cyntech
stockholders, which constituted approximately 89.3% of the 29.0 million shares
of Utah Carbon Fiber then outstanding. Immediately prior to completing the above
transaction, Utah Carbon Fiber transferred substantially all of its assets and
liabilities, excluding trade receivables and payables, to certain of its
stockholders for 1,094,712 shares. In addition, the former officers and
directors of Nevada Cyntech became officers and directors of Utah Carbon Fiber,
which then changed its name to Cyntech Technologies, Inc. As a "reverse
acquisition," this transaction was accounted for as a recapitalization of the
Utah Carbon Fiber corporation, giving effect to the acquisition of all of the
issued and outstanding stock of the Nevada Cyntech corporation. The surviving
entity reflects the assets and liabilities of the Utah and the Nevada
corporations at their historical book value, and the issued common stock and

                                       22
<PAGE>

additional paid-in capital are that of the Utah Carbon Fiber corporation. See
Part III. Item 12. Certain Relationships and Related Transactions, and Note 1 to
Notes to Consolidated Financial Statements.

Results of Operations

         We had no revenues from operations during the years ended July 31, 2001
and 2000. Future revenues will depend on our ability to develop a Cyntech plant.

Years Ended July 31, 2001 and 2000

         Our consulting fees decreased to $122,000, or approximately 72%, for
the year ended July 31, 2001, as compared to $442,000 in such expenses for the
same period in the preceding year. This decrease was the result of a decreased
number of consultants and consulting activity in 2001. Related-party consulting
expenses increased to $322,000 or approximately 16%, for the year ended July 31,
2001, as compared to $278,000 in such expenses for the same period in the
preceding year. This increase was the result of an increased number of
related-party consultants. General and administrative expenses increased to
$476,000 or approximately 64%, for the year ended July 31, 2001, as compared to
$290,000 in such expenses for the same period in the preceding year. This
increase was the result of an accrual of $180,000 for engineering, design, plant
layout and other project development activities during the current year.
However, we expect that these costs will increase in the future.

Years Ended July 31, 2000 and 1999

         Our consulting fees increased to $442,000, or 14%, for the year ended
July 31, 2000, as compared to $388,000 in such expenses for the same period in
the preceding year. Related-party consulting fees increased to $278,000, or
approximately 7%, for the year ended July 31, 2000, as compared to $261,000 in
such expenses for the same period in the preceding year. These increases were
due to increased consulting activity in 2000. General and administrative
expenses decreased to $290,000, or 61%, during the year ended July 31, 2000, as
compared to $751,000 in such expenses for the same period in the preceding year.
These decreases were generally due to our decreased level of research and
development activities. However, we expect that these costs will increase in the
future. Interest expense increased to $217,000 for the year ended July 31, 2000,
as a result of converting a number of current notes and consulting fees payable
to long-term convertible debt, with interest at the rate of 12%, as compared to
$2,000 of finance charges incurred during the same period in the preceding year.

Liquidity and Capital Resources

         As noted above, since inception we have relied principally on proceeds
from borrowings from affiliates and others and from the issuance of securities
to satisfy our cash requirements for operating activities. From inception of
December 31, 1997, through July 31, 2001, we used net cash of $830,000 for
operating activities and $47,000 for investing activities to purchase property
and equipment. We funded these items with $499,000 received from the issuance of
common stock and $404,000 in proceeds from net borrowings, including $372,000
from affiliates, and $32,000 from nonaffiliates. During the year ended July 31,
2000, in order to conserve cash, $1,230,000 in consulting fees, related-party
notes and advances payable, and related accrued interest were converted into
long-term convertible notes due after May 1, 2002, on 30 days demand and
convertible into common stock at $1.00 per share. During the year ended July 31,
2001, a substantial portion of the amounts due under these convertible notes was
converted into common stock. See Part II, Item 5. Market for Common Equity and
Related Stockholder Matters: Recent Sales of Unregistered Securities: Stock
Issued in Miscellaneous Transactions.

                                       23
<PAGE>

         The independent auditor's report accompanying our audited financial
statements as of July 31, 2001 and 2000, included in this report, raises
substantial doubt about our ability to continue as a going concern. See
Consolidated Financial Statements.

Plan of Operation

         Our long-term strategy is to establish revenues through the development
of Cyntech plants, beginning with an initial plant in Chambers County, Texas.
Until our first Cyntech plant is constructed and placed in operation, we plan to
continue to obtain required funds through borrowings from affiliates and others
and from the issuance of common stock or other securities. To fund development
of the Chambers County facility, we will need both to obtain significant amounts
of additional equity through the issuance of common stock or other securities
and to obtain project financing in the form of long-term borrowings secured by
plant assets.

         We estimate that it will take approximately two to three months after
the receipt of at least $2.5 million in equity financing to complete the
preconstruction development of our first plant. Thereafter, we estimate that it
will take an additional 15 to 18 months for actual construction. We are not
likely to receive any revenues, other than possible immaterial amounts of tire
stocking fees we may collect for tires we accept and store on site during
construction, until 30 to 90 days after actual operations commence. Accordingly,
we do not anticipate revenues from our first Cyntech plant to be received prior
to the end of 2002. Delays in obtaining required financing or completing any
other development component would correspondingly delay the receipt of first
revenues from this project.

Capital Requirements

         As of July 31, 2001, we had deficit working capital of $626,000 and a
stockholders' deficit during the development stage of $785,000. We require
capital for general and administrative expenses and other corporate purposes, as
well as costs associated with the development, construction and initial
operation of our first Cyntech plant in Chambers County, Texas.

         In connection with our sponsorship of the e-car Europe feasibility
study, we have committed to make a total payment of $50,000 prior to February
2002. Additionally, we expect that we will require approximately $750,000 to
$900,000 between now and July 31, 2002, for general corporate purposes,
including general and administrative expenses, consulting fees and costs
associated with meeting our legal reporting and filing requirements. We expect
that we will be able to defer, or pay through the issuance of securities,
approximately $300,000 to $500,000 of this amount that is due to others,
particularly affiliates. We expect to meet these needs with funds provided
principally by borrowing from our affiliates, to the extent available, and our
sale of common stock. No one has agreed to loan us any money, accept securities
in lieu of cash payments, or buy any of our common stock.

         Under our Exclusive Option Agreement with Windstar, we had
licensing-fee payments of $250,000 and $500,000 due on August 1, 2001, and
August 31, 2001, respectively. Additionally, we had a $100,000 licensing fee due
to Windstar on May 2, 2001, which we were unable to pay. We have signed a
12-month note for that $100,000 payment that will come due on May 1, 2002.
Windstar has agreed to forbear from collecting on that note and from terminating
the Exclusive Option Agreement for our failure to make the required payments
until August 1, 2003. If we are unable to meet our payments to Windstar, we will
seek to negotiate extended payment terms, although we cannot assure we will be
able to do so. If we are unable to do so, Windstar would have the right to
terminate the license after giving us notice and an opportunity to cure our
default.

                                       24
<PAGE>

         Our total liabilities of approximately $832,000 as of July 31, 2001,
include past due accounts payable of $360,000, accrued liabilities of $102,000,
consulting fees payable of $8,000, notes payable of $72,000, related-party
payables of $110,000, and long-term debt due on demand after August 1, 2003, of
$180,000 due related parties. We will continue to seek the forbearance of our
creditors while we seek additional capital through the sale of securities. In
the interim, we will rely on the continuing forbearance from collection of our
creditors and on loans from affiliates to meet our pressing cash requirements.
We cannot assure that either our creditors will continue to forbear or that we
can borrow any required funds from affiliates for these purposes. We will
attempt to negotiate extended due dates on the notes payable, particularly those
due related parties. No one has agreed to renegotiate the terms of any loan or
to buy any of our common stock. If we are unable to renegotiate the terms of the
loans or make the required repayments, we may be unable to continue.

         In addition to general operating funds, we will require significant
amounts of capital in connection with the development of our first Cyntech
plant, which we estimate will cost a total of approximately $92 million. See
Part I. Item 1: Description of Business: Risk Factors: Risks Related to the
Proposed Development and Operation of Cyntech Plants--Our Exclusive Option
Agreement with Windstar imposes a number of requirements on us and if we fail to
perform, we may lose access to the Windstar ThermReTec(tm) process. Our goal is
to obtain approximately $15 million to $20 million in equity through the sale of
common stock, with the balance of the funds to be obtained through project
financing; however, there is no guarantee that we will be successful in
obtaining such funds.

         If we are unable to obtain the capital required to meet our obligations
under the Windstar license or negotiate extended terms that we can perform and
the license is terminated, we may be unable to continue.


                          ITEM 7. FINANCIAL STATEMENTS

         Our financial statements, including the auditors' report, are included
beginning at page F-1 immediately following the signature page of this report.


              ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.

                                       25
<PAGE>

                                    PART III


      ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Executive Officers and Directors

         Our articles of incorporation provide for the election of the entire
board of directors at each annual meeting of stockholders, with each director to
serve until the next annual meeting and until such director's successor is
elected and qualified. Officers are elected and serve at the pleasure of the
board of directors.

         The following table sets forth the name, age and position of each of
our current directors and executive officers:

          Name          Age                              Title
--------------------  -------  -------------------------------------------------
R. Frank Meyer          56     Director, President, and Chief Executive Officer
Michael Dumdie          29     Director
J.W. Feighner, Jr.      51     Director
William F. Meyer        53     Director and Treasurer
Charles Tovey           62     Senior Vice President
Ike A. Yancy            52     Executive Vice President
J. P. Herrin            70     Vice President--Engineering

         The principal occupation, title and business experience of our
executive officers and directors during the last five years, including the names
and locations of employers, are indicated below.

         R. Frank Meyer has been a Director, President and Chief Executive
Officer of our Company since December 22, 1998. He became a consultant to Nevada
Cyntech on its organization in December 1997 and a director in May 1998. From
1987 until June 1998, Mr. Meyer was an independent consultant and has held the
position of Senior Vice President and major stockholder with Caribbean Building
& Management, Miami, Florida, from February 1985 to December 1990. The company
was active in building multifamily apartments and condominiums in Florida and
built resorts throughout the Caribbean as developers-contractors and in joint
ventures. In 1990, Frank Meyer became active in the development of waste
hydrocarbon recovery technologies and formed Cyntech Research & Engineering to
develop, test and engineer the various technologies. Mr. Meyer, as President of
Cyntech Research, along with other investors, developed the various technologies
that will be utilized by Cyntech Technologies, Inc. Mr. Meyer sold all of his
interests in Cyntech Research to a family limited partnership in late July 2000,
and does not continue to serve as an officer, a director, or in any other
capacity. From 1990 through 1996, Mr. Meyer was the President of Synpro
Environmental Services, Inc. From 1996, Frank Meyer was a consultant providing
services to 12 different waste management and recycling companies. While
associated with these solid waste and recycling companies, he cooperated with
other chemical, electrical and power engineers and scientists, primarily in the
development of hydrocarbon recovery technologies. Mr. Meyer holds a BA degree in
industrial management and a minor in accounting from the University of South
Florida. R. Frank Meyer is the brother of William F. Meyer.

         William F. Meyer has been Treasurer and a Director since June 1998. Mr.
Meyer has been a part-time realtor and real estate developer in Georgia for more
than 25 years with Suwanee Realty Residential. He has been a high school

                                       26
<PAGE>

basketball coach and economics and government instructor, employed by the South
Forsyth County Board of Education, for the past 28 years, retiring in June 2001.
Mr. Meyer has a BA degree in education and pre-law from the University of South
Florida. William F. Meyer is the brother of R. Frank Meyer.

         Michael Dumdie joined our Board of Directors in March 2001. Mr. Dumdie
is currently a Dealer Financial Services Analyst for Mercedes Benz Credit
Corporation, a position he has held since 1998. Prior to that, Mr. Dumdie was
employed by Ernst & Young, LLP, as an Engagement Management Coordinator from
1997-1998, as a Senior Financial Analyst with Cox Enterprises from 1996-1997,
and as a Financial Analyst with NationsBank from 1994-1996. Mr. Dumdie earned an
MBA from Georgia State University in 1998, and a Bachelor's degree in Business
Administration from the University of Georgia in 1993. Mr. Dumdie is the
son-in-law of William F. Meyer and the nephew of R. Frank Meyer.

         J.W. Feighner, Jr. has been a Director since May 2001. For the past 20
years, Mr. Feighner has served as President of Vista Craft, Inc., a Columbus,
Georgia, screen printing firm, and as Chairman and 15% stockholder of Victory
Developers, Inc., a real estate development company that owns 32 shopping
centers in the southeastern United States. Mr. Feighner holds a BS degree in
Industrial Management from Georgia Tech and an MBA degree from Tulane
University.

         Charles Tovey, retired since 1990, became Senior Vice President of
Nevada Cyntech in July 1998, and of our Company when it acquired Nevada Cyntech
in December 1998. Mr. Tovey has spent over 40 years in the petrochemical
industry and related fields, with experience in plant operations, pipeline
construction and operations, marketing of crude oil and related finished
products, labor relations, and administration. He was employed as a labor
relations manager for Southland Paper Mill from 1969 through 1973; as Vice
President of Administration and Labor Relations for Coastal Corporation from
1973 through 1978; as Vice President of Southwest Petroleum Chemicals from 1978
through 1981; as Manager of Operations for E.W. Moran Drilling Contractors from
1981 through 1985; as Vice President of Crude Oil Marketing for El Toro Energy
from 1985 through 1990. Mr. Tovey has a BS degree from the University of Houston
in Economics and Psychology and has had advanced management training at Harvard
University Business School.

         Ike Yancy joined the Company in April 1999. He was a U.S. Navy officer
from August 1968 until August 1973. He was employed in the sales force of N.L.
Industries from September 1973 until March 1979, based in Greensboro, North
Carolina, and Charlotte, North Carolina. He was a technical sales representative
at Cincinnati Milacron Chemicals from April 1979 through March 1980. He was a
sales representative and a regional manager for Anzon America, based in Atlanta,
Georgia, from April 1980 until May 1985. He was an account representative and a
Regional Vice President for Maritz Performance Improvement Company from June
1985 through September 1993, based in Atlanta. Mr. Yancy was Vice President of
Marketing for Commander Aircraft, based in Atlanta, from February 1995 through
August 1996. Additionally, Mr. Yancy has owned his own consulting practice
specializing in efforts to return failing or troubled companies to profitability
since October 1993. He holds a BA degree in English and Math from the University
of Alabama.

         J. P. Herrin became a consultant to Nevada Cyntech in July 1998 and to
our Company when it acquired Nevada Cyntech in December 1998. Since October
1982, Mr. Herrin has also been President of J.P. Herrin & Associates, a San
Antonio, Texas, gas processing consulting engineering firm. Since approximately
1990, Mr. Herrin consulted informally with Mr. Meyer from time to time about
hydrocarbon processing. Mr. Herrin was employed with Valero Hydrocarbons
Company, formerly Coastal States Gas Company, from 1963 to 1982, where he was
made a Vice President in 1976. During his employment with Valero, Mr. Herrin was
directly responsible for the design, engineering and construction of 21 gas
liquids extraction plants and eight gas treating plants. Mr. Herrin holds a BS
degree in chemical engineering from Oklahoma State University.

                                       27
<PAGE>

Compliance with Section 16(a) of the Exchange Act

         Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to us during or respecting our last fiscal year ended July 31, 2001,
and any written representation referred to in paragraph (b)(2)(i) of Item 405 of
Regulation S-B, the following directors, officers, beneficial owners of more
than 10% of any class of our equity securities, and any other persons known to
be subject to Section 16 of the Exchange Act, have not filed, on a timely basis,
reports required by Section 16(a) of the Exchange Act:

         R. Frank Meyer, Michael Dumdie, William F. Meyer, J.W. Feighner, Jr.,
Charles Tovey, Ike Yancy, J.P. Herrin, and Tex-Oil Chemical Limited Partnership
filed required reports on Form 3 after the date they were due. Christopher
Bromley has failed to file the required report on Form 3.

         R. Frank Meyer was required to file three required reports on Form 4,
with a total of seven transactions to be reported. J.W. Feighner was required to
file three required reports on Form 4, with a total of seven transactions to be
reported. Michael Dumdie was required to file three required reports on Form 4,
with a total of three transactions to be reported. William F. Meyer was required
to file three required reports on Form 4, with a total of three transactions to
be reported. Ike Yancy was required to file one required report on Form 4, with
a total of one transaction to be reported. We do not believe any of these
reports on Form 4 have been filed.


                         ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation

         The following table sets forth for each of the last three fiscal years
the annual and long-term compensation earned by, awarded to or paid to each
person who served as a chief executive officer of the Company during the last
fiscal year and by each of the four other highest paid executive officers whose
compensation exceeded $100,000:
<TABLE>
<CAPTION>
                                                                             Long Term Compensation
                                                                        ----------------------------------
                                           Annual Compensation                  Awards           Payouts
                                   ------------------------------------ ------------------------ ---------
                                                                                                             All
                                                              Other     Restricted  Securities              Other
                          Year                               Annual       Stock     Underlying     LTIP     Compen-
       Name and          Ended                    Bonus      Compen-    Award(s)     Options/    Payouts    sation
  Principal Position    July 31    Salary ($)(1)   ($)      sation ($)     ($)       SARs (#)      ($)       ($)
----------------------- ---------  -----------  ---------- ------------ ----------  ------------ --------- ---------
<S>                       <C>       <C>           <C>         <C>       <C>         <C>             <C>      <C>
R. Frank Meyer......      2001      252,000            --         --       --       3,092,316(2)(3) --       34,034
  President (CEO)         2000      190,500(1)         --         --       --          92,316(2)    --       13,109
                          1999      197,000(1)         --         --       --          92,316(2)    --       13,040
</TABLE>

(1)      The amount reflected as salary is paid under a consulting agreement, as
         discussed below. Mr. Meyer has agreed to defer payment of consulting
         fees due him until we have received sufficient funds to pay current
         operating expenses due others. We have issued a promissory note for the
         $508,908 due R. Frank Meyer under his consulting arrangement, payable
         at any time after May 1, 2002, upon 30 days' demand. The principal and
         accrued interest on this note is convertible by Mr. Meyer to our common
         stock at $1.00 per share. Our liability under this promissory note has
         been assumed by Windstar. See Part II. Item 5: Recent Sales of
         Unregistered Securities: Stock Issued in Miscellaneous Transactions.

(2)      Mr. Meyer receives three-year options to purchase 7,693 shares at $0.25
         per share for each month of service as a director, beginning with
         January 1999.

(3)      Effective July 31, 2001, we granted Mr. Meyer five-year options to
         purchase 3,000,000 shares of preferred stock at $0.50 per share.

                                       28
<PAGE>

Option/SAR Grants in Last Fiscal Year

         The following table sets forth information respecting all individual
grants of options and stock appreciation rights ("SARs") made during the last
completed fiscal year to the executive officer named in the summary compensation
table above:
<TABLE>
<CAPTION>
                                                 Individual Grants
---------------------------------------------------------------------------------------------------------------------
             (a)                      (b)                (c)               (d)                     (e)
                                   Number of          % of Total
                                  Securities         Options/SARs
                                  Underlying          Granted to       Exercise or
                                 Options/SARs      Employees During    Base Price
            Name                  Granted (#)        Fiscal Year        ($/share)              Expiration Date
------------------------------ ------------------ ------------------- -------------- --------------------------------
<S>                                <C>                <C>              <C>             <C>
R. Frank Meyer (CEO)                   92,316             20%              $0.25         Beginning August 1, 2003(1)
                                    3,000,000            100%               0.50                    July 17, 2006(2)
</TABLE>

(1)      We grant each director options to purchase 7,693 shares of common stock
         per month of service, exercisable for five years after the date of
         grant. See Compensation to Directors below.

(2)      Effective July 31, 2001, we granted Mr. Meyer five-year options to
         purchase 3,000,000 shares of preferred stock at $0.50 per share. Each
         share of preferred stock will have four votes per share, voting with
         the common stock as a single class, except where voting as a separate
         class is required by law, but will have no other rights, privileges or
         preferences senior to the common stock. At the election of the holder,
         each share of preferred stock is convertible into one share of common
         stock. Such options are transferable by Mr. Meyer only to a personal
         trust, his immediate family, or Tex-Oil Chemical Limited Partnership,
         L.P. These options may not be exercised unless and until our articles
         of incorporation are amended to authorize the issuance of preferred
         stock that is entitled to vote with our common stock as a single class.

Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values

         The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by the executive officer
named in the summary compensation table above and the fiscal year end values of
unexercised options and SARs:
<TABLE>
<CAPTION>
              (a)                        (b)                  (c)                  (d)                  (e)
                                                                                Number of
                                                                               Securities            Value of
                                                                               Underlying           Unexercised
                                                                               Unexercised         In-the-Money
                                                                           Options/SARs at FY   Options/SARs at FY
                                                                                 End (#)              End ($)
                                 Shares Acquired on                           Exercisable/         Exercisable/
             Name                   Exercise (#)      Value Realized ($)      Unexercisable        Unexercisable
-------------------------------- -------------------- -------------------- -------------------- --------------------
<S>                                    <C>                  <C>               <C>                   <C>
R. Frank Meyer (CEO)                   699,044              $11,875           4,424,225/--          $47,430/--
</TABLE>

*        Includes options to purchase 3,000,000 shares of preferred stock, each
         share of which is convertible into one share of common stock.

R. Frank Meyer Consulting Agreement

         We obtain the services of our President and Chief Executive Officer, R.
Frank Meyer, under a consulting agreement. This consulting agreement provides
for a minimum fee of $12,000 per month, with Mr. Meyer to be paid an additional
$200 per hour for each hour worked over 60 hours per month and for reimbursement
of medical expenses and business costs incurred by him on our behalf. This
consulting arrangement with Mr. Meyer remains in effect until December 31, 2007,
or until we hire Mr. Meyer as a full-time employee, whichever occurs first. If
Mr. Meyer's consulting agreement is terminated for reasons other than gross

                                       29
<PAGE>

negligence, willful misconduct or illegal acts, the consulting agreement
provides for Mr. Meyer to be paid at the rate of $150,000 per year for the full
term of the agreement.

         In connection with the grant of options to purchase 3,000,000 shares of
preferred stock, effective July 31, 2001, Mr. Meyer agreed to waive any claim
that he may have for additional compensation for any services rendered in excess
of those for which he is compensated under his consulting agreement.

Compensation to Directors

         We grant each director three-year options to purchase 7,693 shares of
common stock at $0.25 per share for each month of service.

                                       30
<PAGE>

                     ITEM 11. SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of November 9, 2001, the name,
address and stockholdings of each person who owns of record, or was known by us
to own beneficially, 5% or more of the common stock currently issued and
outstanding; the name and stockholdings of each director; and the stockholdings
of all executive officers and directors as a group. Unless otherwise indicated,
all shares consist of common stock, and all such shares are owned beneficially
and of record by the named person or group:
<TABLE>
<CAPTION>
                 Name of Person or Group                   Nature of Ownership(1)       Amount      Percent(2)
                 -----------------------                   ----------------------       ------      ----------
<S>                                                        <C>                        <C>              <C>
Principal Stockholders:
  Tex-Oil Chemical Limited Partnership, L.P.(3).........   Common Stock               22,942,298       62.7
  4305 Derbyshire Trace, SE
  Conyers, GA  30094

  Windstar Research and Engineering, Ltd.                  Common Stock                3,557,538        9.7
  P.O. Box  7275,
  Columbus, GA  31908

  Homer Cutrubus and Phidia Cutrubus(4).................   Common Stock                2,034,483        5.6
  895 West Riverdale Road
  Ogden, UT  84405

  Christopher Bromley(5)................................   Common Stock                3,900,000       10.7
  25876 The Old Road, Suite 240
  Valencia, CA  91381

Directors:
  R. Frank Meyer(6).....................................   Common Stock               22,942,298       62.7
                                                           Options                     4,424,225       10.8
                                                                                     -----------
                                                           Total                      27,366,523       66.0

  Michael Dumdie(7).....................................   Common Stock                  941,179        2.6
                                                           Options                        30,772        0.1
                                                                                        --------
                                                           Total                         971,851        2.7

  William F. Meyer......................................   Common Stock                   51,400        0.1
                                                           Options                       300,027        0.8
                                                                                         -------
                                                           Total                         351,427        1.0

  J.W. Feighner, Jr.(8) ................................   Common Stock                5,587,538       15.3
                                                           Options                        23,079        0.1
                                                                                          ------
                                                           Total                       5,610,617       15.3

  All Executive Officers and
  Directors as a Group (7 persons):.....................   Common Stock               26,394,877       72.1
                                                           Options                     5,153,103       12.3
                                                                                       ---------
                                                           Total:                     31,547,980       75.5
</TABLE>
----------------------
(1)      Includes shares held by entities in which the individual or entity
         shares voting, investment, and dispositive power. Except as otherwise
         noted, however, shares are owned beneficially and of record, and such
         record stockholder has sole voting, investment, and dispositive power.

                                       31
<PAGE>

(2)      Calculations of total percentages of share ownership for each
         individual assumes the exercise of all options held by that individual
         to which the percentage relates, including options subject to vesting
         provisions, if any. Percentages calculated for totals of all executive
         officers and directors as a group assume the exercise of all options
         held by the indicated group.

(3)      Consists of 19,384,760 shares owned of record by Tex-Oil Chemical
         Limited Partnership, L.P., and 3,557,538 shares owned of record by
         Windstar Research and Engineering, Ltd. Tex-Oil Chemical Limited
         Partnership, L.P., a Nevada limited partnership, is wholly owned by the
         immediate family members of R. Frank Meyer, including his wife, two
         adult daughters, and trusts in the name of his two minor sons, for
         which Mrs. Meyer serves as the trustee. R. Frank Meyer holds no direct
         ownership of Tex-Oil Chemical Limited Partnership, L.P. and disclaims
         beneficial ownership. Tex-Oil Chemical Limited Partnership, L.P. owns
         more than 10% of the issued and outstanding voting equity of Windstar
         Research and Engineering, Ltd.

(4)      Homer and Phidia Cutrubus are brothers and hold their interests
         individually in two other partnerships, as noted below:

         Homer Cutrubus...........................................482,899 shares
         Phidia Cutrubus..........................................345,001 shares
         H&P Investments..........................................844,093 shares
         DNS Investments..........................................362,490 shares

(5)      Although his right to retain these shares is disputed by us and the
         shares are subject to a stop transfer order, we believe that
         Christopher Bromley remains the beneficial owner of the following
         shares:

         Kit Bromley & Company..................................2,400,000 shares
         The Challenge, Ltd.....................................1,500,000 shares

(6)      Under the rules of the SEC, R. Frank Meyer is deemed to be the
         beneficial owner of shares owned of record by Tex-Oil Chemical Limited
         Partnership, L.P. Mr. Meyer disclaims beneficial ownership of the
         shares owned by Tex-Oil Chemical Limited Partnership, L.P.

(7)      Michael Dumdie, a nephew of R. Frank Meyer and son-in-law of William F.
         Meyer, serves as Trustee of the Dumdie Financial Trust, which holds
         916,179 shares of our common stock in trust for a group of nonrelated
         stockholders. Mr. Dumdie owns 35,000 shares of our common stock.

(8)      Consists of 780,000 shares owned by Mr. Feighner, 1,050,000 shares held
         by Vistacraft, Inc. and 25,000 shares held by Victory Developers, Inc.,
         companies he owns and controls, and 3,557,538 shares owned by Windstar
         Research and Engineering, Ltd. Mr. Feighner is an executive officer and
         principal stockholder of Windstar.


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Unless otherwise indicated, the terms of the following transactions
between related parties were not determined as a result of arm's-length
negotiations.

Consulting Agreements

Charles Tovey

         We engaged Charles Tovey, an executive officer, as our consultant on
January 5, 1998, for a 10-year period ending on December 31, 2007, at which time
Mr. Tovey will become a month-to-month consultant. Notwithstanding the
foregoing, either Mr. Tovey or we have the right to terminate the agreement on
60 days' notice. Mr. Tovey is required to devote so much of his time as is
reasonably necessary to manage the research and development, plant construction
and operation of our recovery plants and to consult with management and the
board of directors. We have agreed to pay Mr. Tovey a fee of $100 per hour,
together with reimbursement of direct expenses, for services provided us as a
consultant, with a minimum of 10 hours per month. Under this consulting
arrangement, we have accrued $13,000 and $21,000 in consulting fees to Mr. Tovey
for the fiscal years ended July 31, 2001 and 2000, respectively, of which
$16,000 and $8,000 were paid in each of such years, respectively.

Agreements with Tex-Oil

         We have entered into agreements and arrangements with Tex-Oil, our
largest single stockholder and an affiliate of R. Frank Meyer, President and
Chief Executive Officer. Tex-Oil Chemical Limited Partnership, L.P., a Nevada
limited partnership, is wholly owned by the immediate family members of R. Frank
Meyer, including his wife, two adult daughters, and trusts in the name of his
two minor sons, for which Mrs. Meyer serves as the trustee. R. Frank Meyer holds
no direct ownership of Tex-Oil Chemical Limited Partnership, L.P. and disclaims
beneficial ownership. See Part III. Item 11. Security Ownership of Certain
Beneficial Owners and Management. Because of these relationships, the

                                       32
<PAGE>

transactions between Tex-Oil and us were subject to significant conflicts of
interest and were not the result of arm's-length negotiations.

Tex-Oil's Guarantee Related to Certain Consulting and Financing Arrangements

         During March and April 1999, we engaged three companies to provide
financial, strategic planning, investor relations and related services. Each of
these companies was either owned by Christopher (a/k/a Kit) Bromley or
introduced to us by him. Mr. Bromley may have controlled or had previous
business relationships with the companies that he introduced to us. Accordingly,
Mr. Bromley may be deemed to have had or shared voting investment or dispositive
control over the 4,800,000 shares, or about 15.9% of our shares then
outstanding, pledged to three entities by our affiliate Tex-Oil as an
accommodation to us. Under each of these consulting relationships, we were
obligated to pay a specified fee for defined services. As an accommodation to us
and at our request, Tex-Oil guaranteed the obligation to pay the fees to the
consultants under these agreements. Each of these guarantees was secured by a
block of our common stock owned by Tex-Oil. These shares pledged as collateral
were delivered to a custodian acting on behalf of the consultants, which had the
contractual right to sell the shares upon our failure to pay timely the
consulting fee. Although the agreements only require the delivery of a total of
4,800,000 shares as collateral, Tex-Oil actually delivered 5,000,000 shares. We
understood that we would be obligated to reimburse Tex-Oil for any stock or cash
loss that it suffered as a result of its guarantee of our obligation.

         The following table sets forth details respecting these consulting
arrangements:
<TABLE>
<CAPTION>
                                                                                                          Shares
                                                                          Agreement                      Pledged as
     Name of Consultant                Services to be Provided              Date      Consulting Fee     Collateral
     ------------------                -----------------------              ----      --------------     ----------
<S>                           <C>                                         <C>           <C>               <C>
Kit Bromley & Co., Inc.       Business development services and           04/03/99       $  600,000(1)    2,500,000
                              activities, including creation of an
                              advanced business plan and necessary
                              studies
California Business           Corporate investigations, background        04/17/99          200,000         800,000
Intelligence                  checks, due diligence investigations and
                              security analysis

The Challenge, Ltd., Inc.     Marketing, distribution, strategic          03/09/99          350,000       1,500,000
                              development, and agency and                              ------------       ---------
                              representation services within Latin
                              America
Total                                                                                    $1,150,000       4,800,000(2)
                                                                                         ==========       =========
</TABLE>
------------------
(1)      The promissory  note  evidencing our obligation for this consulting fee
         has an  incorrect  principal  amount  of  $625,000.
(2)      Although the agreements provide for a total pledge of 4,800,000 shares,
         Tex-Oil actually delivered a total of 5,000,000 shares as collateral.

         We have concluded that the consulting services were not provided to our
satisfaction, but the consultants asserted that the services had been provided
and that the fee was due and payable. In any event, the custodian delivered to
the consultants all 5,000,000 shares that had been pledged as collateral by
Tex-Oil. Tex-Oil contested the validity of the delivery of the collateral shares
to the consultants. In June 2000, we reviewed the above agreements and
determined to terminate all of such relationships on the basis that each of the
consultants had materially breached its agreement. We advised each of the
consultants named above that (a) such consultant had not provided the services
as required under its consulting agreement; (b) we believed we owed no fees

                                       33
<PAGE>

whatsoever to the consultant; (c) the consultants were to return to Tex-Oil, the
pledgor, all of the shares of common stock pledged as collateral and retained by
the consultant's custodian; (d) stop transfer instructions were being lodged
against the certificates representing all shares pledged as collateral; and (e)
if all pledged shares could not be returned, a full accounting of the shares
sold and the application of the proceeds must be provided, both to Tex-Oil and
to us. In addition, we joined with Tex-Oil in placing stop transfer instructions
with our registrar and transfer agent against registration of transfer of
certificates representing the shares pledged as collateral.

         Each of the pledge agreements in the above relationships provided that
the consultant was required to pay to Tex-Oil, the guarantor, all proceeds from
the sale of the shares pledged as collateral in excess of the amount due and
owing under the related consultant agreement. Notwithstanding our requests, the
consultants have failed and refused to account for the proceeds from any of
their sales of securities pledged by Tex-Oil or to specify the number of shares
sold. Of the total 5,000,000 shares delivered as collateral, 4,400,000 shares
were tendered for registration of transfer. In the face of the stop transfer
instructions that had been placed against such stock, in January 2001, our stock
transfer agent, Atlas Stock Transfer Company, deposited 1,500,000 of such shares
with the Third Judicial District Court, Salt Lake County, Utah, in an
interpleader action naming us, the Challenge, Ltd., and John Does 1 through 20,
as defendants, for determination of rights to the stock by the respective
parties. Neither we nor any other defendant was served with the summons and
complaint, and for that reason the court dismissed the suit, without prejudice,
on October 31, 2001. Of the remaining shares, 600,000 shares were transferred to
third parties prior to the stop transfer notice and apparently sold. A portion
of such proceeds may have been used to pay third-party costs on our behalf. On
April 12, 2001, Tex-Oil was able to obtain the return of the 500,000 shares of
common stock held by one of the consultants, California Business Intelligence,
Inc. The certificate representing those 500,000 shares was canceled and the
shares were transferred to Tex-Oil.

         We believe we suffered substantial but unliquidated damages as a result
of the consultants' breach of their consulting arrangements. Under our
obligation to reimburse Tex-Oil for any stock or cash loss that it suffered as a
result of its guarantee of our obligation, we believe that we may have been
obligated to replace the 600,000 shares that the consultants have not accounted
for, and to reimburse the value of any consulting services actually provided and
reasonable, authorized costs actually paid to third parties on our behalf,
although we dispute that any such services were provided or costs paid. In an
effort to concentrate our limited resources on our core business, we reached an
agreement with Tex-Oil under which we assigned to Tex-Oil all of our rights to
any and all damages for the consultants' breach of our consulting arrangements
in consideration of our agreement to reimburse Tex-Oil for actual losses, net of
any recoveries of damages from the consultants, not to exceed $300,000, payable
at our election in either cash or 600,000 shares of our common stock valued at
the greater of $0.50 per share or the market price of our stock at the time of
payment. In turn, Tex-Oil has released us from any further liability under our
obligation to reimburse Tex-Oil for any stock or cash loss that it suffered as a
result of its guarantee of our obligation. Accordingly, we had recorded a note
payable to Tex-Oil in the amount of $300,000, which we converted to common stock
during the fiscal year ended July 31, 2001.

Loans

         From time to time since our inception, we have received loans or
advances from affiliates and others to fund our ongoing activities, and have
converted past due consulting fees into long-term debt. The following table sets
forth the balance of principal and accrued interest due to each such affiliated
person or group as of the dates indicated for such open account advances:

                                       34
<PAGE>

                                                                  J.W. Feighner,
                                              Tex-Oil Chemical          Jr.(1)
                                              ----------------    --------------
        Balance at July 31, 2000.............    $ 360,000(2)         $ 30,000
          Advances (repayments)..............       17,000              10,000
          Accrued interest...................       12,000                   -
                                                                             -
        Paid by issuance of common stock.....     (389,000)            (30,000)
                                                 ---------            --------
        Balance at July 31, 2001.............           --            $ 10,000
                                                 =========            ========

-------------------
(1)      J.W. Feighner, Jr. became an affiliate when elected as a director in
         May 2001.
(2)      Includes $10,000 assigned to it by Century Caribbean, which is owned
         and controlled by R. Frank Meyer.

         On April 30, 2000, principal and accrued interest then due was
converted to promissory notes due, together with interest at 12% per annum, on
May 1, 2002, subject to conversion of principal and accrued interest to common
stock at $1.00 per share, as follows: R. Frank Meyer, $508,908 (including
$484,577 in accrued but unpaid consulting fees); Century Caribbean, $94,943; and
Tex-Oil Chemical Limited Partnership, L.P., $147,355. Our liability under the
promissory note to R. Frank Meyer has been assumed by Windstar. The notes to
Century Caribbean and Tex-Oil Chemical Limited Partnership, L.P. were converted
to common stock. See Part II. Item 5: Recent Sales of Unregistered Securities:
Stock Issued in Miscellaneous Transactions.

Windstar License of Windstar Process

         On November 30, 1998, we entered into an agreement with Cyntech
Research & Engineering, Inc. to obtain an exclusive license to use the Cyntech
process, including all modifications and improvements, which had been invented
and/or acquired by Cyntech. Cyntech Research & Engineering was owned and
controlled by R. Frank Meyer and Charles Tovey. In June 2000, we were advised
that Cyntech Research & Engineering had transferred, in consideration of
$300,000 and the assumption of its obligations under its agreement with us, all
of its rights under its agreement with us and its rights in the Cyntech process
to Windstar Research and Engineering, Ltd. Windstar may be deemed an affiliate
of our Company because Windstar is owned by Tex-Oil, 20%, Charles Tovey, 20%,
William Feighner, 57.5%, and one other stockholder 2.5%. In connection with that
transfer and the preparation of this filing, we entered into new agreements with
Windstar that replaced our previous agreement with Cyntech Research &
Engineering.

         Our new agreement with Windstar grants us the right for a period of 10
years, renewable at Windstar's option for two successive 10-year periods, to
enter into licenses to use the Windstar ThermReTec(tm) technology in recycling
plants developed by us. The Exclusive Option Agreement provides that each new
plant using the Windstar ThermReTec(tm) process will require a separate license
agreement to be entered into with the separate entity owning and operating the
individual project. When a new license for a new plant is granted, we are
required to pay an initial fee of $1.0 million for each plant processing either
rubber or plastic feedstock as compensation for Windstar's assistance in site
selection, permitting and engineering. We are also obligated to pay Windstar an
ongoing license fee of 7% of the gross income from each plant during the life of
the plant. We would owe an additional $500,000 license fee if a plant processing
either rubber or plastic feedstock were expanded to process both. Under our new
agreement with Windstar, we are required to commence the construction of our
first plant during 2001, and to commence construction of two plants in 2002,
three plants in 2003, four plants in 2004, five plants in 2005, and six plants
per year thereafter.

         If we fail to meet any of the requirements imposed on us by the
Exclusive Option Agreement, Windstar has the right to deliver to us a notice of
default that provides at least 180 days' notice of termination and allows us 90
days to cure the default and thereby prevent termination of the agreement. If

                                       35
<PAGE>

Windstar delivers to us a notice of default and we are unable to cure that
default, Windstar may terminate the agreement with 180 days' notice and we would
thereafter lose access to the Windstar ThermReTec(tm) process.

         Windstar is required to provide engineering, technical and related
support for plant planning, construction and operation. We are required to
protect the confidentiality of technical data on behalf of Windstar. Windstar is
required to assist us in identifying site locations where Cyntech recovery
plants can be located, based on economic criteria established from time to time
by Windstar and us, subject to the right of Windstar to disapprove any plant
location.


                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:
<TABLE>
<CAPTION>
                   SEC
   Exhibit      Reference
    Number        Number                            Title of Document                                Location
-------------- ------------ ------------------------------------------------------------------- -------------------
      <S>          <C>      <C>                                                                 <C>
      Item 2.               Plan of Acquisition, Reorganization, Arrangement, Liquidation or
                            Succession
-------------- ------------ ------------------------------------------------------------------- -------------------
         2.01         2     Exchange Agreement between Carbon Fiber Products, Inc., Cyntech     Incorporated by
                            Technologies, Inc., and the Shareholders of Cyntech Technologies,   Reference(1)
                            Inc. dated effective November 30, 1998

      Item 3.               Articles of Incorporation and Bylaws
-------------- ------------ ------------------------------------------------------------------- -------------------
         3.01         3     Articles of Incorporation, as amended to date                       Incorporated by
                                                                                                Reference(1)
         3.02         3     Bylaws                                                              Incorporated by
                                                                                                Reference(1)

      Item 4.               Instruments Defining the Rights of Security Holders
-------------- ------------ ------------------------------------------------------------------- -------------------
         4.01         4     Specimen stock certificate                                          Incorporated by
                                                                                                Reference(2)

     Item 10.               Material Contracts
-------------- ------------ ------------------------------------------------------------------- -------------------
        10.01        10     Settlement Agreement and Release between Cyntech Technologies,      Incorporated by
                            Inc. and Optima Investments, Inc. dated effective May 1, 1999       Reference(1)
        10.02        10     Consulting Agreement dated January 5, 1998, by and between          Incorporated by
                            Cyntech Technologies, Inc. and R. Frank Meyer                       Reference(1)
        10.03        10     Consulting Agreement dated January 5, 1998, by and between          Incorporated by
                            Cyntech Technologies, Inc. and Charles Tovey                        Reference(1)
        10.04        10     Consulting Agreement dated October 1, 2000, by and between          Incorporated by
                            Cyntech Technologies, Inc. and Laska & Associates, Inc.             Reference(1)
        10.05        10     Exclusive Option Agreement and Form of License Agreement dated      Incorporated by
                            February 1, 2001, by and between Cyntech Technologies, Inc. and     Reference(1)
                            Windstar Research and Engineering, Ltd.
        10.06        10     Nonbinding Engagement Letter for Financing from Corpfinance         Incorporated by
                            International, Limited to Cyntech Technologies, Inc. dated June     Reference(1)
                            11, 1999

                                       36
<PAGE>

        10.07        10     Convertible Promissory Note Due After May 1, 2002, to Laska &       Incorporated by
                            Associates                                                          Reference(2)
        10.08        10     Convertible Promissory Note Due After May 1, 2002, to R.F. Meyer    Incorporated by
                                                                                                Reference(2)
        10.09        10     Convertible Promissory Note Due After May 1, 2002, to Century       Incorporated by
                            Caribbean, Ltd.                                                     Reference(2)
        10.10        10     Convertible Promissory Note Due After May 1, 2002, to Tex-Oil       Incorporated by
                            Chemical Limited Partnership, L.P.                                  Reference(2)
        10.11        10     Form of Option Agreement with Related Schedule                      Incorporated by
                                                                                                Reference(2)
        10.12        10     Assignment Agreement and Covenant Not to Sue dated March 16, 2001   Incorporated by
                                                                                                Reference(2)
        10.13        10     Forbearance Agreement Between Cyntech Technologies, Inc. and        This filing
                            Windstar Research and Engineering, Ltd.
        10.14        10     Assumption Agreement                                                This filing
        10.15        10     Promissory Note to Windstar Research and Engineering, Ltd.          This filing

     Item 21.               Subsidiaries of the Registrant
-------------- ------------ ------------------------------------------------------------------- -------------------
        21.01      21       Schedule of Subsidiaries                                            This filing

</TABLE>
--------------------
(1)      Incorporated by reference from Form 10-SB filed on March 16, 2001.

(2)      Incorporated by reference from Amendment No. 2 to Form 10-SB filed on
         June 5, 2001.

         (b) Reports on Form 8-K: We did not file any reports on Form 8-K for
the quarter ended July 31, 2001.

                                       37
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, this report has been signed below on the registrant and in the
capacities and on the dates indicated.

                                         CYNTECH TECHNOLOGIES, INC.


Date:  November 19, 2001                 By /s/ R. Frank Meyer
                                            ------------------------------------
                                              R. Frank Meyer
                                              President, Chief Executive Officer
                                              and Principal Financial Officer

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the date indicated.

Dated: November 19, 2001
                                   /s/ R. Frank Meyer
                                   --------------------------------------------
                                   R. Frank Meyer, Director and President
                                   (Chief Executive Officer and Chief
                                   Financial Officer)

                                   /s/ Michael Dumdie
                                   --------------------------------------------
                                   Michael Dumdie, Director


                                   /s/ J.W. Feighner, Jr.
                                   --------------------------------------------
                                   J.W. Feighner, Jr., Director

                                   /s/ William F. Meyer
                                   --------------------------------------------
                                   William F. Meyer, Director and Treasurer



                                       38
<PAGE>

CYNTECH TECHNOLOGIES, INC.
Consolidated Financial Statements
July 31, 2001 and 2000



<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Index to Consolidated Financial Statements
--------------------------------------------------------------------------------





                                                                      Page

Independent Auditors' Report                                           F-2


Consolidated balance sheet                                             F-4


Consolidated statement of operations                                   F-5


Consolidated statement of stockholders' deficit                        F-6


Consolidated statement of cash flows                                   F-8


Notes to consolidated financial statements                             F-9




                                                                             F-1
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                                    INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------


To the Board of Directors
and Stockholders of
Cyntech Technologies, Inc.

We have audited the accompanying consolidated balance sheet of Cyntech
Technologies, Inc. and subsidiaries, (a developmental stage company), as of
July 31, 2001 and 2000 and the related  consolidated  statements of  operations,
stockholders'  deficit  and cash flows for the years  then ended and  cumulative
amounts from December 31, 1997 (date of inception)  through July 31, 2001. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cyntech
Technologies, Inc. and subsidiaries, as of July 31, 2001 and 2000 and the
results of their operations and their cash flows for the years then ended and
cumulative amounts from December 31, 1997 (date of inception) through
July 31, 2001, in conformity with accounting  principles  generally  accepted in
the United States of America.

                                                                             F-2
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)
--------------------------------------------------------------------------------

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has a deficit in working capital,
a stockholders' deficit, and has incurred significant losses since inception.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
Note 3. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


TANNER + CO.

Salt Lake City, Utah
November 12, 2001

                                                                             F-4
<PAGE>
<TABLE>
<CAPTION>
                                                                                           CYNTECH TECHNOLOGIES, INC.
                                                                                      (A Developmental Stage Company)

                                                                                           Consolidated Balance Sheet
---------------------------------------------------------------------------------------------------------------------

                                                                                      July 31,           July 31,
                                                                                        2001               2000
                                                                                ------------------------------------
<S>                                                                             <C>                  <C>
        Assets

Current assets:
    Cash                                                                        $           26,000   $        16,000
                                                                                ------------------------------------

               Total current assets                                                         26,000            16,000

Property and equipment, net                                                                 21,000            25,000
                                                                                ------------------------------------

               Total assets                                                     $           47,000   $        41,000
                                                                                ------------------------------------

--------------------------------------------------------------------------------------------------------------------

        Liabilities and Stockholders' Deficit

Current liabilities:
    Accounts payable                                                            $          360,000   $       301,000
    Accrued liabilities                                                                    102,000           143,000
    Consulting fees payable                                                                  8,000           251,000
    Notes payable                                                                           72,000            87,000
    Current portion of related party notes payable                                         110,000           390,000
                                                                                ------------------------------------

               Total current liabilities                                                   652,000         1,172,000

Related party notes payable                                                                180,000                 -
Long-term convertible debt                                                                       -           479,000
Long-term convertible debt - related parties                                                     -           751,000
                                                                                ------------------------------------

               Total liabilities                                                           832,000         2,402,000
                                                                                ------------------------------------

Commitments and contingencies                                                                    -                 -

Stockholders' deficit:
    Preferred stock, $.001 par value, 5,000,000 shares
      authorized, no shares issued and outstanding                                               -                 -
    Common stock, $.001 par value 100,000,000 shares authorized,
      36,606,780 and 30,354,483 shares issued and
      outstanding at July 31, 2001 and  2000, respectively                                  37,000            30,000
    Additional paid-in capital                                                           5,373,000         2,565,000
    Deficit accumulated during the development stage                                    (6,195,000)       (4,956,000)
                                                                                ------------------------------------

               Total stockholders' deficit                                                (785,000)       (2,361,000)
                                                                                ------------------------------------

               Total liabilities and stockholders' deficit                      $           47,000   $        41,000
                                                                                ------------------------------------



--------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.                                                     F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                     CYNTECH TECHNOLOGIES, INC.
                                                                                                (A Developmental Stage Company)

                                                                                           Consolidated Statement of Operations
-------------------------------------------------------------------------------------------------------------------------------

                                                                                                                Cumulative
                                                                                                               Amounts from
                                                                                                               December 31,
                                                                       Years Ended July 31,                    1997 (Date of
                                                            -----------------------------------------          Inception) to
                                                                     2001                  2000               July 31, 2001
                                                            -----------------------------------------------------------------
<S>                                                         <C>                     <C>                      <C>
Sales                                                       $              -        $              -         $             -
                                                            ----------------------------------------------------------------

Consulting expense                                                   122,000                 442,000               1,054,000

Related party consulting expense                                     322,000                 278,000               1,051,000

License fee                                                          100,000                       -                 100,000

General and administrative expenses                                  476,000                 290,000               3,506,000

Impairment of deposit for potential acquisition                            -                  76,000                  76,000
                                                            ----------------------------------------------------------------

        Loss from operations                                      (1,020,000)             (1,086,000)             (5,787,000)

Other income                                                               -                       -                  30,000
Interest expense                                                    (219,000)               (217,000)               (438,000)
                                                            ----------------------------------------------------------------

        Loss before income taxes                                  (1,239,000)             (1,303,000)             (6,195,000)

Income tax benefit                                                         -                       -                       -
                                                            ----------------------------------------------------------------

        Net loss                                            $     (1,239,000)       $     (1,303,000)        $    (6,195,000)
                                                            ----------------------------------------------------------------

Loss per share - basic and diluted                          $           (.04)       $           (.04)
                                                            ----------------------------------------------------------------

Weighted average shares - basic and diluted                       30,844,000              30,294,000
                                                            ----------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.                                                             F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                         CYNTECH TECHNOLOGIES, INC.
                                                                                                    (A Developmental Stage Company)

                                                                                    Consolidated Statement of Stockholders' Deficit
                                                                                              December 31, 1997 (Date of Inception)
                                                                                                    to January 31, 2001 (unaudited)
-----------------------------------------------------------------------------------------------------------------------------------


                                                                                                          Deficit
                                                                                                         Accumulated
                                      Preferred Stock            Common Stock            Additional      During the
                                ------------------------  -----------------------        Paid-In        Development
                                    Shares     Amount       Shares        Amount         Capital           Stage          Total
                                ---------------------------------------------------------------------------------------------------
<S>                               <C>       <C>          <C>            <C>            <C>             <C>             <C>
Balance at
December 31, 1997
(date of inception)                   -     $       -              -    $       -      $         -     $          -    $          -

Issuance of common stock for:
  Cash ($.005 per share)              -             -     25,204,575       25,000           92,000                -         117,000
  Services ($2.38 per share)          -             -        692,830        1,000        1,649,000                -       1,650,000

Net loss                              -             -              -            -                -       (1,982,000)     (1,982,000)
                                ---------------------------------------------------------------------------------------------------

Balance at July 31, 1998              -             -     25,897,405       26,000        1,741,000       (1,982,000)       (215,000)

Issuance of common stock for:
  Cash ($.97 per share)               -             -         66,224            -           64,000                -          64,000
  Services ($.71 per share)           -             -        864,188        1,000          611,000                -         612,000
  Deposit ($1.17 per share)           -             -        300,000            -          350,000                -         350,000

Acquisition of Carbon
Fiber Products, Inc.
(see note 1)                          -             -      3,100,000        3,000         (247,000)               -        (244,000)

Issuance of common stock
options                               -             -              -            -           27,000                -          27,000

Net loss                              -             -              -            -                -       (1,671,000)     (1,671,000)
                                ---------------------------------------------------------------------------------------------------

Balance at July 31, 1999              -             -     30,227,817       30,000        2,546,000       (3,653,000)     (1,077,000)

Issuance of common stock for:
  Services ($.34 per share)           -             -         26,666            -            9,000                -           9,000
  Exercise of stock
    options (.10 per share)           -             -        100,000            -           10,000                -          10,000

Net loss                              -             -              -            -                -       (1,303,000)     (1,303,000)
                                ---------------------------------------------------------------------------------------------------


-----------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.                                                                    F-7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                                                         CYNTECH TECHNOLOGIES, INC.
                                                                                                    (A Developmental Stage Company)

                                                                                    Consolidated Statement of Stockholders' Deficit
                                                                                                                          Continued
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                                          Deficit
                                                                                                         Accumulated
                                      Preferred Stock            Common Stock            Additional      During the
                                ------------------------  -----------------------        Paid-In        Development
                                    Shares     Amount       Shares        Amount         Capital           Stage          Total
                                ---------------------------------------------------------------------------------------------------
<S>                               <C>       <C>          <C>            <C>            <C>             <C>             <C>
Balance at July 31, 2000              -             -     30,354,483      30,000         2,565,000       (4,956,000)     (2,361,000)

Issuance of common stock for:
  Cash ($.25 per share)               -             -        200,000           -            50,000                -          50,000
  Cash ($.35 per share)               -             -        300,000       1,000           104,000                -         105,000

Exercise of stock options:
  ($.20 per share)                    -             -        637,500       1,000           137,000                -         138,000
  ($.25 per share)                    -             -         61,543           -            15,000                -          15,000

  Services ($.50 per share)           -             -         10,000           -             5,000                -           5,000

  Payment of related party
    notes payable
    ($.50 per share)                  -             -        774,477       1,000           387,000                -         388,000
    ($.30 per share)                  -             -        100,000           -            30,000                -          30,000

Payment of related party
   consulting fees payable
  ($.50 per share)                    -             -         50,000           -            25,000                -          25,000

Payment of related party
  convertible debt
  ($.50 per share)                    -             -        561,239       1,000           280,000                -         281,000

  Transfer of related party
     convertible debt
    ($.50 per share)                  -             -      1,197,982       1,000           598,000                -         599,000

Transfer of convertible debt
  ($.50 per share)                    -             -      1,112,871       1,000           555,000                -         556,000

Transfer of related party
  consulting fees payable
  ($.50 per share)                    -             -        853,939       1,000           426,000                -         427,000

Transfer of consulting fees
  payable ($.50 per share)            -             -        392,746           -           196,000                -         196,000

Net loss (unaudited)                  -             -              -           -                 -       (1,239,000)     (1,239,000)
                                     ----------------------------------------------------------------------------------------------

Balance at July 31, 2001              -     $       -     36,606,780    $ 37,000       $ 5,373,000     $ (6,195,000)   $   (785,000)
                                     ----------------------------------------------------------------------------------------------


-----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                                                    F-8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                         CYNTECH TECHNOLOGIES, INC.
                                                                                    (A Developmental Stage Company)

                                                                               Consolidated Statement of Cash Flows
-------------------------------------------------------------------------------------------------------------------


                                                                                                      Cumulative
                                                                            Year Ended                 Amounts
                                                                             July 31,                  Through
                                                            ------------------------------------      July 31,
                                                                    2001                2000            2001
                                                            ------------------------------------------------------
<S>                                                         <C>                    <C>             <C>
Cash flows from operating activities:
    Net loss                                                $      (1,239,000)     $ (1,303,000)   $  (6,195,000)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
        Depreciation                                                    8,000             9,000           26,000
        Bad debt expense                                                    -             9,000            9,000
        Write-off of deposits                                               -            76,000           76,000
        Stock issued for services                                       5,000             9,000        2,549,000
        Note issued for services                                      180,000                 -          180,000
        Note issued for license fee                                   100,000                 -          100,000
        Stock option expense                                                -                 -           27,000
        (Increase) decrease  in:
           Receivables                                                      -                 -           (2,000)
        Increase (decrease) in:
           Accounts payable                                            59,000           119,000          178,000
           Accrued liabilities                                        218,000           211,000          476,000
           Consulting fees payable                                    364,000           656,000        1,746,000
                                                            ----------------------------------------------------

               Net cash used in
               operating activities                                  (305,000)         (214,000)        (830,000)
                                                            ----------------------------------------------------

Cash flows from investing activities-
    purchase of property and equipment                                 (4,000)                -          (47,000)
                                                            ----------------------------------------------------

Cash flows from financing activities:
    Increase in related party note payable                             42,000           210,000          388,000
    Payment on related party note payable                             (16,000)                -          (16,000)
    Increase in notes payable                                               -                 -           47,000
    Payment on notes payable                                          (15,000)                -          (15,000)
    Issuance of common stock                                          308,000            10,000          499,000
                                                            ----------------------------------------------------

               Net cash provided by
               financing activities                                   319,000           220,000          903,000
                                                            ----------------------------------------------------

Net increase in cash                                                   10,000             6,000           26,000

Cash, beginning of period                                              16,000            10,000                -
                                                            ----------------------------------------------------

Cash, end of period                                         $          26,000      $     16,000    $      26,000
                                                            ----------------------------------------------------


-------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                                   F-9
</TABLE>
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                          July 31, 2001 and 2000
--------------------------------------------------------------------------------

1.  Organization  On December 22, 1998, Cyntech Technologies, Inc. (formerly
    and           Carbon Fiber Products, Inc.) (CTI) purchased Cyntech
    Presentation  Technologies - Nevada (CTI-Nev) and Cynetch of Chambers County
                  (the Acquirees) (collectively the Company). The terms of the
                  agreement provide that the Acquirees will be wholly-owned
                  subsidiaries of CTI, and the stockholders of the Acquirees
                  received 25,900,000 shares of CTI common stock.

                  The consolidated financial statements at July 31, 2001 and
                  2000 assumes the acquisition of CTI by the Acquirees occurred
                  December 31, 1997 (date of inception). Because the shares
                  issued in the acquisition of the Acquirees represent control
                  of the total shares of CTI's common stock issued and
                  outstanding immediately following the acquisition, the
                  Acquirees are deemed for financial reporting purposes to have
                  acquired CTI in a reverse acquisition. The business
                  combination has been accounted for as a recapitalization of
                  CTI giving effect to the acquisition of 100% of the
                  outstanding common shares of the Acquirees. The surviving
                  entity reflects the assets and liabilities of CTI and the
                  Acquirees at their historical book value. The issued common
                  stock is that of CTI and the historical results of operations
                  are those of the Aquirees from December 31, 1997 (date of
                  inception) through December 22, 1998 (date of acquisition) and
                  those of the combined entities subsequent to December 22,
                  1998.

                  The Company has acquired the rights to certain technology (see
                  "Licensing Agreement" in Note 13) that it intends to use to
                  develop and operate plants to produce marketable petrochemical
                  fuel products and scrap steel through recycling
                  hydrocarbon-based products such as tires or plastics.


2.  Summary of    Principles of Consolidation
    Significant   The consolidated financial statements include the accounts of
    Accounting    the Company, and its consolidated subsidiaries. All
    Policies      significant intercompany balances and transactions have been
                  eliminated.

--------------------------------------------------------------------------------

                                                                            F-10
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

2.  Summary of    Development Stage Company
    Significant   The Company is considered a development stage Company as
    Accounting    defined in SFAS No. 7. The Company has, at the present time,
    Policies      not paid any dividends and any dividends that may be paid in
    Continued     the future will depend upon the financial requirements of the
                  Company and other relevant factors.

                  Concentration of Credit Risk
                  The Company maintains its cash in bank deposit accounts which,
                  at times, may exceed federally insured limits. The Company has
                  not experienced any losses in such accounts and believes it is
                  not exposed to any significant credit risk on cash and cash
                  equivalents.

                  Cash and Cash Equivalents
                  For purposes of the statement of cash flows, cash includes all
                  cash and investments with original maturities to the Company
                  of three months or less.

                  Property and Equipment
                  Property and equipment are recorded at cost less accumulated
                  depreciation. Depreciation on property and equipment are
                  determined using the straight-line method over the estimated
                  useful lives of the assets. Expenditures for maintenance and
                  repairs are expensed when incurred and betterments are
                  capitalized. Gains and losses on sale of property and
                  equipment are reflected in operations.

                  Revenue Recognition
                  Since the Company has not reported any revenues, the revenue
                  recognition policy is prospective in nature. The Company
                  intends to recognize revenue through the sale of recycled
                  petrochemical fuel products and disposal fees for such
                  materials such as tires or plastics.

                  Revenue will be recognized upon shipment of product or
                  performance of services.

                  Income Taxes
                  Deferred income taxes are provided in amounts sufficient to
                  give effect to temporary differences between financial and tax
                  reporting.

--------------------------------------------------------------------------------

                                                                            F-11
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

2.  Summary of    Loss Per Share
    Significant   The computation of basic loss per common share is based on the
    Accounting    weighted average number of shares outstanding during the
    Policies      period.
    Continued
                  The computation of diluted loss per common share is based on
                  the weighted average number of shares outstanding during the
                  period plus the common stock equivalents which would arise
                  from the exercise of stock options and warrants outstanding
                  using the treasury stock method and the average market price
                  per share during the period. Options to purchase 3,510,838
                  shares and 3,698,320 shares of common stock at prices ranging
                  from $.001 to $.50 per share and options to purchase 3,000,000
                  shares of convertible preferred stock at $.50 per share were
                  outstanding at July 31, 2001 and 2000, respectively, but were
                  not included in the diluted loss per share calculation because
                  the effect would have been antidilutive.

                  Use of Estimates in Financial Statements
                  The preparation of financial statements in conformity with
                  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. Actual results could differ from those estimates.

3.  Going         As of July 31, 2001, the Company's revenue generating
    Concern       activities were not in place, and the Company has incurred
                  significant losses in all periods since inception. In
                  addition, current liabilities exceed current assets. These
                  factors raise substantial doubt about the Company's ability to
                  continue as a going concern.

                  Management intends to convert certain current obligations into
                  equity or long-term notes, however no formal agreements have
                  been reached and there is no assurance that the Company will
                  be successful in such efforts. In addition, management is
                  seeking additional equity and debt financing, however there
                  can be no assurance that the Company will be successful in
                  obtaining such financing.

--------------------------------------------------------------------------------

                                                                            F-12
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3.  Going         The Company's continuation as a going concern is dependent
    Concern       upon its ability to satisfactorily meet its debt obligations,
    Continued     secure adequate new financing and generate sufficient cash
                  flows from operations to meet its obligations. If the Company
                  is unable to secure additional equity or debt financing, it
                  will not be able to continue development of its technology or
                  begin operations. The financial statements do not include any
                  adjustments that might result from the outcome of these
                  uncertainties.

4.  Property and  Property and equipment consists of the following:
    Equipment
<TABLE>
<CAPTION>
                                                                          July 31,
                                                             ------------------------------
                                                                    2001           2000
                                                             ------------------------------
                  <S>                                        <C>               <C>
                  Computer equipment and fixtures            $        17,000   $     13,000
                  Job site trailer                                    30,000         30,000
                                                             ------------------------------
                                                                      47,000         43,000

                  Less accumulated depreciation
                    and amortization                                 (26,000)       (18,000)
                                                             ------------------------------
                                                             $        21,000   $     25,000
                                                             ------------------------------
</TABLE>

5.  Notes         Notes payable consist of the following:
    Payable
<TABLE>
<CAPTION>
                                                                          July 31,
                                                             ------------------------------
                                                                    2001           2000
                                                             ------------------------------
                  <S>                                        <C>               <C>
                  Unsecured note payable to an
                  individual bearing interest at 10% due
                  on demand                                 $              -   $     15,000

                  Unsecured non-interest bearing note
                  payable to an individual bearing
                  interest at 10% due on demand                       25,000         25,000

--------------------------------------------------------------------------------
                                                                            F-13
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

5.  Notes
    Payable
    Continued
<CAPTION>
                  <S>                                        <C>               <C>
                  Unsecured non-interest bearing note
                  payable to a Company bearing interest
                  at 10% due on demand                                 7,000          7,000

                  Unsecured note payable to a minor
                  shareholder of the Company bearing
                  interest at 12%, due on demand                      40,000         40,000

                  Unsecured note payable to a minor
                  shareholder of the Company bearing
                  interest at 9%, due on demand                            -         30,000
                                                          ---------------------------------
                                                             $        72,000   $    117,000
                                                          ---------------------------------
</TABLE>

6.  Related
    Party Notes
    Payable
                  Related party notes payable consist of the following:
<TABLE>
<CAPTION>
                                                                          July 31,
                                                             ------------------------------
                                                                    2001           2000
                                                             ------------------------------
                  <S>                                        <C>               <C>
                  Unsecured note payable to Windstar
                  Research and Engineering, Ltd.
                  (Windstar), an affiliated company
                  controlled by a number of
                  shareholders, officers, and directors of
                  the Company, bearing interest at 12%,
                  due on demand after August 1, 2003         $       180,000   $          -

                  Unsecured note payable to Windstar
                  (see note 14) bearing interest at 12%,
                  due May 2, 2002                                    100,000              -

                  Unsecured notes payable to an entity
                  controlled by the spouse of an
                  officer/majority shareholder, bearing
                  interest at 9%, due on demand                            -        350,000


--------------------------------------------------------------------------------
                                                                            F-14
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

6.      Related
        Party Notes
        Payable
        Continued
<CAPTION>
                  <S>                                        <C>               <C>
                  Unsecured note payable to an
                  officer/majority shareholder bearing
                  interest at 9%, due on demand                            -         10,000

                  Unsecured note payable to
                  director/minor shareholder bearing
                  interest at 9%, due on demand                       10,000              -
                                                           ---------------------------------
                                                                     290,000        360,000

                  Less current portion                              (110,000)      (360,000)
                                                           ---------------------------------
                                                           $         180,000   $          -
                                                           ---------------------------------
</TABLE>

                  During the year ended July 31, 2001, the Company paid related
                  party notes payable of $418,000, including interest, through
                  the issuance of 874,477 shares of common stock.

7.  Long-Term     During the year ended July 31, 2000, the Company entered into
    Convertible   an agreement with various consultants and related parties
    Debt          under which $1,230,000 of consulting fees payable, notes
                  payable, and related accrued interest outstanding to such
                  consultants and related parties were converted into long-term
                  convertible notes. The convertible notes bear interest at 12%,
                  are due May 1, 2002 and are convertible through maturity, at
                  the option of the holder, into one share of common stock for
                  each $1 of principal and interest outstanding.

                  During the year ended July 31, 2001:

                  o        The Company paid related party long-term convertible
                           debt of $281,000, including interest, through the
                           issuance of 561,239 shares, of common stock.

                  o        The Company transferred long-term convertible debt
                           including accrued interest, in the amount of
                           $1,155,000 ($599,000 related party) to Windstar
                           Research & Engineering, Ltd., an affiliated company
                           controlled by a number of shareholders, officers, and
                           directors of the Company.

--------------------------------------------------------------------------------
                                                                            F-15
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

8.  Income        The benefit for income taxes is different from amounts which
    Taxes         would be provided by applying the statutory federal income tax
                  rate to loss before benefit for income taxes for the following
                  reasons:
<TABLE>
<CAPTION>
                                                                          Cumulative
                                                                          Amounts from
                                                                          December 31,
                                             Year Ended July 31,          1997 (date of
                                   ----------------------------------     inception) to
                                            2001             2000         July 31, 2001
                                   -----------------------------------------------------
<S>                                <C>                <C>              <C>
Federal income tax
  benefit at statutory rate        $        387,000   $      443,000   $      2,072,000
Change in valuation allowance              (387,000)        (443,000)        (2,072,000)
                                   ----------------------------------------------------
                                   $              -   $            -   $              -
                                   ----------------------------------------------------
</TABLE>

                  Deferred tax assets (liabilities) consist of the following:

                                                    July 31,
                                    --------------------------------------------
                                             2001                  2000
                                    --------------------------------------------

Net operating loss carryforward     $       2,069,000        $      1,120,000
Consulting fees accrued but not
  paid                                          3,000                 565,000
Valuation allowance                        (2,072,000)             (1,685,000)
                                    --------------------------------------------
                                    $               -        $              -
                                    --------------------------------------------

                  At July 31, 2001, the Company has net operating loss
                  carryforwards available to offset future taxable income of
                  approximately $6,000,000, which will begin to expire in 2018.
                  The utilization of the net operating loss carryforward is
                  dependent upon the tax laws in effect at the time the net
                  operating loss carryforwards can be utilized. The Tax Reform
                  Act of 1986 significantly limits the annual amount that can be
                  utilized for certain of these carryforwards as a result of a
                  change in ownership.

--------------------------------------------------------------------------------
                                                                            F-16
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

9.  Preferred     The Company has authorized 5,000,000 shares of preferred stock
    Stock         with a par value of $.001, for issuance. Each share of
                  preferred stock is convertible into one share of common stock.
                  As of July 31, 2001, there were no preferred shares issued or
                  outstanding. During the year ended July 31, 2001, the Company
                  granted options to purchase 3,000,000 shares of preferred
                  stock at $.50 per share to an officer/director of the Company.

10. Supplemental  Actual amounts paid for interest and income taxes are as
    Cash Flow     follows:
    Disclosure
<TABLE>
<CAPTION>
                                                                                 Cumulative
                                                                                Amounts from
                                                                                December 31,
                                             Year Ended July 31,               1997 (date of
                                      ---------------------------------        inception) to
                                              2001            2000             July 31, 2001
                                      -------------------------------------------------------
                  <S>                 <C>                <C>                <C>
                  Interest            $       2,000      $           -      $      5,000
                                      -------------------------------------------------------

                  Income taxes        $           -      $           -      $          -
                                      -------------------------------------------------------
</TABLE>

                  During the year ended July 31, 2001:

                  o        The Company paid related party notes of $418,000,
                           including interest, through the issuance of 874,477
                           shares of common stock.

                  o        The Company paid related party consulting fees
                           payable of $25,000 through the issuance of 50,000
                           shares of common stock.


                  o        The Company paid related party long-term convertible
                           debt of $281,000, including interest, through the
                           issuance of 561,239 shares of common stock.

                  o        The Company converted accrued interest of $259,000
                           into related party notes payable and long-term debt.


--------------------------------------------------------------------------------

                                                                            F-17
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

10. Supplemental  o        The Company transferred long-term convertible debt
    Cash Flow              and consulting fees payable, including accrued
    Disclosure             interest, in the amount of $1,155,000 ($599,000
    Continued              related party) and $623,000 ($427,000 related party),
                           respectively, to Windstar Research & Engineering,
                           Ltd., an affiliated company controlled by a number of
                           shareholders, officers, and directors of the Company,
                           through the issuance of 3,557,538 shares of common
                           stock.

                  During the year ended July 31, 2000:

                  o        The Company converted $831,000 of consulting fees
                           payable, $120,000 of advances from a related party,
                           $143,000 of accrued interest and $136,000 of related
                           party notes payable to convertible long-term notes
                           payable due May 2002 (see Note 7).

                  o        The Company converted consulting fees payable of
                           $300,000 to a related party note payable.


11. Stock Options Information regarding stock options is summarized below:
<TABLE>
<CAPTION>
                                                                            Range of
                                                     Number of              Exercise
                                                      Options                Prices
                                           -----------------------------------------------
<S>                                                 <C>                  <C>
Outstanding at July 31, 1999                        3,767,545            $   .001 - .25
        Granted                                       276,948                       .25
        Exercised                                    (100,000)                      .20
        Expired                                      (246,173)               .001 - .25
                                           -----------------------------------------------

Outstanding at July 31, 2000                        3,698,320                .001 - .25
        Granted                                     3,561,562                 .25 - .50
        Exercised                                    (749,044)                .20 - .50
        Expired                                             -                         -
                                           -----------------------------------------------

Outstanding at July 31, 2001                        6,510,838                .001 - .50
                                           -----------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                                                            F-18
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

12. Stock-Based   The Company has adopted the disclosure only provisions of
    Compensation  Statement of Financial Accounting Standards (SFAS) No. 123,
                  Accounting for Stock-Based Compensation. Accordingly, no
                  compensation cost has been recognized in the financial
                  statements for common stock equivalents issued to employees at
                  or above the market price of the stock on the date of the
                  grant. Had compensation cost for the Company's stock options
                  been determined based on the fair value at the grant date for
                  awards, consistent with the provisions of SFAS no. 123 the
                  Company's loss and loss per share would be as follows:

                                       Year Ended            Year Ended
                                      July 31, 2001         July 31, 2000
                                   ----------------------------------------

Net loss - as reported             $   (1,139,000)        $    (1,303,000)
Net loss - pro forma               $   (1,744,000)        $    (1,341,000)
Loss per share - as reported       $         (.04)        $          (.04)
Loss per share - pro forma         $         (.06)        $          (.04)
                                   -----------------------------------------

                  The fair value of each option grant is estimated on the date
                  of grant using the Black-Scholes option pricing model with the
                  following assumptions:


                  Expected dividend yield                  $               -
                  Expected stock price volatility                       158%
                  Risk-free interest rate                       4.6% - 6.02%
                  Expected life of options                      4 to 5 years
                                                           -----------------

                  The weighted average fair value of options granted during 2001
                  and 2000 was $.19 and $.14, respectively.

--------------------------------------------------------------------------------
                                                                            F-19
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

12. Stock-Based   The following table summarizes information about stock options
    Compensation  outstanding at July 31, 2001.
    Continued
<TABLE>
<CAPTION>
                                  Options Outstanding                                   Options Exercisable
                      -----------------------------------------------------    ------------------------------------
                                              Weighted
                                               Average
                              Number          Remaining         Weighted           Number               Weighted
       Range of            Outstanding       Contractual        Average          Exercisable            Average
       Exercise                 at              Life            Exercise             at                 Exercise
        Prices               7/31/01           (Years)           Price             7/31/01               Price
--------------------------------------------------------------------------------------------------------------------
<S>                         <C>                <C>            <C>                <C>                  <C>
   $          .001            221,173           .42           $      .001           221,173           $      .001
         .20 - .50          6,289,665          3.75                   .37         6,289,665                   .37
--------------------------------------------------------------------------------------------------------------------

   $    .001 - .50          6,510,838          3.46           $       .34         6,510,838           $       .34
--------------------------------------------------------------------------------------------------------------------
</TABLE>

13. Related Party During the year ended July 31, 2001:
    Transactions
                  o        The Company received cash of $16,000 from an entity
                           controlled by the spouse of an officer/majority
                           shareholder. in exchange for a note payable. These
                           advances were paid by the issuance of common stock.

                  o        The Company received cash of $10,000 from a director
                           and minor shareholder in exchange for a note payable.

                  o        The Company accrued $305,000 of consulting fees
                           liabilities to officers of the Company. These
                           payables were transferred to Windstar Research &
                           Engineering, Ltd., an affiliated company controlled
                           by a number of shareholders, officers, and directors
                           of the Company.

                  o        The Company accrued interest of $105,000 on the
                           balances for related party long-term convertible
                           debt, related party consulting fees payable and
                           related party notes payable.

                  o        The Company paid related party notes and long-term
                           debt of $418,000 and $281,000, including interest,
                           through the issuance of 874,477 shares and 561,239
                           shares, respectively, of common stock.

--------------------------------------------------------------------------------
                                                                            F-20
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

13. Related Party o        The Company transferred related party long-term
    Transactions           convertible debt and related party consulting fees
    Continued              payable, including accrued interest, in the amount of
                           $599,000 and $427,000, respectively, to Windstar
                           Research & Engineering, Ltd., an affiliated company
                           controlled by a number of shareholders, officers, and
                           directors of the Company, through the issuance of
                           2,051,921 shares of common stock.

                  o        The Company recorded related party long-term debt in
                           the amount of $180,000 to Windstar Research &
                           Engineering, Ltd., an affiliated company controlled
                           by a number of shareholders, officers, and directors
                           of the Company, for payments made to a non-related
                           vendor for research and development activities
                           relating to the design and engineering for the
                           proposed facility in Mount Belevue, Texas.

                  o        The Company paid for related party consulting
                           services in the amount of $25,000 rendered by an
                           officer of the Company through the issuance of 50,000
                           shares of common stock.

                  o        The Company had related party notes payable of
                           $10,000.

                  During the year ended July 31, 2000:

                  o        The Company received cash of $10,000 from an
                           officer/majority shareholder in exchange for a note
                           payable.

                  o        The Company received cash of $50,000 from an entity
                           controlled by the spouse of an officer/majority
                           shareholder in exchange for a note payable.

                  o        The Company received $120,000 in advances from an
                           entity controlled by the spouse of an
                           officer/majority shareholder. These advances were
                           converted into long-term convertible debt (see Note
                           7).

                  o        An entity controlled by the spouse of an
                           officer/majority shareholder paid accrued consulting
                           fees of the Company of $300,000 in exchange for a
                           note payable.

--------------------------------------------------------------------------------
                                                                            F-21
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

13. Related Party o        The Company converted $751,000 of consulting fees
    Transactions           payable and notes payable to an officer/majority
    Continued              shareholder or entities controlled by him or his
                           spouse, and accrued interest on such consulting fees
                           and notes, to long-term convertible debt due November
                           2001 (see Note 7).

                  o        Consulting fees payable as of July 31, 2000 include
                           $122,000 due to officers of the Company.

                  o        Accrued liabilities as of July 31, 2000 include
                           interest of $22,000 due to an officer/shareholder or
                           entities controlled by him or his spouse.

                  o        The Company incurred consulting expenses of $228,000
                           from officers or shareholders of the Company.

                  o        The Company had related party long-term convertible
                           debt and notes payable of $1,141,000.

14. Commitments   Licensing Agreement
    and           The Company has entered into a license agreement with Windstar
    Contingencies Research and Engineering, Ltd. (Windstar), an affilated
                  company controlled by a number of shareholders, officers, and
                  directors of the Company, which grants the Company the
                  exclusive right to certain technologies developed by another
                  company relating to the design, manufacture, and operation of
                  facilities to recover petrochemical feedstock from waste
                  rubber and plastics. Under the agreement, the Company is
                  obligated to pay $1,000,000 for Phase I for each plant or
                  facility constructed to use the licensed technology. An
                  additional $500,000 shall be required for each additional
                  development phase constructed. In addition the Company shall
                  pay a monthly license fee of 7% of gross income to the
                  licensor for each plant.

--------------------------------------------------------------------------------
                                                                            F-22
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

14. Commitments   The Company is required to commence building the following
    and           numbers of new plants within the first five years as follows:
    Contingencies
    Continued           Year 2001 - One plant.
                        Year 2002 - Two plants.
                        Year 2003 - Three plants.
                        Year 2004 - Four plants.
                        Year 2005 - Five plants.
                        Year 2006 and thereafter - Six plants per year.

                  During the year ended July 31, 2001, the Company was required
                  to pay an initial $100,000 of the total license fee for the
                  plant scheduled to commence in 2001. The Company issued a note
                  payable in the amount of $100,000 as consideration for this
                  obligation. Subsequent to July 31, 2001, the Company failed to
                  make required payments under the licensing agreement in the
                  amounts of $250,000 and $500,000, and is therefore in default
                  under the licensing agreement. In addition, the Company does
                  not expect to commence construction of the first plant during
                  2001 as required by the agreement.

                  On November 19, 2001, the Company and Windstar entered into a
                  forbearance agreement in which Windstar agreed that until
                  August 1, 2003 it will not terminate the license agreement or
                  exercise any of its rights or remedies provided in the
                  agreement related to the Company's defaults in failing to
                  commence construction of new facilities in 2001 and 2002, and
                  failing to make payments of $250,000, $500,000, and $100,000
                  due on August 1, 2001, August 31, 2001, and May 2, 2002,
                  respectively.

                  Consulting Agreements
                  The Company has a consulting agreement with an
                  officer/shareholder, which requires minimum annual payments of
                  $144,000 and reimbursable costs of $18,000 a year for office
                  and vehicle lease. The agreement expires on December 31, 2007.

                  The Company has a consulting agreement with a firm, which
                  requires minimum annual payments of $63,000. The firm was also
                  granted 1,000,000 stock options which expire December 31,
                  2004. The agreement expires on September 30, 2002.

--------------------------------------------------------------------------------
                                                                            F-23
<PAGE>

                                                      CYNTECH TECHNOLOGIES, INC.
                                                 (A Developmental Stage Company)

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

14. Commitments   Consulting Agreements - Continued
    and           The Company has a consulting agreement with an
    Contingencies officer/shareholder, which requires minimum annual payments of
    Continued     $12,000 and reimbursable costs of $8,600 a year for office and
                  vehicle lease. The agreement expires on December 31, 2007.

                  Contingencies
                  The Company entered into an agreement wherein related party
                  long-term convertible debt of $599,000, including interest,
                  non-related party long- term convertible debt of $556,000,
                  including interest, related party consulting fees payable of
                  $427,000, including interest, and non-related party consulting
                  fees of $196,000, including interest, were transferred to
                  Windstar Research & Engineering, Ltd. (Windstar). As
                  consideration for this transaction, the Company issued
                  3,557,538 shares of common stock to Windstar. Windstar is
                  controlled by certain officers, directors, and shareholders of
                  the Company.

                  The Company may be contingently liable for these amounts due
                  to the related party nature of the transaction and because the
                  individual debt holders have not released the Company from
                  liability.

                  The Company may become or is subject to investigations, claims
                  or lawsuits ensuing out of the conduct of its business. The
                  Company is currently not aware of any such item which it
                  believes could have a material affect of its financial
                  position.

15. Fair Value of The Company's financial instruments consist of cash, payables,
    Financial     and notes payable. The carrying amount of cash, and payables
    Instruments   approximates fair value because of the short-term nature of
                  these items. The carrying amount of notes payable approximates
                  fair value as the individual borrowings bear interest at
                  market interest rates.

--------------------------------------------------------------------------------

                                                                            F-24
<PAGE>