U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]  QUARTERLY REPORT PURSUANT  SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934

                For the quarterly period ending December 31, 2001

[ ]  TRANSACTION  REPORT  PURSUANT  SECTION  13 OR 15 (d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

           For the transition period from __________ to ____________.

                         Commission file number 0-22678

                                   XAIBE, INC.
         --------------------------------------------------------------
        (Exact name of small business issuer as specific in its charter)

            Nevada                                              76-0594907
 ----------------------------------                    -------------------------
 (State of other jurisdiction of                         (I.R.S. Employer
  Incorporation or organization)                          Identification No.)

                 1014 Wirt Road, Suite 245, Houston, Texas 77055
                ------------------------------------------------
                    (Address of principal executive offices)

                                 (713) 688-0400
                            -------------------------
                           (Issuer's telephone number)


              (Former name, former address and former fiscal year,
                          if changed since last report)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 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 [
]

     State the  number of shares  outstanding  of the  Issuer's  class of common
equity, as of the latest practicable date: common stock,  $0.001 par value as of
December 31, 2001: 16,388,545 shares

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


<PAGE>

                                   XAIBE, INC.

                                   FORM 10-QSB

                                      INDEX

                                                                       Page No.
PART I.     FINANCIAL INFORMATION

         Item 1.  Financial Statements

         Balance Sheet as of December 31, 2001................................3

         Statements of Operations for the Six months
         ended December 31, 2001 and 2000.....................................5

         Statements of Cash Flows for the Six months ended
         December 31, 2001 and 2000...........................................6

         Notes to Financial Statements........................................7

         Item 2.  Management's Discussion and Analysis or
         Plan of Operations..................................................11

PART II  OTHER INFORMATION

         Item 1. Legal Proceedings...........................................14
         Item 6  Exhibits and Reports on Form 8-K............................14

<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                   (unaudited)

                                                            December 31,
                                                               2001
ASSETS:

Current Assets:
         Cash                                                 $ 11,548
         Accounts receivable - net                             203,623
         Related party receivable                               86,798
         Accounts receivable - employee                          4,650
         Inventory                                               5,691
                                                            ----------
                  Total Current Assets                         312,310

Plant, Property and Equipment, at cost
         Equipment & machinery                                 189,784
         Furniture & fixtures                                  195,454
                                                              --------
                                                               385,238
         Less accumulated depreciation                         162,996
                                                              --------
                                                               222,242
Other Assets
         Licenses & agreements-net                             206,723
         Goodwill, patents & trademarks-net                     17,680
         Other                                                  14,022
                                                             ---------
                                                               238,425
          Total Assets                                       $ 772,977
                                                             =========







    The accompanying notes are an integral part of these financial statements
                                       3
<PAGE>



                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                   (Continued)

                                                                   December 31,
                                                                      2001
                                                                   (unaudited)

LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES:

Current Liabilities
         Accounts payable                                         $ 670,518
         Notes Payable                                               18,715
         Accrued expenses                                           325,750
         Related party payable                                      234,191
         Current portion long-term debt                             150,000
                                                                  ---------
                  Total Current Liabilities                       1,399,174

Long-Term Liabilities
         Notes payable                                              726,119
         Capital lease obligations                                   28,340
         Less - current portion long-term debt                     (150,000)
                                                                  ---------
                                                                    604,459

Stockholders' Equity
         Common stock, $0.00025 par value per share;
                  authorized 40,000,000 shares;
                  issued 16,338,545 shares                           26,142
         Paid-in capital                                          2,294,340
         Deficit accumulated in the development stage            (3,551,138)
                                                                 ----------
                                                                 (1,230,656)

         Total Liabilities and Stockholders' Equity               $ 772,977
                                                                  =========





    The accompanying notes are an integral part of these financial statements
                                       4
<PAGE>



                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF OPERATIONS
                                   (Unaudited)
<TABLE>

                                                                         For the Six Months
                                                                          Ended December 31,
                                                                      --------------------------
                                                                        2000              2001
                                                                      ----------       --------
<S>                                                                   <C>              <C>


Sales                                                                $ 388,562        $ 583,546
Cost of Goods Sold
         Materials                                                      53,363            6,063
         Freight-in                                                         81                -
         Labor                                                          10,094           18,624
                                                                     ----------       ----------
                  Gross Profit                                         325,025          558,859

Selling, General and Administrative Costs
         Selling expenses  279,882                                     245,601
         Consulting fees   311,924                                      22,919
         General & administrative                                      920,923          662,709
         Amortization expense                                          227,607           18,369
         Depreciation                                                   40,830           19,359
                                                                    ----------       ----------
                                                                     1,781,165          968,957
Other (Income) Expense
         Miscellaneous Income                                          (10,245)         (16,200)
         Interest Income   (526)                                           (13)
         Interest Expense  4,072                                           493
         Gain on Sale of Assets - Net of Repossession Loss                   -           (5,838)
                                                                   -----------       ----------
                  Total costs and expenses                           1,774,465          953,237
                                                                   -----------       ----------

                  Loss Before Income Taxes                          (1,449,440)        (394,378)

Income Taxes                                                                 -                -
                                                                   -----------       ----------

Net Loss                                                          $ (1,449,440)       $(394,378)
                                                                   ===========       ==========

(Loss) Per Common Share:
         Basic                                                         $ (0.26)         $ (0.02)
                                                                   ===========       ==========
         Weighted Average Number of Common
                  Shares Outstanding - Basic                         5,626,689       16,388,545
                                                                   ===========       ==========
</TABLE>


    The accompanying notes are an integral part of these financial statements
                                       5
<PAGE>



                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF CASH FLOWS
                                   (Unaudited)
<TABLE>

                                                                  For the Six Months
                                                                 Ended December 31,
                                                            ---------------------------
                                                               2000               2001
                                                            ----------         ---------
<S>                                                      <C>                   <C>

Cash Flows From Operating Activities:
------------------------------------
Net Loss                                              $ (1,449,440)           $ (394,378)
Adjustment to reconcile Net Income (loss) to net cash
         provided by (used in) Operating Activities:
                  Depreciation                              40,830                19,359
                  Amortization                             227,607                18,369
                  Allowance for doubtful accounts              -                  10,000
                  Loss on repossession of assets               -                   4,957
                  Increase in license rights                   -                  (1,000)
         Changes in components of working capital -
         (Increase) decrease in
                  Accounts Receivable                      (21,801)             (158,609)
                  Other Loans and Receivables              (42,277)                 (196)
                  Inventory                                 11,448                   245
         Increase (decrease) in
                  Accounts Payable                         277,957               142,917
                  Accrued Expenses                          50,448               135,645
                  Related party payable                    344,695                     -
                                                         ---------         -------------
         Net Cash Used by Operating Activities            (560,533)             (222,691)

Cash Flows From Investing Activities:
------------------------------------
(Acquisition) sale of property and equipment               (18,173)               97,934
(Acquisition) sale of other assets                         (83,410)               86,475
                                                        ----------             ---------
Net Cash used by Investing Activities                     (101,583)              184,409

Cash Flows From Financing Activities:
------------------------------------
Issuance of Stock                                          724,795                     -
Capital Contribution                                             -                21,500
Increase in notes payable                                   25,000                82,305
Principal payments on debt                                 (42,656)               (5,000)
                                                         ----------           ----------
Net Cash provided by Financing Activities                  707,139                98,805

Increase (Decrease) in Cash                                 45,023                60,523
Cash balance at beginning of period                        (13,148)              (48,975)
                                                        ----------            ----------
Cash at End of the period                               $   31,875            $   11,548
                                                        ==========            ==========
</TABLE>


    The accompanying notes are an integral part of these financial statements
                                       6
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


1.       Interim Presentation

         The Balance Sheet of Xaibe,  Inc.,  hereafter referred to as "Xaibe" or
         "the  Company",  at December 31, 2001, and the Statements of Income and
         Cash Flows for the periods  indicated  herein have been prepared by the
         Company without audit.

         In the opinion of management,  the statements  reflect all  adjustments
         necessary for a fair presentation of the financial position, results of
         operations and cash flows of the Company and all such  adjustments  are
         of a normal  recurring  nature.  The interim  statements for the period
         ended December 31, 2001 are not necessarily indicative of results to be
         expected for the full year.

2.       Capital Stock

         During the six months ended December 31, 2001,  10,000 shares of common
         stock were issued in connection with the conversion of a like number of
         shares of  convertible  preferred  stock of the  Company's  subsidiary,
         PolarShield,  Inc. bringing the accumulative number of shares converted
         to 1,526,550.

3.       Litigation and Contingencies

          On March 26, 2001, suit, styled E-Business  Development,  Inc., Strong
          Development,   Inc.,  Reach  International,   Inc.  and  Strong  Tower
          Investments,  Inc.  vs.  Xaibe,  Inc.  and  Jimmy  Farmer,  Cause  No.
          2001-16022 was brought against the Company in the 270th District Court
          in Harris County,  Texas. The Plaintiffs in the action alleged various
          wrongful  acts and omissions on the part of management of the Company.
          The action sought  injunctive  relief to prohibit  certain acts and to
          compel the Company to hold a shareholders meeting.

         In April 2001, the parties entered into a settlement  agreement and the
         suit by  E-Business  Development,  et. al. and a motion to dismiss  has
         been filed. Under the terms of the settlement agreement, the plaintiffs
         appointed a new  director of the  Company  and a new  President.  Jimmy
         Farmer  resigned as  President  and will  resign as a director  and the
         Company  agreed  to  call a  shareholders  meeting.  In  addition,  the
         plaintiff  corporations  provided  funding in the amount of $225,000 to
         the Company to pay certain specified obligations of the Company.

<PAGE>


                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (Continued)

3.       Litigation and Contingencies (Continued)

         In May 2000,  suit,  styled  Polarshield of Texas LLC vs. Dan Armstrong
         and John Armstrong,  Cause No. 2000-22572, was filed and brought in the
         129th District Court of Harris County,  Texas. The Company alleges that
         the defendants  committed  material breaches of contract as a result of
         non-payment  of amounts  owing under a  distributorship  agreement  and
         violation of the confidentiality and non-disclosure obligations entered
         into pursuant to the distributorship agreement.  Settlement discussions
         are ongoing.

         In May 2001, suit, styled Polarshield of Louisiana  Residential LLC and
         Jerry Blake vs. Xaibe, Inc., Internet Services,  Inc., Milton Moody and
         George  D.  Carameros,  III,  was filed in the 24th  District  Court of
         Jefferson  Parish,  Louisiana.  The  plaintiffs  allege that  Defendant
         Carameros provided misleading  information which induced the plaintiffs
         to acquire from Carameros certain  distribution  rights relating to the
         Company's  products and allege that the Company bears  liability as the
         alleged source of the  information  provided by Carameros.  The Company
         intends  to   vigorously   defend  the  cause  of  action.   Settlement
         discussions are ongoing.

         In May 2001, suit, styled Xaibe, Inc. v. Steven H. Fodrie, was filed in
         the 334th District Court of Harris County, Texas, seeking an injunction
         in favor of the Company and against Mr. Fodrie, a former  consultant to
         the Company,  requiring the return of 400,000  shares which the Company
         alleges  were   wrongfully   issued  to  the  defendant.   A  temporary
         restraining  order was  issued on June 1,  2001  prohibiting  the sale,
         transfer or pledge of the shares in question pending a hearing relating
         to the grant of a permanent injunction.  In June 2001, Mr. Fodrie filed
         a  counterclaim  and third party action  against the  Company,  certain
         officers,  shareholders and alleged control  persons.  Pursuant to that
         counterclaim, Mr. Fodrie alleged that the Company is in default under a
         Promissory Note to Mr. Fodrie in the amount of $327,000,  which Note is
         allegedly  secured by an Option Agreement under which Mr. Fodrie has an
         option to  acquire an  exclusive  worldwide  license  to the  Company's
         patented  technology  in exchange  for a royalty in the amount of $1.47
         per fluid ounce for sales of product for use in "stationary  and mobile
         refrigerant treatment" and a royalty of five percent of gross sales for
         all other uses with the royalty to be credited 50% to the  repayment of
         the Note in an amount up to  $227,000  with the royalty  decreasing  to
         $1.00 per fluid ounce and 0%  respectively  after  payment or credit of
         royalties in the amount of $1.5 million.  The alleged option  agreement
         expires  upon the  earlier  of  payment in full of the Note or one year
         from the date of grant,  subject  to the right of Fodrie to extend  the
         option for an  additional  one year.  Fodrie also  alleges that certain
         shareholders of the Company are under common  control,  that certain of
         the shares held by those shareholders were obtained unlawfully and that
         those shareholders
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (Continued)

3.       Litigation and Contingencies (Continued)

         have failed to file  required  Schedule 13D reporting  their  ownership
         interest.  Fodrie requests relief consisting of a declaratory  judgment
         that the Note  and  Option  Agreement  are  valid,  that the Note is in
         default,  that Fodrie is entitled to vote certain shares  pursuant to a
         Voting  Agreement,  that the 400,000  shares with  respect to which the
         Company obtained  temporary  restraining  order are valid and seeking a
         temporary  restraining  order  restraining  the Company  from holding a
         shareholder  meeting,  preventing the alleged controlling  shareholders
         from selling or otherwise  transferring  shares of the Company's common
         stock and seeking  actual and punitive  damages.  On June 19, 2001, the
         District  Court  entered an Order  Extending  and  Modifying  Temporary
         Restraining  Order and  Temporary  Order  wherein the Court  restrained
         Fodrie from  expending,  assigning  or  transferring  any stock  and/or
         proceeds  received  by Fodrie in  relation  to the  400,000  shares and
         ordered that the Company not undertake to alter the management, control
         and/or  stock  ownership  of the  Company  without a prior order of the
         Court and  prohibited  certain  shareholders  of the Company and others
         from  transferring  certain of their stock in the  Company.  On July 9,
         2001, a hearing began on the Applications  for Temporary  Injunction of
         the Company and Fodrie. During the conduct of such evidentiary hearing,
         the parties  announced in chambers a proposed  settlement of all claims
         which included the agreement of the Company to purchase all of Fodrie's
         stock in the Company by execution of a Promissory Note in the amount of
         $2.95 million  payable over thirteen (13) months,  secured by assets of
         the  Company,  consisting  principally  of  an  option  to  acquire  an
         exclusive  worldwide  license to utilize the  Company's  technology  on
         terms  substantially  similar to those set forth in the alleged  Option
         Agreement,  and  Fodrie's  return of  400,000  shares  to the  Company,
         canceling the $327,000 Note and  canceling the Option  Agreement,  with
         joint and mutual  releases.  Such  settlement  is  contingent  upon the
         execution  of final  agreements  with joint and mutual  releases of all
         parties which have not occurred.  The Company  believes the allegations
         of Mr. Fodrie are without  merit and intends to vigorously  contest the
         allegations  as they  relate to the  Company if the  settlement  is not
         effectuated.  To allow for the potential settlement, the Court extended
         the June 19,  2001 order as a Temporary  Injunction  pending a trial on
         the merits. In December 2001, a motion for summary judgment was granted
         in favor of Mr. Fodrie based on the proposed  settlement.  Both parties
         have  submitted  proposed  written  orders with  respect to the summary
         judgment and settlement.  As of the date hereof, neither order has been
         signed and the Court has not announced which order, if either, it would
         sign.

<PAGE>



                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (Continued)

4.  Distributorship Sales

         Revenues  for the six months ended  December 31, 2001 include  $500,000
         from the sale of rights to distribute the Company's products in Panama,
         Costa Rica, El Salvador,  Nicaragua and Taiwan.  Under the terms of the
         distributorships,  the  Company  is  entitled  to 50% of the net income
         attributable to the sale of product in those markets.

<PAGE>

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General

         During the quarter ended  September 30, 2000, the Company  entered into
discussions with PolarShield,  Inc.  ("PolarShield")  with respect to a possible
combination of the Company and PolarShield.  The Company and PolarShield entered
into an Exchange  Agreement on September  29, 2000 pursuant to which the Company
agreed to acquire  PolarShield  with management of PolarShield to assume control
of the combined companies.

         On October 27, 2000, the Company completed an exchange (the "Exchange")
pursuant to which the Company issued an aggregate of 5,559,705  shares of common
stock in  exchange  for  97.9% of the  outstanding  shares  of  common  stock of
PolarShield.  Pursuant to the terms of the Exchange,  each share of  PolarShield
common stock was exchangeable for one share of Company common stock. As a result
of the Exchange, PolarShield became a subsidiary of the Company.

         In  connection  with the  Exchange  all  convertible  preferred  stock,
options and warrants to purchase shares of PolarShield  common stock outstanding
immediately  prior to the  consummation  of the  Exchange  were  assumed  by the
Company.  PolarShield had 1,629,550 shares of preferred stock  outstanding which
were  convertible  into  common  stock of the  Company,  or  redeemable,  at the
election of the holder.  During the six months ended  December 30, 2001,  10,000
shares of  PolarShield  preferred  stock were converted into common stock of the
Company, resulting in the issuance of 10,000 shares of common stock bringing the
accumulative number of shares converted to 1,526,550.

         PolarShield,  a Nevada  corporation  formed in 1998,  is engaged in the
marketing of energy management and conservation  solutions  utilizing a patented
refrigerant  process (the "Process")  designed to improve efficiency of heating,
ventilation and air condition and refrigerant systems.

         Following  the  Exchange,  management  adopted  the  business  plan  of
PolarShield.

         This  discussion  relates to, and the  financial  statements  presented
herewith  reflect,  the operations of PolarShield on a stand-alone basis for all
periods prior to the date of the Exchange and reflect the  consolidated  results
of Xaibe and PolarShield from the date of the Exchange forward.

<PAGE>

Results of Operations

         Sales.  The Company's  sales totaled  $583,546 for the six months ended
December 31, 2001, a 50.2% increase as compared to sales of $388,562 for the six
months ended December 31, 2000. The increase in sales was primarily attributable
to the sale of distribution  rights in five foreign countries for $170,000.  The
Company's revenues are highly seasonal in nature, being tied to air conditioning
usage with peak sales  occurring  in spring  and summer  months.  As a result of
seasonal  factors and a substantial  reduction in the Company's  work force,  as
well as  uncertainty  relating  to  ongoing  litigation  and a lack  of  capital
resources,  the  Company had no sales  revenues  during the three  months  ended
December 31, 2001 and expects to have limited or no revenues  during the quarter
ending March 31, 2002.

         Cost of Sales.  The Company's cost of sales totaled $24,687 for the six
months ended December 31, 2001, a decrease of 61.1% as compared to cost of sales
of $63,538 for the six months ended December 31, 2000. As a percentage of sales,
cost of sales decreased to 16.4% from 4.2%. The decrease in cost of sales,  both
in  total  and as a  percentage  of  sales,  was  attributable  to the  sale  of
distributorship rights which have no corresponding cost of sales.

         Selling,  General  and  Administrative  Expense.  Selling,  general and
administrative  expense  ("SG&A")  totaled  $968,957  for the six  months  ended
December 31, 2001, a decrease of 45.6% as compared to SG&A of $1,781,165 for the
six  months  ended  December  31,  2000.  The  decrease  in SG&A  was  primarily
attributable  to the  elimination  of  substantially  all  personnel  during the
quarter ended December 31, 2001 pending the peak selling  season,  resolution of
ongoing litigation and receipt of additional financing to support operations.

         Income Taxes.  The Company had no income tax expense  during the either
the six months ended December 31, 2001 or December 31, 2000. The Company had net
operating  losses  totaling  approximately  $3,551,138  at December 31, 2001 but
recorded no tax benefit as a result of uncertainty  as to the Company's  ability
to operate profitably and utilize the net operating losses.

Liquidity and Capital Resources

         At December 31,  2001,  the Company had a cash balance of $11,548 and a
working capital deficit of $1,220,656.

         Cash  flows  used in  operations  during  the  current  period  totaled
$222,691. Cash flows used in operations were attributable, primarily, to the net
loss for the period  which was  partially  offset by (1)  increases  in accounts
payable,  related party payables and accrued  expenses,  and (2) amortization of
licenses, patents and rights.

         Cash flows provided in investing  activities  during the period totaled
$184,409.  Cash flows  provided in investing  activities  were  attributable  to
dispositions of equipment and other assets.
<PAGE>


         Cash flows provided by financing  activities  during the period totaled
$98,805.  Cash flows provided by financing  activities  were  attributable to an
increase in notes  payable of $82,305 and $21,500 of  contributed  capital which
amounts were partially offset by payments of debt in the amount of $5,000.

         At December 31, 2001, the Company had long-term debt totaling $604,459,
consisting of notes payable of $726,119 and capital lease  obligations  totaling
$28,340,  less the  current  portion  of notes  payable of  $150,000.  The notes
payable bear  interest at rates  ranging from 7.5% to 10.5% and are repayable in
principle and interest  installments over periods from 12 to 60 months ending in
October 2004.

         The Company,  at December 31, 2001,  did not have  adequate  funding to
support its  operations  for the following  twelve  months.  In order to support
those operations,  the Company will either be required to substantially increase
revenue, secure additional capital or secure additional funding from affiliates.
Management  estimates  that the Company will require a minimum of  $1,000,000 of
additional  funding to support  operations  through the end of 2002. The Company
presently  has no  commitments  to  provide  such  funding  and  there can be no
assurance that such funding will be available on acceptable terms or at all.

         In addition to capital required to support  operations,  the Company is
delinquent  on, or in default  with  respect to,  various  obligations  and will
require additional capital to bring those obligations  current.  Included in the
Company's  working  capital  deficit of $1.2  million at  December  31, 2001 are
delinquent  franchise  tax and sales and use tax  obligations  in the  amount of
$53,374.

         The Company is presently  party to multiple legal  proceedings  arising
from various  delinquencies  and defaults on  obligations as well as relating to
the action  between the Company and Mr.  Fodrie.  If a written order is rendered
granting  summary  judgment  in the legal  action  between  the  Company and Mr.
Fodrie,  which order is  substantially on the terms discussed above, the Company
will be required to secure as much as $2.95  million of funding over a period of
13 months in order to satisfy the  judgment.  Failure to pay such amounts  could
result in the grant of an exclusive  worldwide  license to Mr. Fodrie to utilize
the Company's patented technology in exchange for a royalty.

         The Company's  business  continues in an early stage of operations.  In
order to achieve  profitability,  the Company will be required to  substantially
increase  its  revenues  and control  its  operating  costs.  In order to reduce
operating costs,  the Company  relocated its offices to less expensive space and
has laid off substantially all of its employees.  There can be no assurance that
the Company can or will attain profitability.

<PAGE>

                           PART II - OTHER INFORMATION

         ITEM 1.  Legal Proceedings

         The Company has received demand for payment, threats of litigation, and
has had judgments  rendered against it, with respect to amounts owing to various
creditors.

           In December  2001,  a motion for summary  judgment in Xaibe,  Inc. v.
Steve Fodrie was granted in favor of Mr. Fodrie based on the proposed settlement
read into the court  record in July  2001.  Under the  proposed  settlement  the
Company  agreed to purchase all of Fodrie's stock in the Company by execution of
a Promissory  Note in the amount of $2.95  million  payable over  thirteen  (13)
months, secured by assets of the Company, consisting principally of an option to
acquire an exclusive  worldwide  license to utilize the Company's  technology on
terms substantially  similar to those set forth in the alleged Option Agreement,
and Fodrie's  return of 400,000  shares to the Company,  canceling  the $327,000
Note and canceling the Option  Agreement,  with joint and mutual releases.  Both
parties  have  submitted  proposed  written  orders with  respect to the summary
judgment and  settlement.  As of the date hereof,  neither order has been signed
and the Court has not announced which order, if either, it would sign.

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits

                  None

         (b)      Reports on Form 8-K

                  None


                                    SIGNATURE

         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.

                                              XAIBE, INC.



Dated: March 21, 2002                By:   /s/ Lowell Nicholas
                                         --------------------------------
                                         Lowell Nicholas
                                         Chief Executive Officer and Principal
                                         Financial Officer