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, 2000.

[ ]  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.)

               13100 N.W. Freeway, Suite 130, Houston, Texas 77040
               ---------------------------------------------------
                    (Address of principal executive offices)

                                 (713) 690-9233
                            -------------------------
                           (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, 2000: 15,161,385 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 Sheets as of December 31, 2000................................3

         Statements of Operations for the Six months
         ended December 31, 2000 and 1999......................................5

         Statements of Cash Flows for the Six months ended
         December 31, 2000 and 1999............................................6

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

         Item 2.  Management's Discussion and Analysis or
                  Plan of Operations..........................................15

PART II  OTHER INFORMATION

         Item 2.  Changes in Securities and Use of Proceeds...................18
         Item 6   Exhibits and Reports on Form 8-K............................18

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

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

                                                                  December 31,
                                                                     2000
                                                                  ------------
ASSETS:

Current Assets:
         Cash                                                     $ 31,875
         Accounts receivable - net                                  69,616
         Related party receivable                                   15,151
         Accounts receivable - employee                             27,126
         Inventory                                                  10,000
                                                                ----------
                  Total Current Assets                             153,168

Plant, Property and Equipment, at cost
         Equipment & machinery                                     274,493
         Furniture & fixtures                                      191,155
                                                                ----------
                                                                   465,648
         Less accumulated depreciation                              94,153
                                                                ----------
                                                                   371,495
Other Assets
         Licenses & agreements-net                               4,195,857
         Goodwill, patents & trademarks-net                        497,116
         Deferred tax benefit                                      795,615
         Other                                                     101,716
                                                                ----------
                                                                 5,590,303
                                                                ----------
          Total Assets                                         $ 6,115,566
                                                                ==========



    The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                   (Continued)

                                                                  December 31,
                                                                     2000
                                                                  ------------
                                                                  (unaudited)

LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES:

Current Liabilities
         Accounts payable                                        $ 327,092
         Notes Payable                                              25,000
         Accrued expenses                                           58,427
         Related party payable                                     455,796
         Current portion long-term debt                             43,260
                                                                 ---------
                  Total Current Liabilities                        909,575

Long-Term Liabilities
         Notes payable                                             141,314
         Capital lease obligations                                  45,350
         Less - current portion long-term debt                     (43,260)
                                                                 ---------
                                                                   143,404

Stockholders' Equity
         Common stock, $0.00025 par value per share;
                  authorized 40,000,000 shares;
                  issued 15,161,385 shares                           3,790
         Preferred stock, $0.01 par value per share;
                  authorized 5,000,000 shares;
                  issued 1,635,550 shares                           16,355
         Paid-in capital                                         6,787,770
         Deficit accumulated in the development stage           (1,745,328)
                                                                ----------
                                                                 5,062,587
                                                                ----------
         Total Liabilities and Stockholders' Equity             $6,115,566
                                                                ==========


    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                   1999
                                                       --------               --------
<S>                                                    <C>                   <C>

Sales                                                 $ 388,562             $ 302,187
Cost of Goods Sold
         Materials                                       53,363                40,000
         Freight-in                                          81                 1,354
         Labor                                           10,094                32,736
                                                     ----------            ----------
                  Gross Profit                          325,025               228,097

Selling, General and Administrative Costs
         Selling expenses  279,882                      332,696
         Consulting fees   311,924                            0
         General & administrative                       920,923               147,540
         Amortization expense                           227,607                30,330
         Depreciation                                    40,830                24,064
                                                     ----------            ----------
                                                      1,781,165               534,630
Other (Income) Expense
         Miscellaneous Income                           (10,245)                    0
         Interest Income                                   (526)               (1,650)
         Interest Expense                                 4,072                 3,528
                                                     ----------            ----------
                  Total costs and expenses            1,774,465               536,508
                                                     ----------            ----------

                  Loss Before Income Taxes           (1,449,440)             (308,411)

Income Taxes
         Deferred Tax Benefit                           449,510               103,530
                                                    -----------            ----------

Net Loss                                             $ (999,930)            $(204,881)
                                                    ===========            ==========

(Loss) Per Common Share:
         Basic                                        $ (0.0808)            $ (0.0911)
                                                      =========             =========
         Weighted Average Number of Common
                  Shares Outstanding - Basic         12,377,978             2,250,000
                                                     ==========             =========

         Diluted                                      $ (0.0729)                 $n/a
                                                     ==========             =========
         Weighted Average Number of Common
                  Shares Outstanding - Diluted       13,708,863                   n/a
                                                     ==========             ==========
</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                  1999
                                                            ------                ------
<S>                                                         <C>                  <C>

Cash Flows From Operating Activities:
------------------------------------
Net Loss                                                 $ (999,930)           $ (204,881)
Adjustment to reconcile Net Income (loss) to net cash
         provided by (used in) Operating Activities:
                  Depreciation                               40,830                24,064
                  Amortization                              227,607                30,330
                  Allowance for doubtful accounts               -                  35,768
                  Deferred income tax benefit              (449,510)             (103,530)
         Changes in components of working capital -
         (Increase) decrease in
                  Accounts Receivable                       (21,801)              (66,566)
                  Loans & Advances                          (42,277)             (142,597)
                  Inventory                                  11,448               (10,000)
         Increase( decrease) in
                  Accounts Payable                          277,957                15,414
                  Accrued Expenses                           50,448                15,066
                  Related party payable                     344,695                  -
                                                          ---------           ------------
Net Cash Used by Operating Activities                      (560,533)             (406,932)

Cash Flows From Investing Activities:
------------------------------------
Acquisition of property and equipment                       (18,173)             (164,159)
Acquisition of other assets                                 (83,410)             (130,963)
                                                         ----------            ----------
Net Cash used by Investing Activities                      (101,583)             (295,122)

Cash Flows From Financing Activities:
------------------------------------
Issuance of Stock                                           724,795               477,950
Increase in notes payable                                    25,000               266,113
Principal payments on debt                                  (42,656)                    -
                                                         ----------            ----------
Net Cash provided by Financing Activities                   707,139               744,063

Increase (Decrease) in Cash                                  45,023                42,009
Cash balance at beginning of period                         (13,148)                 -
                                                         ----------            ----------

Cash at End of the period                                $   31,875            $   42,009
                                                         ==========            ==========
</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, 2000



1.   Interim Presentation

     The Balance Sheet of Xaibe, Inc.,  hereafter referred to as "Xaibe" or "the
     Company", at December 31, 2000, and the Statements of Income and Cash Flows
     for the periods  indicated herein have been prepared by the Company without
     audit. The Balance Sheet at December 31, 1999, and the Statements of Income
     and Cash Flows for the six months ended December 31, 1999, are derived from
     the December 31, 1999 audited  financial  statements of Polarshield,  Inc.,
     but  do  not  include  all  disclosures   required  by  generally  accepted
     accounting  principles.  It is assumed that these financial statements will
     be read in  conjunction  with the audited  financial  statements  and notes
     thereto.

     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, 2000 are not necessarily  indicative of results to be expected
     for the full year.

2.   Organization

     Xaibe was  incorporated  in the State of Nevada on July 17, 1998, and is in
     the early  developmental and promotional stage. The primary business of the
     Company is the manufacture and sale of polarized  refrigerant oil additives
     and  related  lubricants  and metal  treatments.  The  headquarters  of the
     Company is located in Houston, Harris County, Texas.

     During 1999,  the Company  acquired the rights to distribute and produce an
     oxygen enriched water known as "Biocatalyst" for fish farming, husbandry of
     poultry, and for remediation of animal waste from dairies,  feedlots of all
     kinds,  and for other  similar  uses.  This  agreement  is for the State of
     Mississippi.  This  technology  promises to shorten time to market for farm
     raised  seafood and poultry  and to cut costs in the  processing  of animal
     waste,  and  at the  same  time  making  this  waste  less  harmful  to the
     environment.

     On October 27, 2000,  the Company  completed an exchange  (the  "Exchange")
     pursuant to which the Company  issued  5,559,705  shares of common stock in
     exchange  for  97.9%  of  the   outstanding   shares  of  common  stock  of
     Polarshield, Inc. ("Polarshield"). As a result of the exchange, Polarshield
     became  the  surviving  operating  entity  and the  Company  relocated  its
     principal offices to the offices of Polarshield, located in Houston, Harris
     County, Texas. Because Polarshield's  operations are the only operations of
     the Company,  the financial position and results of operations  reported in
     these financial statements are those of Polarshield.

                                       7
<PAGE>
                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)


2.   Organization (Cont'd)

     Polarshield  was organized in June 1999, as a State of Nevada  Corporation.
     The  primary  business  of the  Company  is the  manufacture  and  sale  of
     polarized  refrigerant  oil  additives  and  related  lubricants  and metal
     treatments.

3.   Summary of Significant Accounting Policies

         A.       Revenue Recognition
                  --------------------
                  Xaibe  utilizes  the  accrual  method  of  accounting  whereby
                  revenue is recognized  when earned and expenses are recognized
                  when  incurred.  The Company sells its products  direct to the
                  customer,  through  distributors  and through retail  outlets.
                  Direct  sales  to  customers  consist  primarily  of  sales to
                  commercial  businesses.  Sales to  residential  customers  are
                  minor.  Revenue is recognized  when the services are rendered,
                  payments  are  due  under  the  terms  of the  Distributorship
                  Agreements  or when the product has been ordered and set aside
                  for the retail outlet customer.

         B.       Inventories
                  -----------
                  Inventories,  consisting  primarily of chemicals,  mineral oil
                  and  transmission  fluids,  are stated at the lower of cost or
                  market,  as  determined  by  the  first-in,  first-out  (FIFO)
                  method.

         C.       Plant, Property and Equipment
                  ------------------------------
                  Plant,   property   and   equipment   are   carried  at  cost.
                  Depreciation  expense for the six months  ended  December  31,
                  2000  was  $40,830.   Depreciation  is  calculated  using  the
                  straight-line  method over the estimated useful lives as shown
                  below:

                           Equipment & Machinery                        5 years
                           Furniture & Fixtures                         5 years

         D.       Other assets
                  -------------
                  Other   assets   consist  of  advances,   licenses,   patents,
                  trademarks  and goodwill.  The licenses are amortized over the
                  unexpired  term of the license and the  goodwill is  amortized
                  over fifteen  years.  Amortization  expense for the six months
                  ended December 31, 2000, was $227,607.

                                       8
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)

3.   Summary of Significant Accounting Policies (Cont'd)

         E.       Income Taxes
                  ------------
                  The Company  accounts for income taxes in accordance  with the
                  asset and  liability  method of  accounting  for income  taxes
                  prescribed by Statement of Financial  Accounting Standards No.
                  109,   Accounting  for  Income  Taxes.  Under  the  asset  and
                  liability  method,  deferred  tax assets and  liabilities  are
                  recognized  for  future  tax   consequences   attributable  to
                  differences  between the financial  statement carrying amounts
                  of existing assets and  liabilities  and their  respective tax
                  bases  and  operating  loss  and tax  credit  carry  forwards.
                  Deferred tax assets and liabilities are measured using enacted
                  tax rates expected to apply to the taxable income in the years
                  in  which  those  temporary  differences  are  expected  to be
                  recovered  or  settled.  Under  SFAS No.  109,  the  effect on
                  deferred tax assets and  liabilities  of a change in tax rates
                  is  recognized  in  income in the  period  that  includes  the
                  enactment date.

         F.       Basis of Accounting
                  -------------------
                  The financial  statements are prepared using the accrual basis
                  of accounting.

         G.       Use of Estimates
                  ----------------
                  The  preparation of financial  statements,  in conformity with
                  generally accepted accounting principles,  requires management
                  to make estimates and assumptions that affect certain reported
                  amounts and  disclosures.  Accordingly,  actual  results could
                  differ from those estimates.

         H.       Cash and Cash Equivalents
                  -------------------------
                  For  purposes of the  statement  of cash flows,  cash on hand,
                  deposits at bank and petty cash are  considered  to be cash or
                  cash equivalents.

         I.       Accounts Payable
                  ----------------
                  Trade accounts payable, including accruals not yet billed, are
                  recognized when the Company  becomes  obligated to make future
                  payments  as a result of a  purchase  of  assets or  services.
                  Trade accounts payable are generally settled within 30 days.


                                       9
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)

4.       Income Taxes

         The tax effects of the  Company's  loss  ($1,449,440)  at the statutory
         federal tax rates (average rate of 31%) were $449,510 and were included
         in  the  deferred  tax  balance  of  $795,615.  There  were  no  timing
         differences.  Depreciation for tax purposes  approximated  depreciation
         for financial  statement  accounting  purposes.  The benefit of the tax
         losses will only be obtained if:

          A.   The Company derives future  assessable  income of a nature and of
               an amount  sufficient  to enable the benefit from the deduction s
               for the loss to be realized: and

          B.   The  Company   continues  to  comply  with  the   conditions  for
               deductibility imposed by federal income tax laws and regulations.

         Deferred tax benefits  were  expected to be realized in future  periods
         beyond the  subsequent  twelve  months.  Therefore,  the benefits  were
         categorized as long-term.

5.       Receivables

         The Company  provides an allowance for doubtful  accounts  equal to the
         estimated   losses  that  will  be  incurred  in   collection   of  all
         receivables.  The estimated  losses are based on historical  collection
         experience  coupled  with  review  of the  current  status  of the then
         currently  outstanding accounts receivable.  The allowance for doubtful
         accounts estimated at December 31, 2000 was $20,000.

6.       Related Party Transactions

                                                              December 31, 2000
                                                              -----------------
         Related party payables                                 $ 455,796
         Related party receivables                              $  15,151

         Related party receivables and payables are current  obligations from/to
         the officers of the Company for advances made in the ordinary course of
         business.

                                       10
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)

7.       Lease Obligations

         Lease  obligations  of the Company are for office space,  furniture and
         equipment.  Capital lease  obligations are amortized over the remaining
         term of lease (i.e.  thirty four months.).  Operating lease  agreements
         vary from thirty two to sixty three months.  . Minimum  lease  payments
         for the next five years are as follows:

                           Year                                    Amount
                           -----                                  --------
                           2001                                  $ 87,664
                           2002                                    67,214
                           2003                                     4,977
                           2004                                     4,680
                           -----                                  --------
                                                                 $164,535

8.       Non-Cash Transactions

         On  October  27,  2000,   the  Company   acquired   the   international
         distribution  and  manufacturing  rights  for  Polarshield's  polarized
         refrigerant  oil  additive in exchange for  3,000,000  shares of Xaibe,
         Inc. common stock.

         The company  entered  into  various  note  payable  agreements  for the
         purchase of equipment in the amount of $134,427.

         On September 13, 2000,  the Company  declared a 4-for-1 stock split for
         all shareholders of record on that date.

         On October 27, 2000,  the Company  completed a business  combination by
         exchanging  common  stock on the basis of one share of its common stock
         for each share of  Polarshield's  common  stock.  The  combination  was
         accounted for as a purchase.  Xaibe's  continuing  operations after the
         combination only consisted of Polarshield  operations.  Therefore,  the
         combination  is considered a reverse  merger of the entities.  Only the
         financial  position and results of operations of Polarshield  have been
         presented in these financial statements.  Xaibe, Inc., was incorporated
         under  the  laws of the  State  of  Nevada  in  July  1998.  Since  its
         inception,  Xaibe has conducted no business  operations  except for the
         acquisition of a license to distribute  and produce an oxygen  enriched
         water product for fish farming, aquaculture, mariculture, the husbandry
         of poultry, and for remediating animal waste from dairies,  feedlots of
         all kinds,  and for other similar  uses.  For the period from July 1998
         (inception),  through  September  30,  2000,  Xaibe had no income  from
         operations, and accumulated losses aggregating $20,061.



                                       11
<PAGE>

                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)


9.       Concentrations, and Credit Risk

         The  primary  financial  instruments,  which  potentially  subject  the
         Company to concentrations of credit risk, are cash, accounts receivable
         and notes payable.  The Company's cash balances are with a high quality
         financial  institution  and are covered by FDIC insurance  limits.  The
         Company routinely assesses the financial strength of its customers and,
         as a consequence,  believes that its trade accounts  receivable  credit
         risk exposure is limited.  The maximum  potential  loss does not exceed
         the amounts already recognized in the balance sheet. Notes payable,  in
         the form of bank debt, are routinely monitored for compliance with loan
         covenants.

         Xaibe, Inc., is  a  Developing  Stage Enterprise  and is in the initial
         stages of Operation. The Company's raw  material, chemicals  and  other
         goods essential tothe production of their products are easily available
         and the Company does not expect any shortages in supply.

10.      Capital Stock

         Common Stock
         ------------
         The Company has authorized  40,000,000 shares of common stock ($0.00025
         par value),  of which 15,161,385  shares were issued and outstanding at
         December 31, 2000.

         Preferred Stock
         ---------------
         Polarshield had authorized  5,000,000  shares of preferred stock ($0.01
         par value),  of which  1,635,550  shares were issued and outstanding at
         December  31,  2000.  The  preferred  shares  of the  Company  carry  a
         preference as to liquidation and convertibility.

         Liquidation Preference:
         -----------------------
         In the event of liquidation,  the preferred shareholders are to be paid
         off before the common stockholders get a return of their capital.

                                       12
<PAGE>
                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)

10.      Capital Stock (Cont'd)

         Conversion Preference:
         ----------------------
         The preferred  shares of the Company are  convertible  in the event the
         Company  goes  public or is acquired by a publicly  held  company.  The
         options of the  stockholders for conversion are through the election of
         one of the following:

          A.   One share of preferred stock for one share of common stock. After
               conversion,  the shares  must be held for at least 18 months from
               the date of conversion; or

          B.   The preferred  share shall be valued at $1 per share and shall be
               converted into common shares on an exchange  basis on which,  the
               common  shares  are  valued at 50% of the market bid price of the
               shares 30 days after the initial trading of the company shares in
               a public  market,  or the merger of the  company  with a publicly
               held  company,  and such  shares  shall be  subject  to a holding
               period restriction of 12 months and shall be subject to Rule 144,
               or

          C.   Retain the preferred shares in the Company;

          D.   Request  repayment  of 115%  of the  amount  of the  subscription
               agreement,  payable by the Company  within 30days of such written
               request.

         EPS-Earnings (Loss) Per Share
         -----------------------------
         Basic  earnings or loss per share is calculated  based upon the average
         common shares  outstanding  for the period.  Fully diluted  earnings or
         loss per share  includes  the average  common  shares  outstanding  and
         includes shares of convertible  preferred stock outstanding,  beginning
         on the date the company acquired Polarshield, Inc., October 27, 2000.

11.      Litigation and Contingencies.

         The Company is currently a party to various disputes arising from their
         operations,  which  involve,  or may  involve,  litigation.  Management
         believes that the outcome of these proceedings, individually and in the
         aggregate,  will have no material  effect on the financial  position or
         results of operations of Xaibe, Inc.

                                       13
<PAGE>
                                   XAIBE, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (Continued)

12.      Subsequent Events

         On December 28, 2000,  (30 trading  days  following  the first quote of
         common stock of Xaibe), the preferred  shareholders of the Company were
         offered a right to convert their  preferred  stock into common stock of
         Xaibe,  on the basis of one share of  preferred  stock for one share of
         common stock,  or redeem their stock at $1.15 per share The election to
         convert or redeem the preferred stock will expire on January 23, 2001.

                                       14
<PAGE>
     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General

Xaibe,  Inc. was formed in July 1998 to produce and distribute a licensed oxygen
enriched water product for fish farming, aquaculture, mariculture, the husbandry
of poultry and for remediating animal waste from dairies,  feedlots of all kinds
and for other similar uses.

Through  June 2000,  the  Company's  operations  had been  limited to efforts to
implement its business plan. No revenues have been generated from those revenues
to date.

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 has 1,629,550 shares of preferred stock  outstanding  which, 45 days
following the first quote on the Company's  common stock, at the election of the
holder,  is:  (i)  convertible  into one share of  common  stock,  subject  to a
"lock-up" for a period of 18 months following conversion,  (ii) convertible into
a number of shares of common stock  determined  by  dividing,  for each share of
preferred stock, 1 by 50% of the closing bid price of the Company's common stock
on the 30th calendar day following the first quote, subject to a "lock-up" for a
period of 12  months  following  conversion,  or (iii)  redeemable  at $1.15 per
share.  The  preferred  shares are  convertible  based on 50% of the closing bid
price if the holder fails to make an election.

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.

                                       15
<PAGE>

Results of Operations

     Sales.  The  Company's  sales  totaled  $388,562  for the six months  ended
December 31, 2000, an increase of 28.6% as compared to sales of $302,187 for the
six months ended December 31, 1999. All sales for both periods were attributable
to PolarShield.  The increase in sales was  attributable  to on-going  marketing
campaigns and increased market penetration of its proprietary products.

     Cost of Sales.  The  Company's  cost of sales  totaled  $63,538 for the six
months ended December 31, 2000, a decrease of 14.2% as compared to cost of sales
of $74,090 for the six months ended December 31, 1999. As a percentage of sales,
cost of sales decreased to 16.4% from 24.5%. The decrease in cost of sales, both
in total and as a percentage of sales, was attributable to increased  margins on
sales of its products and services.

     Selling,   General  and  Administrative  Expense.   Selling,   general  and
administrative  expense  ("SG&A")  totaled  $1,781,165  for the six months ended
December 31, 2000, an increase of 233.2% as compared to SG&A of $534,630 for the
six  months  ended  December  31,  1999.  The  increase  in SG&A  was  primarily
attributable  to (1) an  increase  in  general  and  administrative  expense  of
$773,383  resulting from hiring new personnel and overall growth of the Company,
(2) $311,924 of consulting fees incurred during the current period  attributable
to various professional management consulting agreements, and (3) an increase in
amortization expense of $197,277 attributable to amortization of the purchase of
international marketing rights for its proprietary products.

     Income Taxes. The Company reported a tax benefit of $449,510 during the six
months ended  December 31, 2000 as compared to $103,530  during the 1999 period.
The  tax  benefit  was   attributable   to  net  operating  loss  carryovers  of
PolarShield.

Liquidity and Capital Resources

     At December  31,  2000,  the  Company  had a cash  balance of $31,875 and a
working capital deficit of $755,807.

     Cash flows used in operations  during the current period totaled  $560,533.
Cash flows used in operations were attributable,  primarily, to the net loss for
the period and the tax benefit relating  thereto,  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 used in investing activities during the period totaled $101,583.
Cash flows used in investing  activities  were  attributable  to acquisitions of
equipment and other assets.

     Cash flows  provided  by  financing  activities  during the period  totaled
$707,139.  Cash flows provided by financing  activities were attributable to the
sale of common and preferred stock for $724,795 and an increase in notes payable
of $25,000 which amounts were partially offset by payments of debt in the amount
of $42,656.

                                       16
<PAGE>

     At December 31, 2000,  the Company had long-term  debt  totaling  $143,404,
consisting of notes payable of $141,314 and capital lease  obligations  totaling
$45,350, less the current portion of notes payable of $43,260. The notes payable
bear interest at rates ranging from 4.9% to 10.6% and are repayable in principle
and interest installments over periods from 36 to 60 months ending in 2005.

     During the six months ended December 31, 2000,  the Company's  predecessor,
PolarShield,  received  $724,795 of net proceeds from the sale of 426,000 shares
of its  common  stock  and  308,250  shares  of its  preferred  stock.  With the
acquisition of PolarShield  during the current period,  approximately 98% of the
common  stock of  PolarShield  has been  exchanged  for shares of the  Company's
common  stock.  Additionally,   following  the  Exchange,  1,635,550  shares  of
PolarShield's  preferred stock are convertible into common stock of the Company,
or redeemable,  at the option of the holder as follows: (1) each preferred share
may be converted into one share of common stock,  subject to an 18 month lock-up
period;  or (2) each preferred  share may be converted into common shares at 50%
of the market bid price of the shares 30 days after the  initial  trading of the
company shares in a public market,  or the merger of the company with a publicly
held company,  and such shares shall be subject to a holding period  restriction
of 12 months and shall be subject to Rule 144, or (3) the  preferred  shares are
retained by the holder;  or (4) the  preferred  shares are redeemed at $1.15 per
share.

     As of February  15, 2001,  1,506,550  of the shares of preferred  stock had
been converted into an equal number of shares of common stock and the holders of
52,000 shares had requested  redemption at a cost to the Company of $65,550.  At
February  15, 2001,  77,000  shares of preferred  stock remain  outstanding  and
unconverted or unredeemed and no shares of common stock remained to be converted
pursuant to the Exchange.

     The Company's  operations have been funded to date through a combination of
sales of common  stock and  preferred  stock by  PolarShield  and by loans  from
certain shareholders of PolarShield.  The Company, at February 15, 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
secure  additional  capital or to secure  additional  funding  from  affiliates.
Management  estimates  that the  Company  will  require a minimum of $500,000 of
additional  funding to support  operations  through the end of 2001. 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.

     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. There can be no assurance that the
Company can or will attain profitability.

                                       17
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         On October 27, 2000, the Company issued a total of 5,559,705  shares of
common stock to the holders of 97.9% of the common stock of PolarShield, Inc. in
exchange for shares of PolarShield common stock. The shares were issued, without
general  solicitation  or  advertising,   to  10  persons,  each  of  whom  made
representations that they were accredited  investors,  pursuant to the exemption
from  registration  set forth in Section 4(2) of the Securities Act of 1933. The
certificates  evidencing  the  shares  bear a  legend  restricting  transfer  in
accordance  with Rule 144.  No  commissions  were  paid in  connection  with the
issuance.

         On October 27,  2000,  the Company  issued  3,000,000  shares of common
stock to All American  Foundation,  Inc. in exchange  for certain  international
distribution rights relating to the products marketed by PolarShield. The shares
were issued without general  solicitation or advertising to a single  accredited
investor  pursuant to the exemption from  registration set forth in Section 4(2)
of the  Securities Act of 1933.  The  certificate  evidencing the shares bears a
legend  restricting  transfer in accordance  with Rule 144. No commissions  were
paid in connection with the issuance.

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits

                  None

         (b)      Reports on Form 8-K

     On November 13, 2000,  the Company  filed a Form 8-K,  dated  September 13,
2000,  reporting  under  Item 1 a change in control  of the  Company,  effective
October 27, 2000, under Item 2 the acquisition of PolarShield, effective October
27, 2000, and, under Item 5 a stock split, change of address and the acquisition
of certain marketing rights.

                                       18
<PAGE>
                                    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: February 19, 2001            By: /s/ Jimmy Farmer
                                       -------------------------------------
                                       Jimmy Farmer
                                       Chief Executive Officer and Principal
                                       Financial Officer