UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K




x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
fiscal year ended December 31, 2008





o
            TRANSITION REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





Commission file number:
000-52502




XTREME
GREEN PRODUCTS INC.


(Exact
name of registrant as specified in its charter)





Nevada
            
            26-2373311(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      Number)





5475
Wynn Road, Suite 100


Las
Vegas, Nevada 89118


(Address,
Including Zip Code of Principal Executive Offices)




(702)
870-0700


(Issuer's
telephone number)





Securities
registered under Section 12(b) of the Exchange Act:


NONE


Securities
registered under Section 12(g) of the Exchange Act:


COMMON
STOCK, $0.001 PAR VALUE PER SHARE





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as
      defined in Rule 405 of the Securities Act. Yes o No x





Indicate
      by check mark if the registrant is not required to file reports pursuant
      to Section 13 or Section 15(d) of the Act. Yes o No x





Indicate
      by check mark whether the registrant (1) has 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 o  No
      x





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (229.405 of this chapter) is not contained herein, and will
      not 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-K or any amendment to this Form 10-K. o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer or a smaller reporting
      company.





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Act). Yes o No x





State
      issuer's revenues for its most recent fiscal year.
  -0-





State
      the aggregate market value of the voting and non-voting common equity held
      by non-affiliates computed by   reference to the price at
      which the common equity was last sold, or the average bid and asked price
      of such common equity, as of June 30, 2008, representing the last business
      day of the registrant’s most recently completed second fiscal quarter:
      N/A.  For purposes of this computation, all directors and
      executive officers of the registrant are considered to be affiliates of
      the registrant. This assumption is not to be deemed an admission by the
      persons that they are affiliates of the
  registrant.





State
      the number of shares outstanding of each of the issuer's classes of common
      equity, as of the latest practicable date: 41,393,225 as of February 1,
      2010.










TABLE
OF CONTENTS





PART
      IITEM
      1.
            BUSINESS
            3ITEM
      2.
            PROPERTIES
            7ITEM
      3.
            LEGAL
      PROCEEDINGS
            8ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            8PART
      IIITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
            9ITEM
      6.
            SELECTED
      FINANCIAL DATA
            9ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            10ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
            12ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            12ITEM
      9A(T)
            CONTROLS
      AND PROCEDURES
            13PART
      IIIITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            15ITEM
      11.
            EXECUTIVE
      COMPENSATION
            17ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            19ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
            20ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            20ITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
            21SIGNATURES
            22






- 2
-


FORWARD-LOOKING
STATEMENTS





This
annual report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, which we refer
to in this annual report as the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, which we refer to in this annual
report as the Exchange Act. Forward-looking statements are not statements of
historical fact but rather reflect our current expectations, estimates and
predictions about future results and events. These statements may use words such
as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project"
and similar expressions as they relate to us or our management.  When
we make forward-looking statements, we are basing them on our management's
beliefs and assumptions, using information currently available to us. These
forward-looking statements are subject to risks, uncertainties and assumptions,
including but not limited to, risks, uncertainties and assumptions discussed in
this annual report. Factors that can cause or contribute to these differences
include those described under the headings "Risk Factors" and "Management
Discussion and Analysis and Plan of Operation."





If one or
more of these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, actual results may vary materially from what
we projected. Any forward-looking statement you read in this annual report
reflects our current views with respect to future events and is subject to these
and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. All subsequent written and
oral forward-looking statements attributable to us, or individuals acting on our
behalf are expressly qualified in their entirety by this paragraph. You should
specifically consider the factors identified in this annual report, which would
cause actual results to differ before making an investment decision. We are
under no duty to update any of the forward-looking statements after the date of
this annual report or to conform these statements to actual
results.




PART
I





ITEM
1.  BUSINESS





Organizational
History





The
Company was originally incorporated in the State of Colorado on December 29,
2005, under the name Belarus Capital Corp.  The Company completed a
migratory merger on August 18, 2008 and is currently incorporated in the state
of Nevada.





On
November 12, 2008, the Company entered into a Share Exchange Agreement (the
“Exchange Agreement”) with the shareholders (the “Shareholders”) of Xtreme Green
Products Inc., a Nevada corporation (”Xtreme”), pursuant to which the Company
purchased from the Shareholders approximately 97.43% of the then issued and
outstanding shares of Xtreme’s common stock in consideration for the issuance of
37,837,800 shares of common stock of the Company (the "Share
Exchange").  As a result of the Exchange Agreement, (i) Xtreme became
a subsidiary of the Company and (ii) the Company succeeded to the business of
Xtreme as its sole business.  The Company subsequently changed its
name to Xtreme Green Products Inc.





Overview
of Business





We are
developing revolutionary, green electric powered land and watercraft. Under the
logo “Xtreme Green”, these green powered products will include “green” products
such as personal mobility vehicles, motor scooters, electric motorcycles, and
ATVs. They will also include everyday products such as light trucks (UTVs),
people movers, and golf “cars”.





Designed
with proprietary energy management systems and electric propulsion systems,
these products will have the power and ability of gas powered engines, but
without the particulate pollution or noise pollution. Xtreme aims for its Xtreme
Green products to become the new wave and standard in Xtreme sports and everyday
electric powered living.





Products





Police
Mobility Vehicle (PMV-A09) – The Sentinel





The
Xtreme Green Police Mobility Vehicle (PMV) is designed to replace the bicycle
and foot patrol with state of the art, efficient urban neighborhood and downtown
patrol. The three wheel design and the size of the vehicle (approximately 58”
long and 32” wide) will allow officers to patrol on sidewalks safely as well as
go through open doorways and up 8” curbs when in pursuit or rushing to a crime
scene. The electric propulsion system and energy management will allow an
officer to patrol as much as 80 miles without a charge at about 1 cent per mile
cost. With the internal charger, the PMV can be recharged with any 110 volt
outlet. The PMV is designed with sufficient storage units to allow an officer to
carry the emergency supplies hard to carry on a bicycle or on foot.




- 3
-




The main
features of the PMV are:





·
            One
      person electric vehicle with unique three wheel design·
            Compact
      design allows rider to easily enter buildings and clear interior
      doorways·
            Direct
      drive – no chains or sprockets·
            Low
      center of gravity gives level and secure ride·
            Shock
      absorbers and anti-fatigue pads for smooth safe, fatigue free
      ride·
            Turns
      within its own radius for easy maneuverability·
            Speeds
      of up to 29 miles per hour·
            Hub
      wheel motor allows for quick pickup·
            Easily
      clears standard sidewalk curbs of up to 8” height·
            Lithium
      Ion Battery System with proprietary Energy Management System (EMS). Long
      life batteries can be charged 3000 times with no discernable deterioration
      in performance·
            Travel
      over 80 miles on one charge·
            Internal
      charger allows for charging using any 110/220 volt
  outlet·
            Complete
      police lighting and siren package·
            Ample
      storage compartments·
            Hydraulic
      disc brakes·
            Automatic
      parking brake engagement when rider dismounts
  vehicle





The
police/security PMV is the first three-wheeler that Xtreme will produce. Xtreme
Green Products is working on a consumer version that will be less expensive and
will ride at lower speeds.  The Company has developed a commissioned
sales force in over 40 states to sell to the police, universities and security
companies.
 
 Electric
Motorcycle – the X Rider
 
 Xtreme
also markets and sells a full-sized electric motorcycle that runs on Lithium
cells This motorcycle is over 6 feet long, will drive at speeds of 65 MPH and
will go up to 100 miles on a single charge, the perfect vehicle for going back
and forth to work for pennies per day.





The main features of the Electric
Motorcycle are:





·
            4500
      watt 72 volt hub motor·
            6.5
      feet long, wheelbase of 4.8 feet·
            Net
      weight of 266 pounds·
            Load
      capacity of 330 pounds·
            State
      of the art Lithium Ion Battery System·
            Lithium
      Ion Battery System will last for over 2000 charges – almost 7
      years·
            Proprietary
      computerized Battery Management System for safety and long
      life·
            Speeds
      approaching 65 MPH·
            Maximum
      range of up to 100 miles depending on the battery system
      purchased·
            Climbing
      capacity of over 20 degree grade·
            Front
      disk brakes and rear drum brakes·
            Includes
      a built in charger – 110/220
volts





Electric
Scooter





In
addition to the products discussed above, Xtreme markets and sells a full-sized
(2 meters long) electric scooter that runs on Lithium cells.  This
scooter is over 6 feet long, will drive at speeds of 55 MPH and will go up to 75
miles on a single charge.




- 4
-


The main features of the Electric
Motorcycle are:





·
            3000
      watt 60 volt hub motor·
            6.5
      feet long, wheelbase of 4.8 feet·
            Net
      weight of 266 pounds·
            Load
      capacity of 330 pounds·
            State
      of the art Lithium Ion Battery System·
            Lithium
      Ion Battery System will last for over 2000 charges – almost 7
      years·
            Proprietary
      computerized Battery Management System for safety and long
      life·
            Speeds
      approaching 50 MPH·
            Maximum
      range of up to 75 miles depending on the battery system
      purchased·
            Climbing
      capacity of over 20 degree grade·
            Front
      disk brakes and rear drum brakes·
            Includes
      a built in charger – 110/220
volts





Xtreme
Green Products will implement the diffusion theory of innovation, which has been
successful when introducing new and innovative products to the market. It will
focus on the following five stages: knowledge, persuasion, decision,
implementation, and confirmation. This strategy is designed to attract rental
locations and distributors who will then advertise the product to the public and
governmental agencies, informing them of the benefits and entertainment that the
product will provide. This will aid the end user’s decision to purchase the
Xtreme Green products and satisfaction will be confirmed upon initial
use.  Further, Xtreme Green Products has developed a comprehensive
publicity Green campaign to reach prospective customers and maximize brand
awareness, thereby solidifying positive brand recognition within the
industry.





Associated
Product Lines





Xtreme intends to produce a full
complement of Xtreme Green branded apparel and accessories (to be sold online
and through retail locations) including: Sunglasses, Golf Shirts, Backpacks,
Hats, Jackets, Helmuts, etc





Markets
and Customers





Market Analysis
Summary.





The
market for the Police Mobility Vehicle consists of police departments, federal
agencies, security firms, school districts and large manufacturing and
warehousing facilities. All of these categories are international in nature. For
the first two years, Xtreme intends to distribute within the United States. If
there is interest overseas, Xtreme will expand its focus to cover those areas as
well.





In the
United States alone, there are over 18,769 police departments, with over 663,000
police officers. There are over 97,000 elementary and secondary schools. There
are over 2000 security companies and untold number of large warehouse and
manufacturing facilities. All of these locations as well as the armed services,
the ATF and large state and federal buildings consist of the market segment that
the PMV will enter into.





Competition





With respect to our PMV, we compete
primarily with two major manufacturers.  The first is the Segway
Personal Transporter. This product is two wheeled and works off of a gyroscope
system. The price for this unit is less expensive than Xtreme’s PMV but has many
differences. Some of these differences are:





·
            Lower
      speed (12-15 MPH)·
            Fatiguing
      when used for lengths of time·
            Little
      room for accessories and emergency equipment·
            No
      protection for rider·
            Does
      not include internal charger·
            History
      of breakdowns





- 5
-




Presently,
there are approximately 450 police departments using Segway PTs. In speaking to
these users, the major complaints include stomach discomfort and high breakdown
rates.





The second competitor is T3 Motion. T3
has created and marketed a similar three wheel vehicle to what the Company will
be producing. The costing on T3 is about the same as the PMV.  When
looking at both vehicles, at first there are some similarities but the PMV
actually is much different and addresses a number of design features missing in
the T3. They include:





·
            PMV
      has a lower center of gravity for more stability than the
    T3·
            PMV
      includes suspension and anti-fatigue mats, not on the
T3·
            PMV
      has a hub motor and will go 29 MPH, police version of the T3 has a chain
      drive and goes 25MPH·
            PMV
      includes an internal charger, T3 requires a second battery pack to get
      through the day·
            PMV
      has an auto braking system when the rider leaves·
            PMV
      easily clears 8” curb, T3 not built to go over
  curbs





Xtreme
believes that its PMV is the most state-of-the-art and cost effective vehicle
that has been offered for use in the police and security field to
date.





Strategy
and Implementation Summary





Xtreme
will introduce its innovative and unique product to the marketplace through the
implementation of a strong and inclusive marketing plan that utilizes both
direct and indirect methods of advertising. To increase awareness, Xtreme Green
Products has outlined a series of public relation and advertising marketing
programs. Initially, Xtreme plans the development of a strong distributor
network.





Marketing
Strategy





Xtreme
Green Products will follow a creative marketing plan that will allow it to focus
directly on its target market while using its advertising dollars
conservatively. The primary focus of the marketing strategy is to grow the
Company’s client base. The Company will engage in the following marketing
tactics:





Tradeshows:





o
            Xtreme
      will attend trade police and security meetings and tradeshows throughout
      the United States to increase awareness of its product to prospective
      customers and to simultaneously establish industry connections and
      contacts.




Media:





o
            Xtreme
      Green Products will advertise in trade publications and magazines that
      service the market segments for the products. These ads will
      include a picture of the Company’s product and all necessary contact
      information.





Representatives:





o
            Xtreme
      intends to recruit a large base of U.S. rental representatives on a
      geographical basis board. This will establish a greater awareness of
      Xtreme and its products as well as increase its customer base. These
      representatives will have the rights to all the Xtreme Green products as
      they become available.





o
            Xtreme
      Green Products will enable international representatives to purchase
      rights to a section of a country for a fee, based on the size of the
      country; this will allow them the ability to purchase a minimum amount of
      Xtreme Green products on an annual basis. Xtreme will set up websites that
      accessed on Xtreme’s main website. Both U.S. and International
      Representative Teams will also distribute Xtreme videos, brochures, DVDs,
      and CDs in order to successfully market to its
  customers.




Partnerships:





o
            Xtreme
      will seek to form partnerships with producers and distributors to request
      placements of the Xtreme Green products in movies and television shows.
      This kind of product exposure will prove to be a significant selling point
      and will augment sales
significantly.






- 6
-




As Xtreme
expands, it will reevaluate its marketing strategy to accommodate regional
consumer dynamics – the variants each region has in social, economic, and
buying trends. At the corporate level, an internet-based and direct marketing
strategy will continue to create awareness.




Internet
Strategy





Xtreme
intends to operate with an internet strategy to make its products known to a
national audience. The site will be professionally designed, easily navigable,
and will have a shopping cart feature allowing users to purchase Xtreme’s
Company’s products from the convenience of their homes or offices. The site will
be search engine optimized and Xtreme will additionally utilize Cost-Per-Click
(CPC) marketing with Google AdWords and Yahoo!.








Regulations





General




Xtreme’s
operations are subject to extensive federal, state, provincial, territorial,
local and international environmental and safety laws and regulations relating
to, among other things, the generation, storage, handling, emission,
transportation, disposal and discharge of hazardous and non hazardous substances
and materials into the environment and employee health and safety. Permits are
required for certain of Xtreme’s operations, which are subject to revocation,
modification and renewal by issuing authorities. Governmental authorities have
the power to enforce compliance with their laws and regulations, and violations
may result in enforcement actions such as convictions, the payment of fines or
the issuing of injunctions, or some combination of the foregoing. Xtreme has
obtained compliance certificates issued by the Department of Transportation,
National Highway Transportation Safety Administration and believes that it is
the first company to receive an EPA certification for an electric
vehicle.  Additionally, Xtreme is applying for its EU certification
that is required to ship the vehicles into Europe.




Laws and
regulations relating mostly to engine gaseous emissions, sound levels, safety
and manufacturing standards are in place or will gradually be implemented in
jurisdictions where Xtreme’s products are manufactured and sold. Xtreme believes
its products comply with all existing legislative and regulatory requirements in
the jurisdictions where they are manufactured or sold. Moreover, Xtreme is
taking appropriate measures to ensure that its products will be compliant with
anticipated more stringent regulations as they become effective from time to
time. While these efforts require substantial expenditures, it is impractical at
this time to isolate these specific costs from total project costs.





Manufacturing





Xtreme is
having the components for its products assembled and manufactured in both China
and the United States. While the motor scooter and motorcycle are completely
manufactured and assembled in China, the PMV is manufactured and assembled in
the US. Some other products, like the ATV and the UTv will be manufactured in
China but assembled in the US.





In China,
Xtreme has hired three fulltime employees to set up and manage the coordination
and purchasing of components, the assembly plant for the products and the
quality control visits to suppliers.





Intellectual
property





Xtreme
does not currently have any patents or patent applications for any of its
products or their components.





Employees





We have
nine employees, including two executive officers.  None of our employees is
represented by a labor union, and Xtreme considers its employee relations to be
excellent.  Xtreme seeks to use contract workers and anticipates
maintaining a small full-time employee base.





ITEM
2.  DESCRIPTION OF PROPERTY





The
Company’s principal offices are located at 5475 Wynn Road, Suite 100, Las Vegas,
Nevada, consist of a 5,000 square foot warehouse that is leased at $3,500 per
month. The lease expires on March 31, 2010 and Xtreme plans to move into a new
facility on April 1, 2010 of approximately 35,000-40,000 square feet with a
payment of about $14,000 per month.






- 7
-




ITEM
3.  LEGAL PROCEEDINGS





From time
to time, Xtreme may be named in claims arising in the ordinary course of
business.  Currently, no legal proceedings or claims are pending against or
involving Xtreme that could reasonably be expected to have a material adverse
effect on its business and financial condition.





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





On May
30, 2008, the then sole shareholder of the Company approved:





(i)
            adoption
      of the 2008 Incentive Stock Option Plan,
and




(ii)
            approval
      of the reincorporation of the Company from a Colorado corporation to a
      Nevada corporation.









- 8
-




PART
II





ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES





Our
common stock is not currently traded on any exchange.  We intend to
take the necessary steps to have our common stock included for quotation on the
OTC Bulletin Board as soon as possible.





Recent
Sales of Unregistered Securities





In March
2008, we issued to an investor 100,000 shares of common stock for a total cash
consideration of $50,000.





In April
2008, we issued to an investor 100,000 shares of common stock for a total cash
consideration of $50,000.





In June
2008, we issued to three investors an aggregate of 70,000 shares of common stock
for a total cash consideration of $35,000.





In July
2008, we issued to an investor 10,000 shares of common stock for a total cash
consideration of $5,000.





In July
2008, we issued 50,000 shares of common stock for services rendered valued at
$25,000.





In
September 2008, we issued to one of our directors 200,000 shares of common stock
for a total cash consideration of $100,000.





In
November 2008, we issued to an investor 50,000 shares of common stock for a
total cash consideration of $25,000.





In
November 2008, we issued 56,000 shares of common stock for services rendered
valued at $28,000.





In
December 2008, we issued to an investor 50,000 shares of common stock for a
total cash consideration of $25,000.





All
securities were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended, under Section 4(2)
thereunder, as they were issued in reliance on the recipients’ representation
that they were accredited (as such term is defined in Regulation D), without
general solicitation and represented by certificates that were imprinted with a
restrictive legend. In addition, all recipients were provided with sufficient
access to Company information.




ITEM
6.  SELECTED FINANCIAL DATA





Not
applicable.







- 9
-




ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OPERATIONS




Forward-Looking
Statements





The
information herein contains forward-looking statements. All statements other
than statements of historical fact made herein are forward looking. In
particular, the statements herein regarding industry prospects and future
results of operations or financial position are forward-looking statements.
These forward-looking statements can be identified by the use of words such as
“believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,”
“projects,” “expects,” “may,” “will,” or “should” or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. Forward-looking statements reflect
management’s current expectations and are inherently uncertain. Our actual
results may differ significantly from management’s expectations.





The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.





Overview





Xtreme
Green Products Inc. (“Xtreme”, “we”, “our”, “us”) was incorporated under the
laws of the State of Nevada on May 21, 2007. We are a development stage company
and as such, we have not generated any revenue since our inception. We have
developed a line of electric powered products such as personal mobility
vehicles, motor scooters, light trucks (UTV) and ATVs. We also intend to develop
additional products such as, people movers and golf cars. Our product line will
be based on our proprietary “green” energy management system and electric
propulsion system. These products will have the power and ability of gas powered
engines, but without the particulate pollution or noise pollution.





Pursuant
to the terms of a Share Purchase Agreement dated August 16, 2007, we purchased
5,000,000 shares of common stock of Belarus Capital Corp. (“Belarus” or the
“Company”) in a private purchase transaction in exchange for $125,000 in cash
and 1,000,000 shares of our common stock. At the time of the closing of this
transaction, the 5,000,000 shares represented 100% of the issued and outstanding
shares of common stock of Belarus. We funded the cash portion of the purchase
cost through a combination of a $40,000 loan from one of our founding
stockholders and from the proceeds of a private placement of 184,000 shares of
our common stock at $0.50 per share. The value ascribed to the 1,000,000 shares
of Xtreme stock issued in this transaction was $500,000 ($0.50 per share) which
resulted in a total purchase cost of $625,000 related to the purchase of the
Belarus shares. As a result of this transaction, Belarus became a wholly-owned
subsidiary of Xtreme.





Recent
Developments





On
November 12, 2008, the shareholders of Xtreme entered into a Share Exchange
Agreement (the “Exchange Agreement”) with Belarus pursuant to which Belarus
purchased from the Xtreme shareholders 37,837,800 shares of Xtreme common stock
which represented approximately 97.43% of the then issued and outstanding shares
of Xtreme in exchange for the issuance of 37,837,800 shares of common stock of
Belarus. In connection with the Exchange Agreement, Xtreme surrendered to
Belarus for cancellation, all 5,000,000 shares of common stock of Belarus that
it owned and as a result, Xtreme became a subsidiary of Belarus and Belarus
succeeded to the business of Xtreme as its sole business. Subsequently, Belarus
changed its name to Xtreme Green Products Inc.





Year
ended December 31, 2008 compared to the year ended December 31,
2007





Revenue





We did
not generate any revenue in the years ended December 31, 2008 or
2007.







- 10
-




Costs and
expenses





General
and administrative expenses were $271,635 for the year ended December 31, 2008
compared to $97,585 for the year ended December 31, 2007.  Our general
and administrative expenses consist primarily of (i) product design and other
related product development costs and; (ii) professional fees such as legal and
accounting fees related to our organizational activities and our merger with
Belarus in November 2008.





We
incurred stock based compensation expense related to the issuance of shares of
our common stock in exchange for services rendered of $53,000 for the year ended
December 31, 2008 compared to $303,648 for the year ended December 31, 2007.
This non-cash expense reflects the fair value of the shares of common stock
issued on the date of each grant which was $0.50.





During
the year ended December 31, 2007, we incurred a charge of $625,000 related to
our purchase of Belarus in August 2007. This non-cash expense was based on
management’s evaluation of the carrying value of our investment in Belarus at
December 31, 2007.





Net loss





Our net
loss for the year ended December 31, 2008 was $324,635 or $0.01 per share
compared to a net loss of $1,026,233 or $0.03 per share.





Liquidity
and Capital Resources





Since our
inception (May 21, 2007) and through December 31, 2008, we have incurred a
cumulative net loss of $1,350,868. The notes to our audited financial statements
include language that raises doubt about our ability to continue as a going
concern.  At December 31, 2008, we had cash of $20,341, a net working
capital deficit of $112,220 and we owed our stockholders an aggregate of
$107,993. Of this total, $80,000 was due in full on December 31, 2009. The
remaining stockholder loan is due on demand.





To date
we have generated no revenues. The resulting lack of available cash from our
operations may have an adverse impact on our liquidity, activities and
operations. Until we successfully develop, manufacture, market and sell our
products, we will not generate significant revenues and we may not be
successful. There can be no assurances that we will achieve revenues during the
next twelve months or at all. If we cannot generate sufficient revenues to
continue operations, we may be forced to suspend or cease
operations.




Management
is seeking additional working capital through additional debt or equity private
placements, additional notes payable to institutions or related parties, or from
other available funding sources at market rates of interest, or a combination of
these. The ability to raise necessary financing will depend on many factors,
including the economic and market conditions prevailing at the time financing is
sought. No assurances can be given that any necessary financing can be obtained
on terms favorable to us, if at all.





Since our
inception, we have financed the costs associated with our operational and
investing activities through (i) the sale of shares of our common stock pursuant
to private placements, and (ii) loans from certain of our stockholders. To the
extent that it becomes necessary to raise additional cash in the future, we may
seek to raise it though the sale of debt or equity securities or from additional
loans from our stockholders. There can be no assurances that we will be able to
continue to sell shares of our common stock or borrow additional funds from any
of our stockholders or third parties in order to fund the costs associated with
our future operating and investing activities.





If we are
successful at raising additional equity capital, it may be on terms which would
result in substantial dilution to existing shareholders. If our costs and
expenses prove to be greater than we currently anticipate, or if we change our
current business plan in a manner that will increase our costs, we may be forced
to suspend or cease operations.







- 11
-




Critical
Accounting Policies and Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. As the number of variables and assumptions affecting the
probable future resolution of the uncertainties increase, these judgments become
even more subjective and complex. Actual results may differ from these
estimates.





We have
identified the following critical accounting policies, described below, that are
the most important to the portrayal of our current financial condition and
results of operations.




Stock-Based
Compensation





In
December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees". The provisions of this Statement were effective for
the Company beginning with its fiscal year ending December 31,
2007.


Basis
of Reporting
 
 The
Company’s financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
 
 The
Company has experienced a loss from operations as a result of its investment
necessary to achieve its operating plan, which is long-range in nature. For the
period from inception to December 31, 2008, the Company had a net loss of
$1,350,868 and has working capital and stockholder deficits of $112,220 at
December 31, 2008. In addition, the Company has no revenue generating
operations.
 
 The
Company’s ability to continue as a going concern is contingent upon its ability
to secure additional financing, increase ownership equity and develop profitable
operations. In addition, the Company’s ability to continue as a going concern
must be considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the competitive
environment in which the Company operates.
 
 The
Company is pursuing financing for its operations and seeking additional private
investments. In addition, the Company is seeking to establish its revenue base.
Failure to secure such financing or to raise additional equity capital and to
establish its revenue base may result in the Company depleting its available
funds and not being able pay its obligations.
 
 The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
  Off-Balance
Sheet Arrangements





We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.




ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





Reference
is made to the Index of Financial statements following Part III of this Report
for a listing of the Company’s financial statements and notes
thereto.





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





On August
24, 2009, the Company dismissed its auditors, Rotenberg & Co., LLP
(“Rotenberg").  Effective August 24, 2009, the Company engaged Stark
Winter Schenkein & Co., LLP (“Stark"), as its independent certified public
accountant. The Company's decision to dismiss Rotenberg and retain Stark was
approved by its Board of Directors on August 24, 2009.





The
reports of Rotenberg on the financial statements of the Company for each of the
two most recent fiscal years for which audits have been performed, did not
contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles for the two
most recent fiscal years, except that Rotenberg's opinion in its report on the
Company's financial statements expressed substantial doubt with respect to the
Company's ability to continue as a going concern for the last two fiscal
years.





During
the Company's two most recent fiscal years and the subsequent interim period
through the date of dismissal, there were no reportable events as the term is
described in Item 304(a)(1)(iv) of Regulation S-K.





- 12
-


During
the Company's two most recent fiscal years and the subsequent interim period
through the date of dismissal, there were no disagreements with Rotenberg on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which, if not resolved to the satisfaction of
Rotenberg would have caused it to make reference to the subject matter of the
disagreements in connection with its reports on these financial statements for
those periods.





The
Company did not consult with Stark regarding the application of accounting
principles to a specific transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements,
and no written or oral advice was provided by Stark that was a factor considered
by the Company in reaching a decision as to the accounting, auditing or
financial reporting issues.





On
December 11, 2009, the Company dismissed its auditors,
Stark.  Effective December 11, 2009, the Company engaged Kingery and
Crouse PA (“Kingery"), as its independent certified public
accountant.  The Company's decision to dismiss Stark and retain
Kingery was approved by its Board of Directors on December 11,
2009.





Stark
report on the financial statements for the period from May 21, 2007 (inception)
to December 31, 2007, were not subject to an adverse or qualified opinion or a
disclaimer of opinion and were not modified as to uncertainty, audit scope or
accounting principles for the period from May 21, 2007 (inception) to December
31, 2007, except that Stark’s report on the financial statements as of December
31, 2007 and for the period from May 21, 2007 to December 31, 2007 contained
explanatory language that substantial doubt existed about the Company’s ability
to continue as a going concern due to the Company’s net loss and its working
capital deficiency at December 31, 2007.





From the
date the Company retained Stark on August 24, 2009 through the date of
dismissal, there were no reportable events as the term is described in Item
304(a)(1)(iv) of Regulation S-K.





From the
date the Company retained Stark on August 24, 2009 through the date of
dismissal, there were no disagreements with Stark on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to the satisfaction of Stark would have caused
it to make reference to the subject matter of the disagreements in connection
with its reports on these financial statements for those periods.





The
Company did not consult with Kingery regarding the application of accounting
principles to a specific transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements,
and no written or oral advice was provided by Kingery that was a factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issues.





ITEM 9A(T).CONTROLS AND
PROCEDURES





Evaluation of Disclosure
Controls and Procedures




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in
the reports that we file under the Exchange Act is accumulated and communicated
to our management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required
disclosure.





- 13
-


The
Company’s management, under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial (and principal accounting)
Officer, carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31,
2008.  Based upon that evaluation and the identification of the
material weakness in the Company’s internal control over financial reporting as
described below under “Management’s Report on Internal Control over Financial
Reporting,” the Chief Executive Officer and Chief Financial Officer concluded
that the Company’s disclosure controls and procedures were not effective as of
the end of the period covered by this report.




Management's Report on
Internal Control over Financial Reporting




A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, a public company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles (“GAAP”) including those policies and procedures
that: (i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of
the company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures are being made only in accordance with
authorizations of management and directors of the company, and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements.




Management
is responsible for establishing and maintaining adequate internal control over
financial reporting. Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has assessed the effectiveness of
our internal control over financial reporting as of December 31,
2008.  In making this assessment, our management used the criteria
established in Internal
Control—Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).




During
this evaluation, the Company identified a material weakness in its internal
control over financial reporting.  A material weakness is a
deficiency, or combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis.  The identified material
weakness consists of, as of the end of the period covered by this report,
severely limited financial and other resources and limited number of employees,
namely an understaffed financial and accounting function, and the need for
additional personnel to prepare and analyze financial information in a timely
manner and to allow review and on-going monitoring and enhancement of our
controls.




Based on
our assessment and the criteria discussed above, the Company has concluded that,
as of December 31, 2008, the Company’s internal control over financial reporting
was not effective as a result of the aforementioned material
weakness.




Notwithstanding
the material weakness in the Company’s internal control over financial reporting
and the Company’s consequently ineffective disclosure controls and procedures
discussed above, management believes that the financial statements included in
this Annual Report on Form 10-K present fairly, in all material respects, our
financial position, results of operations, and cash flows for the periods
presented in accordance with the U. S. generally accepted accounting
principles.




This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in
this annual report.




Plan
for Remediation of Material Weaknesses




As our
financial position improves, we plan to enhance our control environment and to
remedy the identified material weakness by expanding the resources available to
the financial reporting process.  These ongoing efforts are to
include: (i) evaluating and improving our existing internal control
documentation to develop clear identification of key financial and reporting
controls; (ii) reviewing our accounting process; (iii) and reviewing our control
procedures and assist us in developing on-going test plans to assure compliance
and enhancement as needed to existing controls; and (iv) adding financial and
accounting personnel as required.




- 14
-


Limitations
on Effectiveness of Controls and Procedures




Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.





Changes
in Internal Control over Financial Reporting




There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or
15d-15 under the Exchange Act that occurred during the quarter ended December
31, 2008 that have materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.




PART
III





ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE





Directors
and Executive Officers





The
following persons are our executive officers and directors as of February 3,
2010:





Name
            
            Age
            
            Position(s)Sandy
      Leavitt
            
            64
            
            Chairman,
      Chief Executive Officer and SecretaryNeil
      Roth
            
            57
            
            President,
      Chief Operating Officer, Chief Financial Officer and
    DirectorRik
      Deitsch
            
            41
            
            DirectorRussell
      E. Hagberg
            
            59
            
            DirectorGreg
      K. Hoggatt
            
            51
            
            DirectorByron
      Georgiou
            
            61
            
            Director*





*On February 1
2010, the Company’s Board of Directors unanimously elected Byron Georgiou to
fill an existing vacancy on the Board, which election is to be effective on the
date the Company’s Directors and Officers insurance policy goes into
effect.




Sandy Leavittover 30 years experience in manufacturing and marketing of automotive
related parts. He has held the position of president for a number of
corporations in this field, and has developed strong and enduring relationships
with Associate companies in the Far East. Mr. Leavitt has been Vice President of
Sumeeko USA, a manufacturer and wholesaler of industrial fasteners and fastening
equipment since 2003 and has pioneered joint ventures and established global
distribution channels which have enabled worldwide sales to the automotive
groups from the low cost producing nations. Mr. Leavitt’s extensive experience
in sales, manufacturing, and distribution has enabled the Company to develop a
comprehensive plan and control of these processes.





Neil Roth
has been our President and Chief Operating Officer since August 2007. He has
also been the President and Chief Operating Officer of Xtreme Green Products,
Inc., a designer and manufacturer of electric power land and watercraft since
that entity’s inception in March 2007. He has also been President of Roth
Enterprises since 2003. In addition, he has been President of Designed
Diagnostics, Inc. since February 2006.Hehas over 35 years of
experience in the consumer products industry and corporate management of large
corporations. His experience includes top executive positions at Eckerd Drugs,
Revco, Thrifty Drugs,
Caldor’s, and Lionel Kiddie City among others. For the past ten years, Mr. Roth
has been a highly sought after marketing consultant as well as president of a
medical diagnostics company. His top level administrative experience in these
multi-billion dollar companies gives him the background to set up and run the
Company’s administrative needs. The marketing and sales experience will allow
him to create and manage, along with Mr. Leavitt, the marketing plan of the
Company.




- 15
-





Rik
Deitsch has been one of our Directors since August 2009.  He
has been the Chief Executive Officer of Nutra Pharma Corp. (nutrapharma.com)
since 2002, and from 1998 to 2002 served as the President of NDA Consulting
Inc., a biotechnology research group that provided consulting services to the
pharmaceutical industry. NDA Consulting specialized in the research of peptides
derived from Cone Snail venom, Cobra venom and Gila Monster venom.  Mr.
Deitsch holds both a B.S. in Chemistry and an M.S. in Biochemistry from Florida
Atlantic University and has conducted research for the Duke University Medical
School Comprehensive Cancer Center. Mr. Deitsch is an adjunct professor and
teaches several business courses for Florida Atlantic University's College of
Business and Continuing Education Department.





Russ
Hagberg has been one of our Directors since August 2009.  He
has served in several executive positions during his management career
with  exposure to the transportation, banking, insurance, health care, and
heavy manufacturing industries.   He was a key member of the senior
management team that successfully restructured Santa Fe Industries and the Santa
Fe Railway, serving as Vice President-HR & Labor Relations, Vice
President-Transportation Operations, and Senior Vice President and Chief of
Staff.  Russ was a member of the Santa Fe Railway Board of Directors and he
also served on the Board of Directors of the DM&E Railroad from 2002 until
its sale in late 2007 to the Canadian Pacific Railway for $2.5 Billion. Mr.
Hagberg is founder and Principal of Hagberg & Associates, a management
consulting firm.  He currently teaches Strategic Management and Leadership
courses at Northern Illinois University (NIU).  Born and raised in Chicago,
Illinois, Russ served as a Captain in the US Army, earned a B.S. Degree in
Marketing from NIU and an MBA from the University of Chicago.




Greg K
Hoggatt has been one of our Directors since August 2009.  He
has been a Delta Airlines pilot and captain since 1985.  He graduated
from Indiana University in 1978 with a double major in chemistry and biology.
Mr. Hoggatt earned his U.S. Navy wings in 1980 and became a flight instructor at
Naval Air Station Pensacola.  He taught air combat maneuvers, carrier
landings, and formation flying to students as well as new
instructors.  He subsequently became an F-14 Tomcat fighter
pilot.  During that time, he was stationed at NAS Oceana, VA and flew
off the USS America from 1981-1985, serving primarily in the Mediterranean and
Indian Oceans.   Honorably discharged from the US Navy in
December 1985, he was hired by Delta Air Lines. His experience as a top
instructor, earned him a check airman position before he completed his first
year at Delta.  Mr. Hoggatt became one of Delta’s youngest captains at the
age of 40 when he moved to the left seat of a Boeing 727 in 1986.





Byron
Georgiou is one of the ten members of the Financial Crisis Inquiry
Commission, a bi-partisan commission created under the Fraud Enforcement and
Recovery Act of 2009 to examine the causes, domestic and global, of the current
financial and economic crisis in the United States.  Mr. Georgiou is
President of Georgiou Enterprises, with wide ranging interests including
partnerships in several private equity firms; a portfolio of carbon emission
reduction projects in China that generate carbon credits under the Kyoto
protocol; and environmental cleanup of deep coal mining sites.  Since
2005, Mr. Georgiou has served on the advisory board of the Harvard Law School
Program on Corporate Governance.  In addition, since 2000, Mr.
Georgiou has been affiliated of counsel to the national law firm of Coughlin
Stoia Geller Rudman & Robbins, the world's largest plaintiffs' securities
practice, and has had a leadership role in the historic litigations prosecuting
financial fraud on behalf of defrauded investors at Enron, WorldCom, Dynegy,
AOLTimeWarner, and UnitedHealth.  In 1994, he co-founded and served as
President of American Partners Capital Group, concentrating on serving the needs
of institutional investors through capital formation programs in a variety of
alternative asset categories.  From 1983-1994, he was Managing Partner
and co-founder of the San Diego law firm of Georgiou, Tosdal, Levine &
Smith, a general civil practice, with emphasis on litigation and appearances
before executive and legislative governmental bodies, and representation of
labor organizations and their members, including contract negotiations and
enforcement for many California public and private sector labor organizations.
From 1980-1983, Mr. Georgiou served as Legal Affairs Secretary to California
Governor Edmund G. Brown Jr., responsible for litigation by and against the
Governor, judicial appointments, liaison with the Attorney General, Judiciary
and State Bar, legal advice to the Governor and members of his Cabinet, and
exercise of the Governor's powers of extradition and clemency.  Mr.
Georgiou served from 1975-1980 in various capacities with the California
Agricultural Labor Relations Board.  Mr. Georgiou received his
undergraduate degree with Great Distinction from Stanford University, attending
on a full Alfred P. Sloan academic scholarship, and his Juris Doctor degree
magna cum laude from
Harvard Law School.





- 16
-


Election
of Directors





All
directors of the Company are elected at its annual meeting of stockholders to
hold office until the next annual meeting of stockholders and until their
successor is elected and qualified, or until such director’s earlier death,
resignation or removal.  All officers of the Company serve at the
pleasure of the Board, subject to their contractual rights, if any.





Committees
of the Board





We do not
have currently any committees of the Board.  All functions typically
performed by committees are performed by the Board as a whole.




ITEM
11.  EXECUTIVE COMPENSATION





To date,
the Company has not paid any compensation to its executive officers or
directors.





2008
Incentive Stock Option Plans





The sole
shareholder of the Company has approved the 2008 Incentive Stock Option Plan
(the "2008 Incentive Plan") and authorized 10,000,000 shares of Common Stock for
issuance thereunder. The following is a summary of principal features of the
2008 Incentive Plan. The summary, however, does not purport to be a complete
description of all the provisions of the 2008 Incentive Plan. A copy of the 2008
Incentive Plan is attached hereto as Appendix A.





General




The 2008
Incentive Stock Option Plan (the "2008 Incentive Plan") was adopted by the Board
of Directors on May 22, 2008. The Board of Directors has initially reserved
10,000,000 shares of Common Stock for issuance under the 2008 Incentive Plan.
Under the Plan, options may be granted which are intended to qualify as
Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code
of 1986 (the "Code") or which are not ("Non-ISOs") intended to qualify as
Incentive Stock Options thereunder.  The then sole shareholder of the
Company subsequently ratified the 2008 Incentive Stock Option Plan




The 2008
Incentive Plan and the right of participants to make purchases thereunder are
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The 2008 Incentive
Plan is not a qualified deferred compensation plan under Section 401(a) of the
Internal Revenue Code and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").




Purpose




The
primary purpose of the 2008 Incentive Plan is to attract and retain the best
available personnel for the Company in order to promote the success of the
Company's business and to facilitate the ownership of the Company's stock by
employees. In the event that the 2008 Incentive Plan is not adopted the Company
may have considerable difficulty in attracting and retaining qualified
personnel, officers, directors and consultants.




Administration




The 2008
Incentive Plan will be administered by the Company's Board of Directors, as the
Board of Directors may be composed from time to time. All questions of
interpretation of the 2008 Incentive Plan are determined by the Board, and its
decisions are final and binding upon all participants. Any determination by a
majority of the members of the Board of Directors at any meeting, or by written
consent in lieu of a meeting, shall be deemed to have been made by the whole
Board of Directors.




Notwithstanding
the foregoing, the Board of Directors may at any time, or from time to time,
appoint a committee (the "Committee") of at least two members of the Board of
Directors, and delegate to the Committee the authority of the Board of Directors
to administer the Plan. Upon such appointment and delegation, the Committee
shall have all the powers, privileges and duties of the Board of Directors, and
shall be substituted for the Board of Directors, in the administration of the
Plan, subject to certain limitations.




- 17
-


Members
of the Board of Directors who are eligible employees are permitted to
participate in the 2008 Incentive Plan and may vote on any matter affecting the
administration of the 2008 Incentive Plan or the grant of any option pursuant to
it. In the event that any member of the Board of Directors is at any time not a
"disinterested person" to the extent that such member is the recipient of a
grant under the 2008 Incentive Plan, then such grant under the Plan shall not be
administered by said member of the Board of Directors, and may only by
administered by a Committee all the members of which are disinterested persons,
as so defined or by the remaining members of the Board of Directors who are not
recipients of the grant in question.




Eligibility




Under the
2008 Incentive Plan, options may be granted to key employees, officers,
directors or consultants of the Company, as provided in the 2008 Incentive
Plan.




Effective
Date




The 2008
Incentive Plan will become effective immediately following the incorporation of
the Company in the State of Nevada as discussed below.




Terms
of Options




The term
of each Option granted under the 2008 Incentive Plan shall be contained in a
stock option agreement between the Optionee and the Company and such terms shall
be determined by the Board of Directors consistent with the provisions of the
2008 Incentive Plan, including the following:




(a)
Purchase Price. The purchase price of the Common Shares subject to each ISO
shall not be less than the fair market value (as set forth in the 2008 Incentive
Plan), or in the case of the grant of an ISO to a Principal Stockholder, not
less that 110% of fair market value of such Common Shares at the time such
Option is granted. The purchase price of the Common Shares subject to each
Non-ISO shall be determined at the time such Option is granted, but in no case
less than 85% of the fair market value of such Common Shares at the time such
Option is granted.




(b)
Vesting. The dates on which each Option (or portion thereof) shall be
exercisable and the conditions precedent to such exercise, if any, shall be
fixed by the Board of Directors, in its discretion, at the time such Option is
granted.




(c)
Expiration. The expiration of each Option shall be fixed by the Board of
Directors, in its discretion, at the time such Option is granted; however,
unless otherwise determined by the Board of Directors at the time such Option is
granted, an Option shall be exercisable for five (5) years after the date on
which it was granted (the "Grant Date"). Each Option shall be subject to earlier
termination as expressly provided in the 2008 Incentive Plan or as determined by
the Board of Directors, in its discretion, at the time such Option is
granted.




(d)
Transferability. No Option shall be transferable, except by will or the laws of
descent and distribution, and, during the lifetime of the Optionee, Options may
be exercised by the Optionee only. No Option granted under the Plan shall be
subject to execution, attachment or other process.




(e)
Option Adjustments. The aggregate number and class of shares as to which Options
may be granted under the Plan, the number and class shares covered by each
outstanding Option and the exercise price per share thereof (but not the total
price), and all such Options, shall each be proportionately adjusted for any
increase decrease in the number of issued Common Shares resulting from split-up
spin-off or consolidation of shares or any like Capital adjustment or the
payment of any stock dividend.




(f)
Termination, Modification and Amendment. The 2008 Incentive Plan (but not
Options previously granted under the Plan) shall terminate ten (10) years from
the earlier of the date of its adoption by the Board of Directors or the date on
which the Plan is approved by the affirmative vote of the holders of a majority
of the outstanding shares of capital stock of the Company entitled to vote
thereon, and no Option shall be granted after termination of the Plan. Subject
to certain restrictions, the Plan may at any time be terminated and from time to
time be modified or amended by the affirmative vote of the holders of a majority
of the outstanding shares of the capital stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of Delaware.




As of
December 31, 2008 no options had been issued under the 2008 Incentive
Plan.




- 18
-


Section
16(a) Beneficial Ownership Reporting Compliance




Under the
Exchange Act, our directors, our executive officers, and any persons holding
more than 10% of our common stock are required to report their ownership of the
common stock and any changes in that ownership to the Securities and Exchange
Commission. To our knowledge, based solely on our review of the copies of such
reports received or written representations from certain reporting persons that
no other reports were required, we believe that during our fiscal year ended
October 31, 2008, Forms 3 for the following reporting persons were filed late:
Sanford Leavitt, Neil Roth and Greg Hoggatt.





- 19
-




ITEM 12.  SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





The
following table sets forth information as of February 1, 2010 regarding the
beneficial ownership of our Common Stock, based on information provided by (i)
each of our executive officers and directors; (ii) all executive officers and
directors as a group; and (iii) each person who is known by us to beneficially
own more than 5% of the outstanding shares of our Common Stock. The percentage
ownership in this table is based on 41,393,225 shares issued and outstanding as
of February 1, 2010.  Unless otherwise indicated, we believe that all
persons named in the following table have sole voting and investment power with
respect to all shares of Common Stock that they beneficially own.





Name and Address of Beneficial Owner (1)
            
            Amount and Nature of Beneficial
              Ownership of Common Stock (2)
            
            
            Percent of
              Common StockSandy
      Leavitt
            
            
            22,261,300
            
            
            
            53.8
            %Neil
      Roth
            
            
            4,625,600
            
            
            
            11.2
            %Rik
      Deitsch (3)
            
            
            670,000
            
            
            
            1.6
            %Russell
      Hagberg (4)
            
            
            250,000
            
            
            
            *Greg
      Hoggatt (5)
            
            
            4,719,400
            
            
            
            11.2
            %Byron
      Georgiou (6)
            
            
            10,000,000
            
            
            
            20.1
            %All Directors and Executive
      Officers as a Group
              (five persons):
            
            
            32,526,300
            
            
            
            76.8
            %







*  
Less than 1%.


(1) The
address of all individuals listed below is c/o Xtreme Green Products Inc., 5475
Wynn Road, Suite 100, Las Vegas, Nevada 89118.


(2) The
number of shares indicated includes (i) shares issuable upon the exercise of
outstanding stock options or warrants held by each individual or group to the
extent such options and warrants are exercisable within sixty days of February
1, 2010.


(3)
Includes 150,000 shares issuable upon exercise of options.


(4)
Includes 150,000 shares issuable upon exercise of options.


(5)
Includes 150,000 shares issuable upon exercise of
options.


(6)
Includes (i) 1,250,000 shares that Mr. Georgiou has committed to purchase (and
the Company has committed to issue) on March 1, 2010, (ii) 3,750,000 shares
issuable upon currently exercisable warrants, and (iii) 3,750,000 shares
issuable upon warrants to be issued on March 1, 2010.  Does not
include 150,000 shares issuable upon exercise of options to be granted when Mr.
Georgiou becomes a member of the Board.




ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





None that
are required to be reported.




ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES




Audit Fees. The
aggregate fees billed by our principal accountants, for professional services
rendered for the audit of the Company's annual financial statements for the last
two fiscal years and for the reviews of the financial statements included in the
Company's Quarterly reports on Form 10-QSB during the last two fiscal years 2008
and 2007 were $11,500 and $10,000, respectively.




Audit-Related Fees.
None.




Tax Fees.
None.




All Other Fees.
None.







- 20
-




ITEM
15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES





Exhibit
      Number
            
            Description2.1
            
            Share
      Exchange Agreement dated November 12, 2008 (1)2.2
            
            Articles
      of Merger*2.3
            
            Articles
      of Merger (Name Change)*3.1
            
            Articles
      of Incorporation *3.2
            
            Bylaws
      *3.3
            
            Form
      of common stock certificate (2)4.1
            
            Form
      of Warrant (3)10.1
            
            2008
      Incentive Stock Option Plan (4)31.1
            
            Chief
      Executive Officer Certification31.2
            
            Chief
      Financial Officer Certification32
            
            Certification
      Pursuant to 18 U.S.C. Section 1350





*      Included
herewith.


(1)
            Incorporated
      by reference to the Company’s Current Report on Form 8-K filed November
      12, 2008


(2)
            Incorporated
      by reference to the Company’s Registration Statement on Form 10-SB filed
      March 15, 2007


(3)
            Incorporated
      by reference to the Company’s Current Report on Form 8-K filed February 3,
      2010


(4)
            Incorporated
      by reference to the Company’s Information Statement on Schedule 14C filed
      June 9, 2008








- 21
-




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.





DATE:       
      February 8, 2010
            XTREME
      GREEN PRODUCTS INC./s/ Sandy LeavittSandy
      LeavittChief
      Executive Officer





POWER
OF ATTORNEY





KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Sandy Leavitt, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any amendments
in this Annual Report on Form 10-K, and to file the same, with exhibits thereto
and other documents in connections therewith, with the Securities and Exchange
Commission, hereby ratifying and conforming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue of hereof.





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.





Signature
            
            Title
            
            Date/s/
            Sandy
      Leavitt
            
            Chief
      Executive Officer and Director
            
            February
      8,  2010(Principal
      Executive Officer)/s/
            Neil
      Roth
            
            President,
      Chief Financial Officer and Director
            
            February
      8,  2010(Principal
      Financial and Accounting Officer)/s/
            Rick
      Deitsch
            
            Director
            
            February
      8,  2010/s/
            Russell
      E. Hagberg
            
            Director
            
            February
      8,  2010/s/
            Gregg
      K. Hoggatt
            
            Director
            
            February
      8,  2010






- 22
-




XTREME
GREEN PRODUCTS INC.




INDEX
TO FINANCIAL STATEMENTS




PAGEREPORT
      OF INDEPENDENT REGISTERED CERTIFIED
              PUBLIC
      ACCOUNTING FIRM
            
            F-1CONSOLIDATED
      BALANCE SHEETS
              DECEMBER
      31, 2008 AND 2007
            
            F-2CONSOLIDATED
      STATEMENTS OF OPERATIONS
              FOR
      THE PERIOD ENDED DECEMBER 31, 2007,THE YEAR ENDED DECEMBER 31, 2008, AND
      THE PERIOD FROM INCEPTION TO DECEMBER 31, 2008
            
            
            F-3CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY
              FOR
      THE THE PERIOD FROM INCEPTION TO DECEMBER 31, 2008
            
            
            F-4CONSOLIDATED
      STATEMENTS OF CASH FLOWS
              FOR
      THE PERIOD ENDED DECEMBER 31, 2007,THE YEAR ENDED DECEMBER 31, 2008, AND
      THE PERIOD FROM INCEPTION TO DECEMBER 31, 2008
            
            
            F-5NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            
            
            F-6 - F-13









- 23
-




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Shareholders
and Board of Directors


Xtreme
Green Products Inc.


(A
Development Stage Company)





We have
audited the accompanying consolidated balance sheet of Xtreme Green Products
Inc. (a development stage company) as of December 31, 2007 and 2008, and the
related consolidated statements of operations, stockholders' (deficit), and cash
flows for the period from inception (May 21, 2007) to December 31, 2007, the
year ended December 31, 2008, and the period from inception (May 21, 2007) to
December 31, 2008. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
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 financial statements referred to above present fairly, in all
material respects, the financial position of Xtreme Products Inc. (a development
stage company) as of December 31, 2007 and 2008, and the results of its
operations, and its cash flows for the period from inception (May 21, 2007) to
December 31, 2007, the year ended December 31, 2008, and the period from
inception (May 21, 2007) to December 31, 2008, in conformity with accounting
principles generally accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company has incurred significant losses from
operations and has working capital and stockholder deficiencies. These factors
raise substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans in regard to this matter are also discussed in Note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.





Kingery
& Crouse PA


Tampa,
Florida


January
31, 2010





F-1




XTREME
GREEN PRODUCTS INC.


(A
Development Stage Company)
 Consolidated
Balance Sheets
 December
31, 2007 and 2008
 
 2007
              
              
              2008ASSETSCurrent
      assets:Cash
              
              $
              5,909
              
              
              $
              20,341Inventory
              
              
              -
              
              
              
              8,766TOTAL
      ASSETS
              
              $
              5,909
              
              
              $
              29,107LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
              
              $
              1,100
              
              
              $
              13,334Accrued
      expenses
              
              
              20,000
              
              
              
              20,000Stockholder
      loans
              
              
              115,394
              
              
              
              107,993Total
      current liabilities
              
              
              136,494
              
              
              
              141,327Commitments
      and contingenciesStockholders'
      deficit:Common
      stock, $0.0001 par value, 100,000,000 sharesauthorized;
      38,257,800 and 38,943,800 sharesissued
      and outstanding
              
              
              3,826
              
              
              
              3,895Additional
      paid-in capital
              
              
              891,822
              
              
              
              1,234,753Deficit
      accumulated during the development stage
              
              
              (1,026,233
              )
              
              
              (1,350,868
              )Total
      stockholders' deficit
              
              
              (130,585
              )
              
              
              (112,220
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              5,909
              
              
              $
              29,107See
      the accompanying notes to the financial statements.


F-2




XTREME GREEN PRODUCTS INC.
 (A
Development Stage Company)
 Consolidated
Statements of Operations
 Period
From Inception (May 21, 2007) to December 31, 2007,
 the Year
Ended December 31, 2008, and the
 Period
From Inception (May 21, 2007) to December 31, 2008
 
 Inception
      to2007
              
              
              2008
              
              
              2008Sales
              
              $
              -
              
              
              $
              -
              
              
              $
              -Costs
      and expenses:General
      and administrative
              
              
              97,585
              
              
              
              271,635
              
              
              
              369,220General
      and administrative - stock based compensation
              
              
              303,648
              
              
              
              53,000
              
              
              
              356,648Purchased
      research and development
              
              
              625,000
              
              
              
              -
              
              
              
              625,000Total
      costs and expenses
              
              
              1,026,233
              
              
              
              324,635
              
              
              
              1,350,868Net
      loss
              
              $
              (1,026,233
              )
              
              $
              (324,635
              )
              
              $
              (1,350,868
              )Per
      share information - basic and diluted:Loss
      per common share
              
              $
              (0.03
              )
              
              $
              (0.01
              )Weighted
      average common shares outstanding
              
              
              37,720,458
              
              
              
              38,577,077See
      the accompanying notes to the financial statements.


F-3




XTREME
GREEN PRODUCTS INC.
 (A
Development Stage Company)
 Consolidated
Statement of Changes in Stockholders' Deficit
 Period
From Inception (May 21, 2007) to December 31, 2008
 
 DeficitAccumulatedAdditional
              
              
              During
      theCommon
      Stock
              
              
              Paid-in
              
              
              DevelopmentShares
              
              
              Par
      Value
              
              
              Capital
              
              
              Stage
              
              
              TotalIssuance
      of common stock to founders at $.0001 per share
              
              
              36,473,800
              
              
              $
              3,648
              
              
              $
              -
              
              
              $
              -
              
              
              $
              3,648Issuance
      of common stock for cash at $.50 per share
              
              
              184,000
              
              
              
              18
              
              
              
              91,982
              
              
              
              -
              
              
              
              92,000Issuance
      of common stock for services at $.50 per share
              
              
              600,000
              
              
              
              60
              
              
              
              299,940
              
              
              
              -
              
              
              
              300,000Issuance
      of common stock in connection with theacquisition
      of Belarus Capital Corp. at $.50 per share
              
              
              1,000,000
              
              
              
              100
              
              
              
              499,900
              
              
              
              -
              
              
              
              500,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,026,233
              )
              
              
              (1,026,233
              )Balance
      - December 31, 2007
              
              
              38,257,800
              
              
              
              3,826
              
              
              
              891,822
              
              
              
              (1,026,233
              )
              
              
              (130,585
              )Issuance
      of common stock for cash at $.50 per share
              
              
              580,000
              
              
              
              58
              
              
              
              289,942
              
              
              
              -
              
              
              
              290,000Issuance
      of common stock for services at $.50 per share
              
              
              106,000
              
              
              
              11
              
              
              
              52,989
              
              
              
              -
              
              
              
              53,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (324,635
              )
              
              
              (324,635
              )Balance
      - December 31, 2008
              
              
              38,943,800
              
              
              $
              3,895
              
              
              $
              1,234,753
              
              
              $
              (1,350,868
              )
              
              $
              (112,220
              )See
      the accompanying notes to the financial statements.


F-4




XTREME GREEN PRODUCTS INC.
 (A
Development Stage Company)
 Consolidated
Statements of Cash Flows
 Period
From Inception (May 21, 2007) to December 31, 2007,
 the Year
Ended December 31, 2008, and the
 Period
From Inception (May 21, 2007) to December 31, 2008


Inception
      to2007
              
              
              2008
              
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (1,026,233
              )
              
              $
              (324,635
              )
              
              $
              (1,350,868
              )Adjustments
      to reconcile net loss to netcash
      used in operating activities:Stock-based
      compensation
              
              
              303,648
              
              
              
              53,000
              
              
              
              356,648Purchased
      research and development
              
              
              625,000
              
              
              
              -
              
              
              
              625,000Changes
      in operating assets and liabilities:Increase
      in inventory
              
              
              -
              
              
              
              (8,766
              )
              
              
              (8,766
              )Increase
      in accounts payable
              
              
              1,100
              
              
              
              12,234
              
              
              
              13,334Increase
      in accrued expenses
              
              
              20,000
              
              
              
              -
              
              
              
              20,000Net
      cash used in operating activities
              
              
              (76,485
              )
              
              
              (268,167
              )
              
              
              (344,652
              )Cash
      flows from investing activities:Cash
      used in acquisition of Belarus Capital Corp.
              
              
              (125,000
              )
              
              
              -
              
              
              
              (125,000
              )Cash
      flows from financing activities:Common
      stock issued for cash
              
              
              92,000
              
              
              
              290,000
              
              
              
              382,000Stockholders
      loans, net
              
              
              115,394
              
              
              
              (7,401
              )
              
              
              107,993Net
      cash provided by financing activities
              
              
              207,394
              
              
              
              282,599
              
              
              
              489,993Net
      increase in cash
              
              
              5,909
              
              
              
              14,432
              
              
              
              20,341Cash
      - beginning of period
              
              
              -
              
              
              
              5,909
              
              
              
              -Cash
      - end of period
              
              $
              5,909
              
              
              $
              20,341
              
              
              $
              20,341Supplemental Cash Flow
      Information:Value
      of common stock issued as considerationin
      acquisition of Belarus Capital Corp.
              
              $
              500,000
              
              
              $
              -
              
              
              $
              500,000Cash
      paid for interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -See
      the accompanying notes to the financial statements.


F-5




XTREME
GREEN PRODUCTS INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


October
31, 2008 and 2007






Note
1. Organization and Significant Accounting Policies.
 
 Xtreme
Products Inc. (the “Company”) was incorporated under the laws of the State of
Nevada on May 21, 2007.  The Company intends to design, manufacture
and sell electric powered recreational watercraft and land based vehicles. The
Company is currently in the development stage and therefore has not developed
all of its accounting policies.
 
 The
financial statements presented herein include the accounts of the Company and
its wholly owned subsidiary Belarus Capital Corp. (“Belarus”) which the Company
acquired on August 16, 2007. All intercompany transactions and balances have
been eliminated in consolidation.
 
 Revenue
Recognition
 
 In
general, the Company will record revenue when persuasive evidence of an
arrangement exists, services have been rendered or product delivery has
occurred, the sales price to the customer is fixed or determinable, and
collectability is reasonably assured. The following policies reflect specific
criteria for the various revenues streams of the Company:
 
 Revenue
will be recognized at the time the product is delivered or the service is
performed. Provision for sales returns will be estimated based on the Company’s
historical return experience.
 
 Deferred
revenue will be recorded for amounts received in advance of the time at which
services are performed and included in revenue at the completion of the related
services.
 
 Cash
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.
 
 Inventory
 
 Inventory
is valued at the lower of cost or market on a first-in first-out basis and
consists primarily of finished goods and parts.
  F-6
  Estimates
 
 The
Company prepares its consolidated financial statements in conformity with
accounting principles generally accepted in the United States of
America.  These principles require management to make estimates,
judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, together with amounts disclosed in the
related notes to the consolidated financial statements.  Actual
results and outcomes may differ from management’s estimates, judgments and
assumptions.  Significant estimates, judgments and assumptions used in
these consolidated financial statements include, but are not limited to, income
and other taxes, and the fair value of stock-based
compensation.  These estimates, judgments, and assumptions are
reviewed periodically and the effects of material revisions in estimates are
reflected in the consolidated financial statements prospectively from the date
of the change in estimate.
 
 Reclassifications
 
 Certain
amounts presented in prior periods financial statements have been reclassified
to conform to current year presentation.
 
 Research
and Development
 
 Research
and development is charged to operations as incurred.
 
 Fair
value of financial instruments
 
 The
Company’s short-term financial instruments consist of cash, accounts payable and
accrued expenses and notes payable. The carrying amounts of these financial
instruments approximate fair value because of their short-term
maturities.  The Company does not hold or issue financial instruments
for trading purposes nor does it hold or issue interest rate or leveraged
derivative financial instruments.
 
 Income
Taxes
 
 The
Company follows SFAS 109 “Accounting for Income Taxes” for recording the
provision for income taxes. Deferred tax assets and liabilities are computed
based upon the difference between the financial statement and income tax basis
of assets and liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or settled. Deferred
income tax expenses or benefits are based on the changes in the asset or
liability each period. If available evidence suggests that it is more likely
than not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income taxes in
the period of change.
  The
Company has adopted FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). The
Interpretation prescribes a recognition threshold and a measurement attribute
for the financial statement recognition and measurement of tax positions taken
or expected to be taken in a tax return. For those benefits to be recognized, a
tax position must be more-likely-than-not to be sustained upon examination by
taxing authorities. The amount recognized is measured as the largest amount of
benefit that is greater than 50 percent likely of being realized upon ultimate
settlement.
 
 Stock-Based
Compensation
 
 In
December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 "Accounting F or
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees". The provisions of this Statement were effective for
the Company beginning with its fiscal year ended December 31, 2007.
  F-7
 
 Net
Income (Loss) Per Common Share
 
 The
Company calculates net income (loss) per share as required by SFAS 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During periods in which the Company incurs
losses common stock equivalents, if any, are not considered, as their effect
would be anti-dilutive or have no effect on earnings per share.
 
 Recent
Pronouncements
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115” (“SFAS 159”).  SFAS 159 permits companies to choose
to measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value and establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. The provisions of SFAS 159 will become effective as
of the beginning of our 2009 fiscal year. The adoption of this new Statement did
not have a material effect on the Company’s financial position, results of
operations, or cash flows.
 
 In
December 2007, the FASB issued SFAS No. 141 (R) “Business Combinations”. SFAS
141R establishes principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree. SFAS 141R also provides guidance for recognizing and measuring the
goodwill acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The guidance will become
effective as of the beginning of the Company’s fiscal year beginning after
December 15, 2008. Management believes the adoption of this pronouncement did
not have a material impact on the Company's financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. The guidance will
become effective as of the beginning of the Company’s fiscal year beginning
after December 15, 2008. Management believes the adoption of this pronouncement
did not have a material impact on the Company's financial
statements.
 F-8
 
 In
February 2008, FASB Staff Position (FSP) No. 157-2, “Effective Date of
FASB Statement No. 157” was issued. FSP No. 157-2 defers the effective
date of SFAS No. 157 to fiscal years beginning after December 15,
2008, and interim periods within those fiscal years, or all non-financial assets
and liabilities, except those that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). Examples of
items within the scope of FSP No. 157-2 are non-financial assets and
non-financial liabilities initially measured at fair value in a business
combination (but not measured at fair value in subsequent periods), and
long-lived assets, such as property, plant and equipment and intangible assets
measured at fair value for an impairment assessment under SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” The partial
adoption of SFAS 157 on February 1, 2008, with respect to financial assets and
financial liabilities recognized or disclosed at fair value in the financial
statements on a recurring basis, has not had a material effect on the Company’s
consolidated financial statements. The Company is currently assessing the
impact, if any, of SFAS No. 157 relating to its planned February 1,
2009. The adoption of the remainder of the standard had no material impact on
the Company’s financial statements.
  In
March 2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities-an Amendment of FASB Statement
No. 133”, which became effective on November 15, 2008. This standard
changed the disclosure requirements for derivative instruments and hedging
activities.  Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations, and (c) how derivative instruments and
related hedging items affect an entity’s financial position, financial
performance, and cash flows. The adoption of this standard had no material
impact on the Company’s financial statements.
  In
April 2008, the FASB issued FASB Staff Position (FSP) FSP 142-3,
“Determination of the Useful Life of Intangible Assets.” This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, “Goodwill and Other Intangible Assets.” The intent of
this FSP if to improve the consistency between the useful life of a recognized
intangible asset under Statement 142 and the period of expected cash flows to
measure the fair value of the asset under FASB Statement No. 141 (Revised
2007), “Business Combinations,” and other U.S. generally accepted accounting
principles (GAAP). This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. Early adoption is prohibited. The Company does not believe
that the adoption of FAS 142-3 has had a material effect on its results of
operations and financial condition.
 F-9
  In
May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1
“Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion (Including Partial Cash Settlement)”. FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008, on a
retroactive basis and will be adopted by the Company in the first quarter of
fiscal 2009. The Company does not believe that the adoption of FSP APB 14-1 has
had a material effect on its results of operations and financial
condition.
  In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles,” which becomes effective upon approval by the
SEC. the standard sets forth the sources of accounting principles and provides
entities with a framework for selecting the principles used in the preparation
of financial statements that are presented in conformity with GAAP. It is not
expected to change any of our current accounting principles or practices and, it
has not had a material impact on our financial statements.
 Note
2. Basis of Reporting
 
 The
Company’s financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
 
 The
Company has experienced a loss from operations as a result of its investment
necessary to achieve its operating plan, which is long-range in nature. For the
period from inception to December 31, 2008, the Company had a net loss of
$1,350,868 and has working capital and stockholder deficits of $112,220 at
December 31, 2008. In addition, the Company has no revenue generating
operations.
 
 The
Company’s ability to continue as a going concern is contingent upon its ability
to secure additional financing, increase ownership equity and develop profitable
operations. In addition, the Company’s ability to continue as a going concern
must be considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the competitive
environment in which the Company operates.
 
 The
Company is pursuing financing for its operations and seeking additional private
investments. In addition, the Company is seeking to establish its revenue base.
Failure to secure such financing or to raise additional equity capital and to
establish its revenue base may result in the Company depleting its available
funds and not being able pay its obligations.
 
 The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
  F-10
 
 Note
3.  Acquisition of Belarus Capital Corp.
 
 Pursuant
to the terms of a Share Purchase Agreement dated August 16, 2007, the Company
purchased 5,000,000 shares of common stock of Belarus directly from its sole
stockholder in a private purchase transaction in exchange for $125,000 in cash
and 1.0 million shares of the Company’s common stock. At the time of the closing
of this transaction, the 5,000,000 shares of Belarus represented 100% of the
issued and outstanding shares of common stock of Belarus.
 
 Belarus
was incorporated under the laws of the State of Colorado on December 29,
2005.  Belarus is considered to be a shell company, as defined by Rule
12b-2 of the Securities Exchange Act of 1934 (the “Exchange
Act”).  The common stock of Belarus is registered under Section 12(g)
of the Exchange Act and accordingly, Belarus is required to make periodic
reports pursuant to the Exchange Act.  The common stock of Belarus
does not trade on an established exchange or on any the over-the-counter
market.
 
 The
Company used the purchase method of accounting to record the acquisition. As of
the date of its acquisition by the Company, Belarus had not commenced operations
and had no assets. The financial statements of Belarus are included in the
consolidated financial statements of the Company effective on the acquisition
date.
 
 The
Company recorded the acquisition of Belarus as follows:
  Cash
                
                $
                125,000Value
      of common stock issued
                
                
                500,000Total
                
                $
                625,000
 The value
ascribed to the 1,000,000 shares of common stock issued by the Company in
connection with this transaction was $0.50 per share, and was based on the price
at which the Company had sold shares pursuant to a private placement. See Note
4.
 
 The
Company recorded the entire $625,000 as purchased research and development and
accordingly, the Company recorded a charge of $625,000 which reduced the
carrying value of its investment in Belarus to $0.
 
 Note
4. Stockholders’ (Deficit)
 
 During
the period covered by these financial statements the Company issued shares of
common stock without registration under the Securities Act of 1933. Although the
Company believes that the sales did not involve a public offering of its
securities and that the Company did comply with the “safe harbor” exemptions
from registration, if such exemptions were found not to apply, this could have a
material impact on the Company’s financial position and results of
operations.
  F-11
 
 On May
24, 2007, the Company issued an aggregate of 36,473,800 shares of common stock
to its three founders for services rendered.  The shares were valued
at the par value of the common stock of $0.0001.  Accordingly, the
Company recorded stock based compensation of $3,648 in connection with this
issuance.
 
 During
the period ended December 31, 2007, the Company issued 184,000 shares of common
stock pursuant to a private placement at a price of $0.50 per shares and
received cash proceeds of $92,000.
 
 During
the period ended December 31, 2007, the Company issued an aggregate of 600,000
shares of common stock for services rendered and recorded stock based
compensation of $300,000. The value ascribed to these shares of $0.50 per share
was based on the price at which the Company had sold shares pursuant to a
private placement.
 
 On August
10, 2007, the Company issued 1,000,000 shares of common stock in connection with
its acquisition of 100% of the issued and outstanding common stock of Belarus
(See Note 3). The value ascribed to these shares of $0.50 per share was based on
the price at which the Company had sold shares pursuant to a private
placement.
 
 During
the year ended December 31, 2008 the Company issued 580,000 shares of common
stock pursuant to a private placement at a price of $0.50 per shares and
received cash proceeds of $290,000.
 
 During
the year ended December 31, 2008, the Company issued an aggregate of 106,000
shares of common stock for services rendered and recorded stock based
compensation of $53,000. The value ascribed to these shares of $0.50 per share
was based on the price at which the Company had sold shares pursuant to a
private placement.
 
 The 2008
Incentive Stock Option Plan (the "2008 Incentive Plan") was adopted by the Board
of Directors on May 22, 2008. The Board of Directors has initially reserved
10,000,000 shares of Common Stock for issuance under the 2008 Incentive Plan and
shall administer the Plan. Under the Plan, options may be granted which are
intended to qualify as Incentive Stock Options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986 (the "Code") or which are not ("Non-ISOs")
intended to qualify as Incentive Stock Options thereunder.
 
 The
purchase price of the Common Shares subject to each ISO shall not be less than
the fair market value (as set forth in the 2008 Incentive Plan), or in the case
of the grant of an ISO to a Principal Stockholder, not less that 110% of fair
market value of such Common Shares at the time such Option is granted. The
purchase price of the Common Shares subject to each Non-ISO shall be determined
at the time such Option is granted, but in no case less than 85% of the fair
market value of such Common Shares at the time such Option is
granted.
 
 As of
December 31, 2007 and 2008, the Company had not issued any stock options or
common stock warrants.
  F-12
 
 Note
5. Stockholder Loans
 
 During
2007, the Company borrowed an aggregate of $115,394 from three of its founding
stockholders. These loans were utilized for general working capital purposes and
to fund in part, the cash portion of the purchase of Belarus. During 2008 an
aggregate of $7,401 was repaid leaving a balance of $107,993 at December 31,
2008. A loan for $80,000 bears interest at 4% per annum commencing January 1,
2009, and is due on December 31, 2009, and the balance is non interest bearing
and is due on demand.  The non-accrual of interest on these loans
during the periods covered by these financial statements does not have a
material effect on the financial statements.
 
 Note
6. Commitments
 
 The
Company leases its facilities pursuant to an operating lease which expires on
March 31, 2010 at a monthly rental of $3,500. Minimum future payments for the
years ended December 31, are as follows:
 
 2009:
$42,000 2010: $10,500
 
 Note
7. Subsequent Events (Unaudited)
 
 Subsequent
to December 31, 2008, the Company issued 1,169,000 shares of common stock
pursuant to a private placement at a price of $0.50 per share and received cash
proceeds of $584,500.
 
 Subsequent
to December 31, 2008, the Company issued an aggregate of 30,425 shares of common
stock for services rendered and recorded stock based compensation of $15,213.
The value ascribed to these shares of $0.50 per share was based on the price at
which the Company had sold shares pursuant to a private placement.
 
 On
January 28, 2010, the Company entered into and consummated the transaction
contemplated under a Subscription Agreement with one investor. Under the terms
of the Agreement, the Company agreed to issue 2,500,000 shares of its common
stock at $0.40 per share and warrants to purchase an additional 7,500,000 shares
in three tranches, as follows: a three year warrant to purchase 2,500,000 shares
of common stock at $0.40 per share; a four year warrant to purchase 2,500,000
shares at $0.65 per share; and a five year warrant to purchase 2,500,000 shares
of common stock at $0.75 per share.
 
 One half
of the securities were issued on January 28, 2010 for a purchase price of
$500,000. The remainder will be issued at a second closing scheduled to occur on
March 1, 2010, and if it does occur, the balance of the purchase price will be
transferred to the Company.