__________________________________________


     UNITED STATES  SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.  20549
                                  ________________

                                    FORM 10-QSB

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

                 For the Quarterly Period Ended September 30, 2002

        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934

                 For the Transition Period From _______ to _______

                                ___________________

                           Commission File Number 0-29351

     HYBRID FUELS, INC. (Exact name of registrant as specified in its charter)

                 NEVADA                                    88 0384399
(State or other jurisdiction of incorporation         (I.R.S. Employer
 or organization)                                     Identification No.)

     PO Box 41118 RPOS Winfield, B.C.,                V1V 1Z7
  (Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code: 250-868-0600

Indicate by check mark whether registrant (1)  has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or shorter period that registrant was required to file
such reports), and (2) has been subject to filing requirements for the past 90
days.
        Yes [X]               No [ ]

The number of shares outstanding of the registrant's common stock as of November
5, 2002 was 21,345,600.

The number of shares issued of the registrant's common stock as of November 5,
2002 was 21,583,353.

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


















================================================================================


                                 HYBRID FUELS, INC.

                                    FORM 10-QSB

                      For the quarter ended September 30, 2002

INDEX


Part I - Financial Information

      Item 1.  Financial Statements                                    Page

Balance sheet as of September 30, 2002.................................F-3

Statements of operations for the quarters ended
September 30, 2002 and 2001............................................F-4

Statements of cash flows for the three months
ended September 30, 2002 and 2001......................................F-5

Notes to Financial Statements..........................................F-6

      Item 2.   Management's Discussion and Analysis
      or Plan of Operation.............................................10

Part II - Other Information............................................18

Signature..............................................................18
Certification..........................................................19

































================================================================================
                                        F-3
Hybrid Fuels, Inc. (A Development Stage Company) Consolidated Balance Sheets

-------------------------------------------------------------------------------
                                                            Sept 30,    June 30,
                                                            2002        2002
                                                            (Unaudited)(Audited)
                                                            $          $
-------------------------------------------------------------------------------
ASSETS

Current Assets
Cash                                                          2,019       1,796
-------------------------------------------------------------------------------
Total Assets                                                  2,019       1,796
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities Accounts payable                         23,219      20,458
Accrued liabilities                                           1,000       3,907
Note payable (Note 4)                                        33,638      33,638
Shareholder loan payable (Note 6(a))                        199,005     199,635
Amounts owing to a  Director (Note 6(b))                    236,718     218,699
-------------------------------------------------------------------------------
                                                            493,580     476,337
-------------------------------------------------------------------------------
Temporary Equity (Note 7(d))                                223,000     223,000
-------------------------------------------------------------------------------
Stockholders' Deficit

Common Stock (Note 7): $0.001 par value;50,000,000 shares
authorized 21,340,600 and 21,300,600 shares are issued
and outstanding respectively                                 21,340      21,300

Additional Paid-in Capital                                  335,095     331,352
Donated Capital-Imputed Interest (Notes 5 and 6)          185,715     174,869
Deficit Accumulated During the Development Stage         (1,256,711) (1,225,062)
-------------------------------------------------------------------------------
Total Stockholders' Deficit                                (714,561)   (697,541)
-------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit                   2,019       1,796



Nature of Operations and Continuance of Business (Note 1) Other Contingencies
(Note 8)

(See Accompanying Notes to the Consolidated Financial Statements)

















================================================================================
                                        F-4
Hybrid Fuels, Inc.
(A Development Stage Company
Consolidated Statements of Operations
(unaudited)



                               Accumulated from     Three Months    Three Months
                               February 26, 1960      Ended            Ended
                              (Date of Inception)  September, 30    September,30
                              to September 30,2002      2002            2001
                                         $                $              $
--------------------------------------------------------------------------------
Revenue                                  -                -                -
--------------------------------------------------------------------------------
Expenses
Deposits & Advances written-off (Note 3)255,512           -                -
Consulting fees                           6,520                           5,473
Disputed compensation (Note 8(b)        243,463          -                 -
Executive compensation (Note 6(b))      234,000         18,000           18,000
Filing and regulatory fees               17,893            263            1,561
General and administration               59,716             41               33
Imputed interest (Notes 5 and 6)        185,715         10,846            7,312
Interest                                  5,621            770            2,044
Investor relations                       16,698           -                -
Professional fees                       166,855          1,597            5,802
Rent and telephone                       42,725            127              137
Research and development                  8,000           -                -
Travel and promotion                     13,993              5              217
--------------------------------------------------------------------------------
                                      1,256,711         31,649           40,579
--------------------------------------------------------------------------------
Net Loss                             (1,256,711)       (31,649)         (40,579)
--------------------------------------------------------------------------------
Net Loss Per Share                                        (.01)            (.01)
--------------------------------------------------------------------------------
Weighted Average Shares Outstanding                 21,320,600       20,657,000





(See Accompanying Notes to the Consolidated Financial Statements)





















================================================================================
                                        F-5
Hybrid Fuels, Inc.
(A Development Stage Company
Consolidated Statements of Cash Flows
(unaudited)


                                                 Three Months      Three Months
                                                        Ended             Ended
                                                September 30,      September 30,
                                                         2002               2001
                                                            $                  $
--------------------------------------------------------------------------------
Cash Flows To Operating Activities

Net loss                                              (31,649)          (40,579)

Non-cash item
Imputed interest                                       10,846             7,312

Adjustment to reconcile net loss to cash
Accounts payable and accrued liabilities                 (146)            9,485
--------------------------------------------------------------------------------
Net Cash Used In Operating Activities                 (20,949)          (23,782)
--------------------------------------------------------------------------------
Net Cash Used By Investing Activities                    -                 -
--------------------------------------------------------------------------------
Cash Flows From Financing Activities

Common stock subscribed for                             3,783             6,300
Proceeds from notes payable                              -                 -
Advances payable                                         -                 -
Amounts owing to a Director                            18,019            15,995
Shareholder loans payable                                (630)            1,490
--------------------------------------------------------------------------------
Net Cash Provided By Financing Activities              21,172            23,785
--------------------------------------------------------------------------------
Net Increase in Cash                                      223                 3
Cash - Beginning of Period                              1,796                 2
--------------------------------------------------------------------------------
Cash - End of Period                                    2,019                 5
--------------------------------------------------------------------------------
Non-Cash Financing Activities

Value of common shares issued for settlement of debt                     10,000
--------------------------------------------------------------------------------
Supplemental Disclosures

Interest paid in cash                                    -
Taxes paid in cash                                       -
--------------------------------------------------------------------------------


(See Accompanying Notes to the Consolidated Financial Statements)











================================================================================
                                        F-6
1.	Nature of Operations and Continuance of Business
The Company was originally incorporated in the State of Florida on February 16,
1960. After a number of name changes the Company changed its name to Polo
Equities, Inc. on June 3, 1993. Prior to May, 1998 the Company had no business
operations.

In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo Equities, Inc., (Polo) (a Nevada corporation), with authorized capital of
50,000,000 common shares of $.001 par value. The two companies then merged
pursuant to Articles of Merger adopted May 28, 1998 and filed with the State of
Nevada on June 10, 1998, which changed its domicile to Nevada.

On May 28, 1998, the Company acquired, by issuing 12,000,000 shares, Hybrid
Fuels, USA, Inc. and 330420 B.C. Ltd., which changed its name to Hybrid Fuels
(Canada) Inc. This acquisition was accounted for as a reverse merger whereby the
shareholder of Hybrid Fuels, USA, Inc. and Hybrid Fuels (Canada) Inc. gained
control of Polo Equities Inc. which changed its name to Hybrid Fuels, Inc. All
historical financial statements are those of Hybrid Fuels, USA, Inc. and Hybrid
Fuels (Canada) Inc. As part of the acquisition, three shareholders holding
12,000,000 previously issued shares returned their shares for cancellation. For
accounting purposes the acquisition was treated as a reverse merger business
purchase of Polo Equities Inc. by Hybrid Fuels, USA, Inc. and Hybrid Fuels
(Canada) Inc. No amount was allocated to the intellectual asset as it was
acquired from a related party and the transfer had no cost basis associated with
it. There was no public market for the shares of Polo Equities, Inc. at the time
of the reverse merger. The Company operates through these two wholly-owned
subsidiaries. On May 29, 1998 the Company changed its name to Hybrid Fuels,
Inc., herein "the Company". On June 10, 1998 the Company began trading on the
OTC Bulletin Board under the symbol "HRID" and in December, 1999 was moved to
the "Pink Sheets".

Pursuant to the above acquisition, the Company acquired a number of proprietary
technologies with the primary objective of the business being to build small
farm scale ethanol facilities which involves a number of proprietary
technologies exclusively owned by the Company. Other proprietary technology
involves the use of a bio-gas burner which burns manure and bedding straw. This
technology eliminates ground and ground-water contamination and produces most of
the energy required for the facility by supplying heat for fermentation and
vaporization and for the operation of a greenhouse, if desired. Another
exclusive proprietary technology is a vegetable based formula which allows
diesel and ethanol to emulsify. This hybrid fuel reduces particulate emissions
without reduction in power when used in an unaltered diesel engine.

The Company is in the early development stage. In a development stage company,
management devotes most of its activities in investigating business
opportunities and further advancing its technologies. Because of a serious
working capital deficiency and significant operating losses from inception,
there is substantial doubt about the ability of the Company to continue as a
going concern. The Company will need to rely on the forbearance of some
creditors and related parties have agreed to continue to fund working capital as
needed. The Company has entered into discussions with third parties to directly
finance a facility in which the Company will then commence with its business
plan.

2.	Summary of Significant Accounting Policies
(a)	Consolidated Financial Statements
These consolidated financial statements represent the consolidation of the
Company and its two subsidiaries Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels
(Canada) Inc.

(b)	Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.

===============================================================================
                                        F-7

2.	Summary of Significant Accounting Policies (continued)

       (c)	Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the periods. Actual results
could differ from those estimates.

       (d)	Accounting for Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation," requires that stock
awards granted be recognized as compensation expense based on fair values at the
date of grant. Alternatively, a company may account for stock awards granted
under Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock
Issued to Employees," and disclose pro forma income amounts which would have
resulted from recognizing such awards at their fair value. The Company has
elected to account for stock-based compensation for employees under APB No. 25
and make the required pro forma disclosures for compensation expense. Stock
based compensation for non-employees are accounted for using SFAS No. 123.

       (e) Basic and Diluted Net Income (Loss) per Share The Company computes
net income (loss) per share in accordance with SFAS No. 128, "Earnings per
Share" (SFAS 128). SFAS 128 requires presentation of both basic and diluted
earnings per shares (EPS) on the face of the income statement. Basic EPS is
computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of common shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period including stock options,
using the treasury stock method, and convertible preferred stock, using the
if-converted method. In computing Diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential common shares if their effect is antidilutive. Loss per share for June
and September 2002 do not include the effect of the potential conversions of
stock options, warrants or convertible debentures, as their effect would be
anti-dilutive.

        (f)	Foreign Currency Transactions/Balances
Transactions in currencies other than the U.S. dollar are translated at the rate
in effect on the transaction date. Any balance sheet items denominated in
foreign currencies are translated into U.S. dollars using the rate in effect on
the balance sheet date.

3.	Deposit on Plant
The Company deposited Cnd$250,000 ($170,561), with Mega Holdings, Inc., pursuant
to an option agreement to purchase a beef processing plant owned by Mega
Holdings, Ltd. The Company agreed to purchase the beef processing plant facility
including land, buildings and equipment for Cnd$3,000,000 which was below
appraised value. The purchase agreement required an additional payment of
Cnd$150,000 on June 24, 2000, the parties agreed to extend the deadline for the
payment until March 15, 2001. This payment was not made and the deposit was
forfeited and the option agreement terminated. Upon anticipated completion of
the purchase, this beef processing plant was to be operated by Blue Mountain
Packers, Ltd. (a related company). The Company intended to acquire the issued
and outstanding common shares of Blue Mountain Packers, Ltd. for a nominal
amount and operate it as a wholly-owned subsidiary. Blue Mountain Packers, Ltd.,
received certification by the Canadian Food Inspection Agency of the Government
of Canada, Department of Agriculture for the processing of Canadian beef. Blue
Mountain Packers is a related party due to having one common director. The
Company advanced $84,951 to Blue Mountain Packers for plant refurbishing.
Interest on these advances was to be paid at 8%. Due to the termination of the
option agreement these advances were considered uncollectible and were charged
to operations during fiscal 2001.
================================================================================
                                        F-8
4.	Note Payable
On September 15, 2000, the Company issued a note for Cnd$50,000 ($33,638) due
and payable on or before September 15, 2001 plus 8% interest. Repayment of the
note has been extended until completion of a financing. Interest of $5,590 has
been accrued for the 24 months ended September 30, 2002 and is included in
accounts payable.

5.	Advances Payable
Prior to the year ended June 30, 2001, a non-related company coordinated
investor relations services for the Company, paid expenses of $69,248 on behalf
of the Company and loaned the Company Cnd$78,000 ($50,220) for a total amount
owing of $119,468. This debt was settled in June 2001 by the issuance of
1,000,000 restricted common shares of the Company. These advances were
non-interest bearing and unsecured until the settlement date. Imputed interest
of $16,291, calculated at a rate of 15% per annum, was charged to operations and
treated as donated capital during fiscal 2001 and 2000.

6.	Related Party Transactions/Balances
        (a) Cash loans of $499,059 were advanced to the Company by the major
        shareholder. A total of $365,590 was repaid with cash. The controlling
        shareholder also paid office, rent and professional fees totalling
        $62,786 on behalf of the Company. During the fiscal year ended June 30,
        2002, $1890 was advanced by another shareholder. The balance of $199,005
        is currently owing without interest or specific repayment terms. Imputed
        interest of $4,928 (2001 - $3,950), calculated at a rate of 10% per
        annum, was charged to operations and treated as donated capital.

        (b) The President who is also a Director of the Company, has paid
        office and related expenses from personal funds in the amount of $16,505
        of which $13,788 has been reimbursed with cash.  Effective July 1, 1999
        the President is entitled to a deferred salary of US$6,000 per month and
        was owed a total of $234,000 at September 30, 2002. These amounts are
        unsecured, non-interest bearing and due on demand. Imputed interest of
        $5,918 (2001 - $3,362), calculated at a rate of 10% per annum, was
        charged to operations and treated as donated capital.

        (c) See Note 3 for advances to Blue Mountain Packers Ltd.

        (d) On September 19, 2001 pursuant to a directors' resolution, a
        total of 200,000 shares were issued to a director/officer of the Company
        to settle $10,000 owing as at June 30, 2001. On October 18, 2001, a
        further 100,000 shares were issued to an arms-length party for services
        rendered to the Company, valued at $5,000.

7.	Stockholders' Equity
        (a) On May 28, 1998, the Company acquired, by issuing 12,000,000
        shares, Hybrid Fuels, USA, Inc. and 330420 B.C. Ltd., which changed its
        name to Hybrid Fuels (Canada) Inc. This acquisition was accounted for as
        a reverse merger whereby the shareholder of Hybrid Fuels, USA, Inc.
        gained control of Polo Equities Inc. As part of the acquisition three
        shareholders representing 12,000,000 previously issued shares returned
        their shares for cancellation. For accounting purposes the acquisition
        was treated as a business purchase by Hybrid Fuels USA Inc. of Polo
        Equities, Inc. No amount was allocated to the intellectual asset as it
        was acquired from a related party and the transfer had no cost basis
        associated with it. There was no public market for the shares of Polo
        Equities, Inc. at the time of the reverse merger.

        (b) On August 4, 1998 and March 23, 1999, the Company's former Board of
        Directors authorized the issuance of 1,000,000 and 900,000 shares
        respectively to individuals without consideration. On August 21, 1999,
        the current Board of Directors resolved that share certificates
        representing ownership of these 1,900,000 shares were issued without
        adequate consideration being paid to the Company and were therefore not
================================================================================
                                        F-9
7.	Stockholders' Equity (continued)
        fully paid and non-assessable. The Company cancelled the share
        certificates and indemnified the transfer agent, for any costs or
        liability it may incur in any way arising out of the cancellation of
        such shares and the transfer agent removed the 1,900,000 shares from the
        stockholder list effectively reversing the issuance. Six of the
        cancelled certificates, totalling 550,000 shares, have been endorsed and
        returned to the Company for cancellation. The contingencies regarding
        the cancelled shares relate to anyone who may have subsequent holder
        rights, and possibly the individuals who were issued those shares who
        may claim that they were issued for due consideration. The Company has
        determined that there is no amount to be accrued for future liabilities
        associated with claims by subsequent shareholders. To date when these
        shares are delivered to a broker for possible resale the broker phones
        the Company or the transfer agent and the shares are kept and cancelled.
        The Company will continue to monitor this issue. No other contingent
        liabilities have been included as some of the previous directors have
        been informed verbally of the cancellation. No formal legal demand has
        been made as the former administration has failed to provide addresses
        despite a number of requests.

        (c) On May 17, 2000 the Company issued 1,500,000 shares for $150,000
         cash pursuant to a subscription agreement dated February 17, 2000.

        On February 17 and 18, 2000, the Company accepted subscription
        agreements and notes whereby the Company would receive $300,000 for
        3,000,000 shares. The 3,000,000 shares were issued and were then held in
        escrow. These shares were subsequently released from escrow to the
        investors to facilitate financing. The notes were to bear interest at 8%
        and were to be paid within 60 days or at the discretion of the
        President. In June 2000 the President extended the time for repayment to
        one week of the Company being re-listed on the Over-The-Counter Bulletin
        Board or other suitable exchange. When it became apparent there were
        going to be long delays the notes were demanded to be repaid by February
        21, 2001.

        The notes were not paid as demanded, and the 3,000,000 shares have since
        been sold by the investors to innocent third parties. The investors did
        not and have not paid the Company for these shares, despite demands.
        Since these shares have been resold to innocent third parties they must
        be considered outstanding. The Company intends to sue the investors for
        the balance due on the notes, however the Company believes the balance
        is uncollectible.


        (d) Between October 1998 and June 1999, the previous administration sold
        a total of 361,120 common shares of the Company to 34 subscribers on the
        basis of an Offering Memorandum that contained a significant number of
        inaccuracies. A total of $223,000 was raised pursuant to this Offering.
        The current administration has concerns regarding possible
        misstatements, omissions and misleading statements. On the advice of
        legal counsel, the Company offered these 34 subscribers the option of
        receiving restricted stock as the Company did not and does not have the
        funds to repay these subscribers. Those who opted to receive restricted
        stock were also given an undertaking that they would receive a
        rescission offer when the Company was in a position to repay their money
        plus appropriate interest, in return for a return of the restricted
        stock, or they could elect to retain the stock. To date, 23 subscribers,
        have, pursuant to this offer received 237,753 shares, representing
        $158,000. These shares are issued but not considered outstanding. The
        remaining 11 subscribers, who paid $65,000 for 123,367 shares, have not
        responded to the offer. These subscriptions are recorded as temporary
        equity until rescission rights have been revoked.


===============================================================================
Page-10-

7.	Stockholders' Equity (continued)
        (e) See Note 5 for 1,000,000 restricted common shares issued to a
        non-related company to settle debt of $119,468 during fiscal 2001.

        (f) A total of 100,000 restricted common shares, valued at $5,000, were
        issued to the plant manager of Blue Mountain Packers Ltd. for plant
        refurbishing work to March 15, 2001.

        (g) On September 19, 2001, 200,000 shares were issued to settle debt
        referred to in Note 6(d).

        (h) On October 18, 2001, 100,000 shares where issued for services
        referred to in Note 6(e).

        (i) During fiscal 2002 a total of 377,000 shares were issued for cash of
        $31,185 at an average price of $0.08 per share.

        (j) During the three months ended September 30, 2002 a total of 40,000
        shares were issued for cash of $3,783 at an average price of $0.095 per
        share.

8.	Legal Issues
Although the Company is not involved in any legal proceedings, several issues
may eventually lead to the Company instituting legal action as follows:

        (a) See Note 7(b) for contingencies relating to improperly issued shares
        that were later cancelled.

        (b) Unauthorized and/or unsupported payments in the amount of $243,463
        were made from Company funds by past officers of the Company during the
        period May, 1998 to June, 1999. The Company has requested a full
        accounting from the past president. All amounts that were unauthorized
        by the board of directors or amounts that are not properly documented
        with invoices and receipts have been accounted for as disputed executive
        compensation. At such time as Company resources permit, the Company will
        seek legal advice to determine whether or not it is possible to recover
        all such disputed and unauthorized amounts from the previous
        administration.

        (c) See Note 7(d) for temporary equity and related rescission rights for
        subscribers of 361,120 shares of the Company.


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

PLAN OF OPERATION
This Form 10-QSB contains forward-looking statements. The words "anticipate",
"believe", "expect", "plan", "intend", "estimate", "project", "could", "may",
"foresee", and similar expressions identify forward-looking statements that
involve risks and uncertainties. You should not place undue reliance on forward-
looking statements in this Form 10-QSB because of their inherent uncertainty.
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto and other financial information included
in this Form 10-QSB and our Form 10-KSB for the year ended June 30, 2002. Actual
results could differ materially from the results discussed in the
forward-looking statements.

The Company is a developmental stage company and has had no income since the
acquisition of the hybrid fuels technology in June 1998, nor is it likely to
have any significant cash flow until after the end of its current fiscal period
ending June 30, 2003. If the Company is unable to obtain funds from external
sources, it is probable that it will be unable to continue to operate in the
long term.
===============================================================================
Page-11-

Item 2.  Management's Discussion and Analysis or Plan of Operation (con't)

Although the Company is in the developmental stages, the process behind Hybrid's
intended business has been researched and developed over more than a decade.  A
plant that integrated the process described below was constructed and operated
near Dalum, Alberta from 1994 to 1996. That facility was designed to prove the
concepts and included all of the ethanol-making and cattle-feeding features of a
full-scale commercial operation. That operation is the source of the actual
operating results that are referred to later in this report.

After that plant was closed in 1996, further research, development and
construction enabled us modify construction materials and layout to improve the
buildings and equipment and refine the process, which is now ready for market.

The Company's intended business is to sell and build farm scale plants that
produce ethanol integrated with a cattle finishing operation. Grain, corn or
other feedstock is fermented and then distilled to make the ethanol. Left over
from the ethanol production process are a high protein mash, called "distillers
grain" and water, called "stillage water". These contain nutrients and are
therefore used as feed and water for livestock. By using the distillers grain
and stillage water on site the animals get the benefit of the nutrients in these
byproducts. In addition, the plants do not incur the costs of drying the
distillers grain and transporting it as would be necessary if it was to be used
at another site. A further benefit is that no costs are incurred to dispose of
the stillage water. Rather than it being something that is costly to be disposed
of, it becomes a valuable feed product.

The manure and used bedding straw are cleaned up frequently, thus removing the
media in which disease would otherwise grow. They are burned in a gasifier and
the heat produced is used in the fermentation and distillation processes. From
discussions with the gasifier manufacturer, management believes that there will
be sufficient heat leftover to operate a greenhouse, if the operator so desires.

The ethanol is mixed with a proprietary emulsifier and diesel. When this
emulsion was tested at The British Columbia Institute of Technology in June,
1996, in an unaltered diesel engine, it reduced the particulate (black smoke)
emissions by over 62% and the NOx emissions by over 22%, without any loss of
power.

For a more detailed description of the entire process, plus sources of
information and references, the reader is referred to the Company's Form 10-KSB
for the year ended June 30, 2001, as amended and filed with the SEC.

Although there are no operating plants at the moment, the Company is expecting
to have the first one operating in the spring of 2003, as described below.

The Company intends to sell these facilities (except the column and spinner) to
farm operators, preferably those who grow or have access to sufficient grain to
supply the plant. Management believes this would be about 40,000 bushels of
barley or other suitable grain for a plant which would feed 200 head of cattle
on a continually rotating basis.

RESULTS OF OPERATIONS

The loss for the present quarter is $31,649 compared to $40,579 for the
comparable quarter last year. The loss for the same quarter last year was higher
largely due to higher professional and consulting fees. We anticipate higher
professional and consulting fees in the upcoming year. The higher imputed
interest this quarter of $10,846 compared to $7,312 for the same period last
year results from increased amounts owing to the President as a result of the
increase in deferred salary over the same quarter last year. The loss for this
quarter includes amounts of $18,000, which is deferred salary for the President,
and $10,846 imputed interest, which do not represent a cash outlay. These
================================================================================
Page-12-

RESULTS OF OPERATIONS (con't)

non-cash items total $28,846. Working capital was obtained from cash received
from the sale of shares.

At the end of the quarter, the Company had cash reserves of $2019, which was the
balance of cash received from the sale of 40,000 shares for $4,000. The shares
were sold when the shares were trading around 9 to 10 cents. This cash should be
sufficient to pay all operating costs for the next three to six months. In the
absence of operating activities, the Company's general and administrative
expenses for the next 12 months that require a cash outlay are expected to be
less than $1500 per month, exclusive of executive compensation, which is
deferred.

PLAN OF OPERATION

Background

We are a development stage company that has not yet proved the feasibility of
its planned principal operations.  In their opinion on our June 30, 2002
financial statements, our independent auditors raised a substantial doubt about
our ability to continue as a going concern because we have not generated any
revenues and have conducted operations at a loss since inception.  To date we do
not have any operations that generate revenue and have been unable to raise
money to begin operations. Until such time as we prove the feasibility of our
planned principal operations, we are likely to continue to experience a cash
shortage. Because we are a developmental stage company, we are unlikely to be
able to borrow money from banks and other traditional financial institutions.
We do not anticipate making any commitments to borrow money within the next 12
months, unless we can secure construction loans to build our first plant.  The
lack of long term, adequate financing continues to be of great concern to
management.

We will require additional capital soon in order to continue as a going concern
in the long term.  Until we have arranged financing, no operating activities are
planned. In the absence of operating activities, our general and administrative
expenses for the next 12 months are expected to be less than $500 per month,
exclusive of executive compensation, which is deferred, and professional fees
for legal and accounting services. Legal and accounting costs are likely to
increase significantly this fiscal year as we apply for listing on the OTC
Bulletin Board.

Our ability to continue to operate in the future depends on us being able to
raise money to build our first plant. We have identified a contractor, Team
Steel Building Systems, of Edmonton, Alberta, that is working towards making
arrangements to build the first plant, and we are therefore concentrating our
efforts on raising money to build the first plant and commence operations. We
estimate we need to raise approximately $1 million to cover payables, build the
first plant, begin the development of operating activities and deal with
potential claimants. This estimate includes $350,000 for plant construction,
$110,000 for cattle, $30,000 for payables (excluding shareholder loans and
accrued executive salaries), $70,000 for salaries, consumables and other
operating expenses until the plant begins to generate cash flow, and $250,000
for contingencies and to start developing operating activities. The remaining
$190,000 constitutes a reserve for any shortfalls in our estimation process or
any unforeseen contingencies.  Although we are negotiating with potential
investors to fund the construction of the first plant, we do not have any
commitments at this time.

Management recognizes that to generate long-term cash flow, we need to develop
operating activities. We need to build and begin operating the first bio-fuel
and beef facility to create cash flow and to demonstrate to potential operators,
lenders and investors that the technology works as described. Prospective
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Page-13-

PLAN OF OPERATION(con't)

operators and those who will approve the financing for the construction of
subsequent plants want to see a profitable facility in operation before they
commit themselves.

Although we do not have significant cash reserves, related parties have
indicated a willingness for the time being to continue to pay operating expenses
and advance funds to pay legal and accounting fees. The Company therefore
believes that it can continue as a going concern in the near term. These related
parties are not obligated to pay Company operating costs, and therefore, no
assurances can be given that they will continue to do so. If these related
parties cease to advance money to pay these operating costs, the Company may
have to cease operations and liquidate.

Strategy to Raise Capital

So far, all potential investors we have contacted have been reluctant to invest
funds as long as we are on the "pink sheets." On September 27th 2002, the SEC
told us verbally that they had no further comment on our SEC filings. Our plan
now is to comply with all applicable SEC reporting requirements so that we can
have a market maker apply to the NASD to have our common stock authorized for
inclusion on the OTC Bulletin Board.  We are aware of a class of investors who
will invest money in companies whose stocks are traded on the OTC Bulletin
Board, although we do not have any specific investors identified at this time
who have committed to invest funds in the Company.  We hope to have met these
requirements and to have our stock quoted on the OTC Bulletin Board within two
months.  Although our plan is to have our stock traded on the OTC Bulletin
Board, there can be no assurance concerning the time frame when that may occur,
if at all.

Because of our low stock price, and the fact that we are on the "pink sheets",
we do not intend to sell additional shares of our common stock in the immediate
future unless we have no other source of money to pay expenses.  Once our stock
is trading on the OTC Bulletin Board, we plan to contact prospective investors
to raise the approximately $1 million in capital discussed above.  This planned
offering and sale of our common stock will not be registered under the
Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirement.  This disclosure is not an offer of securities or a solicitation of
an offer to buy securities.  Placements will be made only to investors with
preexisting contacts with Hybrid Fuels and its authorized representatives.  If
we encounter unforeseen delays or difficulties in getting our stock to trade on
the OTC Bulletin Board and we must continue to trade on the pink sheets, we may
reevaluate the price at which we will sell our equity securities to raise
capital.

Our plan to have our stock traded on the OTC Bulletin Board could also be
frustrated by the introduction of the BBX Exchange, a proposed automated
electronic exchange that would replace the negotiated order system of the OTC
Bulletin Board.  In the near term, the NASD may slow its processing of new
applications to the OTC Bulletin Board, because the OTC Bulletin Board will
terminate soon and BBX applications may be filed now.  The BBX Exchange is
slated to go "live" in the second quarter of 2003.  The most recent NASD
proposal to the SEC regarding the BBX Exchange does not contain a definite date
when the OTC Bulletin Board will terminate, but the stated objective of the
introduction of the BBX Exchange is to remove any market for stocks between the
pink sheets and the BBX Exchange.  If the uncertainty created by the BBX
Exchange prevents us from having our stock traded on the OTC Bulletin Board, we
would have to reevaluate our capital raising strategy.  We would have to assess
whether we would remain a pink sheets company and sell our equity securities at
the lower prices that a pink sheets listing entails or whether we could achieve
the more rigorous listing standards of the BBX Exchange and apply to have our
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Page-14-

PLAN OF OPERATION(con't)

common stock traded there.  If we were to attempt the BBX Exchange alternative,
we would either have to raise some capital at the pink sheets level to fund the
application process or have to convince related parties to advance these funds.

Plan of Operation Assuming Adequate Capital Raised

The discussion in this section assumes that we will succeed in raising the
approximately $1 million that will be used to place our first plant in service.
The major goal of placing the first plant in service is to demonstrate the
economic feasibility of the system. Once this first plant is operating, we
expect to use it as a demonstration and training facility and to earn revenue
from its operation. Assuming that it will be necessary to pay market price for
grain, bedding and other supplies and that we will receive no more than market
price for the finished animals, our projections indicate that the plant should
generate sufficient revenue to pay all of our operating costs, plus a small
surplus which may be used toward development of operating activities. The
financial institutions that have expressed interest in financing subsequent
plants want to see this first plant generate sufficient cash flow to pay all
operating costs and debt service. We anticipate that the plant will show
sufficient cash flow to make it possible for us to get approval for financing
subsequent plants.

Management has planned to build the first plant at Oyama, on approximately six
acres of farmland just north of Kelowna, British Columbia. We will need to
finalize a lease to enable us to build on this site.  This location provides the
company supervisory ability and site control. Once we have financing available
to construct the plant, we believe we can quickly finalize the lease for the
site.

An operating facility includes the barn, the ethanol making equipment, the
bio-furnace or gasifier, "Greener Pastures" grass growing system, and the right
to use the proprietary information and technology, as more fully described under
"Proposed Facilities" on page 6 above. The cost of building this plant is
anticipated to be approximately $350,000. Approximately $220,000 of this cost is
for foundations and flooring, buildings, the gasifier, the ethanol making
equipment, tanks and machinery. Soft costs, for such items as permits,
engineering and other professional fees, survey and layout, site preparation,
delivery of buildings and materials, rentals, small tools and miscellaneous, are
estimated at $60,000. We estimate we will spend approximately $70,000 for
construction labor and supervision.

Once financing iected take another two weeks. Once the buildings are finished,
the installation of the gasifier, pens, feed bunks and ethanol making equipment
are expected to take another month. Our plan then provides up to another two
months for any delays, initial start-up and testing, for a total of up to four
months from beginning construction until the plant is fully operational. At one
point we had attempted to have a contractor construct the plant, which we would
then lease from the contractor.  That proposed arrangement is no longer
available to us; we must finance the plant construction ourselves.

We have designed the plant to accommodate 200 head of cattle.  As we near the
end of testing the plant, we plan to begin the finishing operation for the
cattle, with an initial group of 20 to 25 cattle.  The finishing operation is
designed to function on a staggered basis, so that every two weeks (initially)
we will bring in an additional 20 to 25 cattle.  We will sell the cattle on the
same staggered basis as they complete the finishing process.  As we gain
experience with the plant, we intend to bring cattle in 40 to 50 at a time on

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Page-15-

PLAN OF OPERATION(con't)

three to five week intervals to take maximum advantage of the size of the trucks
used to transport the cattle.

The cattle will begin the finishing operation in quieting pens where they spend
approximately two weeks being transitioned from their prior diet to the wet
distillers grains diet.  After completing the diet transition, the cattle are
moved into the barn, where, on average, they will spend approximately 100 days
being fed the finishing diet.  At the end of the finishing operation, our plans
for this demonstration plant call for the cattle to be sold at auction.  As one
group of cattle is sold, another takes its place, as both the finishing
operation and our staggered acquisition scheme are scheduled to take
approximately three to four months, depending on how long the finishing takes.
As a result of using this staggered acquisition scheme, we will not run the
plant at full capacity until approximately four months have passed from the
plant becoming operational.  As a result the cattle we begin selling during the
fourth month, which will generate our initial revenues, will bear a
disproportionate amount of fixed costs compared to cattle sold beginning in the
eighth month.  We believe, however, that at the end of the fourth month, when we
sell the first group of finished cattle, we will be able to prepare pro forma
information that will demonstrate the financial fundamentals of the plant for
purposes of demonstrating cash flows to prospective financiers of future plants.

We plan to add, on average, between 400 and 500 pounds per head during the
finishing operation.  The weight per head when we acquire the cattle will vary,
principally due to the time of year when the cattle are acquired (most calves
are born in the spring and are ready to begin being sold as feeder cattle seven
months to a year later). Generally speaking, the older they are, the more they
weigh. One of our fundamental assumptions is that the plant will have the
potential to break even if we can sell finished cattle at prices per pound that
are less than the prices per pound at which we purchase them.  Generally in the
cattle industry feeder cattle sell at a higher price per pound than finished
cattle.  The increase in weight during the finishing operation provides the
potential for generating a profit or at least breaking even when selling
finished cattle at a lower price per pound.  For example, assume we purchase a
600 pound animal for $0.90 per pound, or $540, that we finish to 1000 pounds and
sell at $0.85 per pound, or $850.  The $310 difference between our purchase
price and the sale price would have to cover the consumables purchased to
prepare wet distillers grains for the animal and a pro rata share of the plant's
operating costs, including debt service.  At this time we do not have financial
data to support the breakeven pricing spread for the plant.  Developing this
relationship between the plant's cost structure and tolerable price
differentials will provide critical information for prospective financiers of
future plants.

We expect that as sale prices move close to or exceed purchase prices, the
plant's cattle finishing operation will make a profit.  Cattle prices are
volatile, however, so there is a distinct risk that sale prices for finished
cattle could be below the pricing threshold, resulting in a loss on cattle
finishing.  The greater the price spread, the more important ethanol sales
become to the overall profitability of the plant.  Farmers with integrated
operations who grow their own consumables could have greater price flexibility
on the cattle finishing operation if their cost of producing the consumables is
less than the market price for consumables.  We do not plan to have an
integrated operation at the first plant, so we will have to pay market prices
for our consumables.

We do not plan to sell the ethanol produced by the first plant during at least
the first two to three months of its operation.  We have discussed with a local
owner of a sawmill and trucking company giving him the ethanol for this two- to
three-month period, with a view toward charging him in the future once he has
determined that he can use the ethanol economically without harm to his
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Page-16-

PLAN OF OPERATION(con't)

equipment.  Once the plant is at full capacity, we project that the plant will
produce approximately 240 US gallons of ethanol per day, which could be sold at
market prices slightly below the price of the diesel fuel with which it will be
blended.  The price of ethanol will vary, usually in tandem with the price of
diesel.  Assuming a price of $0.70 per gallon for ethanol, monthly sales of
ethanol would be approximately $5,000.

Once we have operated the plant for four months, we believe that the actual
financial results for the finishing operation and ethanol sales will provide us
with a basis to prepare pro forma financial information projecting the economic
feasibility of the plant.  By establishing the economic feasibility of the
plant, we will then be able to implement our business plan, which is based on
identifying third parties who will work with us to construct and operate their
own plants.  If our assumptions prove wrong or we encounter unforeseen
obstacles, our ability to demonstrate the plant's economic feasibility may be
delayed, or, in the worst case, we may not be able to establish the economic
feasibility of the plant and may have to abandon the business and liquidate the
company.

Plan of Operation Assuming Establishment of Facility Feasibility

The discussion in this section assumes that we will succeed both in raising the
approximately $1 million that will be used to place our first plant in service
and in demonstrating the economic feasibility of the plant.  Once these
milestones are achieved, we intend to have others build, own and operate
additional plants, while we earn revenues from a variety of sources related to
the plants.  We plan to earn revenue from:

1. operating the demonstration facility we build and own;
2. profit on the sale of subsequent plants;
3.   the lease of the column and spinner to each operator;
4. the royalties and service fees that each operator will pay;
5. the purchase of the ethanol mixture from the operator at 80 % of wholesale
value and the sale to distributors or end-users;
6. an incentive from premiums from marketing the finished animals.

Once we have established the economic feasibility of our demonstration plant, we
intend to operate it and earn revenue from the sale of cattle and ethanol.

We intend to license our technology and provide our expertise to third parties
that want to construct plants.  We expect to earn a profit and recognize revenue
on the sale of each plant. We plan to charge fees in connection with the sale of
each plant, based on the value to the operator of having us organize and
supervise the construction of the plant and train the operator. We expect the
fees from the sale of the plants to be sufficient to cover all of the operating
costs we will incur in qualifying candidates, training operators, supervising
construction and start-up, etc., until royalties are received.

To date, we have received applications from more than 50 farmers who have
expressed interest in constructing a plant. We are currently developing a
screening process to select suitable candidates, and we expect to assist them in
obtaining financing for plant construction. Once we have demonstrated our
demonstration plant's economic feasibility for purposes of obtaining financing
of subsequent plants, we expect to have selected four operators.  After
operators have been selected and have qualified for financing, we plan to train
them and assist in constructing the facility. We anticipate that it will take
approximately six months from the time our plant demonstrates economic viability
to build the second plant and get it operating.

We intend to lease to the operators, on a permanent basis, the separation
column, which is used to distill the ethanol, and the spinner, which is used to
================================================================================
Page-17-

Plan of Operation (con't)

separate the mash from the water after the fermentation process. These two items
are integral parts of the plants, and leasing them is designed to protect the
secrecy of these most vital pieces of the technology. The lease payments will
generate revenue for us and will be payable monthly in amounts yet to be
finalized.

We plan to charge a royalty for the use of the trade secrets and proprietary
information. The royalty, which is expected to be $2500US per month, per plant,
based on the projected benefits of the use of trade secrets to the operator,
will begin when each plant begins operation. Incentives in the form of reduced
royalties may be offered to the first 10 to 20 operators who make early
commitments to purchase plants.

We also expect to charge each operator service fees to cover the cost of ongoing
training, service, technical support, and quality control. We expect these fees
to be in the $150 to $250 per month range.

We expect to enter into contracts with our operators to act as their marketing
arm for the beef and fuel. We expect this arrangement to generate revenue for us
and give us control over greater quantities of both products than any individual
operator would have. We believe this arrangement will provide us with the
ability to make better deals with, and provide more secure delivery to,
distributors and other purchasers. We believe that operators will appreciate
being relieved of these marketing responsibilities, particularly if beef sales
at premium prices generate greater revenue for them. We expect revenue for
Hybrid to come from the resale of the fuel and from a portion of any premium
that the Company can obtain from the sale of the beef.

Based on the results of the test trials at the Dalum plant, we believe we will
be able to generate premium prices for the beef because it is hormone free and
because of its high quality and taste. At the Dalum plant, the purchaser of the
123 heifers agreed to pick up subsequent lots at the plant and pay a premium of
$0.10 per pound for all of the beef that could be produced using our process. We
do not have commitments from any buyers to purchase the beef at premium prices
at this time.

We believe that ultimately the best way to obtain the best premium, is to
control the processing, marketing and distribution of the finished beef. To that
end we continue to search for money to purchase the packing plant known as Blue
Mountain Packers, near Salmon Arm, B.C. This purchase is not likely to happen
before our next fiscal year end, but it remains part of our long term plan. No
commitment will be made to purchase the packing plant until sufficient money is
committed to pay the purchase price and cover operating expenses until positive
cash flow is achieved.

Within 18 to 24 months of the first plant demonstrating viability, we expect
third parties to have 15 to 20 plants operating. We expect that many of these
operators will require assistance to obtain financing in order to construct a
plant. We have had preliminary discussions with CIBC, Scotiabank, Leaseline,
Dominion Leasing and a Swiss broker with connections to several European "ECO"
funds, all of whom have expressed interest in providing financing for plants. We
have been told that our project should qualify if we can demonstrate the
economic viability of the operation. Once the first plant is operating the plan
is for the Swiss broker to arrange to have the appropriate representatives of
these ECO funds inspect the plant and if it qualifies, to use them as a source
of financing for plant construction, thereby permitting us to expand our
operations.




================================================================================
Page-18-

PART II	Other Information

Item 2.   	RECENT SALES OF UNREGISTERED  SECURITIES.

     			Date, title and amount of securities sold

      	Date                         Title                 	     Amount
       	September 12, 2002      	Common Stock               40,000 shares

The 40,000 shares were issued for $4000 cash paid to the Company on September
12, 2002. The Company relied upon Section 4(2) of the Securities Act of 1933 to
effect the issuance of the shares. All shares were issued in a private
transaction at the unsolicited request of one existing shareholder of the
Company, who is a sophisticated investor. There was no public solicitation or
offering, no underwriters were involved, and the Company received the entire
proceeds.






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

Dated: November 12, 2002

HYBRID FUELS, INC.

By: /s/ Clay Larson	        By: /s/ John Morrison
Director, CEO & President	Director & CFO































================================================================================
Page-19-
                                   CERTIFICATIONS
Certification of Principal Executive Officer

I, Clay Larson, certify that:


1. I have reviewed this quarterly report on Form 10-QSB of Hybrid Fuels Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Ruels 13a-14 and 15d-14) for the registrant and we have:

        a)designed such disclosure controls and procedures to ensure that
        material information relating to the registrant, including its
        consolidated subsidiaries, is made known to us by others within those
        entities, particularly during the period in which this quarterly report
        is being prepared;

        b)evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
        this quarterly report (the "Evalutation Date"); and

        c)presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

        a) all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

        b)any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

November 12, 2002   /s/ Clay Larson

                   Clay Larson Chief Executive Officer and President
                   (Principal Executive Officer)





================================================================================
Page-20-                 CERTIFICATIONS (continued)

Certification of Principal Financial Officer

I, John Morrison, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Hybrid Fuels Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Ruels 13a-14 and 15d-14) for the registrant and we have:

        a)designed such disclosure controls and procedures to ensure that
        material information relating to the registrant, including its
        consolidated subsidiaries, is made known to us by others within those
        entities, particularly during the period in which this quarterly report
        is being prepared;

        b)evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
        this quarterly report (the "Evalutation Date"); and

        c)presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

        a) all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

        b)any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


November 12, 2002  /s/ John Morrison
                   John Morrison Chief Financial Officer
                   (Principal Financial Officer)




================================================================================