HYBRID FUELS INC.
                         (Formerly Polo Equities, Inc.)
                          (A Development Stage Company)





                              FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                          June 30. 2000, 1999 AND 1998






                           WILLIAM J BUTCHER, CPA P.S.
                ----------Certified Public accountant-----------


                                 1620 3rd Street
                              Marysville, WA 98205
                              Phone (360) 658-8347
                              FAX - (360) 658-1165


<PAGE>
                                TABLE OF CONTENTS



Accountant's Report                                    1

Financial Statements

     Balance Sheet                                     2

     Statement's of Loss and Accumulated Deficit       3

     Statements of Cash Flows                          4

     Statements of Changes in Stockholders' Equity     5


Notes to Financial Statements                        6-8


<PAGE>
<TABLE>
<CAPTION>
                                           Hybrid Fuels, Inc.
                                     (Formerly Polo Equities, Inc.)
                                     (A Development Stage Company)
                                    Statement of Financial Position
                            for the years ended June 30, 2000, 1999 and 1998


                                              ASSETS
                                              ------

CURRENT ASSETS                                         June 30, 2000    June 30, 1999    June 30, 1998
--------------                                        ---------------  ---------------  ---------------
<S>                                                   <C>              <C>              <C>

     Cash                                             $          485   $            0   $       56,976
                                                      ---------------  ---------------  ---------------
          Total Current Assets                                   485                0           56,976

OTHER ASSETS
------------
     Deposit on Plant (Note 5)                               170,561                0                0
     Stockholder Note Receivable (Note 6)                    150,000                0                0
                                                      ---------------  ---------------  ---------------
          Total Other Assets                                 320,561                0                0

TOTAL ASSETS                                                 321,046                0           56,976
                                                      ==============  ===============  ================

                            LIABILITIES AND STOCKHOLDERS EQUITY
                            -----------------------------------

CURRENT LIABILITIES
-------------------
     Accounts Payable                                             39                0                0
     Stockholder Payable (Note 7)                            266,144          293,183          150,580
                                                      ---------------  ---------------  ---------------
          Total Current Liabilities                          266,144          293,183          150,580

STOCKHOLDERS' EQUITY
--------------------
     Common Stock 001 par value
          50,000,000 shares authorized; is, 103,420
          shares issued and outstanding at June 30,
          2000,16,923,600 shares issued and
          outstanding at June 30, 1999, 15,000,000
          shares issued and outstanding at June 30,
          1998. (Note 8)                                      18,103           16,924           15,000

     Additional Paid in Capital                              362,074           15,074            3,398
     Deficit accumulated.                                   (325,275)        (325,181)        (112,002)
                                                      ---------------  ---------------  ---------------
          Total Stockholders' Equity                          54,902         (293,183)         (93,604)


TOTAL LIABILITIES AND STOCKHOLDERS EQUITY             $      321,046   $            0   $       56,976
                                                      ==============  ===============  ================
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       -2-
<PAGE>
<TABLE>
<CAPTION>
                                              Hybrid Fuels, Inc
                                       (Formerly Polo Equities, Inc.)
                                        (A Development Stage Company)
                                 Statement of Losses and Accumulated Deficit
               for the years ended June 30, 2000, 1999 and 1998 and Inception to June 30, 2000

                                                                                                 Inception
                                                                                             February 26, 1960
                                                                                                through
                                           June 30, 2000    June 30, 1999    June 30, 1999    June 30, 2000
                                          ---------------  ---------------  ---------------  -----------------
<S>                                       <C>              <C>              <C>              <C>
REVENUE                                   $                $                $                $
     Sales                                             0                0                0                  0

     Cost of Sales                                     0                0                0                  0
                                          ---------------  ---------------  ---------------  -----------------
     Gross Profit                                      0                0                0                  0
EXPENSES
     Accounting Fees                                   0           13,650                0             13,650
     Advertising                                       0              147                0                147
     Automobile                                        0                0              545                545
     Banking                                          55              119              261                435
     Commissions                                       0            3,307                0              3,307
     Contract Labor                                    0            1,961                0              1,961
     Executive Compensation                            0           62,818           55,757            118,575
     Filing & Registration fees                        0                0            5.000              5,000
     General & Administration                          0                0                0             18,398
     Insurance                                         0              450            2,635              3,085
     Legal Fees                                        0            8,500                0              8,500
     License & Permits                                 0              125                0                125
     Marketing                                         0            2,664            2,923              5,587
     Miscellaneous                                     0              749              400              1,149
     Office Expense                                   39            3.114              468              3,621
     Postage & Delivery                                0            6,241              431              6,671
     Printing & Reproduction                           0           11,004            6,566             17,570
     Professional Fees                                 0           70,755           12,459             83,214
     Rent                                              0           13,457            1,793             15,249
     Security                                          0            1,142              106              1,248
     Telephone                                         0           11,694            1,746             13,440
     Travel & Entertainment                            0            1,284            2,515              3,799
                                          ---------------  ---------------  ---------------  -----------------
     Total operating Expenses                         94          213,180           93,604            325,275
                                          ---------------  ---------------  ---------------  -----------------
Net (Loss)                                           (94)        (213,180)         (93,604)  $       (325,275)
                                                                                             =================
Accumulated Deficit beginning of period         (325,181)        (112,002)         (18,398)

Accumulated Deficit end of period         $     (325,275)  $      325,181   $     (112,002)
                                          ===============  ===============  ===============
</TABLE>


   The accompanying Dotes arc an integral part of these financial statements.


                                       -3-
<PAGE>
<TABLE>
<CAPTION>
                                                        Hybrid Fuels, Inc.
                                                  (Formerly Polo Equities. Inc.)
                                                   (A Development Stage Company)
                                                  Statement of Cash Flows for the
                             years ended June 30, 2000, 1999, arid 1998 and Inception to June 30, 2000


                                                                                                                     Inception
                                                                                                                 February 26, 1960
                                                                                                                      through
                                                               June 30, 2000      June 30, 1999    June 30, 1998    June 30, 2000
                                                            ------------------  ----------------  ---------------  ---------------
<S>                                                         <C>                  <C>              <C>              <C>
CASH FLOWS PROM OPERATING ACTIVITIES                                       (94)  $     (213,180)  $      (93,604)  $     (325,275)
     Net Loss
     Adjustments to reconcile net loss to cash
          used in operating activities
          Changes in assets and liabilities

               Accounts Payable                                             39                0                0               39

                    Net cash used in operating activities                  (55)        (213,180)         (93.604)        (325,236)

CASH FLOWS FROM IN VESTING ACTIVITIES

     Loan to Blue Mountain                                                  61                0                0         (170,56l)

          Net cash provided (used) by investing activities            (170,561)               0                0         (170,561)
                                                            ------------------  ----------------  ---------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Shareholder Note Receivable                                      (150,000)               0                0         (150,000)

     Shareholder Loans Payable                                         (27,078)         142,603          150,580          277,602

     Sale of common stock                                              348,179           13.600                0          368,680
                                                            ------------------  ----------------  ---------------  ---------------
          Net cash provided (used) by financing activities             171,101          156,203          150,580          496,282

NET INCREASE (DECREASE) IN CASH                                            485          (56,976)          56,976              485

CASH AT BEGINNING OF PERIOD                                                  0           56,976                0                0
                                                            ------------------  ----------------  ---------------  ---------------
CASH AT END OF PERIOD                                       $              485                0           56,976   $          485
                                                            ==================  ================  ===============  ===============
</TABLE>


      The accompanying notes are an integral part of these financial statements.


                                       -4-
<PAGE>
<TABLE>
<CAPTION>
                                                Hybrid Fuels, Inc.
                                          (Formerly Polo Equities, mc,)
                                          (A Development Stage Company)
                                  Statement of Changes in Stockholders' Equity
                               for the years ended June 30, 2000, 1999 and 1998



                                                        Common Stock                         Deficit
                                                   ---------------------------              Accumulated
                                                                                 Additional  during the
                                                                   Par Value      Paid-in   development
                                                      Shares        Amount       Capital        stage     Total
                                                   -------------  -----------  ------------  ---------  ---------
<S>                                                <C>            <C>          <C>           <C>        <C>
Balance at June 30,1997                            $ 15,000,000       15,000         3,398    (18,398)         0
                                                   ============  ===========  ============  =========  ==========
Net loss June 30. 1997                                                                        (93,604)   (93,604)
                                                                                             ---------  ---------

Balance at June 30, 1998                             15,000.000       15,000         3,398   (112,002)   (93,604)
                                                   ============  ===========  ============  =========  ==========
Issuance of 1,000,000 shares common stock on
Aug 4,1998, (Note 8)                                  1,000,000        1,000        (1,000)         0          0

Issuance of 2,400 shares common stock on Sept.
19, 1998 for cash.                                        2,400            3         3,597          0       3600

Issuance of 21,200 shares common stock on Nov
24, 1998 for cash                                        21,200           21         9,979          0     10,000

Issuance of 900,000 shares common stock on
March 23, 1999, (Note 8)                                900,000          900          (900)         0          0

Net loss June 30. 1999                                                                  0    (213,180)  (213,180)
                                                   -------------  -----------  ------------  ---------  ---------

Balance at June 30, 1999                             16,923,600       16,924        15,074   (325,181)  (293,183)
                                                   ============  ===========  ============  =========  ==========

Issuance of 5,000 shares common stock on Sept 1,
1999 for cash                                             5,000            5         2,495          0      2,500

Issuance of 15,000 shares common stock on Oct 8,
1999 for cash                                            15,000           15         7,485          0      7,500

Cancellation of August 4, 1998 1,000,000 share
issuance and March 23, 1999 900,000 share
issuance (Note 8)                                    (1,900,000)      (1,900)        1,900          0          0

Issuance of 29,050 shares common stock on Jan 6,
2000 for cash                                            29,050           29        16,971          0      1,700

Issuance of 17.730 shares common stock on Feb 7,
2000 for cash                                            17,730           18        12,662          0     12,680

Issuance of 13.040 shams common stock on March
17, 2000 for cash                                        13,040           13         8,487          0      8,500

Issuance of 1,500,000 shares common stock on
February 17. 2000 pursuant to subscription
agreement                                             1,500,000        1,500       148,500          0    150,000

Issuance of 1,500,000 shares common stock on
February 17, 2000 pursuant to subscription
agreement                                             1,500,000        1,500       148,500          0    150,000

Net loss June 30, 2000                                        -            -             0        (94)       (94)
                                                   -------------  -----------  ------------  ---------  ---------

Balance at June 30,2000                              18,103,420       18,103       362,074    325,275     54,902
                                                   ============  ===========  ============  =========  ==========
</TABLE>


      The accompanying notes are an integral part of these financial statements.


                                       -5-
<PAGE>
                               HYBRID FUELS, INC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE  1.  THE  COMPANY
----------------------

The  Company was originally incorporated in the state of Florida on February 16,
1960  as  Fiberglass  industries Corporation of America. On August 29, 1966, the
Company  changed  its  name  to Rocket-Atlas Corp. and again changed its name on
November  21,  1966  to Rocket Industries, Corporation. On January 27, 1984, the
Company  changed  it's name to Polo Investment Corp. of Missouri, Inc. On August
2,  1985  the  name was changed to Medical Advanced Systems, Inc. and on June 3,
1993  the  Company  changed  its  name  to  Polo  Equities,  Inc

In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo  Equities,  Inc., (a Nevada corporation), (Polo) with authorized capital of
50,000,000  shares of $.001 par value common stock. The Company then merged with
Polo  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 29, 1998 the Company changed its name to Hybrid Fuels, Inc., the current
name.

In  May  of  1998,  in  a  stock for stock exchange, the Company acquired Hybrid
Fuels,  USA,  Inc.  and 330420 B.C. Ltd., which changed its name to Hybrid Fuels
(Canada)  Inc.,  As part of the acquisition, the Company acquired the technology
necessary for the Company's current operations. The Company operates through its
wholly  owned subsidiaries, Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc.

Prior to the acquisition of Hybrid Fuels, U.S.A., Inc, and Hybrid Fuels (Canada)
Inc.  the  Company  had  no  significant  operations  and was seeking a business
opportunity.

NOTE  2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
--------------------------------------------------------

This  summary  of  significant  accounting  policies  of Hybrid Fuels, Inc. (the
Company)  is  presented  to  assist  in  understanding  the  Company's financial
statements.  The  financial  statements  and  notes  are  representations of the
Company's  management  who  is  responsible for their integrity and objectivity.
These  accounting  policies  conform to generally accepted accounting principles
and  have  been  consistently  applied  in  the  preparation  of  the  financial
statements.


NATURE  OF  OPERATIONS
----------------------

See  The  Company  above


CASH  AND  CASH  EQUIVALENTS
----------------------------

For  purposes  of  the  statement  of  cash  flows,  the  Company  considers all
short-term  debt securities purchased with a maturity of three months or less to
be  cash  equivalents.


PROPERTY  AND  EQUIPMENT
------------------------

Property  and  equipment  are  stated at the lower of cost or fair market value.
Depreciation is computed for financial statement purposes as well as for federal
income  tax purposes using the MACRS (Modified Accelerated Cost Recovery System)
method  of  depreciation.  Equipment is depreciated over five years. Software is
amortized  over  five  years.


INCOME  TAXES
-------------

The Company has not filed any tax returns. It is anticipated that if tax returns
were  filed, the company would have net operating losses. The current deficit of
$325,275 at June 30, 2000 would potentially create a similar net operating loss,
which  could  begin  expiring  for  tax  purposes  in  2004.


                                       -6-
<PAGE>
                               HYBRID FUELS, INC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

USE  OF  ESTIMATES
------------------

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

FOREIGN  EXCHANGE
-----------------

Some financial activity was based on Canadian dollars and translated on June 30.
2000  using  the  rate  of  (C$/US$)  1.468  or  a  multiplier  of  .6812.


NOTE  3.  GOING  CONCERN
------------------------

Because  of  a  deficiency  in working capital and significant operating losses,
there  is doubt about the ability of the Company to continue in existence unless
additional working capital is obtained. The Company currently has plans to raise
sufficient  working capital through equity financing and through the acquisition
of  companies having sufficient assets and cash flow to enable the Company to be
self-sufficient and profitable. The Company has acquired an option to purchase a
Beef  Packing  Plant  which  it  anticipates  will  begin  operations  about the
beginning  of  November,  2000.  See  NOTE  5


NOTE  4.  COMPANY  FACILITIES
-----------------------------

The  Company  currently  uses office space at #214-2791 Hwy 97 N, Kelowna, B.C.,
VIX4J8,  which  is  provided  by  a  shareholder  at no cost to the Company. The
President  also  maintains  an  office  in  his  home at no cost to the Company.


NOTE  5.  DEPOSIT
-----------------


The  Company  deposited  $250,000  Canadian  Dollars  ($170,561  USD),  to  Mega
Holdings,  Ltd.,  pursuant  to  an agreement to purchase a beef processing plant
owned  by  Mega  Holdings,  Ltd.  The  Company  has  agreed to purchase the beef
processing plant facility including land, buildings and equipment for $3,000,000
Canadian  Dollars.  The property, buildings and related equipment were appraised
in  1996 at a replacement value of $4,990,000 Canadian Dollars, during a time in
which  the  plant  was  dormant  and  in need of repair.  The purchase agreement
requires  an  additional  payment of $150,000 Canadian Dollars within 45 days of
acceptance,  which  made  it  due  on  June 24, 2000, the parties have agreed to
extend  the deadline for the payment.  Upon completion of the purchase this beef
processing  plant  will be operated by Blue Mountain Packers, Ltd.,  The Company
intends  to  acquire the issued and outstanding shares of stock of Blue Mountain
Packers,  Ltd.  and operate this corporation as a wholly owned subsidiary.  Blue
Mountain  Packers,  Ltd.  recently  received  certification by the Canadian Food
Inspection Agency of the Government of Canada, Department of Agriculture for the
processing  of  Canadian  beef.


NOTE  6.  STOCKHOLDERS  LOAN  RECEIVABLE
----------------------------------------

On  February  17,  2000  the  Company executed a subscription agreement and note
whereby  the  Company  would receive $150,000 for 1,500,000 shares common stock.
The  note  was  interest  free  and is to be received within one (1) week of the
Company  being  re-listed  on  the  OTC:BB  or  other  suitable  exchange.


NOTE  7.  NOTE  RECEIVABLE  BLUE  MOUNTAIN
------------------------------------------

On  September  15,  2000, the Company issued a note to Douglas Dickie dba Deelay
Holdings  for  $33,638  USD due and payable on or before September 15, 2001 plus
interest  in  the  amount  of  $2,691  USD  and passed this loan through to Blue
Mountain  Pakers  Ltd.,  which  executed  a  note  at  the  same  terms.


                                      - 7 -
<PAGE>
                               HYBRID FUELS, INC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE  8.  STOCKHOLDERS  LOAN  PAYABLE
-------------------------------------

Advanced  by the controlling shareholder of the Company;  The money was advanced
to  the  Company  with  no  specific  term  of  repayment.


NOTE  9.  DIRECTOR  PAYABLE
---------------------------

The President and Director Clay Larson, has paid office and related expenses for
the  Company,  from his personal funds in the amount of $2,187 USD.  The Company
has  agreed  to  reimburse  him  for  these  expenses.


NOTE  10.  STOCKHOLDERS  EQUITY
-------------------------------

The  issuer was originally incorporated in Florida as Fiberglass Industries Corp
of  America  in  February, 1960 with authorized capital of 500,000 shares with a
par  value  of  $.10  per  share.

In October, 1964, the Company changed its authorized capital to 1,500,000 shares
of  common  stock  with  a  par  value  of  $.10  per  share

On  November  21,  1966,  the  Company  changed  its  name to Rocket Industries,
Corporation.  and  at  that  time  authorized capital was increased to 3,000,000
shares  and  par  value  was  changed  to  $.05  per  share.

On  January  27,  1984,  the Company changed its name to Polo Investment Corp of
Missouri  Inc.  and  increased  its  authorized  capital  to  30,000,000 shares.

On  June  3,  1993,  the  Company  changed  its  name to Polo Equities, Inc. and
increased  its  authorized  capital to 50,000,000 shares common stock with a par
value  of  $.001  per  share.

In May 1998, the Company caused a Nevada corporation to be formed under the name
Polo  Equities,  Inc.,  (  a  Nevada  corporation),  with  authorized capital of
50,000,000 shares of $.001 par value common stock.  The Company then merged with
Polo  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 29, 1998, the Company changed its name to Hybrid Fuels, Inc., the current
name.

In  accordance  with  the  terms  of an acquisition agreement, 12,000,000 of the
15,000,000 shares outstanding at the time, were canceled and 12,000,000 treasury
shares  were issued in a share for share exchange by which the issuer became the
owner  of all of the issued and outstanding shares of Hybrid Fuels, USA Inc. and
330420  B.C.  LTD.  That Company changed it's name to Hybrid Fuels (Canada) Inc.
By  acquiring  control  of  that  company,  this  Company  gained control of the
intellectual  property.

On  August 4, 1998, the Company 's Board of Directors authorized the issuance of
1,000,000  shares  common  stock to individuals without consideration.  On March
23,  1999, the Company's Board of Directors issued an  additional 900,000 shares
common  stock,  also  without  consideration.  On  August 21, 1999, the Board of
Directors resolved that share certificates numbered 10166 through 10174 totaling
1,000,000  shares  common  stock  and  certificates numbered 10212 through 10220
totaling  900,00  shares common stock were issued without adequate consideration
being  paid to the Company and were therefore not fully paid and non-assessable.
The Company cancelled the share certificates and indemnified the transfer agent,
Standard  Registrar and Transfer Company Inc., 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  canceled certificates, totaling 550,000
shares,  have  been  endorsed  and  returned  to  the  Company for cancellation.


                                      - 8 -
<PAGE>
                               HYBRID FUELS, INC.
                         (Formerly Polo Equities, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE  11. U.S.A. SECURITIES  AND  EXCHANGE  COMMISSION
------------------------------------------------------

On November 7, 2000, the Company filled a Form SB-2 Registration Statement under
The  Securities  Act  of  1933  with  the  Securities  and  Exchange Commission.
Registration  File  Number  333-49424.  The  Company  has  been  advised  by the
Securities  and Exchange Commission that the June 30, 2000, Financial Statements
needed  to  be  updated  and  resubmitted  as  an  amended  submission.



                                       -9-
<PAGE>