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 March 31, 2008

          [_]   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
         (State or other jurisdiction of incorporation or organization)

                                   88 0384399
                      (I.R.S. Employer Identification No.)


                 237 Main Street, Box 880, Niverville, Manitoba
                    (Address of principal executive offices)

                                     R0A1E0
                                  (Postal Code)

       Registrant's telephone number, including area code: (888) 550-2333


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 [_]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]

The number of issued and outstanding shares of the registrant's common stock as
of May 15, 2008 was 30,111,733.

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


<PAGE>

                                TABLE OF CONTENTS

PART-I    FINANCIAL INFORMATION                                             PAGE

Item 1    Financial Statements.............................................. F-1

Item 2    Plan of Operation..................................................  1

Item 3    Controls and Procedures............................................  6


PART-II   OTHER INFORMATION                                                 PAGE

Item 1    Legal Proceedings..................................................  6

Item 2    Unregistered Sales of Equity Securities and Use of Proceeds .......  6

Item 3    Defaults Upon Senior Securities....................................  6

Item 4    Submission of Matters to a Vote of Security Holders................  7

Item 5    Other Information..................................................  7

Item 6    Exhibits and Reports on Form 8-K...................................  7

          Signature..........................................................  7



<PAGE>


Hybrid Fuels, Inc.
(A Development Stage Company)

March 31, 2008

<TABLE>
<CAPTION>
                                                                                   Index

<S>                                                                                <C>
Consolidated Balance Sheets.........................................................F-1

Consolidated Statements of Operations...............................................F-2

Consolidated Statements of Cash Flows...............................................F-3

Notes to the Consolidated Financial Statements......................................F-4
</TABLE>




<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                                   March 31,          June 30,
                                                                                                     2008               2007
                                                                                                      $                  $
                                                                                                 (unaudited)

ASSETS
<S>                                                                                              <C>                 <C>
Current Assets

  Cash                                                                                                  347               3,965
--------------------------------------------------------------------------------------------------------------------------------
Total Current Assets                                                                                    347               3,965

Property and Equipment (Note 4)                                                                     747,972             820,602

Intangible Assets (Note 5)                                                                          421,487             505,784
--------------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                                      1,169,806           1,330,351
================================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

  Accounts payable                                                                                  217,155             137,229
  Accrued liabilities                                                                                34,355              30,316
  Note payable and other advances (Note 6)                                                           51,850              50,048
  Due to related parties (Note 7(a) and (c))                                                        261,607             229,704
  Due to a former director (Note 8)                                                                 326,701             326,701
  Current portion of capital lease obligation (Note 9)                                                7,898               7,349
--------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                                           899,566             781,347

Capital Lease Obligation (Note 9)                                                                     4,788              10,374

Redeemable and Restricted Common Shares (Note 11(a)(ii))                                            222,767             222,767
--------------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                                 1,127,121           1,014,488
--------------------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Notes 1 and 11)

Stockholders' Equity

Common Stock: $0.001 par value; 50,000,000 shares authorized;
30,111,733 shares issued and outstanding (June 30, 2007 - 30,052,933 shares)                         30,112              30,053

Additional Paid-in Capital                                                                        2,436,788           2,416,847

Common Stock Subscribed (Note 10)                                                                     1,946              20,000

Donated Capital                                                                                     737,970             656,286

Accumulated Other Comprehensive Loss                                                                   (732)               (582)

Deficit Accumulated During the Development Stage                                                 (3,163,399)         (2,806,741)
--------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                                           42,685             315,863
--------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity                                                        1,169,806           1,330,351
================================================================================================================================

                          (The accompanying notes are an integral part of these consolidated financial statements)
</TABLE>

                                      F-1
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)
(unaudited)

<TABLE>
<CAPTION>

                                                     Accumulated from
                                                     January 28, 1998                For the                       For the
                                                    (Date of Inception)       Three Months Ended              Nine Months Ended
                                                        to March 31,                March 31,                      March 31,
                                                            2008               2008           2007           2008            2007
                                                              $                  $              $              $               $
<S>                                                      <C>             <C>             <C>             <C>               <C>
Revenue                                                           -               -               -               -               -
------------------------------------------------------------------------------------------------------------------------------------

Expenses

  Deposits and advances written-off                         305,512               -               -               -               -
  Depreciation and amortization                             267,187          80,823          20,998         158,845          24,965
  Foreign exchange loss (gain)                               35,257          (9,691)           (570)          4,948          (3,867)
  General and administrative (Note 7(b))                  1,931,049          34,707          28,752         133,682         130,310
  Imputed interest (Notes 7(a) and 8)                       617,969          19,728          19,728          59,183          59,183
  Research and development                                   16,925               -               -               -               -
------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                  3,173,899         125,567          68,908         356,658         210,591
------------------------------------------------------------------------------------------------------------------------------------
Operating Loss                                           (3,173,899)       (125,567)        (68,908)       (356,658)       (210,591)

Other Income

  Gain on settlement of debt                                 10,500               -               -               -               -
------------------------------------------------------------------------------------------------------------------------------------
Net Loss                                                 (3,163,399)       (125,567)        (68,908)       (356,658)       (210,591)

Other Comprehensive Loss

  Foreign currency translation adjustment                      (732)            859               -            (150)              -
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Loss                                       (3,164,131)       (124,708)        (68,908)       (356,808)       (210,591)
====================================================================================================================================
Net Loss Per Share - Basic and Diluted                                            -               -           (0.01)          (0.01)
====================================================================================================================================
Weighted Average Shares Outstanding                                      30,112,000      30,053,000      30,098,000      27,731,000
====================================================================================================================================

                       (The accompanying notes are an integral part of these consolidated financial statements)
</TABLE>

                                      F-2
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)

<TABLE>
<CAPTION>
                                                                                                      For the Nine Months
                                                                                                             Ended
                                                                                                           March 31,
                                                                                                    2008               2007
                                                                                                      $                  $

  Operating Activities
<S>                                                                                               <C>                <C>
    Net loss                                                                                      (356,658)          (210,591)

    Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                                158,845             24,965
      Donated services                                                                              22,500             22,500
      Imputed interest                                                                              59,183             59,183
      Stock-based compensation                                                                           -             25,500

    Changes in operating assets and liabilities:
      Accounts payable and accrued liabilities                                                      83,965             61,492
      Due to related parties                                                                        30,189             13,584
------------------------------------------------------------------------------------------------------------------------------
  Net Cash Used In Operating Activities                                                             (1,976)            (3,367)
------------------------------------------------------------------------------------------------------------------------------
  Investing Activities

     Purchase of property and equipment                                                             (1,184)                 -
------------------------------------------------------------------------------------------------------------------------------
  Net Cash Used in Investing Activities                                                             (1,184)                 -
------------------------------------------------------------------------------------------------------------------------------
  Financing Activities

    Advances from related parties                                                                    1,713              3,366
    Repayment of capital lease obligation                                                           (5,037)                 -
    Common stock subscribed                                                                          1,946                  -
------------------------------------------------------------------------------------------------------------------------------
  Net Cash Provided By (Used In) Financing Activities                                               (1,378)             3,366
------------------------------------------------------------------------------------------------------------------------------
  Effect of Exchange Rate on Changes on Cash                                                           920             (1,462)
------------------------------------------------------------------------------------------------------------------------------
  Decrease in Cash                                                                                  (3,618)            (1,463)

  Cash - Beginning of Period                                                                         3,965              3,533
------------------------------------------------------------------------------------------------------------------------------
  Cash - End of Period                                                                                 347              2,070
==============================================================================================================================
  Non-cash Investing and Financing Activities

    Common shares issued to acquire property and equipment and
      intangible assets                                                                                  -          1,413,600
==============================================================================================================================
  Supplemental Disclosures

    Interest paid                                                                                      590                  -
    Income taxes paid                                                                                    -                  -
==============================================================================================================================

                              (The accompanying notes are an integral part of these consolidated financial statements)
</TABLE>

                                      F-3
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

1.   Nature of Operations and Continuance of Business

     In May 1998, the Company caused a Nevada corporation to be formed under the
     name Polo Equities, Inc. 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.

     On May 28, 1998, the Company acquired, by issuing 12,000,000 shares, Hybrid
     Fuels, USA, Inc., with an inception date of January 28, 1998, 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.

     On May 29, 1998 the Company changed its name to Hybrid Fuels, Inc., herein
     "the Company". The Company trades on the OTC Bulletin Board under the
     symbol HRID.

     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 that involve a number of
     proprietary technologies exclusively owned by the Company. Other
     proprietary technology involves the use of a bio-gas burner that 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 that allows diesel and ethanol to
     emulsify. This hybrid fuel reduces particulate emissions without reduction
     in power when used in an unaltered diesel engine.

     On December 14, 2006, the Company entered into an Asset Purchase Agreement
     ("Agreement") to acquire certain assets that includes a steel-construction
     cattle barn and ethanol plant, interior operating systems and equipment, a
     gasifier, facility designs and intellectual property at a total fair value
     of $1,413,600. Pursuant to the terms of the Agreement, the Company issued
     3,720,000 shares of common stock at a fair value of $0.38 per share.

     These consolidated financial statements have been prepared on a going
     concern basis, which implies the Company will continue to realize it assets
     and discharge its liabilities in the normal course of business. As at March
     31, 2008, the Company had a working capital deficit of $899,219 and has
     accumulated losses of $3,163,399 since inception. The continuation of the
     Company as a going concern is dependent upon the continued financial
     support from its shareholders, the ability of the Company to obtain
     necessary equity financing to continue operations, and the attainment of
     profitable operations. These factors raise substantial doubt regarding the
     Company's ability to continue as a going concern. These financial
     statements do not include any adjustments to the recoverability and
     classification of recorded asset amounts and classification of liabilities
     that might be necessary should the Company be unable to continue as a going
     concern.

     The Company expects that future capital requirements for developing and
     expanding technologies will be met through stock offerings by way of
     private placements.


2.   Summary of Significant Accounting Policies

     (a)  Basis of Presentation

          These consolidated financial statements represent the consolidation of
          the Company and its wholly-owned subsidiary, Hybrid Fuels (Canada)
          Inc. The Company's fiscal year end is June 30.

                                      F-4
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

2.   Summary of Significant Accounting Policies (continued)

     (b)  Interim Financial Statements

          The interim unaudited consolidated financial statements have been
          prepared in accordance with accounting principles generally accepted
          in the United States for interim financial information and with the
          instructions to Securities and Exchange Commission ("SEC") Form
          10-QSB. They do not include all of the information and footnotes
          required by generally accepted accounting principles for complete
          financial statements. Therefore, these financial statements should be
          read in conjunction with the Company's audited consolidated financial
          statements and notes thereto for the year ended June 30, 2007.

          The consolidated financial statements included herein are unaudited;
          however, they contain all normal recurring accruals and adjustments
          that, in the opinion of management, are necessary to present fairly
          the Company's consolidated financial position at March 31, 2008 and
          June 30, 2007, and the consolidated results of its operations and
          consolidated cash flows for the three and nine months ended March 31,
          2008 and 2007. The results of operations for the nine months ended
          March 31, 2008 are not necessarily indicative of the results to be
          expected for future quarters or the full year.

     (c)  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.

     (d)  Use of Estimates

          The preparation of financial statements in conformity with US
          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 reporting period. The Company
          regularly evaluates estimates and assumptions related to valuation of
          long-lived assets, stock-based compensation, donated expenses and
          deferred income tax asset valuation allowances. The Company bases its
          estimates and assumptions on current facts, historical experience and
          various other factors that it believes to be reasonable under the
          circumstances, the results of which form the basis for making
          judgments about the carrying values of assets and liabilities and the
          accrual of costs and expenses that are not readily apparent from other
          sources. The actual results experienced by the Company may differ
          materially and adversely from the Company's estimates. To the extent
          there are material differences between the estimates and the actual
          results, future results of operations will be affected.

     (e)  Earnings (Loss) per Share

          The Company computes earnings (loss) per share in accordance with SFAS
          No. 128, "Earnings per Share" which requires presentation of both
          basic and diluted earnings per shares ("EPS") on the face of the
          income statement. Basic EPS is computed by dividing earnings (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
          anti-dilutive.

     (f)  Foreign Currency Translation

          The functional currency of the wholly-owned subsidiary is the Canadian
          dollar. The financial statements of this subsidiary are translated to
          United States dollars under the current rate method in accordance with
          SFAS No. 52 "Foreign Currency Translation". Under the current rate
          method, all assets and liabilities are translated at the rates of
          exchange in effect at the balance sheet date and revenues and expenses
          are translated at the average rates of exchange during the year. The
          effect of this translation is recorded in a separate component of
          stockholders' equity. A cumulative translation adjustment of $1,591 as
          of December 31, 2007 has been included in accumulated other
          comprehensive loss in the accompanying consolidated balance sheet.
          Gains and losses arising on translation or settlement of foreign
          currency denominated transactions or balances are included in the
          determination of income.

          Transactions in foreign currencies are recorded at the approximate
          rate of exchange at the transaction date. Monetary assets and
          liabilities resulting from these transactions are translated at the
          rate of exchange in effect at the balance sheet date. All differences
          are recorded in the results of operations.

                                      F-5
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

2.   Summary of Significant Accounting Policies (continued)

     (g)  Comprehensive Loss

          SFAS No. 130, "Reporting Comprehensive Income," establishes standards
          for the reporting and display of comprehensive loss and its components
          in the financial statements. As at March 31, 2008 and 2007, the
          Company's only component of comprehensive loss was foreign currency
          translation adjustments.

     (h)  Financial Instruments

          The fair values of cash, accounts payable, accrued liabilities, notes
          and advances payable, due to related parties, and due to a former
          director approximate their carrying values due to the immediate or
          short-term maturity of these financial instruments. The fair value of
          the capital lease obligation is estimated to approximate its carrying
          value based on borrowing rates currently available to the Company for
          loans with similar terms. The Company's operations are in Canada which
          results in exposure to market risks from changes in foreign currency
          rates. The financial risk is the risk to the Company's operations that
          arise from fluctuations in foreign exchange rates and the degree of
          volatility of these rates. Currently, the Company does not use
          derivative instruments to hedge exposure to foreign currency risk.

     (i)  Income Taxes

          The Company accounts for income taxes using the asset and liability
          method in accordance with SFAS No. 109, "Accounting for Income Taxes".
          The asset and liability method provides that deferred tax assets and
          liabilities are recognized for the expected future tax consequences of
          temporary differences between the financial reporting and tax bases of
          assets and liabilities, and for operating loss and tax credit
          carryforwards. Deferred tax assets and liabilities are measured using
          the currently enacted tax rates and laws that will be in effect when
          the differences are expected to reverse. The Company records a
          valuation allowance to reduce deferred tax assets to the amount that
          is believed more likely than not to be realized.

     (j)  Stock-based Compensation

          Prior to January 1, 2006, the Company accounted for employee
          stock-based awards under the recognition and measurement provisions of
          Accounting Principles Board Opinion No. 25, "Accounting for Stock
          Issued to Employees" using the intrinsic value method of accounting.
          Effective January 1, 2006, the Company adopted the fair value
          recognition provisions of SFAS No. 123R "Share Based Payments", using
          the modified prospective transition method. The Company had not issued
          any stock options and had no unvested share based payments prior to
          January 1, 2006. Accordingly, there was no effect on the Company's
          reported loss from operations, cash flows or loss per share as a
          result of adopting SFAS No 123R.

          All transactions in which goods or services are the consideration
          received for the issuance of equity instruments are accounted for
          based on the fair value of the consideration received or the fair
          value of the equity instrument issued, whichever is more reliably
          measurable. (k) Property and Equipment

          Property and equipment are recorded at cost. Amortization has been
          provided using the following rates and methods:

          Building                                      10 years straight line
          Equipment                                     5 years straight line
          Computer Equipment                            3 years straight line
          Tractor                                       5 years straight line

     (l)  Intangible Assets

          Intangible assets consist of intellectual property, including
          engineering and proprietary design of a hydroponics green grass
          growing system and are recorded at cost. Amortization of these costs
          has been provided over their estimated useful life of 5 years using
          the straight line method.

                                      F-6
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

2.   Summary of Significant Accounting Policies (continued)

     (m)  Long-lived Assets

          In accordance with SFAS No. 144, "Accounting for the Impairment or
          Disposal of Long-Lived Assets", the Company tests long-lived assets or
          asset groups for recoverability when events or changes in
          circumstances indicate that their carrying amount may not be
          recoverable. Circumstances which could trigger a review include, but
          are not limited to: significant decreases in the market price of the
          asset; significant adverse changes in the business climate or legal
          factors; accumulation of costs significantly in excess of the amount
          originally expected for the acquisition or construction of the asset;
          current period cash flow or operating losses combined with a history
          of losses or a forecast of continuing losses associated with the use
          of the asset; and current expectation that the asset will more likely
          than not be sold or disposed significantly before the end of its
          estimated useful life. Recoverability is assessed based on the
          carrying amount of the asset and its fair value which is generally
          determined based on the sum of the undiscounted cash flows expected to
          result from the use and the eventual disposal of the asset, as well as
          specific appraisal in certain instances. An impairment loss is
          recognized when the carrying amount is not recoverable and exceeds
          fair value.

     (n)  Recent Accounting Pronouncements

          In March 2008, the Financial Accounting Standards Board ("FASB")
          issued SFAS No. 161, "Disclosures about Derivative Instruments and
          Hedging Activities - an amendment to FASB Statement No. 133". SFAS No.
          161 is intended to improve financial standards for derivative
          instruments and hedging activities by requiring enhanced disclosures
          to enable investors to better understand their effects on an entity's
          financial position, financial performance, and cash flows. Entities
          are required to provide enhanced disclosures about: (a) how and why an
          entity uses derivative instruments; (b) how derivative instruments and
          related hedged items are accounted for under Statement 133 and its
          related interpretations; and (c) how derivative instruments and
          related hedged items affect an entity's financial position, financial
          performance, and cash flows. It is effective for financial statements
          issued for fiscal years beginning after November 15, 2008, with early
          adoption encouraged. The Company is currently evaluating the impact of
          SFAS No. 161 on its financial statements, and the adoption of this
          statement is not expected to have a material effect on the Company's
          financial statements.

          In December 2007, the FASB issued SFAS No. 141 (revised 2007),
          "Business Combinations". This statement replaces SFAS No. 141 and
          defines the acquirer in a business combination as the entity that
          obtains control of one or more businesses in a business combination
          and establishes the acquisition date as the date that the acquirer
          achieves control. SFAS No. 141 (revised 2007) requires an acquirer to
          recognize the assets acquired, the liabilities assumed, and any
          noncontrolling interest in the acquiree at the acquisition date,
          measured at their fair values as of that date. SFAS 141 (revised 2007)
          also requires the acquirer to recognize contingent consideration at
          the acquisition date, measured at its fair value at that date. This
          statement is effective for fiscal years, and interim periods within
          those fiscal years, beginning on or after December 15, 2008. Earlier
          adoption is prohibited. The adoption of this statement is not expected
          to have a material effect on the Company's financial statements.

          In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
          Interests in Consolidated Financial Statements Liabilities -an
          Amendment of ARB No. 51". This statement amends ARB 51 to establish
          accounting and reporting standards for the non-controlling interest in
          a subsidiary and for the deconsolidation of a subsidiary. This
          statement is effective for fiscal years, and interim periods within
          those fiscal years, beginning on or after December 15, 2008. Earlier
          adoption is prohibited. The adoption of this statement is not expected
          to have a material effect on the Company's financial statements.

          In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
          for Financial Assets and Financial Liabilities - Including an
          Amendment of FASB Statement No. 115". This statement permits entities
          to choose to measure many financial instruments and certain other
          items at fair value. Most of the provisions of SFAS No. 159 apply only
          to entities that elect the fair value option. However, the amendment
          to SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
          Securities" applies to all entities with available-for-sale and
          trading securities. SFAS No. 159 is effective as of the beginning of
          an entity's first fiscal year that begins after November 15, 2007.
          Early adoption is permitted as of the beginning of a fiscal year that
          begins on or before November 15, 2007, provided the entity also elects
          to apply the provision of SFAS No. 157, "Fair Value Measurements". The
          adoption of this statement is not expected to have a material effect
          on the Company's financial statements.

                                      F-7
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

2.   Summary of Significant Accounting Policies (continued)

     (o)  Recent Accounting Pronouncements (continued)

          In September 2006, the FASB issued SFAS No. 157, "Fair Value
          Measurements". The objective of SFAS No. 157 is to increase
          consistency and comparability in fair value measurements and to expand
          disclosures about fair value measurements. SFAS No. 157 defines fair
          value, establishes a framework for measuring fair value in generally
          accepted accounting principles, and expands disclosures about fair
          value measurements. SFAS No. 157 applies under other accounting
          pronouncements that require or permit fair value measurements and does
          not require any new fair value measurements. The provisions of SFAS
          No. 157 are effective for fair value measurements made in fiscal years
          beginning after November 15, 2007. The adoption of this statement is
          not expected to have a material effect on the Company's financial
          statements.

          In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting
          for Uncertainty in Income Taxes, an interpretation of FASB Statements
          No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty
          in income taxes by prescribing a two-step method of first evaluating
          whether a tax position has met a more likely than not recognition
          threshold and second, measuring that tax position to determine the
          amount of benefit to be recognized in the financial statements. FIN 48
          provides guidance on the presentation of such positions within a
          classified statement of financial position as well as on
          derecognition, interest and penalties, accounting in interim periods,
          disclosure, and transition. FIN 48 is effective for fiscal years
          beginning after December 15, 2006. The adoption of this statement did
          not have a material effect on the Company's financial statements.


3.   Asset Purchase Agreement

     On December 14, 2006, the Company entered into an Asset Purchase Agreement
     ("Agreement") to acquire certain assets that include a steel-construction
     cattle barn and ethanol plant, interior operating systems, equipment, a
     gasifier and facility designs at fair value of $851,618, and intellectual
     property at fair value of $561,982, totaling $1,413,600. Pursuant to the
     terms of the Agreement, the Company issued 3,720,000 shares of common stock
     at a fair value of $0.38 per share. Of these issued shares a director of
     the Company and the President of the Company received a total of 1,860,000
     shares and a shareholder received 1,193,333 shares.


4.   Property and Equipment
<TABLE>
<CAPTION>
                                                                        March 31,          June 30,
                                                                          2008              2007
                                                      Accumulated     Net Carrying      Net Carrying
                                       Cost          Amortization         Value             Value
                                        $                  $                $                 $

     <S>                             <C>               <C>               <C>               <C>
     Buildings                       765,160            99,366           665,794           723,652
     Equipment                        86,459            21,721            64,738            77,812
     Computer equipment                1,184               266               918                 -
     Tractor                          22,030             5,508            16,522            19,138
     ---------------------------------------------------------------------------------------------
                                     874,833           126,861           747,972           820,602
     =============================================================================================
</TABLE>
     The tractor is under capital lease.

                                      F-8
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

5.   Intangible Assets

<TABLE>
<CAPTION>
                                                                         March 31,         June 30,
                                                                           2008              2007
                                                     Accumulated       Net Carrying      Net Carrying
                                       Cost         Amortization          Value             Value
                                        $                $                  $                 $
     <S>                             <C>               <C>               <C>               <C>
     Intellectual property rights    561,982           140,495           421,487           505,784
     =============================================================================================
</TABLE>

     The following is the estimated annual amortization expense for each of the
next five years:

                                                 $

                                   2008       28,103
                                   2009      112,400
                                   2010      112,400
                                   2011      112,400
                                   2012       56,184
                                             -------
                                             421,487
                                             =======


6.   Note Payable and Other Advances

     (a)  On September 15, 2000, the Company issued a note to a company
          controlled by the President of the Company for Cdn$50,000 payable on
          or before September 15, 2001 plus 8% interest. The Company extended
          repayment of the note until the completion of a financing arrangement.
          The note payable was $48,915 after translation into U.S. dollars as at
          March 31, 2008 (June 30, 2007 - $47,215).

     (b)  As at March 31, 2008, cash advances totalling $2,935 (Cdn$3,000) (June
          30, 2007 - $2,833 (Cdn$3,000)) from unrelated parties are non-interest
          bearing, unsecured and due on demand.


7.   Related Party Transactions

     (a)  A shareholder is owed $210,522 (June 30, 2007 - $200,677) for payment
          of rent, office expenses and professional fees on behalf of the
          Company. Imputed interest of $22,429 (2007 - $22,429), calculated at a
          rate of 15% per annum, was charged to operations and treated as
          donated capital. This amount owing is unsecured, non-interest bearing
          and due on demand.

     (b)  During the nine month period ended March 31, 2008, the Company
          recognized a total of $22,500 (2007 - $22,500) for donated services
          provided by the President of the Company.

     (c)  As at March 31, 2008, officers of the Company are owed $51,085 (June
          30, 2007 - $29,027) for advances and expenses paid on behalf of the
          Company. This amount is unsecured, non-interest bearing and due on
          demand.


8.   Amounts Owing to a Former Director

     The former President, who was also a director of the Company, is owed
     $326,701 as March 31, 2008 (June 30, 2007 - $326,701). This amount is
     unsecured, non-interest bearing and due on demand. During the nine month
     period ended March 31, 2008, imputed interest of $36,754 (2007 - $36,754),
     calculated at a rate of 15% per annum, was charged to operations and
     treated as donated capital.

                                      F-9
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

9.   Capital Lease Obligation

     During the year ended June 30, 2007, the Company assumed a leasing
     arrangement involving equipment. The lease is for a term expiring on
     October 31, 2009, and requires payments of $696 (Cdn$711) per month.

     The following represents future minimum lease payments under capital leases
     and the present value of the minimum lease payments as of March 31, 2008:

                                                                            $
       2008                                                               2,086
       2009                                                               8,343
       2010                                                               2,781
       ------------------------------------------------------------------------
       Total lease payments                                              13,210
       Less: Amounts representing interest at 4.9% per annum               (524)
       ------------------------------------------------------------------------
       Present value of minimum lease payments                           12,686
       Current portion of obligation under capital lease                 (7,898)
       ------------------------------------------------------------------------
       Long-term portion of obligation under capital lease                4,788
       ========================================================================


10.  Common Stock

     (a)  On September 18, 2007, the Company issued 58,800 shares of common
          stock at $0.34 per share for proceeds of $20,000. The proceeds were
          received in May 2007 and recorded as common stock subscribed as at
          June 30, 2007.

     (b)  On January 24, 2008, the Company accepted stock subscriptions for
          11,600 shares of common stock at $0.17 per share for proceeds of
          $1,946 (Cdn$2,000). As at March 31, 2008, the proceeds are recorded as
          common stock subscribed.


11.  Commitments and Contingencies

     (a)  Although the Company is not involved in any legal proceedings, several
          issues may eventually lead to the Company instituting legal action as
          follows:

     i)   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 fully paid and non-assessable. The Company cancelled the share
          certificates and indemnified the transfer agent, for any costs or
          liability that may incur arising out of the cancellation of such
          shares. The transfer agent removed the 1,900,000 shares from the
          stockholder list effectively reversing the issuance. Six of the
          cancelled certificates, totaling 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 have been delivered to a
          broker for possible resale, the broker has informed 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
          former management has failed to provide addresses despite a number of
          requests.

                                      F-10
<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(expressed in U.S. dollars)
(unaudited)

11.  Commitments and Contingencies

     ii)  Between October 1998 and June 1999, the management at that time sold a
          total of 361,120 common shares of the Company to 34 subscribers on the
          basis of an Offering Memorandum ("Offering") that contained a
          significant number of inaccuracies. A total of $223,000 was raised
          pursuant to this Offering. Management had 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 have the funds to
          repay these amounts to the 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 232,753 shares,
          representing $158,000. The remaining 11 subscribers, who paid $65,000
          for 128,367 shares, did not respond to the offer. These subscriptions
          were recorded as redeemable and restricted common shares until
          rescission rights have been revoked.

     (b)  On December 16, 2006, the Company entered into a Joint Venture
          Agreement with a third party to develop two facilities that will
          utilize the Company's proprietary technology. The Company is obligated
          to contribute its proprietary technology having an equivalent agreed
          upon value of Cdn$9,000,000.


     (c)  The Company is committed to a lease for the land where its building is
          located. The Company is required to pay a monthly rent of Cdn$1,000 up
          to December 31, 2008 when the lease expires.

                                      F-11

<PAGE>

ITEM 2.  Plan of Operation
--------------------------

This Form 10-QSB contains forward-looking statements. The words "anticipate",
"believe", "expect", "plan", "intend", "estimate", "project", "could", "may",
"foresee", and other similar expressions identify forward-looking statements
that involve risks and uncertainties. The reader 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 fiscal year ended June
30, 2007. Actual results could differ materially from the results discussed in
the forward-looking statements. Hybrid Fuels Inc. ("the Company") assumes no
responsibility to correct or update the forward-looking statements as
circumstances change and therefore, the forward-looking statements should be
assumed to speak only as at the date of the filing of this report.

Hybrid Fuels Inc. is a development-stage company and has had no income since the
inception date of June 10, 1998. The Company is unlikely to have any significant
cash flow until after the fiscal year ending June 30, 2008.

As at June 30, 2007, 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. As of March
31, 2008, the Company has a working capital deficit of $(899,219).

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

After the Dalum facility was closed in 1996, further research enabled us to
modify the facility's material requirements, improve the building designs,
select the latest equipment and refine the process.

At this time the Company's intended principal business is to integrate cattle
feeding and finishing with the production of electrical power.

On December 14, 2006 the Company acquired a commercial-ready facility situated
in Oyama, BC, Canada from a Hybrid Fuels Inc. shareholder consortium that
financed its construction. This facility includes all equipment and
infrastructure necessary to utilize the Company's proprietary technology
including a cattle barn, ethanol-producing plant, gasifier/burner (manure/straw
burning unit) and a hydroponics barley-grass growing system. The facility was
acquired for total consideration of 3.72 million restricted common shares of
Hybrid Fuels Inc. valued at $1,413,600.

The purpose of this facility is to demonstrate the economic feasibility of the
`Hybrid Fuels' system. Once this first facility is operating, the intention is
to use it for demonstration and training purposes and to earn revenue from its
operation. Our projections indicate that the facility will show sufficient
profitability to make it possible for us to get approval for financing
subsequent facilities.

                                       1
<PAGE>

The proposed facilities are planned to consist of a cattle barn, a hydroponics
barley-grass growing system, an ethanol-producing plant, a gasifier/burner
(manure/straw burning unit), a hot-air turbine and generator.

The cattle barn at the Oyama facility has been designed to accommodate 200 head
of cattle and the hydroponics barley-grass growing system. The barns have also
been designed to raise beef cattle under controlled atmospheric conditions. The
buildings are constructed from prefabricated metal, insulated sufficiently to
keep the cattle warm in cold weather and cool in warm weather. The barns include
air-to-air heat exchangers that in cold weather, exchange the warm, heavily
moisture-laden barn air with fresh air from outside, that is heated and dried as
it passes through a heat exchanger.

Once the facility is operational, it is expected that the cattle will be fed
starting with 50 head and adding another 50 approximately every four weeks until
the barn is at full capacity. As we gain experience with the facility, we intend
to operate the barn continuously at full capacity during the subsequent 100-day
feeding cycles. Until the Company is operating a beef processing facility it is
intended that the cattle will be sold to processors at a price reflective of its
high quality.

The cattle barn includes floor space for six individual pens - five occupied
pens and one pen remaining empty and free of manure and bedding waste. Cattle
are to be moved to a clean pen every five days on a rotational basis. The manure
and bedding straw is removed from the pens and destroyed in the gasifier/burner
that provides heat energy for the ethanol production and the hydroponics feed
system.

In the ethanol plant, grains are fermented and then distilled to produce the wet
ethanol. The heat is supplied from the burning of the used bedding straw and
manure in the gasifier/burner. The ethanol production process also generates a
high protein product, called "distillers mash" and a liquid byproduct called
"stillage water." The mash and liquid is supplemented by barley grass and
creates an excellent feed for the cattle. The expected weight gain is an average
of four pounds a day per head during the planned 100-120 day feeding cycle.

Once the facility is operating at full capacity, we project that the ethanol
production will be approximately 200 US gallons (800 litres) per day. The
ethanol is intended to be "de-natured" with approximately 2% diesel fuel so
there is no pure ethanol accessible in the plant. Ethanol produced by the first
facility is expected to be used in the gasification process. It is expected that
using ethanol in this process will result in a significant increase in heat
energy, ie. BTUs, for the purpose of electrical power generation.

The hydroponics barley-grass growing system is expected to produce a ration of
10-15 pounds per day of fresh grass per animal, year round, regardless of
climate. We believe the grass unit for the 200-head barn represents the
approximate equivalent of 400 acres of grass growing land.

The Company has no immediate sources of funding except through private sources.
Until one facility is fully operational and demonstrates cash flow Hybrid Fuels
Inc., and our wholly-owned subsidiary Hybrid Fuels (Canada), expects to have
limited access to banks, trust companies, and other traditional lending sources.

Estimated operating costs to June 30, 2008 total $400,000. This estimate
includes $125,000 for cattle and feed, $200,000 for payables (excluding related

                                       2
<PAGE>

party loans and accrued executive salaries), $50,000 for technical support and
labor and $25,000 for contingencies and other operating expenses. These
estimates are subject to change based on conditions outside of management's
control and actual experience with operating the first facility.

Operations are expected to commence once the initial testing of the facility's
gasifier/burner, air exchange and feed system are completed and ready for the
first delivery of cattle. Management expects that this will be completed before
the fiscal year ending June 30, 2008. However, it must be emphasized that any
delay in the completion of these tasks will also delay commencement of
operations. It is difficult to establish the start date of operations since the
Company is relying on third parties to complete the facility which includes work
by testing consultants and timely provision of equipment and installation.
Therefore, completion of these tasks is not entirely under our control.

The facility will not be run at full capacity until approximately four months
have passed from the facility becoming operational. During this four-month
period we believe that we will have sufficient data to estimate revenue streams
and expenses to establish comprehensive business plans.

The Company expects to expand the size of the cattle barn in future facilities
to accommodate 400 head of cattle for economy of scale. The Company believes the
additional heat energy that will be generated as a result of this expansion
makes it feasible to develop renewable energy generation systems. It is expected
that each facility could produce approximately 400 US gallons (1,600 litres) of
ethanol daily, generate up to one megawatt of power, finish up to 1,200 head of
cattle annually and provide up to 5 full-time jobs. The hydroponics section of
the 400-head barn is designed to have the grass growing capacity equivalent to
approximately 800 acres of grassland.

It is intended that future facilities will be constructed for the Company by
independent contractors on privately-owned farms after a written, contractual
agreement is made between the Company and the operator(s).

On December 16, 2006 a formal agreement was signed between the Company's
wholly-owned subsidiary Hybrid Fuels (Canada) Inc. and the A4 Bar Cattle Company
Ltd., covering the joint venture between the two companies, known as the
'Siksika A4 Bar Farm Operations Project.' The site of the project is located
approximately 60 miles east of Calgary, Alberta, Canada on the land of the
Siksika First Nations.

Construction of the Project was expected to commence in the current fiscal year
ending June 30, 2008 but has been delayed due to the inability of the A4 Bar
Cattle Company Ltd. to obtain the necessary financing. There can be no assurance
that this project will be initiated and developed as intended.

The Project is planned to consist of the construction of two facilities - each
utilizing Hybrid Fuels' proprietary technology together with the industry
expertise and cattle provided by A4 Bar Cattle Company Ltd.

The two facilities are expected to produce a combined daily volume of
approximately 800 US gallons (3,200 litres) of ethanol per day, generate up to 2
megawatts of power, finish up to 2,400 head of cattle annually, and provide up
to 10 full time jobs. The internal hydroponics barley grass growing system is
designed to produce a 10-15 pound ration of grass per head of cattle per day.

The Company anticipates conducting further research and development with respect
to the following:

                                       3
<PAGE>

1. Researching efficiencies in facility construction and operation;
2. Researching new technologies; consulting with various technical researchers
and agriculture officials.

If resources permit, the amount we anticipate spending on research and
development for the fiscal year ending June 30, 2008 is approximately $500,000.

Once we have a fully operational facility, and have proven the technology and
processes, we intend that our subsidiary, Hybrid Fuels (Canada) Inc., will
operate it and generate revenue from the sale of electrical power and finished
cattle.

Efforts to improve every aspect of the whole operation continue with positive
results. Management believes the overall Hybrid Fuels program involving
progressive and environmental sensitivity towards cattle feeding, maintenance
and processing will present a chemical-free product cycle which offers a world
class benchmark for the industry.


Results of Operations For The Three Months Ended March 31, 2008
---------------------------------------------------------------

The net loss for the present quarter is $(125,567) compared to $(68,908) for the
comparable quarter last year. The difference is largely attributable to
depreciation and amortization expense for the present quarter of $80,823
compared to $20,998 for the comparable quarter last year. This expense is
related to the Oyama facility that was acquired in December 2006. There was also
a foreign-exchange gain in the present quarter of $9,691.

At the end of the quarter, the Company had cash of $347 compared to $3,965 at
June 30, 2007. As at March 31, 2008, the Company had a working capital deficit
of $(899,219) compared to $(777,382) as at June 30, 2007.

The President and CEO of the Company donated services in the amount of $7,500 in
the current quarter.

Although we currently do not have significant cash reserves, related parties
have indicated a willingness to provide operating capital in exchange for
restricted common shares. These related parties are under no obligation and no
assurances can be given that they will continue to do so. The Company is also
actively pursuing other potential sources of financing.


Risk Factors
------------

The following factors have affected or could affect the Company's actual results
and could cause such results to differ materially from those expressed in any
forward-looking statements made by the Company. Investors should consider
carefully the following risks and speculative factors inherent in and affecting
the business of the Company and an investment in the Company's common stock.

1. Our cash reserves may not be adequate to cover our costs of operations. To
date, we have covered our operating losses by loans from shareholders or private
placements of securities. We expect to fund our general operations and marketing
activities in the near term with our current cash, that was obtained from loans
from shareholders and/or the sale of securities. However, our cost estimates may
not include enough provisions for any contingency, unexpected expenses or
increases in costs that may arise.

2. We will need to raise additional capital to develop operations and to pay

                                       4
<PAGE>

ongoing expenses. If additional funds are raised through the issuance of equity,
our shareholders' ownership will be diluted. There can be no assurance that
additional financing will be available on terms favorable to us or at all. If
funds are not available on terms acceptable to us, we may not be able to
continue our business.

3. We have not sought protection of our intellectual property through any
patents, but have elected to protect it through non-disclosure agreements. Our
intended business may be adversely affected if we are unable to adequately
protect our intellectual property. Because our intellectual property is not
protected by patents, others may seek to discover and use our intellectual
property. We cannot provide assurance that our intellectual property rights will
not be invalidated, circumvented or challenged. If we are found to infringe on
the intellectual property rights of others, we may not be able to continue to
market our process, or we may have to enter into costly license or settlement
agreements. Third parties may allege infringement by us with respect to past,
current or future intellectual property rights. Any claim of infringement,
regardless of merit, could be costly, time consuming and require us to develop
non-infringing technology or enter into royalty, licensing or settlement
agreements. These agreements could be on terms unfavorable or unacceptable to us
and could significantly harm the development of our business. In the future, we
may also have to enforce our intellectual property rights through litigation.
Any such enforcement could also result in additional costs and could materially
affect our financial condition and our business.

4. We have a history of operating losses and an accumulated deficit, as of March
31, 2008, of ($3,163,399).

5. Our ability to begin operations and to generate revenues and profits is
subject to the risks and uncertainties encountered by development stage
companies. Our future revenues and profitability are unpredictable. We currently
have no operating activities that will produce revenue. Furthermore, we cannot
provide assurance that we will be successful in raising the money necessary to
begin or expand operations.

6. We have no operating history which makes an evaluation of our future
prospects very difficult. There can be no assurances that we will be able to
develop operations that are profitable or will operate as intended. If the
market for our facilities fails to develop, or develops more slowly than
anticipated, we may not be able to meet our expenses and may not achieve
profitable results.

7. Our common stock is not widely traded, and, as a result, the prices quoted
for our stock may not reflect its fair market value. Because of the low volume
of trading in our common stock, our stockholders may find it difficult to sell
their shares.

8. We currently have no insurance covering our operations, potential products,
services or directors and officers.

9. Future performance depends on the ability to attract, train, and retain
management, technical and marketing personnel. In the future, loss of one or
more key employees could negatively impact us, and there is no "key man" life
insurance in force at this time. There can be no assurance that we will attract
or maintain key employees or other needed personnel.

10. The production of beef and electrical power are both highly competitive.

                                       5
<PAGE>
Giant companies compete in both markets with significant competitive advantages.
Many competitors of the Company have significantly greater resources and
experience than the Company. Additionally, competitors of the Company may have
better access to financial and marketing resources superior to those available
to the Company. With the resources and name recognition that competitors
possess, the Company may face severe adversity entering the markets it is
pursuing. There is no assurance the Company will be able to overcome the
competitive disadvantages it will face as a small, start-up company with limited
capital.

11. The continual shift in supply and demand factors create volatility in cattle
pricing that could result in a loss on cattle finishing.

12. There are a number of technological challenges that must be successfully
addressed to complete our development and commercialization efforts. Our
inability to address such technological challenges could adversely affect our
ability to acquire customers for our technology. Delays in development, as a
result of technological challenges or other factors, may result in the
introduction or commercial acceptance of our technology later than anticipated.

13. Since May 2003, the Canadian beef market has suffered as a consequence of
the United States limiting imports from Canada because of an isolated case of
Bovine Spongiorm Encephalopathy (BSE). A recurrence of BSE in Canada could
potentially have an adverse effect on the Company even though the age of
finished cattle raised within our controlled facilities are planned to be under
the current 30-month age restriction on beef imported into the U.S.

ITEM 3.  Controls and Procedures
--------------------------------

Based on an evaluation as of the end of the period, the Company's Principal
Executive Officer and Principal Financial Officer has concluded that the
Company's disclosure controls and procedures as defined in Exchange Act Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act 1934 (the "Exchange
Act") are effective to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation. There were no significant deficiencies or material weakness,
and therefore there were no corrective actions taken.


                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1. Legal Proceedings
-------------------------

No legal proceedings are threatened or pending against the Company or any of its
officers or directors. Further, none of the Company's officers or directors or
affiliates of the Company are parties against the Company or have any material
interest in actions that are adverse to the Company's interests.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-------------------------------------------------------------------

N/A

Item 3. Defaults Upon Senior Securities
---------------------------------------

N/A

                                       6
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

N/A

Item 5. Other Information
-------------------------

N/A

Item 6.  Exhibits
-----------------

Exhibit 31.1 Principal Executive Officer Certification (section 302 of the
Sarbanes-Oxley Act of 2002)

Exhibit 31.2 Principal Financial Officer Certification (section 302 of the
Sarbanes-Oxley Act of 2002)

Exhibit 32.1 Principal Executive Officer Certification (section 906 of the
Sarbanes-Oxley Act of 2002)

Exhibit 32.2 Principal Financial Officer Certification (section 906 of the
Sarbanes-Oxley Act of 2002)


Signature
---------

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


HYBRID FUELS, INC.

By: /s/ Douglas Dickie
----------------------

Name:  Douglas Dickie
Title: President/CEO/CFO


Dated: May 19, 2008


                                       7