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, 2005

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

                For the Transition Period From _______ to _______

                               -------------------

                         Commission File Number 0-29351

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

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


          237 Main Street, Box 880, Niverville, Manitoba         R0A 1E0
             (Address of principal executive offices)         (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 [_]

The number of issued and outstanding shares of the registrant's common stock as
of May 20, 2005 was 25,379,733.

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


<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                              <C>
PART-I             FINANCIAL INFORMATION                                                        PAGE

Item 1             Financial Statements..........................................................F-0

Item 2             Plan of Operation.............................................................3

Item 3             Controls and Procedures.......................................................5


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............................6

Item 5            Other Information..............................................................6

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

                  Signature......................................................................7
</TABLE>

                                       2

<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)


<TABLE>
                                                                                                 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,
                                                                                         2005            2004
                                                                                          $               $
                                                                                     (unaudited)       (audited)
<S>                                                                                       <C>           <C>
ASSETS

Current Assets

  Cash                                                                                    444           7,907
--------------------------------------------------------------------------------------------------------------

Total Assets                                                                              444           7,907
==============================================================================================================


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

  Accounts payable                                                                     55,488          50,265
  Accrued liabilities                                                                   3,000           3,250
  Note payable and other advances (Note 3)                                             43,566          39,432
  Amounts owing to related parties (Note 4)                                           205,031         205,050
  Amounts owing to a former director (Note 5)                                         326,701         326,701
--------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                             633,786         624,698

Redeemable and Restricted Common Shares (Note 7(b))                                   223,000         223,000
--------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                     856,786         847,698
--------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Note 7)
Subsequent Event (Note 8)

Stockholders' Deficit

Common Stock (Note 6): $0.001 par value; 50,000,000 shares authorized
25,046,980 and 23,371,980 shares issued and outstanding, respectively                  25,047          23,372

Additional Paid-in Capital                                                            835,775         625,828

Donated Capital                                                                       411,237         329,554

Deferred Compensation                                                                 (91,750)        (27,299)

Deficit Accumulated During the Development Stage                                   (2,036,651)     (1,791,246)
--------------------------------------------------------------------------------------------------------------
Total Stockholders' Deficit                                                          (856,342)       (839,791)
--------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit                                               444           7,907
==============================================================================================================
</TABLE>



    (The Accompanying Notes are an Integral Part of the Financial Statements)


                                      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
                                        (Date of Inception)       Three Months Ended          Nine Months Ended
                                           to March 31,                 March 31,                 March 31,
                                                2005             2005          2004          2005          2004
                                                 $                $             $             $             $
<S>                                             <C>              <C>           <C>          <C>            <C>
Revenue                                               -               -             -             -             -
--------------------------------------------------------------------------------------------------------------------


Expenses

Consulting fees                                  97,820               -         3,769             -         3,769
Deposit and advances written-off                255,512               -             -             -             -
Donated services (Note 4)                        30,000           7,500             -        22,500             -
Executive compensation                          573,466               -         6,003             -        42,003
Foreign exchange loss (gain)                      9,510           (235)         1,543         4,779         1,543
General and administrative                      267,097          14,954        28,486        46,018        31,177
Imputed interest (Note 4 and 5)                 381,237          19,728        19,812        59,183        58,639
Professional fees                               209,497           6,550         7,714        12,376         8,248
Research and development                         16,925               -         1,216             -         1,216
Stock-based compensation (1)                    195,587          73,250        45,478       100,549        49,228
--------------------------------------------------------------------------------------------------------------------

Total Expenses                                2,036,651         121,747       114,021       245,405       195,823
--------------------------------------------------------------------------------------------------------------------

Net Loss                                     (2,036,651)       (121,747)     (114,021)     (245,405)     (195,823)
====================================================================================================================

Net Loss Per Share                                                (0.01)        (0.01)        (0.01)        (0.01)
====================================================================================================================

Weighted Average Shares Outstanding                          24,326,000    22,041,000    23,759,000    22,011,000
====================================================================================================================


(1) Stock-based compensation is
    excluded from the following:

     Consulting fees                            160,146          73,250        45,478       100,549        49,228
     Executive compensation                       7,667               -             -             -             -
     General and administrative                  27,774               -             -             -             -
--------------------------------------------------------------------------------------------------------------------
                                                195,587          73,250        45,478       100,549        49,228
====================================================================================================================
</TABLE>


    (The Accompanying Notes are an Integral Part of the Financial Statements)


                                      F-2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended
                                                                                                March 31,
                                                                                          2005            2004
                                                                                            $              $
<S>                                                                                       <C>            <C>
  Cash Flows To Operating Activities

    Net loss                                                                              (245,405)      (195,823)

    Adjustments to reconcile net loss to net cash used in
    operating activities
      Accrued executive compensation                                                             -         36,000
      Amortization of deferred compensation and other
      stock-based compensation                                                             100,549         45,722
      Donated services                                                                      22,500              -
      Imputed interest                                                                      59,183         58,639

    Change in operating assets and liabilities
      Accounts payable and accrued liabilities                                               4,973         15,687
  -------------------------------------------------------------------------------------------------------------------
  Net Cash Used In Operating Activities                                                    (58,200)       (39,775)
  -------------------------------------------------------------------------------------------------------------------
  Net Cash Used In Investing Activities                                                          -              -
  -------------------------------------------------------------------------------------------------------------------

  Cash Flows From Financing Activities

    Advances from (to) related parties                                                         (19)         2,256
    Proceeds from issuance of common stock                                                  46,622         39,886
  -------------------------------------------------------------------------------------------------------------------
  Net Cash Provided By Financing Activities                                                 46,603         42,142
  -------------------------------------------------------------------------------------------------------------------
  Effect of Exchange Rate Changes on Cash                                                    4,134          1,134
  -------------------------------------------------------------------------------------------------------------------

  Net Increase (Decrease) in Cash                                                           (7,463)         3,501

  Cash - Beginning of Period                                                                 7,907          1,247
  -------------------------------------------------------------------------------------------------------------------

  Cash - End of Period                                                                         444          4,748
=====================================================================================================================

  Non-cash Investing and Financing Activities

    Common shares issued for services                                                      165,000         86,670
    Common shares issued to settle debt                                                          -         13,791
=====================================================================================================================

  Supplemental Disclosures

    Interest paid                                                                                -              -
    Income taxes paid                                                                            -              -
=====================================================================================================================
</TABLE>


    (The Accompanying Notes are an Integral Part of the Financial Statements)

                                      F-3

<PAGE>

Hybrid Fuels, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(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". On June 10, 1998 the Company began trading on the OTC
     Bulletin Board under the symbol "HRID" and in December 1999 was moved to
     the "Pink Sheets". The Company was re-listed on the OTC Bulletin Board in
     March 2003 and received "active" status in April 2003.

     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 involves 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.

     The Company is a development stage company with management devoting most of
     its activities in investigating business opportunities and further
     advancing its technologies. The ability of the Company to emerge from the
     development stage with respect to any planned principal business activity
     is dependent upon its successful efforts to raise additional equity
     financing and/or attain profitable operations. There is no guarantee that
     the Company will be able to complete any of the above objectives. At March
     31, 2005, the Company had a working capital deficit of $633,342 and an
     accumulated deficit of $2,036,651. These factors, among others, cause
     substantial doubt about the continuance of the Company 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)  Consolidated Financial Statements

          These consolidated financial statements represent the consolidation of
          the Company and its wholly owned subsidiary, Hybrid Fuels (Canada)
          Inc. The Company's subsidiary is currently inactive and has no
          material assets, liabilities or operations. The Company's fiscal year
          end is June 30.

     (b)  Cash and Cash Equivalents

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

     (c)  Use of Estimates

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


                                      F-4
<PAGE>

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

2.   Summary of Significant Accounting Policies (continued)

     (d)  Basic and Diluted Net Income (Loss) per Share

          The Company computes net income (loss) per share in accordance with
          SFAS No. 128, "Earnings per Share" (SFAS 128) 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
          net income (loss) available to common shareholders (numerator) by the
          weighted average number of common shares outstanding (denominator)
          during the period. Diluted EPS gives effect to all dilutive potential
          common shares outstanding during the period including stock options,
          using the treasury stock method, and convertible preferred stock,
          using the if-converted method. In computing diluted EPS, the average
          stock price for the period is used in determining the number of shares
          assumed to be purchased from the exercise of stock options or
          warrants. Diluted EPS excludes all dilutive potential common shares if
          their effect is anti-dilutive. At March 31, 2005, the redeemable and
          restricted shares disclosed in Note 7(b) have not been included in
          either basic or diluted EPS.

     (e)  Foreign Currency Translation

          The Company's functional and reporting currency is the United States
          dollar. Foreign currency transactions are primarily undertaken in
          Canadian dollars and are translated into United States dollars using
          exchange rates at the date of the transaction. Monetary assets and
          liabilities denominated in foreign currencies are re-measured at each
          balance sheet date at the exchange rate prevailing at the balance
          sheet date. Foreign currency exchange gains and losses are charged to
          operations. The Company has not, to the date of these financial
          statements, entered into derivative instruments to offset the impact
          of foreign currency fluctuations.

     (f)  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, 2005 and 2004, the
          Company has no items that represent a comprehensive loss and,
          therefore, has not included a schedule of comprehensive loss in the
          financial statements.

     (g)  Financial Instruments

          The fair values of cash, accounts payable, accrued liabilities, notes
          and advances payable, and amounts due to related parties approximate
          their carrying values due to the immediate or short-term maturity of
          these financial instruments.

     (h)  Income Taxes

          Potential benefits of income tax losses are not recognized in the
          accounts until realization is more likely than not. The Company has
          adopted SFAS No. 109 "Accounting for Income Taxes" as of its
          inception. Pursuant to SFAS No. 109 the Company is required to compute
          tax asset benefits for net operating losses carried forward. Potential
          benefit of net operating losses have not been recognized in these
          financial statements because the Company cannot be assured it is more
          likely than not it will utilize the net operating losses carried
          forward in future years.

     (i)  Stock-based Compensation

          The Company accounts for stock-based awards using the intrinsic value
          method of accounting in accordance with Accounting Principles Board
          Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25).
          Under the intrinsic value method of accounting, compensation expense
          is recognized if the exercise price of the Company's employee stock
          options is less than the market price of the underlying common stock
          on the date of grant. SFAS 123 "Accounting for Stock-Based
          Compensation" established a fair value based method of accounting for
          stock-based awards. Under the provisions of SFAS 123, companies that
          elect to account for stock-based awards in accordance with the
          provisions of APB 25 are required to disclose the pro forma net income
          (loss) that would have resulted from the use of the fair value based
          method under SFAS 123.

          The Company follows the disclosure requirements of SFAS No. 148,
          "Accounting for Stock-Based Compensation -- Transition and Disclosure
          an Amendment of FASB Statement No. 123", which requires more prominent
          disclosures in both annual and interim financial statements regarding
          the method of accounting for stock-based employee compensation and the
          effect of the method used on reported results. As of March 31, 2005,
          the Company has not issued any stock options.

                                      F-5
<PAGE>

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

2.   Summary of Significant Accounting Policies (continued)

     (j)  Interim Financial Statements

          These interim unaudited financial statements have been prepared on the
          same basis as the annual financial statements and in the opinion of
          management, reflect all adjustments, which include only normal
          recurring adjustments, necessary to present fairly the Company's
          financial position, results of operations and cash flows for the
          periods shown. The results of operations for such periods are not
          necessarily indicative of the results expected for a full year or for
          any future period.

     (k)  Recent Accounting Pronouncements

          In December 2004, the Financial Accounting Standards Board (FASB)
          issued SFAS No. 123R, "Share Based Payment". SFAS 123R is a revision
          of SFAS No. 123, and supersedes APB Opinion No. 25, "Accounting for
          Stock Issued to Employees" and its related implementation guidance.
          SFAS 123R establishes standards for the accounting for transactions in
          which an entity exchanges its equity instruments for goods or
          services. It also addresses transactions in which an entity incurs
          liabilities in exchange for goods or services that are based on the
          fair value of the entity's equity instruments or that may be settled
          by the issuance of those equity instruments. SFAS 123R focuses
          primarily on accounting for transactions in which an entity obtains
          employee services in share-based payment transactions. SFAS 123R does
          not change the accounting guidance for share-based payment
          transactions with parties other than employees provided in SFAS 123 as
          originally issued and Emerging Issues Task Force Issue No. 96-18,
          "Accounting for Equity Instruments That Are Issued to Other Than
          Employees for Acquiring, or in Conjunction with Selling, Goods or
          Services". SFAS 123R does not address the accounting for employee
          share ownership plans, which are subject to AICPA Statement of
          Position 93-6, "Employers' Accounting for Employee Stock Ownership
          Plans". SFAS 123R requires a public entity to measure the cost of
          employee services received in exchange for an award of equity
          instruments based on the grant-date fair value of the award (with
          limited exceptions). That cost will be recognized over the period
          during which an employee is required to provide service in exchange
          for the award - the requisite service period (usually the vesting
          period). SFAS 123R requires that the compensation cost relating to
          share-based payment transactions be recognized in financial
          statements. That cost will be measured based on the fair value of the
          equity or liability instruments issued. The scope of SFAS 123R
          includes a wide range of share-based compensation arrangements
          including share options, restricted share plans, performance-based
          awards, share appreciation rights, and employee share purchase plans.
          Public entities that file as small business issuers will be required
          to apply SFAS 123R in the first interim or annual reporting period
          that begins after December 15, 2005. The adoption of this standard is
          not expected to have a material effect on the Company's results of
          operations or financial position.

          In December 2004, the FASB issued SFAS No. 153, "Exchanges of
          Nonmonetary Assets - An Amendment of APB Opinion No. 29". The guidance
          in APB Opinion No. 29, "Accounting for Nonmonetary Transactions", is
          based on the principle that exchanges of nonmonetary assets should be
          measured based on the fair value of the assets exchanged. The guidance
          in that Opinion, however, included certain exceptions to that
          principle. SFAS No. 153 amends Opinion No. 29 to eliminate the
          exception for nonmonetary exchanges of similar productive assets and
          replaces it with a general exception for exchanges of nonmonetary
          assets that do not have commercial substance. A nonmonetary exchange
          has commercial substance if the future cash flows of the entity are
          expected to change significantly as a result of the exchange. The
          provisions of SFAS No. 153 are effective for nonmonetary asset
          exchanges occurring in fiscal periods beginning after June 15, 2005.
          Early application is permitted and companies must apply the standard
          prospectively. The adoption of this standard is not expected to have a
          material effect on the Company's results of operations or financial
          position.

          The FASB has also issued SFAS No. 151 and 152, but they will not have
          any relationship to the operations of the Company therefore a
          description and its impact for each on the Company's operations have
          not been disclosed.

     (l)  Reclassifications

          Certain reclassifications have been made to the prior year's financial
          statements to conform to the current period's presentation.

                                      F-6

<PAGE>

3.   Note Payable and Other Advances

     (a)  On September 15, 2000, the Company issued a note for CAD$50,000
          (US$33,638) payable on or before September 15, 2001 plus 8% interest.
          The Company extended repayment of the note until the completion of a
          financing arrangement. Interest expense of $2,758 has been accrued for
          the nine months ended March 31, 2005 (2004 - $2,549). The note payable
          was $41,100 after translation into U.S. dollars at March 31, 2005. For
          the nine months ended March 31, 2005, the Company incurred a foreign
          currency translation loss of $3,900 that was charged to operations.
          Accrued interest from September 15, 2000 of $14,180 is included in
          accounts payable as of March 31, 2005.

     (b)  Cash advances totalling CAD$3,000 from unrelated parties is
          non-interest bearing, unsecured and due on demand.

4.   Related Party Transactions/Balances

     (a)  The controlling shareholder is owed $199,371 (June 30, 2004 -
          $199,371) for payment of rent, office expenses and professional fees
          on behalf of the Company. This amount is non-interest bearing,
          unsecured and without specific terms of repayment. Imputed interest of
          $22,429 (2003 - $22,560), calculated at a rate of 15% per annum, was
          charged to operations and treated as donated capital. An amount of
          $1,890 (June 30, 2004 - $1,890) is owing to another shareholder. This
          amount is unsecured, non-interest bearing, with no specific terms of
          repayment.

     (b)  The President of the Company is owed $nil (June 30, 2004 - $3,789) for
          advances and expenses paid for on behalf of the Company. This amount
          is unsecured, non-interest bearing and due on demand. During the nine
          months ended March 31, 2005, the Company recognized a total of $22,500
          for donated services provided by the President of the Company.

     (c)  The Vice-President of the Company is owed $3,670 for expenses paid on
          behalf of the Company. This amount is unsecured, non-interest bearing
          and due on demand.

5.   Amounts Owing to a Former Director

     The former President, who was also a director of the Company, is owed
     $2,701 for office and related expenses paid for on behalf of the Company.
     Effective July 1, 1999 the former President was entitled to a salary of
     US$6,000 per month or $324,000 in total and was owed a total of $326,701 at
     March 31, 2005. These amounts are unsecured, non-interest bearing and due
     on demand. Imputed interest of $36,754 (2004 - $36,079), calculated at a
     rate of 15% per annum, was charged to operations and treated as donated
     capital. The Company did not have a written employment contract with the
     former President.

6.   Common Shares

     (a)  Private Placements

          On March 31, 2005, 50,000 shares of common stock were issued for cash
          at a price of $0.08 per share for total proceeds of $4,144
          (CAD$5,000).

          On January 21, 2005, 300,000 shares of common stock were issued for
          cash at a price of $0.08 per share for total proceeds of $24,606
          (CAD$30,000).

          On October 28, 2004, 120,000 shares of common stock were issued for
          cash at a price of $0.08 per share for total proceeds of $9,788
          (CAD$12,000).

          On October 20, 2004, 30,000 shares of common stock were issued for
          cash at a price of $0.08 per share for total proceeds of $2,387
          (CAD$3,000).

          On September 1, 2004, 25,000 shares of common stock were issued for
          cash at a price of $0.08 per share for total proceeds of $1,905
          (CAD$2,500).

          On August 31, 2004, 50,000 shares of common stock were issued for cash
          at a price of $0.08 per share for total proceeds of $3,792
          (CAD$5,000).


                                      F-7
<PAGE>

6.   Common Shares (continued)

     (b)  Non-cash Consideration

          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. Equity instruments issued to employees and the cost of the
          services received as consideration are measured and recognized based
          on the fair value of the equity instruments issued.

          On March 30, 2005, 400,000 shares of common stock were issued at a
          price of $0.15 per share in consideration for consulting services
          rendered and valued at $60,000.

          On January 25, 2005, 700,000 shares of common stock were issued at a
          price of $0.15 per share in consideration for consulting services
          rendered and to be rendered and valued at $105,000.

7.   Commitments and Contingencies

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

     (a)  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 are delivered to a broker for
          possible resale the broker phones the Company or the transfer agent
          and the shares are kept and cancelled. The Company will continue to
          monitor this issue. No other contingent liabilities have been
          included, as some of the previous directors have been informed
          verbally of the cancellation. No formal legal demand has been made as
          former management has failed to provide addresses despite a number of
          requests.

     (b)  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 and does not have
          the funds to repay these subscribers. Those who opted to receive
          restricted stock were also given an undertaking that they would
          receive a rescission offer when the Company was in a position to repay
          their money plus appropriate interest, in return for a return of the
          restricted stock, or they could elect to retain the stock. To date, 23
          subscribers, have, pursuant to this offer received 232,753 shares,
          representing $158,000. These shares are issued but not considered
          outstanding. The remaining 11 subscribers, who paid $65,000 for
          128,367 shares, have not responded to the offer. These subscriptions
          are recorded as redeemable and restricted common shares until
          rescission rights have been revoked.

8.   Subsequent Event

     On April 1, 2005, 100,000 shares of common stock were issued for cash at
     price of $0.08 per share for total proceeds of $7,878 (CAD$10,000).

                                      F-8


<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 year ended June 30,
2004. 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 developmental stage company and has had no income since
the acquisition of the hybrid fuels technology in June 1998. The Company is
unlikely to have any significant cash flow until after the end of the current
fiscal year ending June 30, 2005.

In their opinion on our June 30, 2004 annual financial statements, our
independent auditors raised substantial doubt regarding our ability to continue
as a going concern because we have not generated any revenues and have conducted
operations at a loss since inception.

The management of Hybrid Fuels Inc. recognizes the importance of developing
existing technologies and creating new opportunities as well. The current Board
of Directors, together with several members of our Technical Advisory Committee,
has been pursuing the expansion of the Hybrid Fuels technology to meet the
changing demands of the agricultural industry and to create additional economic
and renewable energy opportunities.

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

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

The amount we anticipate spending on research and development for the remainder
of the fiscal year ending June 30, 2005 is approximately $20,000.

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.

Currently, the Company's intended principal business is to integrate cattle
feeding-to-finish with the production of wet ethanol. The main source of revenue
for the Company is expected to come from the sale of finished cattle and a blend
of wet ethanol and diesel fuel.

Our subsidiary, Hybrid Fuels (Canada), has entered into a verbal agreement with
a group of Hybrid Fuels Inc. shareholders to construct a fully operational
facility at Oyama, B.C., Canada on 12 acres of farmland. This group is bearing
the financial burden of constructing this commercial facility and retains legal
ownership. Once the facility has been completed, the Company will negotiate with
this group to acquire or lease the facility on mutually agreeable terms. The
land on which the facility is being constructed is owned by an unrelated third
party.

The commercial facility being built by the shareholder group is to include all
items necessary for a fully operational facility utilizing the Company's
technology. The Company has not incurred any costs pertaining to the facility to
date and will not be obligated financially until the facility has been completed
and the Company enters into a formal agreement to either acquire or lease the
facility on mutually agreeable terms.

                                       3

<PAGE>


An operating facility includes the cattle barn, ethanol-producing plant,
gasifier/burner (manure burning unit), and a hydroponic barley-grass growing
system.

In these facilities, barley is fermented and then distilled to produce the wet
ethanol. 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.

We have designed the barn to accommodate 200 head of cattle and the hydroponic
barley-grass growing system. Once the facility is operational, we will begin
feeding cattle 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. At the end of each feeding cycle, the cattle
will be sold at auction.

Each 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 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 hydroponic feed system.

Ethanol produced by the first facility in the first two to three months of its
operation will be used for testing purposes. Once the facility is operating at
full capacity, we project that the ethanol production will be approximately 200
US gallons per day.

It is intended that the wet ethanol will be blended with a proprietary
emulsifier and diesel fuel. When this newly created fuel was tested in an
unaltered diesel engine at the British Columbia Institute of Technology in June
1996, it reduced particulate emissions (black smoke) by over 62% and the
smog-causing nitrogen oxide (NOx) emissions by more than 22%. Researchers also
noted no measurable loss of engine power when testing this fuel blend.

The hydroponic 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. Each grass unit represents approximately the equivalent of 400 acres of
grass growing land.

Current estimates have the final cost of building this facility to be
approximately $450,000. An estimated $275,000 of this cost is for foundations
and flooring, buildings, the gasifier/burner, the ethanol-producing equipment,
tanks and machinery. Soft costs, for such items as permits, engineering and
other professional fees, survey and layout costs, site preparation, delivery of
buildings and materials, equipment rentals, tools and miscellaneous items, are
estimated to cost $75,000. Approximately $100,000 is expected to cover
construction labour and supervision expenses.

The Company has no immediate funding source except through private sources and
until one facility is fully operational and demonstrates cash flow Hybrid Fuels
Inc., and our wholly-owned subsidiary Hybrid Fuels (Canada), has limited access
to banks, trust companies, and other traditional lending sources. The completion
and operation of the first facility is expected to enable the Company to
demonstrate to potential operators and investors that the technology and
processes work as described. We do not have any long-term commitments for
financing at this time.

Barring any unforeseen circumstances, operations are projected to commence
before June 30, 2005, the end of the current fiscal year. By that time it is
expected that the initial testing of the facility's gasifier/burner and feed
system will be completed and ready for the first delivery of cattle.

Operating costs to the end of the first quarter (September 30, 2005) are
estimated at $250,000. This estimate includes $120,000 for cattle and feed,
$60,000 for payables (excluding related party loans and accrued executive
salaries), $40,000 for technical support and labor and $30,000 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.

The facility will not be run at full capacity until approximately four months
have passed from the facility becoming operational. We believe that at the end
of the fourth month of operations, when we sell the first group of finished
cattle, we will have sufficient data from which to prepare pro forma information
for purposes of estimating cash flows and generating a comprehensive business
plan.

                                       4
<PAGE>

Once we have a fully operational facility, and have proven the technology and
processes, our subsidiary, Hybrid Fuels (Canada) Inc., will operate it and will
earn revenue from the sale of the finished cattle and wet ethanol.

It is intended that future facilities will be constructed, for the Company, by
independent contractors on privately owned farms. The intention is for these
facilities to be operated  by the farmer(s) under terms of an agreement
that will be determined once the Company has the data from operations of the
first facility.

Results of Operations For The Three Months Ended March 31, 2005
---------------------------------------------------------------

The loss for the present quarter is $121,747 compared to $114,021 for the
comparable quarter last year.

The difference is mainly attributable to an increase in stock-based compensation
in the amount of $27,772 and a decrease in general and administrative expenses
of $13,532 compared to the comparable quarter last year. The Company issued
1,100,000 shares in the current quarter for consulting services rendered and to
be rendered at a fair value of $165,000, of which $73,250 was charged to
operations and $91,750 was recorded as deferred compensation.

There was no executive compensation during the quarter compared to $6,003 for
the comparable quarter last year. The President and CEO of the Company donated
services in the amount of $7,500 in the current quarter.

At the end of the quarter, the Company had cash of $444 compared to $548 at the
end of the previous quarter. During the quarter we received $28,750 in cash from
the issuance of restricted common stock. As at March 31, 2005, the Company had a
working capital deficit of $(633,342) compared to $(640,823) as at December 31,
2004.

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.

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

Based on an evaluation as of the end of the period, the Company's Principal
Executive Officer and Acting Principal Financial Officer have 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.



                                       5
<PAGE>


                           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
-------------------------------------------------------------------

Set forth below is information regarding the issuance and sales of our
securities without registration during the three months ended March 31, 2005. No
such sales involved an underwriter and no commissions were paid in connection
with the sale of any securities. All shares were issued with restrictive
legends. Restricted securities must be owned and fully paid for at least one
year. After the one-year holding period, the number of shares non-affiliates may
sell during any three-month period cannot exceed 1% of the outstanding shares of
the same class being sold. If the shares have been owned for two years or more,
no volume restrictions apply to non-affiliates.

On January 24, 2005, 300,000 shares of restricted common stock were issued for
cash at a price of $0.08 per share for total proceeds of $24,606 (CAD$30,000).

On January 25, 2005, 700,000 shares of restricted common stock were issued at a
price of $0.15 per share in consideration for consulting services rendered and
to be rendered and valued at $105,000.

On March 30, 2005, 400,000 shares of restricted common stock were issued at a
price of $0.15 per share in consideration for consulting services rendered and
valued at $60,000.

On March 31, 2005, 50,000 shares of restricted common stock were issued for cash
at a price of $0.08 per share for total proceeds of $4,144 (CAD$5,000).

The foregoing issuance of common stock were made in reliance upon the exemption
from registration set forth in Regulation S promulgated under of the Securities
Act of 1933 for transactions not involving a US person.

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

N/A

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 and Acting Principal Financial Officer
Certification (section 302 of the Sarbanes-Oxley Act of 2002)

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


                                       6
<PAGE>


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/ Paul Warkentin
----------------------

Name:   Paul Warkentin
Title:  President/CEO/Acting CFO


Dated: May 23, 2005



                                       7