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

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

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended September 30, 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
          incorporation or organization)          Identification No.)


    237 Main Street, Box 880, Niverville, Manitoba            R0A1E0
    ----------------------------------------------            ------
      (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 [ ]

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 November 18, 2005 was 25,869,433

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


<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>           <C>                                                                      <C>
PART-I        FINANCIAL INFORMATION                                                  PAGE

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

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

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

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

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

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








                                       2
<PAGE>


Hybrid Fuels, Inc.
(A Development Stage Company)

September 30, 2005

                                                                           Index


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










                                      F-0
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 September 30,       June 30,
                                                                                      2005             2005
                                                                                       $                $
                                                                                  (unaudited)        (audited)
<S>                                                                                <C>              <C>
ASSETS

Current Assets

  Cash                                                                                    693              946
--------------------------------------------------------------------------------------------------------------
Total Assets                                                                              693              946
==============================================================================================================


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

  Accounts payable                                                                     75,575           67,220
  Accrued liabilities                                                                   6,500           47,000
  Note payable and other advances (Note 3)                                             45,273           93,153
  Due to related parties (Note 4)                                                     205,122          204,099
  Due to a former director (Note 5)                                                   326,701          326,701
--------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                             659,171          738,173

Redeemable and Restricted Common Shares (Note 7(b))                                   223,000          223,000
--------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                     882,171          961,173
--------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Note 7)

Stockholders' Deficit

Common Stock (Note 6): $0.001 par value; 50,000,000 shares authorized
25,549,980 and 25,174,980 shares issued and outstanding, respectively                  25,550           25,175

Additional Paid-in Capital                                                            929,436          847,311

Common Stock Subscribed (Note 8)                                                        8,163               --

Donated Capital                                                                       465,692          438,464

Deferred Compensation                                                                 (65,250)         (78,500)

Deficit Accumulated During the Development Stage                                   (2,245,069)      (2,192,677)
--------------------------------------------------------------------------------------------------------------
Total Stockholders' Deficit                                                          (881,478)        (960,227)
--------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit                                               693              946
==============================================================================================================
</TABLE>



                (The Accompanying Notes are an Integral Part of
                     the Consolidated FinancialStatements)

                                      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)      For the Three Months Ended
                                                               to September 30,              September 30,
                                                                      2005               2005             2004
                                                                       $                  $                $
<S>                                                             <C>                <C>              <C>
Revenue                                                                 --                 --               --
-----------------------------------------------------------------------------------------------------------------

Expenses

Deposits and advances written-off (Note 3 (c))                     305,512                 --               --
Foreign exchange loss                                               11,863              2,617            2,430
General and administrative (1) (Note 4)                          1,500,577             40,547           38,933
Imputed interest (Note 4 and 5)                                    420,692             19,728           19,727
Research and development                                            16,925                 --               --
-----------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                         2,255,569             62,892           61,090
-----------------------------------------------------------------------------------------------------------------

Operating Loss                                                  (2,255,569)           (62,892)         (61,090)

Other Income

Gain on settlement of debt                                          10,500             10,500               --
-----------------------------------------------------------------------------------------------------------------
Net Loss                                                        (2,245,069)           (52,392)         (61,090)
=================================================================================================================
Net Loss Per Share - Basic and Diluted                                                     --               --
=================================================================================================================
Weighted Average Shares Outstanding                                                25,367,000       23,397,000
=================================================================================================================

(1) Stock-based compensation is included in the following:

     General and administrative                                    222,087             13,250               --
=================================================================================================================
</TABLE>



                (The Accompanying Notes are an Integral Part of
                     the Consolidated FinancialStatements)

                                      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 Three Months Ended
                                                                                              September 30,
                                                                                         2005             2004
                                                                                           $               $
<S>                                                                                   <C>              <C>
Operating Activities

  Net loss                                                                            (52,392)         (61,090)

  Adjustments to reconcile net loss to net cash used in
  operating activities
    Amortization of deferred compensation and other
    stock-based compensation                                                           13,250           13,650
    Donated services                                                                    7,500            7,500
    Imputed interest                                                                   19,728           19,727
    Foreign exchange loss                                                               4,297               --
    Gain on settlement of debt                                                        (10,500)              --

  Change in operating assets and liabilities
    Accounts payable and accrued liabilities                                            9,701              331
-----------------------------------------------------------------------------------------------------------------
Net Cash Used In Operating Activities                                                  (8,416)         (19,882)
-----------------------------------------------------------------------------------------------------------------

Financing Activities

  Proceeds from advances                                                                   --            2,310
  Advances from related parties                                                            --            4,259
  Common stock subscribed                                                               8,163               --
  Proceeds from issuance of common stock                                                   --            5,697
-----------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities                                               8,163           12,266
-----------------------------------------------------------------------------------------------------------------

Decrease in Cash                                                                         (253)          (7,616)

Cash - Beginning of Period                                                                946            7,907
-----------------------------------------------------------------------------------------------------------------
Cash - End of Period                                                                      693              291
=================================================================================================================
Non-cash Investing and Financing Activities

  Common shares issued to settle debt                                                  93,000               --
=================================================================================================================

Supplemental Disclosures

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



                (The Accompanying Notes are an Integral Part of
                     the Consolidated FinancialStatements)

                                      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". 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.

     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 generate significant revenue. There is no guarantee that
     the Company will be able to complete any of the above objectives. At
     September 30, 2005, the Company had a working capital deficit of $658,478
     and an accumulated deficit of $2,245,069. 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 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.

     (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 September 30, 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, 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.

     (h)  Income Taxes

          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.
          The potential benefits 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. As of September 30, 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)  Recent Accounting Pronouncements

          In May 2005, the Financial Accounting Standards Board (FASB) issued
          SFAS No. 154, "Accounting Changes and Error Corrections - A
          Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS 154 changes
          the requirements for the accounting for and reporting of a change in
          accounting principle and applies to all voluntary changes in
          accounting principle. It also applies to changes required by an
          accounting pronouncement in the unusual instance that the
          pronouncement does not include specific transition provisions. SFAS
          154 requires retrospective application to prior periods' financial
          statements of changes in accounting principle, unless it is
          impracticable to determine either the period-specific effects or the
          cumulative effect of the change. The provisions of SFAS No. 154 are
          effective for accounting changes and correction of errors made in
          fiscal years beginning 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.

          In December 2004, the FASB issued SFAS No. 123R, "Share Based
          Payment". SFAS No. 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 No. 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 No. 123R focuses primarily on accounting for
          transactions in which an entity obtains employee services in
          share-based payment transactions. SFAS No. 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 No. 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 No. 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 No. 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 No. 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 No. 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 March 2005, the SEC staff issued Staff Accounting Bulletin No. 107
          ("SAB 107") to give guidance on the implementation of SFAS NO. 123R.
          The Company will consider SAB 107 during implementation of SFAS NO.
          123R.

      (l) Reclassifications

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

                                      F-6
<PAGE>

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

3.   Note Payable and Other Advances

     (a)  On September 15, 2000, the Company issued a note for CAD$50,000
          (US$42,710) 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 $975 has been accrued for
          the period ended September 30, 2005 (2004 - $901). The note payable
          was $42,710 after translation into U.S. dollars at September 30, 2005.
          For the three month period ended September 30, 2005, the Company
          incurred a foreign currency translation loss of $2,000 that was
          charged to operations. Accrued interest from September 15, 2000 of
          $16,111 is included in accounts payable as of September 30, 2005.

     (b)  Cash advances totalling $2,563 (CAD$3,000) from unrelated parties are
          non-interest bearing, unsecured and due on demand.

     (c)  In April 1998, a creditor advanced $50,000, bearing interest at 1% per
          month. However, as the Company did not receive the cash, as an agent
          of the Company unknowingly kept it, no liability was previously
          recognized in the financial statements. During the year ended June 30,
          2005, the Company was notified of the debt and recognized the full
          amount and accrued interest of $43,000, resulting in a charge to
          operations of $93,000. On August 16, 2005, the Company issued 375,000
          shares of common stock to settle the outstanding debt and accrued
          interest.

4.   Related Party Transactions

     (a)  A shareholder is owed $199,371 (June 30, 2005 - $199,371) for payment
          of rent, office expenses and professional fees on behalf of the
          Company. Imputed interest of $7,476, 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 three month period ended September 30, 2005, the Company
          recognized a total of $7,500 (2004 - $7,500) for donated services
          provided by the President of the Company.

     (c)  At September 30, 2005, the Vice-President of the Company is owed
          $5,751 (June 30, 2005 - $4,728) 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 $326,701 at
     September 30, 2005. These amounts are unsecured, non-interest bearing and
     due on demand. Imputed interest of $12,251 (2004 - $12,251), 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

     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 August 16, 2005, the Company issued 375,000 shares of common stock to
     settle an outstanding debt of $50,000 and accrued interest of $43,000.

                                      F-7
<PAGE>

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

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. Restricted shares 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. 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 October 5, 2005, the Company issued 30,000 shares of common stock at a
     price of $0.08 per share for proceeds of $2,532 (CAD$3,000), and 56,700
     shares of common stock at a price of $0.10 per share for proceeds of $5,631
     (CAD$6,590). The proceeds were received in full prior to September 30,
     2005.

                                      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,
2005. 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 quarter ending
December 31, 2005.

As at June 30, 2005, 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
September 30, 2005, the Company has a working capital deficit of $(658,478).

The management of Hybrid Fuels Inc. recognizes the importance of developing
existing technologies and creating new opportunities as well.

During the next twelve months, 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.

If resources permit, the amount we anticipate spending on further research and
development for the fiscal year ending June 30, 2006 is approximately $50,000.

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

                                       3
<PAGE>

ownership. Once the facility has been completed, the Company intends to
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.

An operating facility includes the cattle barn, ethanol-producing plant,
gasifier/burner (manure burning unit), and a hydroponics 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 hydroponics
barley-grass growing system. Once the facility is operational, we expect to
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, it is
intended that 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 hydroponics feed system.

Ethanol produced by the first facility in the first two to three months of its
operation is expected to 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 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 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 $600,000. An estimated $350,000 of this cost is for foundations
and flooring, buildings, the gasifier/burner, the ethanol-producing equipment,
the hydroponics unit, 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 $125,000. Approximately $125,000 is
expected to cover construction labour and supervision expenses.

                                       4
<PAGE>

The Company has encountered delays in commencing operations that are largely
attributable to ongoing financing requirements and testing of the feed system.
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. Additional
financing has been required from the aforementioned shareholder group in order
to complete the testing process and implement necessary improvements to the
facility. This process is time consuming and has contributed to the delay in
commencing operations.

Operations are expected to commence in the quarter ending March 31, 2006. Within
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.

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.

Assuming operations can commence in the quarter ending March 31, 2006, operating
costs to the end of the quarter 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 operating cost estimate of $250,000 would not adequately cover the cost of
acquiring an operating facility if the Company chooses and enters into a
purchase agreement as opposed to a lease agreement.

It is expected that 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 expect to
sell the first group of finished cattle, we will have sufficient data to enable
us to estimate cash flows and generate a comprehensive business plan.

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 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 based in Oyama, BC.

Results of Operations For The Three Months Ended September 30, 2005
-------------------------------------------------------------------

The loss for the present quarter is $52,392 compared to $61,090 for the
comparable quarter last year. The difference is mainly attributable to a gain of
$10,500 in the settlement of a debt.

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

                                       5
<PAGE>

At the end of the quarter, the Company had cash of $693 compared to $946 at the
end of the previous quarter. During the quarter we received $8,163 in cash from
subscriptions to restricted common stock. As at September 30, 2005, the Company
had a working capital deficit of $(658,478) compared to $(737,227) as at June
30, 2005.

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.

                           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 September 30,
2005. No such sales involved an underwriter and no commissions were paid in
connection with the sale of any securities.

On August 16, 2005, 375,000 shares of common stock were to one person to settle
an outstanding debt of $93,000.

The foregoing issuance of common stock was made in reliance upon the exemption
from registration set forth in Section 4 (2)of the Securities Act of 1933.

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

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<PAGE>

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)


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: November 21, 2005









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