United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10 QSB/A

                                   (Mark One)

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

                  For the quarterly period ended June 30, 2005

                                       or

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

                        Commission File Number: 333 33134

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

             Georgia                                 58 2267238
             -------                                 ----------
    (State or other jurisdiction                  (I.R.S. Employer
  of incorporation or organization)              Identification No.)

                    12409 Telecom Drive, Tampa, Florida 33637
                    -----------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (813) 979 9222
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the 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 for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [XX] No [__]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b 2 of the Exchange Act). Yes [__] No [XX]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [__] No [__]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. At August 23, 2005, the Company
had 42,215 Series A Preferred Shares and 195,209 Series B Preferred Shares
outstanding and 83,354,981 of its $0.001 par value common shares outstanding.

<PAGE>

                               HYBRID FUEL SYSTEMS
                              Report on Form 10QSB
                       for the period ended June 30, 2005

                                     PART I

Item 1 - Financial Statements

         Consolidated Balance Sheet for the six month period
         ended June 30, 2005 and the annual period ended
         December 31, 2004                                                     2

         Statement of Operations for the three and six months
         periods ended June 30, 2005 and 2004                                  3

         Statement of Cash Flows for the three and six month
         periods ended June 30, 2005 and 2004                                  4

         Notes to Financial Statements                                       5-9

Item 2 - Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                10

Item 3 - Controls and Procedures                                              13

                                     PART II

Item 1.  Legal Proceedings 13

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 13

Item 3.  Defaults Upon Senior Securities 13

Item 4.  Submission of Matters to a Vote of Security Holders 13

Item 5.  Other Information 13

Item 6.  Exhibits 13

                                       1
<PAGE>

                            HYBRID FUEL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEET
For the Six Months Period Ended June 30, 2005 (unaudited) and annual period
ended December 31, 2004 (audited)

                                     ASSETS

                                                       June 30,     December 31,
                                                         2005          2004
                                     ASSETS          (unaudited)     (audited)
                                                     -----------    -----------
Current Assets
   Cash                                              $    26,068    $     2,025
   Accounts Receivable, net                          $    52,065    $    27,005
   Deposit on Acquisition                            $   200,000    $        --
   Prepaid expenses and deposits                     $    79,360    $     7,845
   Other Assets                                      $     9,571    $        --
   Inventory                                         $    53,800    $    36,623
                                                     -----------    -----------
Total current assets                                 $   420,864    $    73,498
Property Plan & Equipment, net                       $    71,934    $     8,507
                                                     -----------    -----------
Total Assets                                         $   492,798    $    82,005
                                                     ===========    ===========

                                   LIABILITIES

Current Liabilities
   Accounts Payable                                  $   147,638    $   120,980
   Accounts Payable in settlement                    $    81,956    $   121,956
   Debt in litigation                                $   109,868    $   109,868
   Due to Related Parties                            $        --    $     7,197
   Due to Related Parties - Convertible Debt         $   127,752    $    18,866
   Notes Payable - Current                           $   300,000    $        --
   Notes Payable - Discount on Debt                  $  (262,500)   $        --
   Debts in Default                                  $   109,536    $   123,272
   Convertible Debt in Default                       $    78,200    $    78,200
   Sales and Payroll Taxes Payable                   $    93,794    $   130,094
   Other Current Liabilities                         $    48,334    $    42,825
                                                     -----------    -----------
Total current liabilities                            $   834,578    $   753,258
Long-Term Liabilities
   Notes Payable - Long Term                         $   300,000    $        --
   Discount on debt                                  $  (262,500)   $        --
                                                     -----------    -----------
Total Long-Term Liabilities                          $    37,500    $        --
                                                     -----------    -----------
Total Liabilities                                    $   872,078    $   753,258

                              SHAREHOLDERS' DEFICIT

Shareholders'  Deficit
Preferred Stock - A (.01 par value) 42,215           $       422    $       422
   shares authorized; 42,215 issued and
   outstanding (liquidation preference $8,021)
Preferred Stock - B (.01 par value) 954,563          $     1,952    $     1,952
   shares authorized; 195,209 shares issued
   and outstanding. (liquidation preference

Common Stock (.001 par value) 150,000,000            $    83,355    $    65,510
   shares authorized; 83,354,981 and 65,509,843
   shares issued and outstanding, respectively
   Additional Paid-In Capital                        $ 10,784,738   $ 8,677,270
   Deferred Compensation                             $  (350,000)   $  (500,000)
   Accumulated Deficit                               $(10,899,747)  $(8,916,407)
                                                     -----------    -----------
Total Shareholders' Deficit                          $  (379,280)   $  (671,253)
                                                     -----------    -----------
Total Liabilities and Shareholders' Deficit          $   492,798    $    82,005
                                                     ===========    ===========

                                       2
<PAGE>

                            HYBRID FUEL SYSTEMS, INC.
                             STATEMENT OF OPERATIONS
  For the Three and Six Months Periods Ended June 30, 2004 and 2005 (unaudited)

<TABLE>
<CAPTION>

                                    Three Months    Three Months     Six Months      Six Months
                                       Ended           Ended           Ended           Ended
                                      June 30,        June 30,        June 30,        June 30,
                                        2005            2004            2005            2004
                                    ------------    ------------    ------------    ------------
              REVENUES
<S>                                 <C>             <C>             <C>             <C>
Product Sales                       $     35,574    $      9,079    $     53,737    $     89,171
Cost of product sales               $     18,175    $      8,622    $     29,007    $     28,109
                                    ------------    ------------    ------------    ------------

Gross Profit                        $     17,399    $        457    $     24,730    $     61,062

              EXPENSES

Operating Expenses
   Consulting Fees                  $     78,908    $     10,500    $    158,789    $     72,598
   Research & Development           $     38,207    $     33,648    $     79,854    $     49,738
   Compensation                     $    208,307    $    68,165     $    571,504    $    138,364
   Legal & Professional Fees        $    171,947    $     38,697    $    247,095    $     51,056
   Other operating expenses         $     62,768    $     76,776    $    142,982    $     81,862
                                    ------------    ------------    ------------    ------------
Total Operating Expenses            $    560,137    $    227,786    $  1,200,224    $    393,618
                                    ------------    ------------    ------------    ------------

Loss from operations                $   (542,738)   $   (227,329)   $ (1,175,494)   $   (332,556)
                                    ------------    ------------    ------------    ------------

Other Expenses
   Interest Expense                 $    294,664    $    237,619    $    807,846    $    488,986
   Other expenses                   $      1,739    $         --    $         --    $         --
                                    ------------    ------------    ------------    ------------

Loss from other Expenses            $    296,403    $    237,619   $     807,846    $    488,986
                                    ------------    ------------    ------------    ------------

Net Loss                            $   (839,141)   $   (464,948)   $ (1,983,340)   $  (821,542)
                                    ============    ============    ============    ============

Basic and diluted weighted            83,354,971      12,163,646      82,239,165      12,163,646
average common shares outstanding


Basic and diluted loss per share    $      (0.01)   $      (0.04)   $      (0.02)   $     (0.07)

</TABLE>

                                       3
<PAGE>

                            HYBRID FUEL SYSTEMS, INC.
                             STATEMENT OF CASH FLOWS
 For the Three and Six Months Periods Ended June 30, 2004 and 2005 (unaudited)

<TABLE>
<CAPTION>
                                                        Six Months     Six Months
                                                          Ended          Ended
                                                         June 30,       June 30,
                                                           2005           2004
                                                       -----------    -----------
<S>                                                    <C>            <C>
Cash flows from operating activities
Net Loss                                               $(1,983,340)   $  (821,542)
Adjustments to reconcile net income to
   net cash provided (used) by operating activities)
     Common stock issued for services                  $   151,000
     Depreciation                                      $     8,806    $     4,807
     Amortization of Deferred Compensation             $   150,000
     Amortization of debt discount                     $   785,957    $   479,974

Change in operating assets and liabilities
     Accounts Receivable                               $   (25,060)   $   (62,196)
     Inventory                                         $   (17,177)   $    (8,034)
     Prepaid & Deposits                                $  (271,515)
     Accounts Payable                                  $    26,658    $    (8,364)
     Taxes Payable
     Accrued Liabilities                               $   (30,792)   $   (33,676)
                                                       -----------    -----------
Net Cash Provided (used) by operating activities       $(1,205,463)   $  (449,031)

Cash flows from Investing Activities
     Purchase of Equipment                             $   (72,234)
     Loan                                              $    (9,571)
                                                       -----------    -----------
Net cash provided (used) by investing activities       $   (81,805)

Cash flows from Financing Activities
     Loans from Related Parties                        $   772,093    $   479,974
     Proceeds from exercise of warrants                $       150
     Payment on related party note                     $    (7,000)
     Proceeds from notes payable                       $   600,000
     Payments on Notes payable                         $   (53,932)
                                                       -----------    -----------
Net cash provided (used) by financing activities       $ 1,311,311    $   479,974

Net increase (decrease) in cash and cash equivalents   $    24,043    $    30,943
Beginning cash and cash equivalents                    $     2,025    $         6
                                                       -----------    -----------
Ending cash and cash equivalents                       $    26,068    $    30,949

Supplement disclosure of cash flow information
Cash paid during the year for interest                 $    15,907    $        --
Common stock issued for services                       $   151,000    $        --
Amortization of Common Stock issued
   for deferred compensation                           $   150,000    $        --
                                                       ===========    ===========
Amortization on debt discount                          $   785,957    $   479,974
                                                       ===========    ===========
Stock issued for debt conversion to related party      $   663,206    $        --
                                                       ===========    ===========
</TABLE>

                                       4
<PAGE>

                            HYBRID FUEL SYSTEMS, INC.
                     Notes to Unaudited Financial Statements
   for the three and six months periods ended June 30, 2005 and June 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hybrid Fuel Systems, Inc. (the "Company") is a small-scale manufacturer of
systems which convert mobile gasoline and diesel engines to operate on
alternative fuels such as natural gas and propane.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.

Accounts Receivable

Accounts receivable, are stated at estimated net realizable value. Accounts
receivable are comprised of balances due from customers. In determining
collectibility, historical trends are evaluated and specific customer issues are
reviewed to arrive at appropriate allowances.

Inventories

Inventories, are stated at the lower of cost or market. Cost is determined using
the first-in, first-out method. Inventories consist of component parts used in
the manufacture and assembly of retrofit systems for the conversion of gasoline
and diesel engines to non-petroleum based fuels such as compressed natural gas.

Property, Plant and Equipment

Depreciation is provided for using the straight-line method, in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives (asset categories range from two to seven years).
Leasehold improvements are amortized using the straight-line method over the
lives of the respective leases or the service lives of the improvements,
whichever is shorter. Leased equipment under capital leases is amortized using
the straight-line method over the lives of the respective leases or over the
service lives of the assets for those leases that substantially transfer
ownership. Accelerated methods are used for tax depreciation.

Impairment of Assets

The Company's policy is to evaluate whether there has been a permanent
impairment in the value of long-lived assets, certain identifiable intangibles
and goodwill when certain events have taken place that indicate that the
remaining balance may not be recoverable. When factors indicate that the
intangible assets should be evaluated for possible impairment, the Company uses
an estimate of related undiscounted cash flows. A deficiency in these cash flows
relative to the carrying amounts is an indication of the need for a write-down
due to impairment. The impairment write-down would be the difference between the
carrying amounts and the fair value of these assets. Losses on impairment are
recognized by a charge to earnings. Factors considered in the valuation include
current operating results, trends and anticipated undiscounted future cash
flows.

Income Taxes

The Company utilizes the guidance provided by Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109). Under the liability
method specified by SFAS 109, deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities as measured by the enacted tax rates which will be in effect
when these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. Valuation allowances are provided if
necessary to reduce deferred tax assets to the amount expected to be realized.

                                       5
<PAGE>

Earnings (Loss) Per Common Share

Earnings (loss) per share are computed using the basic and diluted calculations
on the face of the statement of operations. Basic earnings (loss) per share are
calculated by dividing net income (loss) by the weighted average number of
shares of common stock outstanding for the period. Diluted earnings (loss) per
share is calculated by dividing net income (loss) by the weighted average number
of shares of common stock outstanding for the period, adjusted for the dilutive
effect of common stock equivalents, using the treasury stock method. The
warrants outstanding were determined to be antidilutive and therefore do not
affect earnings per share.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities, as well as the reported amounts of revenues
and expenses for the period then ended. The actual outcome of the estimates
could differ from the estimates made in the preparation of the financial
statements.

Revenue Recognition

Revenues are recognized when the merchandise is shipped to the customer, which
is when title and risk of loss has passed to the customer.

Stock Based Compensation

The Company has adopted the disclosure-only provisions of SFAS No. 123,
Accounting for Stock Based Compensation, but applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for options issued to
employees. Under Opinion No. 25, the intrinsic method is used to determine
compensation expense when the fair market value of the stock exceeds the
exercise price on the date of grant. As of the date of this report, no options
had been granted under the plan and therefore no compensation expense has been
recognized.

Research and Development Costs

The Company charges research and development costs to expense as incurred.

Fair Value of Financial Instruments

The Company, in estimating its fair value disclosures for financial instruments,
uses the following methods and assumptions:

Cash, Accounts Receivable, Accounts Payable and Accrued Expenses:

The carrying amounts reported in the balance sheet for cash, accounts
receivable, accounts payable and accrued expenses approximate their fair value
due to their relatively short maturity.

Long-Term Obligations:

The fair value of the Company's fixed-rate long-term obligations is estimated
using discounted cash flow analyses, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.

Restatements

Convertible Debt

White Knight (WK) has provided financing to the Company starting with the last
quarter of 2003. The financing is to be repaid in common shares at a conversion
rate of $0.04 per share. The conversion rate was set at the time that the
Company's stock was trading at $0.03 per share, in December 2003.

Since the financing includes an embedded conversion feature, the Company has
restated the financial statements for the amortization of the resulting debt
discount for the quarters ended June 30, 2005 and 2004, pursuant to EITF 00-27
and EITF 98-5. The debt has no stated redemption date and therefore, the
discount is amortized at the time of the advances using the average price per
share of the common stock for the quarter within which the advances were made
versus the conversion price of $.04 per share. Previously, it was determined
that the instrument was a financial derivative pursuant to EITF 00-19 and FAS
133 which basically required valuation but not interest expense treatment.

The effect of the restatement was to increase interest expense for the six month
period ended June 30, 2005 by $710,957 and $479,974 for the respective period
ended June 30, 2004. The amortization of the debt discount to interest expense
reflected a non-cash expense for the embedded conversion feature of the debt
agreement.

NOTE 2 - DEBT IN DEFAULT

The Company did not meet the original payment terms on the note payable to
Peachtree National Bank through June 30, 2005. On April 1, 2005, we paid $20,000
to begin a payment plan with Peachtree National Bank which requires us to remit
approximately $10,000 a month until the debt is fully repaid. During June 2005,
we reached agreement with Peachtree National Bank to pay off the outstanding
amount of approximately $69,000 upon receipt of the proceeds from the second
traunch of financing provided by Alpha Fund. The Company is scheduled to receive
the Alpha Fund financing upon the effectiveness of a registration statement
relating to the securities underlying the financing.

                                       6
<PAGE>

NOTE 3 - COMMITMENTS AND CONTINGENCIES

The Company is delinquent in the payment of payroll and state sales taxes. The
Company is currently following payment schedules, developed after negotiations
with the taxing authorities. Amounts in arrears for delinquent taxes, along with
estimated penalties and interest assessed by the taxing authorities are as
follows, as of June 30, 2005 and 2004.

                             2005       2004
                             ----       ----

Payroll and sales taxes   $ 71,897   $142,058
Penalties and interest      21,896     60,881

Total                     $ 93,793   $202,939

During June, 2004, the Company entered a negotiated settlement with the IRS and
began making monthly payments including an initial payment of $15,000 plus
$5,000 a month through such date as the obligation is repaid in full.

NOTE 4 - SHAREHOLDERS' EQUITY

Preferred Stock

Effective February 1, 2002, the Company designated 999,779 shares of previously
undesignated preferred stock as Series A Preferred Stock, for which 45,216
shares are authorized and Series B Preferred Stock, for 954,563 shares are
authorized.

Series A Preferred Stock is convertible, at the option of the holder, at any
time, into shares of the Company's common stock as determined by dividing $.19
by a conversion price determined on the date the related certificate is
surrendered. The conversion price is subject to periodic adjustment and is
initially established at $.01632. Series A Preferred Stock is automatically
convertible into shares of the Company's common stock upon (i) the date
specified by vote or written consent or agreement of holders of at least three
quarters of the shares of Series A Preferred outstanding, or (ii) upon the
closing of the sale of the company's common stock in a firm commitment,
underwritten public offering registered under the Securities Act in which the
Company receives gross proceeds of no less than $20 million. Series A Preferred
Stock has a liquidation preference of the greater of $.19 per share or the
amount that such share would be entitled to upon liquidation or distribution.
The Series A Preferred Stock has voting rights, except as to the election of
debtors, equal to the number of shares of common stock into which the Series A
Preferred Stock is convertible. The Series A preferred Stockholders have the
right to elect one director of the Company.

Series B Preferred Stock is convertible, at the option of the holder at any
time, into shares of the Company's common stock as determined by dividing the
lower of $.09 or the price per share paid by the holder of the Series B
Preferred Stock by a conversion price determined on the date the related
certificate is surrendered. The conversion price is subject to periodic
adjustment and is initially established at $.00773. Series B Preferred Stock is
automatically convertible into shares of the Company's common stock upon (i) the
date specified by vote or written consent or agreement of holders of at least
three quarters of the shares of Series B Preferred Stock outstanding, or (ii)
upon the closing of the sale of Company's common stock in a firm commitment,
underwritten public offering registered under the Securities Act in which the
Company receives gross proceeds of no less than $20 Million. Series B Preferred
Stock has a liquidation preference of the greater of $.09 per share or the
amount that such share would be entitled to upon liquidation or distribution.
The Series B Preferred Stock has voting rights, except as to the election of
directors, equal to the number of shares of common stock into which the Series B
Preferred Stock is convertible. The Series B Preferred Stockholders have the
right to elect one director of the Company.

                                       7
<PAGE>

NOTE 5 - RELATED PARTY

The Company receives financing from White Knight SST, Inc. (WK). WK is a major
stockholder and has officers who serve in management positions for the Company.
Per our agreement with WK, any funding provided by WK is to be repaid in common
shares of stock at a conversion price of $0.04 per share. The conversion price
was agreed upon in December, 2003, when the Company's stock was at $0.03 per
share.

During the quarter ended March 31, 2005, approximately $590,000 of outstanding
debt due to WK had been converted into approximately 14,700,000 shares of common
stock. In addition, the Company had a receivable from WK in the amount of
$72,248 from the issuance of 1,806,196 common shares during the quarter ended
March 31, 2005. During the quarter ended June 30, 2005, WK advanced a total of
$200,000 to the Company, of which $72,248 represented the related party
receivable from the period period.

Due to the convertible nature of the advances, the Company has calculated the
embedded conversion benefit for each period of advances of financing and
recorded a debt discount applicable to that period, in accordance with EITF
00-27 and EITF 98-5. For the six months ended June 30, 2005, the Company
calculated the intrinsic value between the per share conversion price of $0.04
and the average stocks closing price for the quarter. The calculated debt
discount exceeded the current period advances and therefore, in accordance with
EITF 00-27, was limited to the actual debt financing received. Since there is no
stated redemption date, the Company amortized a total debt discount of $710,957
for the six months ended June 30, 2005, which represented the debt financing
received from WK during that period.

The Company also has an employment agreement with WK to provide executive
management services to the Company. WK's two principal executive officers serve
as the Company's President, CEO, Director and as Chairman of the Board for a
period two years. Compensation is paid exclusively through the issuance of
restricted common stock equal to a cash value of $25,000 per month total for the
services of both executives. The common stock issued pursuant to the agreement
vests on a quarterly basis in advance. During the year ended December 31, 2004,
the Company issued approximately 12,000,000 shares of common stock for the total
$600,000 compensation due. As of December 31, 2004, the Company had amortized
$100,000 of the deferred related party compensation to compensation expense. For
the six months ended June 30, 2005, the Company amortized $150,000 of deferred
related party compensation related to this amount.

NOTE 6 - DEBT FINANCING

On April 1, 2005, we held our first closing pursuant to a Subscription Agreement
we entered into with several accredited investors dated as of March 31, 2005,
pursuant to which the investors subscribed to purchase an aggregate principal
amount of $1,200,000 in secured convertible promissory notes, and Class A common
stock purchase warrants which would be issued on each closing date assuming full
conversion of the convertible notes issued on each such closing date. We issued
the aforementioned securities to the investors pursuant to Rule 506 of
Regulation D as promulgated under the Securities Act of 1933, as amended (the
"Act"), and/or Section 4(2) of the Act.

$600,000 of the purchase price was paid to us by the investors on the initial
closing date of April 1, 2005 and $600,000 of the purchase price will be paid to
us pursuant to the second closing, which will take place on the 5th day after
the actual effectiveness of the registration statement which we are required to
file with the Securities and Exchange Commission registering the shares of our
common stock, par value $.001 per share, issuable upon conversion of the
convertible notes and exercise of the warrants.

The convertible notes bear simple interest at rate equal to the "prime rate" as
published in the Wall Street Journal from time to time plus 3% per annum,
provided however that the interest shall not be less than 8% per annum. Interest
is calculated on the basis of a 360 day year and is payable monthly, in arrears
commencing on August 1, 2005. The principal amount of the convertible notes
shall be amortized over a two-year period with payments commencing on August 1,
2005. Each investor shall have the right to convert the convertible notes after
the date of issuance and at any time, until paid in full, at the election of the
investor into fully paid and nonassessable shares of our common stock at a
conversion price of $0.55 per share. The conversion price is adjustable in the
event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the conversion price of the convertible notes will be adjusted in the
event that we spin off or otherwise divest ourselves of a material part of our
business or operations or dispose all or a portion of our assets. The
convertible notes are secured by all of our assets, pursuant to the terms of a
Security Agreement, dated as of March 31, 2005 between us and Barbara Mittman,
who is acting as collateral agent pursuant to the terms of a collateral agent
agreement dated as of March 31, 2005.

                                       8
<PAGE>

We issued an aggregate of 1,636,364 Class A common stock purchase warrants to
the investors and will issue an additional 1,636,364 Class A common stock
purchase warrants at the second closing. The Class A warrants are exercisable
until five years from the initial closing date at an exercise price equal to the
lower of $0.81 per share or 101% of the closing bid price of our common stock on
the last trading day preceding the initial closing. The exercise price of the
Class A warrants will be adjusted in the event of any stock split or reverse
stock split, stock dividend, reclassification of common stock, recapitalization,
merger or consolidation. In addition, the exercise price of the warrants will be
adjusted in the event that we spin off or otherwise divest ourselves of a
material part of our business or operations or dispose all or a portion of our
assets.

Due to there being detachable warrants and a beneficial convertible feature of
the note as of June 30, 2005, the Company has recorded a discount to the debt in
the amount of $600,000 and will record an additional $600,000 debt discount when
the Company receives the additional $600,000 of funding, in accordance with EITF
Issue No. 98-5 "Accounting For Convertible Securities With Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios", and EITF 00-27
"Application of EITF Issue No. 98-5 To Certain Convertible Instruments". The
value of the detachable warrants was determined to be $1,945,594 (assuming both
draws were made on the financing) using the Black Scholes option pricing model
with a volatility of 234.42 % and risk free interest rate of 4.13%. In
accordance with EITF 00-27,when the calculated value of the detachable warrants
exceeds the amount of the debt, the discount is limited to the amount of the
debt. Since the debt is $1,200,000, the discount associated with the warrants
would be limited to that amount. In the calculation of the warrants and the
embedded conversion feature the warrants are to be calculated first, the entire
discount is being allocated to the warrants since that exceeds the maximum
discount allowed. Therefore, there is no allocation of the discount to the
embedded conversion feature of the debt. The discount of $1,200,000 will then be
amortized over the life of the debt which is twenty eight months or
approximately $43,000 per month. As of June 30th 2005 the company received
$600,000 of the $1,200,000 where the company amortized $75,000 for the three
months ended.

We filed a registration statement registering the shares of our common stock
issuable upon conversion of the convertible notes and exercise of the Class A
warrants on May 10, 2005 and we are obligated to cause it to be effective within
90 days after the initial closing date or approximately August 1, 2005. If we do
not meet the aforementioned filing and effectiveness deadlines, we shall pay to
each investor an amount equal to 1% for the first 30 days or part thereof of the
pendency of such non-registration event and 2% for each 30 days or part thereof,
thereafter of the purchase price of the notes remaining unconverted and purchase
price of the shares of our common stock issued upon conversion of the notes.

The above descriptions of the convertible note, the Class A common stock
purchase warrants, the Subscription Agreement and the Security Agreement are not
complete and are qualified in their entirety by the full text of such documents
which are included as exhibits to our Form 8-K Report filed April 5, 2005.

NOTE 7 - SUBSEQUENT EVENTS

      Acquisition of DRV Energy

On August 11, 2005 (the "Closing Date"), we completed the closing of a Share
Exchange Agreement (the "Agreement") with DRV Energy, Inc., an Oklahoma
corporation ("DRV") and the sole shareholder of DRV, Sheri Vanhooser (the "DRV
Shareholder") that was entered into on June 29, 2005. The purchase price for DRV
Energy was $4,000,000 which was based on achieving certain revenue levels for
2005. 10% of the purchase price was to be paid in cash with 50% paid at closing
and 50% payable January 1, 2006 contingent to achieving certain revenue levels
and 90% of the purchase price or 11,612,903 of our common shares were delivered
during August, 2005. The value of $0.31 was given to our shares for the purposes
of this agreement as representing 100% of the closing bid price of our stock on
June 29, 2005. Pursuant to the Agreement, we acquired all of the outstanding
equity stock of DRV from the DRV Shareholder.

DRV Energy, Inc., an Oklahoma corporation ("DRV") was formed November 30, 1994
to engage in the alternative fuels industry through the sales and services of
vehicle conversion system. DRV is a small volume manufacturer of EPA Certified
bi-fuel and dedicated natural gas and propane turnkey conversion systems. DRV
Energy also has a full service alternative fuels center with slow/fast fill
stations as well as compressor installation and maintenance capabilities.

The overriding factor in our decision to acquire DRV Energy was the market-ready
state of their menu of EPA-Certified conversion systems. Since inception, we
have devoted our development to a heavy-duty diesel to natural gas conversion
system. While we are proceeding with required EPA verifications, until that
project is completed, we are unable to market our systems domestically. DRV on
the other hand, is actively in the market place selling EPA certified systems.
The conversion of the 71 Dallas County School System buses is an example of how
combining DRV with us allows us to begin focusing on marketing and sales in
conjunction with our development.

The allocation of the purchase price has not been provided due to the
preliminary state of determining the fair value.

                                       9
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations

This Report contains forward-looking statements, within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, which reflect our
expectation or belief concerning future events that involve risks and
uncertainties. Our actions and performance could differ materially from what is
contemplated by the forward-looking statements contained in this Report. Factors
that might cause differences from the forward-looking statements include those
referred to or identified under "Risk Factors" in our Annual Report on Form
10-KSB for the year ended December 31, 2004 and other factors that may be
identified elsewhere in this Report. Reference should be made to such factors
and all forward-looking statements are qualified in their entirety by the above
cautionary statements.

The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the results of our
operations and financial condition. The discussion should be read in conjunction
with the financial statements and notes thereto.

Overview

Since 1996, we have sought to commercialize our dual-fuel technology with
limited success. Between 2001 and the year ended December 31 2003, we
experienced a substantial slow-down in our operational state due principally to
under capitalization. We engaged White Knight on December 23, 2003 as a crisis
finance and management company. Since that date, the principals of White Knight
have arranged for the majority of our financing and our Chief Executive Officer,
Chairman of our Board of Directors and a Director serve similar capacities with
White Knight. White Knight's executives also served as our interim Chief
Financial Officer and financial administrator.

Notwithstanding our incorporation in 1996, Hybrid is still considered a
development or start-up stage enterprise. In this case, the typical issues
surrounding a start-up have been exacerbated because we've spent the past two
years attempting to build a company while addressing a rather significant number
of financial legacy issues. Further, the alternative fuels industry has, to a
large extent, grown up in an atmosphere where the sale of systems similar to our
conversion technology was predicated on the need to reduce harmful emissions and
was not based on an economic return to our customers. Finally, providing insight
into our product and manufacturing costs as well as expenses incurred in
delivering our technology have been difficult because we have previously sold
our systems at the rate of one or two a month. We have not had the ability nor
demand for our product to take advantage of quantity discounts in our raw
materials and component parts. We address these three issues in this discussion
followed by a more specific analysis of our financial results.

Addressing historical financial legacy issues

We have previously reported on the various payment plans or straight-out
pay-offs we've had to under take during the past two years commencing December,
2003. These includes a payment schedule with the IRS, the liquidation of various
debts in default as well as the payment of various vendors. Our ability to
address these issues was made possible exclusively as a result of the capital
provided by White Knight. To a meaningful degree, in the course of addressing
certain of the financial legacy issues as well as seeking to engage and retain
professionals, we were required to issue shares of our common stock which have
been additive to the net loss of operations we've accumulated. Now that these
issues have been addressed, we do not foresee the need to use our cash or equity
resources in this manner.

                                       10
<PAGE>

Expanding our revenue model

Among our challenges was the one-product nature of our enterprise. We held the
license to a dual fuel technology which is compatible with heavy duty diesel
engines. While this is a promising market, this single-product focus did not
allow us to expand our revenue model. A major portion of our efforts during 2005
have been to identify areas where we could expand our revenue model within the
alternative fuels industry.

Our first effort in this regard was to finalize the design of our dual-fuel
diesel system. As previously reported, we completed this redesign during 2004
and have since conducted independent tests on three occasions to maximize the
emission reductions which could be achieved through the use of our system. We
then sought to expand our revenue model in two ways. First, we have begun
construction and anticipate completing the build-out of our emission testing lab
and engine room facility in PeachTree City, Georgia during September, 2005. Once
completed, we will be in a position to solicit the use of our facility for a fee
from firms and individuals interested in independent emission measurements. We
further determined to expand our revenue model by acquiring the ability to
market EPA certified systems to the light and medium weight vehicle market and
to include the use of propane as an alternative fuel in addition to natural gas.
As we reported on a Form 8-K on August 12, 2005, we completed the acquisition of
DRV Energy, Inc. (DRV). DRV, a nine-year old company, offers a series of light
and medium weight EPA certified conversion systems. We now believe our ability
to offer light, medium and heavy duty systems in configurations which can
utilize natural gas or propane offering solutions for both gasoline as well as
diesel powered vehicles positions us to take a meaningful role in the
alternative fuels industry.

The Alternative Fuels Industry

Unlike most industries, the alternative fuels industry in the domestic
marketplace was primarily born out of the need to comply with EPA mandates
relating to emissions discharge. The sale of systems similar to our dual fuel
approach were sold without regard to the economic consequences of the buyer. In
the course of implementing the EPA plan, federal and state authorities made
available financing through grants in that each grant was designed to seek out
technologies which could bring vehicles into EPA compliance. Since there was no
economic factor involved in the sale, i.e., the product didn't have to promise a
return on investment, these systems were priced at rates that were not in any
manner consistent with an economic based sale and since the granting authority
was concerned with emissions and not profits, there was no incentive to offer
systems at conventional rates.

This factor more than anything else, in our opinion, has led to the demise of a
number of companies in the alternative fuels industry. Our system is an
excellent example of this faulty pricing model. In our case, at December, 2003,
we had historically sought to sell our systems in prices ranging from $8,000 to
$12,000. We have since lowed our price to $4,500 and based on that structure,
our margins, before administrative expenses, will be in the 50% or greater
range. We believe that bring our technology into a economic driven model instead
of an environmental model will have a lasting impact of our performance.

Calculating the comparisons between our reporting periods

Providing meaningful insight into our product and manufacturing costs as well as
expenses incurred in delivering our technology have been difficult because we
have previously sold our systems at the rate of one or two a month under federal
and/or state grants. We have not had the ability for our product to take
advantage of quantity discounts in our raw materials and component parts.
Further, our labor costs in our present environment would appear unusually high
given our revenues. However, in order for us to position the company to maximize
revenue opportunities, we have found it necessary to engage professionals and
mechanics in sufficient number to complete the build-out of our facility in
Atlanta as well as developing new systems for certain clients.

We have attempted in the following two sections to provide some insight into the
changes in our financial results. However, given the factors sited above, we
don't believe these comparisons are indicative of our future operating
performance.

                                       11
<PAGE>

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004

The following compares our financial statements for the three months period
ended June 30, 2004 and 2005. However, 2004 was a period of reengineering our
principal product as well as addressing a number of legal and financial matters
which had been created over a period from our inception in 1996 through December
2003. During the first six months of 2005, we encountered a number of one-time
expenses in the outfitting and build-out of our Atlanta, Georgia facilities. We
therefore believe the following may not be indicative of our future operating
results.

Our current assets increased 473% from $73,498 at the year ended December 31,
2004 to $420,864 for the six month period ended June 30, 2005 and during this
same period our total assets increased by approximately 501% from $82,005 to
$492,798. Total liabilities during this period increased by 16 % from $753,257
at the year ended December 31, 2004 to $872,078 at June 30, 2005. The increase
in liabilities is principally the result of a convertible note obtained on April
1st 2005. Our Shareholders' Deficit decreased during this six month period from
$(671,252) at the year ended December 31, 2004 to $(379,280) at June 30, 2005
primarily due to 18% increase in additional paid in capital.

Since December 2003, White Knight has provided substantially all of capital
requirements. During the 2nd quarter 2005, we obtained financing from White
Knight SST in the amount of $200,000. We have and will periodically converted
amounts owed to White Knight at a conversion rate equal to $0.04 per share. This
conversion rate was determined in December 2003 as our trading price at that
time was $0.03 per share. White Knight does not charge interest and there is no
requirement to repay amounts owed in cash. A related party receivable from the
1st quarter 2005 for $72,248 was applied against the 2nd quarter financing. Our
Chairman and Chief Executive Officer serve similar capacities with White Knight
and both individuals are operating under two-year employment agreements to our
Company. All conversions of White Knight debt are issued as restricted common
stock and there are no registration rights.

In comparing the three month period ended June 30, 2004 and 2005, our revenue
and gross profits increased by 292% and 3707%, respectively from $9,079 and $457
to $35,574 and $17,399. Pending our CARB certification which is discussed
elsewhere in this report, our systems are only eligible for sale in foreign
markets and through State and Federal grant programs. The increase in revenues
and gross profits during this period were principally due to a grant received
from New York State to BAF a licensee of Hybrid. Comparing these two periods,
our operating expenses increased to 146% from $227,786 for the three months
period ended June 30, 2004 to $560,137 for the period ended June 30, 2005. Our
net loss for the three months period increased approximately 80% from $(464,948)
for the three months ended June 30, 2004 to $(839,141) for the three month
period ended June 30, 2005.

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

The following compares our financial statements for the six months period ended
June 30, 2004 and 2005. However, 2004 was a period of reengineering our
principal product as well as addressing a number of legal and financial matters
which had been created over a period from our inception in 1996 through December
2003. During the first six months of 2005, we encountered a number of one-time
expenses in the outfitting and build-out of our Atlanta, Georgia facilities. We
therefore believe the following may not be indicative of our future operating
results.

The following compares our financial statements for the six months period ended
June 30, 2004 and 2005. However, 2004 was a period of reengineering our
principal product as well as addressing a number of legal and financial matters
which had been created over a period from our inception in 1996 through December
2003. During the first six months of 2005, we encountered a number of one-time
expenses in the outfitting and build-out of our Atlanta, Georgia facilities. We
therefore believe the following may not be indicative of our future operating
results.

New marketplace developments

Before discussing the mechanical changes to our financial statements, certain
overall market factors have developed since the start of 2005 that we believe
will have a meaningful impact to our future operations. Our business model
envisions the sale of conversion systems which allow diesel or gasoline engines
to operate on alternative fuels such as natural gas and propane. In our opinion,
based on our internal research, the retail pump price of diesel and gasoline
have risen dramatically above levels reached during just the preceding year.
Further, we are of the view that while natural gas has likewise fluctuated
upwards, the gap between the price of the conventional fuel are priced higher
compared to natural gas in the domestic marketplace by approximately $0.75 to
$1.50 per gallon equivalent. Further, we have developed the opinion, based on
our internal research, that a major contributing factor to this price gap is not
so much the price of a barrel of oil, but rather, the lack of refining capacity
to convert oil into gasoline, diesel and jet fuel.

Based on this assumption, we believe this gap in pricing will remain a fixture
for at least a 4 to 6 year period while the world increases refining capacity.
The primary shift to our business model is the previously, a "sale" of a
conversion system was not an economic sale but rather an appeal to for the buyer
to reduce pollution. In the reality of our marketplace, we have not encountered
many firms or individuals willing to make the investment in a conversion system
strictly for environmental purposes. With the change in fuel pricing discussed
above, we now believe for the first time that we can make an economic argument
for the purchase of our systems because the client can now calculate a
reasonable payback period and, following conversion, the user can operate with a
cheaper fuel.

Notwithstanding this change within our marketplace, we found our company unable
to react to this changing dynamic because we diesel conversion system has not
yet completed the required EPA/CARB certifications for sale within the domestic
marketplace.

As we disclosed in a recent Form 8-K filing, we acquired DRV Energy, Inc. during
July of this year. DRV Energy brought a family of EPA certified systems which we
could market immediately. Further, our previous efforts have focused on strictly
diesel conversions to natural gas. We are now in a position to offer either
diesel or gasoline conversions and in the case of gasoline, we can convert to
either natural gas or propane.

We now discuss the changes to our financial statements for the six months
periods ended June 2005 compared to 2004. However, as we discussed above, the
addition of the DRV family of conversion systems mean the comparative results
discussed below may not be indicative of our future operating results.

Our current assets increased 229% from $128,077 at the period ended June 30,
2004 to $420,864 for the six month period ended June 30, 2005 and during this
same comparative period our total assets increased by approximately 243% from
$143,654 to $492,798. Total liabilities during this period decreased by 53.9%
from $1,894,132 at the period ended June 30, 2004 to $872,078 at June 30, 2005.
Our Shareholders' Deficit decreased during this six month period from
$(1,753,251) at the period ended June 30, 2004 to $(379,280) at June 30, 2005
primarily due to 116% increase in additional paid in capital.

Since December 2003, White Knight has provided substantially all of capital
requirements. During the six month period ended June 30, 2005, we obtained
financing from White Knight SST in the amount of $772,092. We have and will
periodically converted amounts owed to White Knight at a conversion rate equal
to $0.04 per share. This conversion rate was determined in December 2003 as our
trading price at that time was $0.03 per share. White Knight does not charge
interest and there is no requirement to repay amounts owed in cash. Our Chairman
and Chief Executive Officer serve similar capacities with White Knight and both
individuals are operating under two-year employment agreements to our Company.
All conversions of White Knight debt are issued as restricted common stock and
there are no registration rights.

In comparing the six month period ended June 30, 2004 and 2005, our revenue and
gross profits decreased by 40% and 60%, respectively from $89,171 and $61,062 to
$53,737 and $24,730. Pending our CARB certification which is discussed elsewhere
in this report, our systems are only eligible for sale in foreign markets and
through State and Federal grant programs. Comparing these two periods, our
operating expense increased 205% from $393,618 for the six months period ended
June 30, 2004 to $1,200,224 for the period ended June 30, 2005. Our net loss for
the six months period increased approximately 286% from $(329,995) for the six
months ended June 30, 2004 to $(1,272,384) for the six month period ended June
30, 2005.

Certain expectations for 2005

We believe our dual-fuel technology has immediate market potential outside of
the United States with particular emphasis on areas with a significant
differential between the cost of diesel and natural gas. We will continue our
primary objective to complete the EPA/CARB verification.

The Company is also pursuing the use of its technology with stationary diesel
engines and on new vehicles manufactured after 2004. We are also exploring the
use of our technology in bio-diesel and synthetic field applications.

                                       12
<PAGE>

Item 3 Controls and Procedures

Evaluation of disclosure controls and procedures.

An evaluation was performed under the supervision and with the participation of
our management, including the Chief Executive Officer, of the effectiveness of
the design and operation of our disclosure procedures. Based on management's
evaluation as of the end of the period covered by this Quarterly Report, our
principal executive and financial officer concluded that our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) were sufficiently
effective to ensure that the information required to be disclosed by us in the
reports that the we file under the Exchange Act is gathered, analyzed and
disclosed with adequate timeliness, accuracy and completeness.

Changes in internal controls.

There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the evaluation referred to above, nor were there any significant deficiencies or
material weaknesses in our internal controls. Accordingly, no corrective actions
were required or undertaken.

Item 1 - legal Proceedings

There is no pending litigation or other proceedings against the Company.

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

On April 1, 2005, we held our first closing pursuant to a Subscription Agreement
we entered into with several accredited investors dated as of March 31, 2005,
pursuant to which the investors subscribed to purchase an aggregate principal
amount of $1,200,000 in secured convertible promissory notes, and Class A common
stock purchase warrants which would be issued on each closing date assuming full
conversion of the convertible notes issued on each such closing date. We issued
an aggregate of 1,636,364 Class A common stock purchase warrants to the
investors and will issue an additional 1,636,364 Class A common stock purchase
warrants at the second closing. The Class A warrants are exercisable until five
years from the initial closing date at an exercise price equal to the lower of
$0.81 per share or 101% of the closing bid price of our common stock on the last
trading day preceding the initial closing. We issued the aforementioned
securities to the investors pursuant to Rule 506 of Regulation D as promulgated
under the Securities Act of 1933, as amended (the "Act"), and/or Section 4(2) of
the Act.

Item 3 - Defaults Upon Senior Securities

None.

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

None.

Item 5 - Other Information

None.

Item 6. Exhibits

No. Description of Exhibit

31.1 Chief Executive Officer and Chief Financial Officer Section 302
Certification

32.1 Chief Executive Officer and Chief Financial Officer Certification

                                       13
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                            Hybrid Fuel Systems, Inc.

                                          By:/s/ MARK CLANCY
                                             ------------------------
                                             Mark Clancy
                                             Chief Executive Officer,
                                             Chief Financial Officer

Date: September 27, 2005