SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
   Hybrid Fuels Inc., 237 Main Street, Box 880, Niverville, MB, Canada, R0A1E0

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn:  Meagan Caldwell

           Re. Form 10-KSB for the fiscal year ended June 30, 2004
           Re. Form 10-QSB for the period ended September 30, 2004

Ms. Caldwell:

Following are our responses to the comment letter dated January 21, 2005 (the
"Letter"), prepared by the staff of the Securities and Exchange Commission (the
"Staff") relating to the above referenced registration statement.

Each numbered paragraph below corresponds to the numbered paragraph in the
Letter:

     1. N/A

     2. The nature of the business prior to the acquisition of Hybrid Fuels, USA
     and 330420 BC Ltd. in May 1998 was one of researching and testing various
     individual components. All costs were borne privately. The corporation
     330420 BC Ltd. was established as a subsidiary and would operate as part of
     a long-range development plan in Canada. There were no bankruptcies,
     material mergers or sales of significant assets.

     3. The accounting procedure for the commercial facility constructed near
     Cardston, Alberta was the responsibility of a private builder group. Once
     the builder group had completed construction and demonstrated the facility
     was fully operational, the commercial facility was to be transferred to
     Hybrid's subsidiary, Hybrid Fuels (Canada) Inc. (formerly 330420 BC Ltd.).

     The facility was never completed and therefore never operational and
     therefore, the accounting procedure is not the responsibility of Hybrid
     Fuels Inc.

     The incident of the farmer removing the structures from the farm is before
     the Law Courts in Alberta in a private law suit that does not involve
     Hybrid Fuels Inc. or its subsidiary, Hybrid Fuels Canada (formerly 330420
     BC Ltd.).

     4. Energy contained in a gallon of fuel (when referring to liquids) are
     measured in BTUs (British Thermal Units). The production of ethanol
     requires expenditure of energy and is one of the major costs. Ethanol per
     gallon contains about 80,000 BTUs. If production of that gallon requires
     burning of 1 gallon of diesel fuel which is rated at 125,000 BTUs per
     gallon then there is a negative "Energy Balance." Modern distilleries
     should run with approximately 3:1 favourable "Energy Balance." In our case
     we recover the energy required to produce ethanol from the
     gasifying/burning of manure and waste bedding. Our final "energy balance"
     is therefore very highly favourable and is as low as shown only because we
     include the energy costs of growing the grain and most calculations do not
     take this into account.

     5. The Company does not have any employees. The Company has used
     consultants or independent contractors for the various tasks required to be
     performed on a quarter-by-quarter basis.

     6. Our subsidiary has entered into a verbal agreement with a group of
     Hybrid Fuels Inc. shareholders to construct a fully operational facility.
     No written contracts have been made. This will be included as a risk factor
     in the 10KSB.

                                       1
<PAGE>

     7. Cattle prices can be volatile and could result in a loss on cattle
     finishing. This will be included as a risk factor in the 10KSB.

     8. This private shareholder group is bearing the financial burden of
     construction and retains legal ownership until the facility is completed
     and all systems are operational. At that time, the Company will negotiate
     with the group to acquire or lease the facility on mutually agreeable
     terms.

     9. Construction of the facility is expected to be completed by March 31,
     2005. The feed system, including the growth cycle of the barley grass,
     would be prepared during the next 30 days. Operations are expected to
     commence by April 30, 2005 once the feed system is ready for the first
     delivery of cattle.

     10. In the quarter ending September 30, 2003, our wholly-owned subsidiary,
     Hybrid Fuels (Canada) Inc., entered into a verbal agreement with a group of
     Hybrid Fuels Inc. shareholders to construct a fully operational facility at
     Oyama, BC.

     The Company has no funding source except through private sources and until
     one facility is fully operational and demonstrates cash flow, Hybrid Fuels
     Inc. and its subsidiary have limited access to banks, trust companies, and
     other traditional lending sources. The private shareholder group is bearing
     the financial burden of construction and retains legal ownership.

     Once the facility is completed and all systems are operational the Company
     will negotiate with the shareholder group to acquire or lease the facility
     on mutually agreeable terms.

     11. The Company does not have legal ownership or obligations relating to
     the facility therefore no amounts have been recorded in the Company's
     consolidated financial statements.

     Once the facility is completed and all systems are operational the Company
     will negotiate with the group to acquire or lease the facility on mutually
     agreeable terms.

     12. We expect that at the end of the fourth month of operations, when we
     sell the first group of finished cattle, we will have an initial set of
     data from which to prepare pro forma information for purposes of estimating
     cash flows and generating a current business plan.

     13. Construction of the facility is expected to be completed by March 31,
     2005. The feed system, including the growth cycle of the barley grass,
     would be prepared during the next 30 days. Operations are expected to
     commence by April 30, 2005 once the feed system is ready for the first
     delivery of cattle.

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

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

     The amount we anticipate spending on research and development for fiscal
     2005 is $20,000.

     14. Listed below are the Company's critical accounting policies:

     The preparation of our consolidated financial statements in conformity with
     accounting principles generally accepted in the United States requires us
     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. While there are a number of significant accounting
     policies affecting our consolidated financial statements, we believe the
     following two critical accounting policies involve the most complex,
     difficult and subjective estimates and judgements:

                                       2
<PAGE>

          o    Foreign currency translation
          o    Stock-based compensation

     Foreign Currency Translation

     Our 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. We have not, to the date of these
     financial statements, entered into derivative instruments to offset the
     impact of foreign currency fluctuations.

     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.

     Statement of Financial Accounting Standards No. 123, "Accounting for
     Stock-Based Compensation," (SFAS 123), established a fair value based
     method of accounting for stock-based awards. Under the provisions of SFAS
     123, companies that elect to account for stock-based awards in accordance
     with the provisions of APB 25 are required to disclose the pro forma net
     income (loss) that would have resulted from the use of the fair value based
     method under SFAS 123.

     The Company follows the disclosure requirements of Statement of Financial
     Accounting Standards No. 148, "Accounting for Stock-Based Compensation --
     Transition and Disclosure an Amendment of FASB Statement No. 123" (SFAS
     148), which requires more prominent disclosures in both annual and interim
     financial statements regarding the method of accounting for stock-based
     employee compensation and the effect of the method used on reported
     results. As of December 31, 2004, the Company has not issued any stock
     options.

     15. The Company was originally incorporated in the state of Florida on
     February 16, 1960 as Fiberglass Industries Corporation of America. A copy
     of the Articles of Incorporation was included as an exhibit in the
     Company's Form 10-SB registration statement.

     16. The functional and reporting currency of the Company is the United
     States dollar. The wording in Note 2(e) to the financial statements was
     incorrectly changed from United States to Canadian. This has been corrected
     in the Form 10-QSB for the period ending December 31, 2004.

     17. We excluded the restricted shares issued in calculating the basic and
     dilutive EPS. We have disclosed this in the Form 10-QSB for the period
     ending December 31, 2004.

     18. To date there have been no stock options issued to employees or
     non-employees.

     19. Additional paragraph added to the beginning of Note 6 and additional
     disclosure added in Note 6 (h):

     All transactions in which goods or services are the consideration received
     for the issuance of equity instruments are accounted for based on the fair
     value of the consideration received or the fair value of the equity
     instrument issued, whichever is more reliably measurable. Equity
     instruments issued to employees and the cost of the services received as
     consideration are measured and recognized based on the fair value of the
     equity instruments issued.

     On March 29, 2004, 600,000 shares of common stock were issued to two
     directors for director services at a price of $0.14 per share. Of these
     shares issued, 400,000 shares related to services to be provided for the
     period from January 1 to December 31, 2004. As a result $27,299 has been
     charged to operations and the remaining balance of $27,299 has been
     recorded as deferred compensation. The fair value of the shares was based
     on the fair market value of the shares at the time the shares were issued.

                                       3
<PAGE>

     20. The securities must be owned and fully paid for at least one year.
     After the one-year holding period, the number of shares non-affiliates may
     sell during any three-month period can't exceed 1% of the outstanding
     shares of the same class being sold.

     At the time an order to sell is placed, a notice must be filed with the SEC
     on Form 144 if the sale involves more than 500 shares or the aggregate
     dollar amount is greater than $10,000 in any three-month period. The sale
     must take place within three months of filing the Form and, if the
     securities have not been sold, an amended notice must be filed.

     Provided that the seller meets the conditions of Rule 144 the restriction
     can only be removed by the transfer agent with the consent of the issuer in
     the form of an opinion letter from the issuer's legal counsel.

     If the shares have been owned for two years or more, no volume restrictions
     apply to non-affiliates.

     21. Additional disclosures added to Notes 6 (d) (e) (f) (h) (j):

       6. (d) On September 10, 2003, 7,500 shares of common stock were issued
     at a price of $0.25 per share in consideration for investor relations
     services rendered for a total value of $1,875.

          (e) On September 23, 2003, 7,500 shares of common stock were issued at
     a price of $0.25 per share in consideration for investor relations services
     rendered for a total value of $1,875.

          (f) On October 23, 2003, 7,500 shares of common stock were issued at a
     price of $0.14 per share in consideration for investor relations services
     rendered for a total value of $1,050.

          (h) On March 29, 2004, 600,000 shares of common stock were issued to
     two directors for director services at a price of $0.14 per share for a
     total value of $84,000. Of these shares issued, 400,000 shares related to
     services to be provided for the period from January 1 to December 31, 2004.
     As a result $27,299 has been charged to operations and the remaining
     balance of $27,299 has been recorded as deferred compensation. The fair
     value of the shares was based on the share price of cash sales at the time
     the shares were issued. The fair value of the shares was based on the fair
     market value of the share at the time the shares were issued.

          (j) On April 1, 2004, 133,333 shares of common stock were issued at
     $0.23 per share in consideration for investor relations services rendered
     for a total value of $30,667, and 33,333 shares of common stock were issued
     at $0.23 per share in consideration for management fees for a total value
     of $7,667.

     22. The terms of the restrictions are:

     The securities must be owned and fully paid for at least one year. After
     the one-year holding period, the number of shares non-affiliates may sell
     during any three-month period can't exceed 1% of the outstanding shares of
     the same class being sold.

     At the time an order to sell is placed, a notice must be filed with the SEC
     on Form 144 if the sale involves more than 500 shares or the aggregate
     dollar amount is greater than $10,000 in any three-month period. The sale
     must take place within three months of filing the Form and, if the
     securities have not been sold, an amended notice must be filed.

     Provided that the seller meets the conditions of Rule 144 the restriction
     can only be removed by the transfer agent with the consent of the issuer in
     the form of an opinion letter from the issuer's legal counsel.

     If the shares have been owned for two years or more, no volume restrictions
     apply to non-affiliates

     23. Pursuant to the footnote by regulation S-B Item 401(f) and SEC Release
     33-8220, the Company is not subject to the audit committee disclosures.

     24. A code of ethics has been adopted by the Board of Directors and will be