Hybrid Fuel Systems - Phase II Begins: Emissions Testing Commences at Olson-Ecologics Laboratory

TAMPA, Fla.--July 21, 2004--Hybrid Fuel Systems, Inc., ("Hybrid" or "the Company") (OTC:HYFS) today announced commencement of the formal process for EPA/CARB verification of emissions at Olson-Ecologics laboratory in Fullerton, California.

In order to qualify for U.S. Federal and state grants and tax benefits, the reduction in polluting emissions achieved from Hybrid's Digital Fuel System must be measured by independent testing agencies and verified by the EPA/CARB. Hybrid currently has CARB verification for the Company's Mechanical Fuel System on older model-year four-stroke heavy-duty vehicles 1993 and older excluding those equipped with self-compensating or electronic fuel pumps.

During June 2004, the HFS completed a six-month intensive development project of its Digital Fuel System through emission and other measurements of a Mack E7 350+ horsepower engine at the BAF testing facilities in Dallas, Texas. Phase II in Hybrid's Digital Fuel System verification process is to formally test emissions at Olson-Ecologics laboratory in Fullerton, California, an approved laboratory for EPA/CARB. Testing protocol includes a set-up phase followed by a series of measurements followed by a 1,000 hour operating period during which further measurements are taken. Following the 1,000 hour period, the same measures taken initially are repeated and compared. We estimate this portion of the verification process will take approximately eight weeks. Upon completion of the eight week period the raw data collected is compiled into a report which is then submitted to the EPA/CARB. Approximately four weeks following the delivery of the final report, the EPA/CARB will issue a letter indicating the success or failure of our verification

"We have completed Phase I testing for CARB Verification," said CEO Mark Clancy. "This goal was first expressed by our company in the mid 90s and the acceleration of development during the last six months has allowed us to reach this critical goal. We are optimistic of a favorable outcome from this process and look forward to offering for sale a market-ready and verified digital dual fuel option in the fourth quarter of 2004," concluded Mr. Clancy.

About Hybrid Fuel Systems: Hybrid was incorporated in the State of Georgia in 1996 to manufacture and market retrofit systems for the conversion of gasoline and diesel engines, stationary or vehicular, to non-petroleum based fuels such as compressed natural gas and liquefied natural gas. Since 1998, we have dedicated our research and development exclusively to conversion kits for diesel-powered engines. We currently market alternative fuel conversion kits for diesel fuel engines which include a patented device. Our dual fuel conversion technology, utilizing either compressed or liquefied natural gas, has demonstrated diesel vehicles can be successfully and economically retrofitted to utilize natural gas as a dual fuel. No engine modifications are required and vehicles retain the diesel engine qualities of performance, torque, power, and efficiency. On-the-road results indicate diesel fuel consumption can be offset by as much as 85% with natural gas. To learn more about HFS visit our internet website at http://www.hybridfuelsystems.com. Since December 2003 Hybrid has been managed and operated by White Knight SST, Inc. Visit the internet website of White Knight at http://www.whiteknightsst.com.