================================================================================
SCHEDULE 14A
(RULE
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
x
Filed by a Party other than the Registrant [_]
o
Check the appropriate box:
[_]
x Preliminary Proxy Statement
[_]
o Confidential, For Use of the Commission Only (As Permitted by Rule 14a-6(e)(2))
[X]
o Definitive Proxy Statement
[_]
o Definitive Additional Materials
[_]
o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HYBRID TECHNOLOGIES, INC.
(Name
(Name of Registrant as Specified In Its Charter)
(Name
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]
x No fee required
[_]
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]
o Fee paid previously with preliminary materials.
[_]
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION DATED NOVEMBER , 2007
HYBRID TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 2006
DECEMBER , 2007
Las Vegas, Nevada
May 9, 2006
November , 2007
The Annual Meeting of Stockholders (the "Annual Meeting") of Hybrid Technologies, Inc., a Nevada corporation (the "Company"), will be held at the Best Western Port O'Call Hotel,1935 McKnight Boulevard NE,Calgary, Alberta, T2E 6V4, Canada, on Monday, May 29, 2006,Friday, December 21 , 2007, at 8:00 A.M. (local time) for the following purposes:
1. To elect fivefour directors to the Corporation's Board of Directors, each to hold office for a one-year term, and until his or her successor is elected and qualified or until his or her earlier resignation or removal (Proposal No. 1);
2. To amend the Articles of Incorporation of the Company to increase the authorized number of shares of Common Stock from 27,000,00050,000,000 to 50,000,000250,000,000 (Proposal No. 2); and
3. To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are more fully described in the Proxy Statement which is attached and made a part of this Notice.
The Board of Directors has fixed the close of business on Friday, May
5, 2006,Monday, November 19, 2007, as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in person. However, whether or not you expect to attend the Annual Meeting in person, you are urged to mark, date, sign and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope provided to ensure your representation and the presence of a quorum at the Annual Meeting. If you send in your proxy card and then decide to attend the Annual Meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ Holly A. Roseberry
-----------------------
President and Chief Executive Officer
| /s/ Holly A. Roseberry | |
| President and Chief Executive Officer |
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION DATED NOVEMBER , 2007
HYBRID TECHNOLOGIES, INC.
5001
5841 East Bonanza Road
Charleston
Suite 138-145
230-145
Las Vegas, Nevada 89110
89142
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the "Board") of Hybrid Technologies, Inc., a Nevada corporation (the "Company"), of proxies in the enclosed form for use in voting at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at the Best Western Port O'Call Hotel, 1935 McKnight Boulevard NE,Calgary, Alberta, T2E 6V4, on Monday, May 29, 2006,Friday, December 21, 2007, at 8:00 A.M. (local time), and any adjournment or postponement thereof.
Only holders of record of the Company's Common Stock, par value $.001 per share (the "Common Stock"), on May 5, 2006November 19, 2007 (the "Record Date") will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, the Company had outstanding 24,650,563__________- shares of Common Stock.
Any person giving a proxy in the form accompanying this Proxy Statement has the power to revoke it prior to its exercise. Any proxy given is revocable prior to the Annual Meeting by an instrument revoking it or by a duly executed proxy bearing a later date delivered to the Secretary of the Company. Such proxy is also revoked if the stockholder is present at the Annual Meeting and elects to vote in person.
The Company will bear the entire cost of preparing, assembling, printing and mailing the proxy materials furnished by the Board of Directors to stockholders. Copies of the proxy materials will be furnished to brokerage houses, fiduciaries and custodians to be forwarded to the beneficial owners of the Common Stock. In addition to the solicitation of proxies by use of the mail, some of the officers, directors and regular employees of the Company may (without additional compensation) solicit proxies by telephone or personal interview, the costs of which the Company will bear.
This Proxy Statement and the accompanying form of proxy is being sent or given to stockholders on or about May 9, 2006.
November , 2007.
Stockholders of the Company's Common Stock are entitled to one vote for each share held. Such shares may not be voted cumulatively.
Each validly returned proxy (including proxies for which no specific instruction is given) which is not revoked will be voted "FOR" each of the proposals as described in this Proxy Statement and, at the proxy holders' discretion, on such other matters, if any, which may come before the Annual Meeting (including any proposal to adjourn the Meeting).
Determination of whether a matter specified in the Notice of Annual Meeting of Stockholders has been approved will be determined as follows.
As to Proposal No. 1, those persons will be elected directors who receive a plurality of the votes cast at the Annual Meeting in person or by proxy and entitled to vote on the election. Accordingly, abstentions or directions to withhold authority will have no effect on the outcome of the vote.
Proposal No. 2, approval of an amendment of the Articles of Incorporation of the Company to increase the authorized number of shares of Common Stock from 27,000,00050,000,000 to 50,000,000,250,000,000, requires for approval the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock.
Abstentions will be considered shares present in person or by proxy and entitled to vote and, therefore, will have the effect of a vote against the matter. Broker non-votes will be considered shares not present for this purpose and will have no effect on the outcome of the vote. Directions to withhold authority to vote for directors, abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present for the Annual Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the stockholders will elect five (5)four (4) directors to serve one year terms or until their respective successors are elected and qualified.
In the event any nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, the proxies may be voted for the balance of those nominees named and for any substitute nominee designated by the present Board or the proxy holders to fill such vacancy, or for the balance of the nominees named without nomination of a substitute, or the size of the Board may be reduced in accordance with the By-Laws of the Company. The Board has no reason to believe that any of the persons named below will be unable or unwilling to serve as a nominee or as a director if elected.
Assuming a quorum is present, the fivefour nominees receiving the highest number of affirmative votes of shares entitled to be voted for them will be elected as directors of the Company for the ensuing year. Unless marked otherwise, proxies received will be voted "FOR" the election of each of the fivefour nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of as many of the nominees listed below as possible, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.
Name Age Position
Holly A. Roseberry....................... 54 Chief Executive Officer,
President and Director
Mehboob Charania......................... 50 Director
Brian Newman............................. 55 Director
Greg Navone.............................. 59 Director
Shaffiq Kotadia.......................... 49 Director
Name | | Age | | Position |
| | | | |
| Holly A. Roseberry | | 55 | | Chief Executive Officer, President and Director |
| | | | |
| Mehboob Charania | | 51 | | Director |
| | | | |
| Brian Newman | | 56 | | Director |
| | | | |
| Greg Navone | | 60 | | Director |
The following information with respect to the principal occupation or employment of each nominee for director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such nominee's business experience during the past five years, has been furnished to the Company by the respective director nominees:
2
HOLLY A. ROSEBERRY was appointed as our secretary, treasurer and chief financial officer on February 20, 2002. On November 15, 2002, she resigned from these positions and was appointed as our president, chief executive officer and as a director. From 2001 to 2003, she acted as manager for the Azra Shopping Center. She obtained a Bachelor of Arts degree from Sacred Heart University in Bridgeport, Connecticut in 1973. Ms. Roseberry was employed from 1993 to 1996 as human resources manager, and from 1997 to 1999 as business office manager, of the Las Vegas location of Wards Department Store. Ms. Roseberry has held the positions of President, Chief Executive Officer and a Director of our majority-owned subsidiary, Zingo, Inc. since August 30, 2005.
MEHBOOB CHARANIA has acted as our secretary treasurer and chief
financial officer since November 15, 2002. Since June 2001, Mr. Charania has been the owner and operator of Infusion Bistro, a restaurant located in Calgary, Alberta. From 1998 to 2001, he acted as a manager at IBM's Calgary office. Mr. Charania has held the position of Secretary and a Director of our majority-owned subsidiary, Zingo, Inc. since August 30, 2005.
BRIAN NEWMAN age 55, graduated with a Bachelor of Commerce degree from the University of Calgary in 1978, and received a degree as a Chartered Accountant from the Institute of Chartered Accountants in Alberta in 1982. He has been a director and President of Brian Newman Professional Corporation, a public accounting firm located in Calgary, Alberta for the past 25 years. Mr. Newman has served since September 2004 to the present as a director of Olympia Financial Group, and since September 2004 to the present has also served as a director of Albury Resources Ltd. Both of these companies are publicly traded in Canada, but neither is a reporting company under the Securities Exchange Act of 1934.
GREGORY NAVONE age 59, graduated from St. Mary'sMary’s College in Morgan, California, in 1968, with a Bachelor of Arts degree. For the past two years, Mr. Navone has been the owner and President of First Interstate Mortgage, a mortgage banking firm. Since 1987, Mr. Navone has been the owner and President of First Capital Financial. Both these firms are located in Las Vegas, Nevada. Mr. Navone was appointed a director of the Company shortly following its incorporation in April 2000, and served as a director until February, 2002.
SHAFFIQ KOTADIA, age 49, a computer infrastructure specialist, has been a
director and President since 1990 of The Dolphin Project Inc., an information
technology consulting firm located in Calgary, Alberta. Mr. Kotadia graduated
from the University of British Columbia in 1979 with a Bachelor of Science
degree in physics/geophysics.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended July 31, 2005,2007, the Board of Directors of the Company acted by unanimous written consent on eighteen (18) occasions.held eight (8) meetings. No director nominated for election at the Annual Meeting attended fewer than 100% of the total number of meetings of the Board of Directors during the last fiscal year.
Our directors are elected by the stockholders and our officers are appointed by our board of directors. Our officers hold office until their successors are elected and qualified. Vacancies in our board are filled by the board itself.
We do not have an audit committee, although we intend to establish such
a committee followingof which Mr. Brian Newman is the Annual Meeting.sole member. We believe that Mr. Brian Newman qualifies as an "audit“audit committee financial expert"expert” under the rules of the Securities and Exchange Commission and we intend that Mr. Newman would be
appointed by the Board as an independent member of the Audit Committee.
Commission.
We do not have a nominating committee or a compensation committee, or a committee or committees performing the functions of such committees. Following the Annual Meeting, we intend to establish a nominating committee and a compensation committee, each composed of independent directors. Follwing the Annual Meeting the newly-elected Board of Directors will
consider and adopt a Code of Ethics.
There are no formal procedures for stockholders to nominate persons to serve as directors; however, the Board will consider nominations from stockholders, which should be addressed to Holly A. Roseberry, Chief Executive Officer, at the Company'sCompany’s address set forth above.
Stockholder Communications with the Board of Directors
3
Our stockholders may communicate with our Board of Directors by writing directly to the Board of Directors or to Holly A. Roseberry, Chief Executive Officer, at the Company'sCompany’s address set forth above.
Our corporate officer will deliver stockholder communications to the Board of Directors.
COMPENSATION OF DIRECTORS
Directors currently receive no compensation for meetings attended and are reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the Board or any committee thereof they attend.
The proxy holders intend to vote the shares represented by proxies for all of the Board's nominees, except to the extent authority to vote for the nominees is withheld.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL
NOMINEES NAMED ABOVE.
MANAGEMENT
Executive Officers and Directors
Our executive officers and directors and their respective ages as of May 1, 2006October 31, 2007 are as follows:
Name Age Office
- -------------------- ----- ------
Holly Roseberry 54 President, Chief Executive
Officer and Director
Mehboob Charania 50 Secretary, Treasurer, and
Director
Name | | Age | | Position |
| | | | |
| Holly A. Roseberry | | 55 | | Chief Executive Officer, President and Director |
| | | | |
| Mehboob Charania | | 51 | | Director |
| | | | |
| Brian Newman | | 56 | | Director |
| | | | |
| Greg Navone | | 60 | | Director |
Our Board of Directors now consists of four directors. Shaffiq Kotadia resigned as a director on October 19, 2007 for personal reasons.
No director or executive officer of the Company has any family relationship with any other director or executive officer of the Company.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who beneficially own more than ten percent of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on its review of the copies of such forms received by it, the Company believes that during the fiscal year ended July 31, 2007 all such filing requirements applicable to its officers and directors were complied with.
Executive Compensation
The following table sets forth certain information as to the Company's highest paid executive officers and directors for the Company's fiscal years ended July 31,
20052007 and
2004, and for the six months ended July 31, 2005.2006. No other compensation was paid to any such officer or director other than the cash compensation set forth below.
4
Annual Compensation Awards Payouts
- --------------------------------------------- ------------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Comp. Awards Options/ Payouts Comp.
Position * ($) ($) ($) ($) SARs(#) ($) ($)
- -------------- ---- ------ ----- ------ ---------- ---------- ------- ---------
Holly . 2005 $48,926
Roseberry 2004 $6,225
President **
-----------------
SUMMARY COMPENSATION TABLE
Name and
Principal
Position** | | Year
* | | Salary
($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonquali- fied Deferred Compensation Earnings ($) | | All Other Compen- Sation | | Total ($) | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | |
| Holly | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Roseberry | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| President | | | 2006 | | $ | 48,300 | | | | | | | | | | | | | | | | | | | | $ | 48,300 | |
| | | | 2007 | | $ | 60,500 | | | | | | | | | | | | | | | | | | | | $ | 60,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mehboob | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Charania, | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Director | | | 2007 | | $ | 1,827 | | | | | | | | | | | | | | | | | | | | $ | 1,827 | |
* Years ended July 31, 20052007 and July 31, 2004. Ms. Roseberry's direct
compensation for the six months ended July 31, 2005 was $26,000.
**2006.
** Holly Roseberry has held the office of President since November 15, 2002. Ms. Roseberry's functions as President have included, in addition to accounting and regulatory filing oversight, management and the sale of the Azra shopping center, general management of our day-to-day operations, working with the attorneys and accountants for the Company, general oversight of the agreements with and oversight of consultants to the Company and correspondence with the Company's transfer agent. Ms. Roseberry, as President and Chief Executive Officer, received management fees of $1,100 per week through December 31, 2006 and $1,210 per week thereafter in our 2007 fiscal year. Her compensation for 2007 included $12,000 of directors fees paid by Zingo, Inc., our wholly-owned telecommunications subsidiary.
Option/SAR Grants in Last Fiscal Year
There were no grant of options to purchase our common stock to our officers or directors in fiscal 2005,2007, and there were no exercises of such options during or options held at the end of such fiscal year by officers or directors.
Directors’ Compensation
Commencing June 1, 2006, we have paid Brian Newman, Gregory Navone and Shaffiq Kotadia directors’ fees of $1,000 per month. Ms. Roseberry is compensated as Chief Executive Officer, and receives no additional directors fees from the Company for acting as a director. In our fiscal year ended July 31, 2007, Ms. Roseberry received $12,000 in directors fees from Zingo, Inc., our majority-owned telecommunications subsidiary.
DIRECTOR COMPENSATION
| Name | | Fees
Earned or
Paid in
Cash ($) | | Stock
Awards ($) | | Option
Awards ($) | | Non-Equity
Incentive Plan
Compensation ($) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) | | All Other
Compensation
($) | | Total
($) | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | |
| Brian Newman | | $ | 12,000 | | | | | | | | | | | | | | | | | $ | 12,000 | |
| Gregory Navone | | $ | 12,000 | | | | | | | | | | | | | | | | | $ | 12,000 | |
| Shaffiq Kotadia | | $ | 12,000 | | | | | | | | | | | | | | | | | $ | 12,000 | |
PRINCIPAL STOCKHOLDERS
The following table sets forth
ascertain information concerning the number of
March 31, 2006, the beneficial
ownership of the Common Stock of the Company by each person beneficially owning
more than 5% of such securities, by each of the directors and executive officers
of the Company, and by the directors and executive officers of the Company as a
group. At March 31, 2006, a total of 24,645,646 shares of Common Stock were
outstanding.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock
- ------------- ------------------- ---------------- -----------
Common Stock Salim S. Rana Investments Corp. 4,385,685 18%
5001 E. Bonanza Rd., Suite
138-145, Las Vegas,
Nevada 89110 (1)
Common Stock Holly Roseberry 2,300 *
President, CEO, Director
5001 E. Bonanza Rd.,
Suite 138-145
Las Vegas, Nevada 89019
5
Common Stock All Officers and Directors 2,300 *
as a Group that consists of
two people
Common Stock Sterling Capital Corp. 13,326,882 54%
- -------------------------
* Less than 1%
(1) Salim R. Rana is the President of Salim S. Rana Investments Corp.
(3) The address of Sterling Capital Corp. is 200-675 West Hastings Street,
Vancouver, B.C., V6B 1N2
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Acquisition and Disposition of Azra Shopping Center
By an agreement dated April 10, 2002, we acquired from Salim S. Rana Investments
Corp., a private Nevada company ("SSRIC"), a 100% interest in the real property
and all buildings and improvements situated thereon, known as the Azra Shopping
center, located in Las Vegas, Nevada. The purchase price was $4,150,000 and was
paid as follows:
1. We issued 40,000,000 shares of common stock for $0.01 per share;
2. We assumed a first mortgage on the Azra Shopping Center for $3,150,000; and
3. We issued a promissory note for $600,000 to SSRIC.
The purchase of the Azra shopping center was negotiated with SSRIC and
approved by our Board, based on the Board's view of the possible value of the
Azra shopping center. The Company believes that these were arms-length
negotiations.
We completed the acquisition through our wholly-owned subsidiary,
Whistler Commercial Holding, Inc., on April 15, 2002, with operations
transferring effective May 1, 2002.
On January 1, 2003, we sold the Azra shopping center. In connection
with the disposition of the Azra shopping center, the Company sold the stock,
valued at $100, of Whistler Commercial Holding, Inc., the subsidiary holding
title to the property, for $100 to Kim Larsen, an unrelated third party
purchaser, as an investment property. Mr. Larson assumed the mortgage debt. The
assumption of the mortgage debt represented the purchase price negotiated for
the property, hence the minimal price attributed to the sale of the subsidiary's
stock. The Company then assumed the unpaid balance of $377,960 of the $600,000
note to SSRIC, since the Company's subsidiary was liable on this debt and the
purchaser was not willing to assume the debt to SSRIC in connection with its
purchase of the Azra property.
The basis for the Company's decision regarding the sale of the Azra
property and the assumption of debt by the Company in connection with the sale
of this property are that the prospects for the shopping center became much less
favorable, due to the continuing economic decline following the terrorist
attacks on September 11, 2001. The vacancy rate in May 2002 was approximately
10%, and by the end of the year was about 35%. The rents had declined from
approximately $30,000 per month to approximately $26,000 per month, and the
property was losing money.
6
We incurred a loss of $757,024 during the fiscal year from these
discontinued operations.
During our fiscal year ended January 31, 2004, SSRIC advanced approximately
$175,000 additionally to the Company. We have repaid this debt and all
subsequent advances by this stockholder as of February 25, 2004.
During the year ended January 31, 2004, interest in the amount of $24,070
relating to the Azra shopping center debt was paid to SSRIC. Since the amount
due was not repaid in the required $200,000 installments due on January 31, 2003
and January 31, 2004, the debt was subject to simple interest at 10%; by
agreement with SSRIC interest was accrued through October 31, 2003, only and not
thereafter.
We entered into a Stock Redemption and Reissuance Agreement (the
"Redemption Agreement"), dated as of February 10, 2004, with SSRIC, our major
stockholder, pursuant to which SSRIC on February 10, 2004, contributed 1,000,000 shares of our common stock (3,000,000owned beneficially as of October 24, 2007 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors, and (iii)officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares adjusted for the three-for-one
forward split effective March 10, 2004) owned by SSRIC (the "Shares") to our
treasury. At that time, we had only 6,000 authorized but unissuedshown.| Title of class | | Name and address of beneficial owner | | Number of Shares of Common Stock | | Percentage of Common Stock (1) | |
| Common Stock | | Holly Roseberry | | 3,876 | | * | |
| | | President, CEO, Director | | | | | |
| | | 5841 E. Charleston, Suite 230-145 | | | | | |
| | | Las Vegas, Nevada 89142 | | | | | |
| | | | | | | | |
| | | All Officers and Directors | | 3,876 | | * | |
| | | Directors as a Group that | | | | | |
| | | Consists of four persons | | | | | |
| | | | | | | | |
| | | Eurolink Corporation | | | | | |
| | | 35 New Road, Lower Flat PP Box 211 | | | | | |
| | | Belize City, Belize | | 14,691,254 | | 37.2 | % |
| | | | | | | | |
| | | Esmeralda Development Ltd. | | | | | |
| | | 200-675 West Hastings St. | | | | | |
| | | Vancouver, BC Canada V6B 1N2 | | 2,194,847 | | 5.5 | % |
| | | | | | | | |
| | | Rocamar Investments Ltd. | | | | | |
| | | 2502-1331 W Georgia St. | | | | | |
| | | Vancouver, BC Canada V6E 4P1 | | 2,343,000 | | 5.9 | % |
* Less than 1%
(1) As of October 24, 2007, there were 39,500,511 shares of our common stock available for issuance upon exercise of options or for consultants
or potential private investorsissued and outstanding.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In our fiscal year ended July 31, 2007, Ms. Roseberry received $12,000 in the Company. Under the Redemption Agreement,
SSRIC contributed the Shares to the Company's treasury at no cost to the
Company. The Company had the ability under the Redemption Agreement, and did,
utilize the shares for proper corporate purposes, including option exercises and
issuances to consultants. Under the Redemption Agreement, the Company was
obligated to return the Shares, at no cost, to SSRIC upon the first to occur of
the following events: (1) the return to the Company of the certificate for
3,375,000 shares of common stock held improperly by International Business
Consultants GMBH in escrow for a financing that had not closed and had no
prospect of closing, or (2) an increase in the Company's authorized common stock
of at least 3,000,000 shares as contemplated by the Company's information
statement referred to above. On May 20, 2004, International Business Consultants
GMBH redelivered to the Company the certificate for 3,375,000 shares, anddirectors fees from Zingo, Inc., our suit against this company and others associated with it will be withdrawn. Based
on the return of these shares, on June 3, 2004, the Company reissued the
3,000,000 shares contributed to the Company's treasury by SSRIC.
majority-owned telecommunications subsidiary.
PROPOSAL NO. 2
APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
THE COMPANY'S COMMON STOCK, PAR VALUE $.001 PER SHARE, FROM
27,000,000
50,000,000 TO 50,000,000
250,000,000
The Board of Directors of the Company has adopted a resolution unanimously approving and recommending to the Company's stockholders for their approval an amendment to the Company's Articles of Incorporation to provide for an increase of the number of shares of Common Stock that the Company is authorized to issue from 27,000,00050,000,000 to 50,000,000.
250,000,000.
The Board of Directors recommends the proposed increase in the authorized number of shares of Common Stock to insure that a sufficient number of authorized and unissued shares is available (i) for
issuance as collateral security for loans made to us under the Wyndom Capital, Inc. Loan Agreement, for which 10,000,000 shares are requred; (ii) for the 2006 Restricted Stock Plan, pursuant to which
5,000,0003,000,000 shares are reserved, availability of the full number of shares so reserved being subject to approval of this amendment;
(ii)(iii) to raise additional capital for the operations of the Company; and
(iii)(iv) to make options and shares available to employees, future non-employee directors and consultants of the Company as an incentive for services provided to the Company. Such shares would be available for issuance by the Board of Directors of the Company without further action by the stockholders, unless required by the Company's Certificate of Incorporation or by the laws of the State of Nevada. Neither the presently authorized shares of Common Stock nor the additional shares of Common Stock that may be authorized pursuant to the proposed amendment carry preemptive rights.
7
As of March 31,October 24, 2006, we had 5,000,0003,000,000 shares of Common Stock reserved for issuance under our 2006 Restricted Stock Plan.Plan, and we are required to issue 10,000,000 shares to be held as collateral security in connection with the Wyndom Capital Loan Agreement. Therefore, with 24,645,64639,500,511 shares of common stock issued and outstanding as of March 31, 2006,October 24, 2007, we do not have approximately 2,350,000an adequate number of shares available for issuance upon grant of future options or for other corporate purposes. Approval of this amendment will be necessary for us to be able to issue options for the full number of shares reserved under the 2006 Restricted Stock Plan. There are currently no set plans or arrangements relating to the possible issuance of any additional shares of Common Stock proposed to be authorized.
The additional shares of Common Stock, if issued, would have a dilutive effect upon the percentage of equity of the Company owned by present stockholders. The issuance of such additional shares of Common Stock might be disadvantageous to current stockholders in that any additional issuances would potentially reduce per share dividends, if any. Stockholders should consider, however, that the possible impact upon dividends is likely to be minimal in view of the fact that the Company has never paid dividends, has never adopted any policy with respect to the payment of dividends and does not intend to pay any cash dividends in the foreseeable future. In addition, the issuance of such additional shares of Common Stock, by reducing the percentage of equity of the Company owned by present stockholders, would reduce such present stockholders' ability to influence the election of directors or any other action taken by the holders of Common Stock.
If Proposal No. 2 is approved by the Company's stockholders, the Board of Directors expects to file a Certificate of Amendment to the Company's Articles of Incorporation increasing the number of authorized shares of Common Stock as soon as practicable after the date of the Annual Meeting. The Certificate of Amendment would amend and restate paragraph (a) of Article III of the Company's Articles of Incorporation to read substantially as follows:
" Article III
(a) The corporation shall have authority to issue a total of Two Hundred Fifty-Five Million (55,000,000)(255,000,000) shares, of which Two Hundred Fifty Million (50,000,000)(250,000,000) shares shall be Common Stock, par value $.001 per share (the "Common Stock"), and Five Million (5,000,000) shares shall be Preferred Stock, par value $.001 per share (the "Preferred Stock")."
”
The Company's authority to issue up to 5,000,000 shares of Preferred Stock, par value $.001 per share, would remain unchanged by the proposed amendment.
Annexed to this Proxy Statement and marked Exhibit A is the proposed amendment to the Articles of Incorporation of the Company.
The vote required for approval of the Proposal to amend the Articles of Incorporation is the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION.
8
DISSENTERS' DISSENTERS’ OR APPRAISAL RIGHTS
Under Nevada law, our stockholders do not have any dissenters'dissenters’ or appraisal rights with respect to the approval of the Certificate of Amendment.
INDEPENDENT AUDITORS
Mason Russell West LLC (now Haynie & Company, as a result of a November 1, 2007 merger of Mason Russell West LLC with Haynie & Company in which its name was changed to Haynie & Company), has served as the Company's independent auditors since our 2004 fiscal year and has been appointed by the Board to continue as the Company's independent auditors for the fiscal year ending July 31, 2006. Mason Russell West LLC2008. Haynie & Company has no interest, financial or otherwise, in the Company. A representative of Mason Russell West LLCHaynie & Company is not expected to be present at the Annual Meeting.
Audit Fees
The aggregate fees billed by our independent auditors for the last two years were as follows:
Year ended JanuaryJuly 31, 2004: $16,450
2006: $20,000
Year ended JanuaryJuly 31, 2005: $21,000
2007: $26,500
Audit Related Fees
There were no fees billed for audit related services.
Tax fees
There were no fees billed for tax compliance, tax advice and tax planning.
All other fees
There were no other fees billed by our independent auditors for the fiscal years ended JanuaryJuly 31, 20042006 and 2005.
2007.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 20072008 ANNUAL MEETING
Proposals of stockholders intended to be presented at next year's Annual Meeting of Stockholders must be received by Holly A. Roseberry, Chief Executive Officer, Hybrid Technologies, Inc., 50015841 East Bonanza Road,Charleston, Suite 138-145,230-145, Las Vegas, NV 89110,89142, on or before October 1, 2006.
2008.
APPENDIX - FORM 10-KSB
The
Amendment No. 1 to the Company's Form 10-KSB for the fiscal year ended July 31, 2005,2007, containing all financial statements is attached to this proxy statement as an Appendix.
9
FINANCIAL INFORMATION - INCORPORATED BY REFERENCE
The Company's reportsreport on Form 10-QSB for its first fiscal quarter, the three months ended October 31, 2005, and for its second fiscal quarter,2007, expected to be filed shortly prior to the three months ended January 31, 2006, as well as Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the
second quarter Form 10-QSB, areAnnual Meeting, is incorporated herein by reference.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
THIS PROXY STATEMENT AND THE APPENDIX HERETO REFER TO CERTAIN DOCUMENTS OF THE COMPANY THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT CHARGE, DIRECTED TO HOLLY A. ROSEBERRY, CHIEF EXECUTIVE OFFICER, HYBRID TECHNOLOGIES, INC., 50015841 EAST BONANZA DRIVE,CHARLESTON, SUITE 138-145,230-145, LAS VEGAS, NEVADA 89110,89142, TELEPHONE NUMBER (818) 780-2403. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY MAY 20, 2006.
DECEMBER 10, 2007.
OTHER MATTERS
The Board of Directors is not aware of any other business which will come before the Annual Meeting, but if any such matters are properly presented, the proxies solicited hereby will be voted in accordance with the best judgment of the persons holding the proxies. All shares represented by duly executed proxies will be voted at the Annual Meeting.
It is important that the proxies be returned promptly and that your shares be represented. Stockholders are urged to mark, date, execute and promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ Holly A. Roseberry
Las Vegas, Nevada Holly A. Roseberry,
May 9, 2006 President and Chief Executive Officer
10
| By Order of the Board of Directors, |
| | |
| | /s/ Holly A. Roseberry |
| Las Vegas, Nevada | | Holly A. Roseberry, |
| November , 2007 | | President and Chief Executive Officer |
| | |
FORM OF PROXY
PROXY FOR ANNUAL MEETING OF
HYBRID TECHNOLOGIES, INC.
5001
5841 EAST BONANZA ROAD,CHARLESTON, SUITE 138-145,230-145, LAS VEGAS, NEVADA 8911089142
(818) 780-2403
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF
HYBRID TECHNOLOGIES, INC.
THE UNDERSIGNED hereby appoint(s) Holly A. Roseberry and Mehboob Charania, or either of them, with full power of substitution, to vote at the Annual Meeting of Stockholders of Hybrid Technologies, Inc., a Nevada corporation (the "Company"), to be held on May 29, 2006,December 21, 2007, at 8:00 A.M., Pacific Daylight Time, at the Best Western Port O'Call Hotel, 1935 McKnight Boulevard NE,Calgary, Alberta, T2E 6V4, or any adjournment thereof, all shares of the common stock which the undersigned possess(es) and with the same effect as if the undersigned was personally present, as follows:
PROPOSAL (1): ELECT DIRECTORS.
Holly A. Roseberry
Mehboob Charania
Brian Newman
Greg Navone
Shaffiq Kotadia
| o | For All Nominees Listed Above | | Withhold Authority to Vote |
| (except as marked to the contrary below) | | for All Nominees Listed Above |
| | | |
( ) For All Nominees Listed Above ( ) Withhold Authority to Vote
(except as marked to the contrary below) for All Nominees Listed Above
-------------------------------------------------------------------------------
(ToTo withhold vote for any nominee or nominees, print the name(s) above.)
PROPOSAL (2): APPROVE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
( )
oFor ( ) oAgainst ( ) oAbstain
PROPOSAL (3): TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
( ) In their discretion, the proxy-holders are ( ) Withhold Authority
authorized to vote upon such other business
as may properly come before the meeting or
any adjournment thereof.
11
| In their discretion, the proxy-holders are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. | o | Withhold Authority |
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND IN THE DISCRETION OF THE PROXIES NOMINATED HEREBY ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Please
(Please sign exactly as name appears hereon. If the stock is registered in the names of two or more persons, then each should sign. Executors, administrators, trustees, guardians, attorneys and corporate officers should include their capacity or title.)
Please sign, date and promptly
return this Proxy in the enclosed
envelope.
- ---------------------------------- ------------------------
Signature Date
- ---------------------------------- ------------------------
Signature Date
12
| Please sign, date and promptly return this Proxy in the enclosed envelope. | |
| | | |
| | | |
| Signature | | Date | |
| | | |
| | | |
| Signature | | Date | |
| | | |
EXHIBIT A
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR NEVADA PROFIT CORPORATIONS
(Pursuant
(Pursuant to NRS 78.385 and 78.390 -– After issuance of Stock)
1. Name of corporation: Hybrid Technologies, Inc.
2. The articles have been amended as follows: Paragraph (a) Article III of the Articles of Incorporation of the corporation is deleted in its entirety and the following is substituted therefor:
" Article III
(a) The corporation shall have authority to issue a total of Two Hundred Fifty-Five Million (55,000,000)(255,000,000) shares, of which Two Hundred Fifty Million (50,000,000)(250,000,000) shares shall be Common Stock, par value $.001 per share (the "Common Stock"), and Five Million (5,000,000) shares shall be Preferred Stock, par value $.001 per share (the "Preferred Stock")."
”
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is: _________ shares voted in favor of the amendment out of ________ shares outstanding and entitled to vote.
/s/ Holly Roseberry June _____, 2006
4. Officer Signature:
--------------------------------------------------------
Holly Roseberry, President and Chief Executive Officer
================================================================================
Appendix- Form 10-KSB
| /s/ Holly Roseberry | __________, 2007 |
| 4. Officer Signature: | | |
|
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ ]10-KSB/A
|X| Annual Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934
For the fiscal year ended ----------------
[X]July 31, 2007
-------------
|_| Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act
Of 1934
For the transition period from
February 1, 2005 to July 31, 2005
COMMISSION FILE NUMBER: 000-33391
----------------------------
HYBRID TECHNOLOGIES, INC.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of small business issuer in its charter)
NEVADA 88-0490890
- ----------------------------------------- -------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50015841 East Bonanza Road,Charleston, Suite 138-145230-145
Las Vegas, Nevada 8911089142
- ----------------------------------------- -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(818) 780-2403
- -----------------------------------------
Issuer's telephone number
Securities registered under
Section 12(b) of the Exchange Act: NONE
Securities registered under
Section 12(g) of the Exchange Act: COMMON STOCK, PAR VALUE $0.001 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [X]|X| No [__]|_|
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
|X|
State issuer's revenues for its most recent fiscal year: $-0-$1,378,812.
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ]|_| Yes [X]|X| No
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.): $23,006,927$59,046,270 based on the closing price for our
shares of common stock of $5.40$2.38 on October 25, 2005.November 12, 2007.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 18,993,24339,500,511 shares of common stock as
at October 25, 2005.24, 2007.
Transitional Small Business Disclosure Format (check one): Yes [ ]|_| No [X]
2|X|
PART I
NOTE REGARDING FORWARD LOOKING STATEMENTS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report contains historical information as well as
forward-looking statements. Statements looking forward in time are included in
this Annual Report pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve known and
unknown risks and uncertainties that may cause our actual results in future
periods to be materially different from any future performance suggested herein.
We wish to caution readers that in addition to the important factors described
elsewhere in this Form 10-KSB, the following forward looking statements, among
others, sometimes have affected, and in the future could affect, our actual
results and could cause our actual consolidated results during 2004,2007, and beyond,
to differ materially from those expressed in any forward-looking statements made
by or on our behalf.
ITEM 1. DESCRIPTION OF BUSINESS.
Background
- ----------
Hybrid Technologies, Inc. ("we", "us", the "Company" or "Hybrid
Technologies") was incorporated under the laws of the State of Nevada in April
2000. We are a development stage technology company. We are engaged in the
development and marketing of electric powered vehicles and products and, through
our majority-owned subsidiary Zingo Inc., in providing telecommunications
services through our VoIP system that utilizes the Internet.
We changed our name from Whistler Investments, Inc. to Hybrid
Technologies, Inc. on March 9, 2005.2005 to reflect our corporate focus. Since our
incorporation, we have been
involved in the evaluation ofevaluated various business opportunities including the
exploration of the Queen Mineral Propertya mineral
property in British Columbia; the Azra Shopping Center in Las Vegas, which we
acquired on April 10, 2002, and disposed of on January 1, 2003; a Vancouver
based coffee franchise; producing oil and gas properties in California; and a medical
software product and services company. To date,We did not pursue several of these opportunities, and
none of these business opportunities has resulted in our generation ofproduced meaningful revenue.
Following the sale of the Azra shopping center near the end of our
fiscal year ended January 31, 2003, and our determination made in the first
quarter of our that fiscal year not
to pursue acquisition of a medical software company, we began to focus our
efforts on the development and marketing of electric powered vehicles and
products.
3
License Agreements with RV Systems.
In orderTo take the steps necessary to begin to take the
necessary steps to begin to implementimplementing our new business
strategy, on June 27, 2003, we entered into a licensing agreement with NuAge
Electric, Inc. ("NuAge"), whereby we agreed to acquire a license, subject to a 20% royalty interest
retained by NuAge, to all of NuAge's rights relating to the manufacture and sale
of two and three wheel electric vehicles using an electric power drive system
technology licensed by NuAge from Nu Pow'r, LLC. Onwhich on October 21, 2003, the
original licensing agreement between Hybrid Technologies and NuAge was terminated. On the samethat
date, we entered intosigned a new licensing and distribution agreement with RV Systems, Inc.
("RV Systems")to acquire the worldwide rights (with the exception of India for
the two-and three-wheeled vehicle technology) to sell, distribute and/or
manufacture specified products utilizing the portable power systems developed by
RV System's affiliate, Lithium House, Inc. ("Lithium House"). Our agreement with RV Systems included licensed technologies in three
separate product groups: (i) two- and three-wheeled vehicles to be manufactured
and sold in all countries except India; (ii) lawn and garden equipment to be
manufactured and sold in all countries; and (iii) Neighborhood Electric Vehicles
(NEV's) to be manufactured and sold in all countries. We also entered
into an agreement to retain the services of Mr. Chaz Haba, the founder of
Lithium House, to provide technical advice to Hybrid Technologies'sTechnologies' Board of
Directors. Under the License Agreement, we paid license fees so that weto acquired the
rights to utilize the lithium ion and lithium polymer battery packs, proprietary
controllers and propulsion systems developed by Lithium House in any two-wheel,
three-wheel and four-wheel vehicles (with the exception of India for the two-
and three-wheeled vehicle technology).House. On July 2, 2005,
we notified RV Systems that it was in material default under the License
Agreement. On October 25, 2005, we filed suit against Lithium House, RV Systems,
Chaz Haba and related parties, in the California Superior Court, Los Angeles
County, seeking recovery of amounts paid under the RV Systems License Agreement
for failure of performance by RV Systems, and for other damages. See "ITEM 3-Legal Proceedings" below.On June 23,
2006 Hybrid, Lithium House, RV Systems and all related parties signed settlement
documents. Hybrid has recovered its prototype vehicles and incurred no further
expense related to this litigation or the licensing agreement.
1
Recent Developments
Acquisition and Subsequent Disposition of Telecommunications Subsidiary.
On November 24, 2004 we formed WhistlerTel, Inc. under the laws of the
State of Nevada, and on December 3, 2004 we purchased (through this subsidiary)
the assets of Tradewinds Telecom LLC, Fort Lauderdale, Florida. Tradewinds
Telecom was operated as WhistlerTel Inc through this wholly-owned subsidiary.
The strategic initial objective of our telecommunications operations is to
develop a superior multilevel platform that provides highly reliable and
advanced VoIP telecommunications services. We plan to focus our efforts in many parts of the
globe where the area is equipped broadband access for Internet services. The
VoIP system is developed to work via the Internet thus allowing those
destinations to have access to a highly advanced telephone system. The immediate
focus is Central and Latin America, Europe and developed countries in Asia.
WhistlerTel serviced customers in North America, Central America, Latin America
and Europe. On August 18, 2005, we entered into
anthe Agreement and Plan of Reorganization (the "Agreement"), with Javakingcoffee,
Inc., a Nevada corporation, changing the name of which was changed to Zingo, Inc. on August 23, 2005
("Zingo"), pursuant to which,and on August 19,
2005, we soldselling all of the outstanding shares of Whistlertel to Zingo, valued at $5 million, and
received in exchange 80,000,000 shares of Zingo's common stock, or 69.56% of
Zingo's outstanding common stock. Effective August 30, 2005, Holly A. Roseberry
and Mehboob Charania, who are two of our two directors, were appointed to constitute
the new Board of Directors of Zingo. On August 30, 2005, Zingo's Board of
Directors appointed Holly Roseberry as President and Chief Executive Officer,
and Mehboob Charania as Treasurer and Secretary, of the Company.
Liquidity and Capital Resources
As of July 31, 2005,2007, we had cash on hand of $166,215. As of
July 31, 2005,$3,775. At that same date our
liabilities totaled $4,347,505 and primarily
consisted of a $3,000,000 loan payable to Sterling Capital, and notes payable in
the amount of $80,000 due to related parties.$1,537,496. During the period since inception on April 12,
2000 to July 31, 2005,2007, we had incurred operating losses totaling $20,428,808.$44,527,591. On
July 31, 2005,2007, we had a working capital deficiencysurplus of $4,139,711$577,244 and a stockholders'
deficit of $4,054,052.
4
$1,984,776.
We had 18,993,24339,500,511 shares of common stock issued and outstanding as of
October 25, 2005.24, 2007. Our common stock is traded on the OTC Bulletin Board. OnThe
Board of Directors of Hybrid has approved and issued the following stock
dividends: February 28, 2005, we effected a one-for-ten stock dividend, and on March 8,
2005, we announced that our Board of Directors had approved a ten-for-one
reverse stock split, which was effective Wednesday, March 9, 2005. On10%; June 17, 2005, and5%; September 2, 2005, we effected one-for-twenty (5%) stock dividends.
General
- --------
We are a development stage technology company. We are engaged in the
development and marketing of electric powered vehicles and products and, through
our majority-owned subsidiary Zingo Inc., in providing highly reliable and
advanced telecommunications services through our VoIP system that utilizes the
Internet.
Our telecommunications operations are held in Zingo Inc., a
publicly-traded company, in which we hold an approximate 69% equity interest.
Our Electric Battery Pack and Vehicle Technology
- ------------------------------------------------
With the termination of all licensing relationships with RV Systems and
Lithium House, we are developing the portable battery power pack technology and
effecting vehicle conversions from conventional power systems to electric power
systems in a facility we have leased in Mooresville, North Carolina. We plan,
once development is completed, to market our own brand of portable battery power
pack systems. We also plan to complete conversions of four-, three- and
two-wheel vehicles, and to further develop the resulting prototypes for limited
commercial production, beginning in 2006.
In our Mooresville, North Carolina, facility we have in the conversion
process Chrysler PT Cruiser, Mini Cooper, Chrysler Crossfire and Smart car. We
are replacing gasoline power systems with all new electric power systems,
including battery management systems. We have an additional PT Cruiser in
Phoenix, Arizona, on which we are installing solar cells. We are also converting
one large ATV, four small ATV's, electric bicycles and two different electric
scooter versions. We have 85 electric scooters in inventory that are partially
converted. We plan to commence conversions on three-wheeled vehicles, such as
small ATV's and vehicles for handicapped persons.
Our Mooresville facility consists of about 11,000 square feet of space.
At present, our equipment at the facility consists of a metal working lathe,
four metal welders, six work tables, grinders, a metal cutting machine, a car
lift and power supplies and chargers.
The Battery Packs We Would Use
The electric vehicle battery pack performs the same function as the
gasoline tank in a conventional vehicle: it stores the energy needed to operate
the vehicle.
We would not be in the business of building battery cells. We are
working with Eagle Pitcher/Kokam and other supplier of batteries and in
developing battery management systems. We have developed a system for
interconnection of small battery cells with each other. The system we have
developed with Eagle Pitcher/Kokam optimizes battery cell balancing in terms of
voltage output. In addition, our CAM bus system allows monitoring of multiple
interconnected batteries without separate wiring for each battery cell. Our
battery packs can be produced in a wide variety of sizes, capacities and
voltages as required by the particular product application.
5
We use individual lithium polymer cells that have 4.2 volts DC and 100AH
each and are connected in such a manner (in parallel and series) to provide up
to 336 volts DC and5%;
November 30, KW (thus a battery pack can contain up to 160 individual
cells) depending on the performance required. The battery pack may contain many
"packs" of the cells each in a ABS protection shell for protection against
abrasion and moisture and will have a separate thermal cut off circuit to
prevent over heating and control circuits that will monitor the voltage during
discharge and charging to ensure that the pack does not go below a minimum
voltage or above a maximum.
Electric Motors
We are using a variety of electric motors in our prototypes. We are not
reliant on any single manufacturer of electric motors. There are a large number
of domestic and foreign manufacturers of electric motors, and we anticipate no
difficulties in obtaining adequate quantities of the motors with the
specifications we require at reasonable commercial prices from a number of these
sources.
We believe that the most important characteristic of our technology is
that the lithium battery power source we intend to use is much more efficient
and powerful than other battery power sources. Vehicles utilizing this
technology have the ability to travel far greater distances, can recharge in
less time and also benefit from weight reduction, as compared with vehicles
using other battery powered systems. One of the major historic hurdles facing
electric vehicle manufacturers is that most power sources would not allow the
vehicle to travel over 100 miles before needing to be recharged. We believe that
we can produce electric powered vehicles with a travel range greater than 200
miles.
A significant difference between electric vehicles and gasoline-powered
vehicles is the number of moving parts. The electric vehicle motor has one
moving part, the shaft, whereas the gasoline-powered vehicle's motor has
numerous moving parts. Fewer moving parts in the electric vehicle leads to
another important difference: the electric vehicle requires less periodic
maintenance and is more reliable. The gasoline-powered vehicle requires a wide
range of maintenance, from frequent oil changes filter replacements, periodic
tune ups, and exhaust system repairs, to the less frequent component
replacement, such as the water pump, fuel pump, alternator, etc. The electric
vehicle's maintenance requirements are fewer, and therefore the maintenance
costs are lower. The electric motor's one moving part, the shaft, is very
reliable and requires little or no maintenance. The controller and charger are
electronic devices with no moving parts, and they require little or no
maintenance. Electric vehicle batteries are sealed and are maintenance free,
However, the life of these batteries is limited, and batteries will require
periodic replacement. New batteries are being developed that will not only
extend the range of electric vehicles, but will also extend the life of the
battery pack which may eliminate the need to replace the battery pack during the
life of the vehicle.
6
Products Under Development
- --------------------------
We have products under development in the following categories.
We plan to purchase for conversion a golf cart, a type of neighborhood
electric vehicle (NEV). A NEV is a type of 4-wheeled vehicle, larger than a go
cart but smaller than most light-duty passenger vehicles. NEV's are usually
configured to carry two or four passengers with a pickup bed. NEV's are defined
by the United States National Highway Traffic Safety Administration as subject
to Federal Motor Vehicle Safety Standard (FMVSS} No. 500. Per FMVSS 500, NEV's
have top speeds between 20 and 25 miles per hour and are defined as "Low Speed
Vehicles". FMVSS 500 requires that NEV's be equipped with headlamps, stop lamps,
turn signal lamps, tail lamps, reflex reflectors, parking brakes, rear view
mirrors, windshields, seat belts, and vehicle identification numbers. About 35
states have passed legislation or regulations allowing NEV's to be licensed and
driven on roads that are generally posted at 35 miles per hour or less. While
NEV's were initially used in gated communities, they have been increasingly used
by the general public for school transportation, shopping and general
neighborhood trips. In addition, they are used at military bases, national
parks, commercial airports and for local government activities.
We are also developing the "R car", with our Chrysler Crossfire
conversion. This car would carry four passengers and reach speeds of up to 90
miles per hour, with a range of approximately 200 miles. The R Car is subject to
Federal approvals in effect for passenger cars, including safety standards.
ATV's and Lawn and Garden Equipment
We are in the process of conversion of five ATV's. Conversion of ATV's
currently involves conversion of four small two-passenger ATV's and a four-wheel
drive, two-passenger ATV with a truck bed. We also developed what we view as a
next generation ATV with four-wheel independent suspension produced by a major
ATV manufacturer. This is planned to be the first "stealth" (or totally quiet)
ATV. This ATV was displayed at the Globe 2004 exposition in Vancouver, B.C.,
Canada.
We have not commenced active product development in the lawn and garden
equipment product category. We plan to approach major manufacturers of these
products with regard to joint product development.
Current Joint Venture Negotiations in Progress
- ----------------------------------------------
China -
Upon completion of the revised two wheel conversion using Geely
Corporation frames, we will revist with Geely Corporation to proceed with
manufacturing.
U.S. Navy
On2005, 5%; February 5, 2004 we announced the initiation of a lithium-ion
conversion project with the United States Navy. We have funded the initial 3kw
prototype for this project, and the prototype has been completed and delivered
to the Navy.
7
Electric Cars
Ron Cerven, previously of California Cinema Vehicles is currently a
full time consultant for Hybrid. The Chrysler Crossfire - R-Car - is being
re-done to use our new technology and battery management systems.
Solar House
Our Lithium Solar House project is to provide a test bed for an
alternative source of power to the home -- not connected to the power grid. We
have plans approved by the City of Van Nuys and are currently renovating this
Solar House. The Solar House is immediately adjacent to Lithium House's facility
in Van Nuys, California, and is involved in the litigation with RV Systems,
etal. See "Item 3. Legal Proceedings".
California Highway Patrol
Hybrid Technologies funded a lithium-powered bike to honor officers
killed in the line of duty. This bike, produced by Big Bear Choppers, was
displayed throughout California during the first week of28, 2006, 10%; March 31, 2006, 5%; May 2005 at media
events honoring slain troopers, and will be kept in the CHP museum.
Other Initiatives
We believe that the keys to our success in the future will be to
aggressively pursue the most opportunistic markets and to concentrate our
resources on the market(s) that have the most return for the time and effort
expended. We have also initiated with the Mayor of Mexico City a project aimed
at converting pre-existing vehicles in Latin America to electric propulsion
units. Negotiations for the conversion of several vehicles are now underway. It
is anticipated that the first conversions will be taxi cabs located in Mexico
City. Mexico City has the world's worst air pollution, according to the United
Nations, due primarily to vehicle emissions. The zero-emission vehicle projects
are aimed at reducing harmful contaminants in the city's air, while providing
usable cost-efficient alternate energy sources in public transit vehicles. The
Mini Cooper being modified for the Mexico Embassy is scheduled to be delivered
by December 2005.
Our Telecommunications Operations
- ---------------------------------
We offer telecommunications services to business and residential
customers utilizing VoIP technology. The strategic initial objective of our
telecommunications operations is to develop a superior multilevel platform that
provides highly reliable and advanced telecommunications services. Our
telecommunications operations are conducted through our subsidiary, Zingo, Inc.,
of which we own approximately 69% of the outstanding common stock. We plan to
focus our efforts in many parts of the globe where the area is equipped
broadband access for Internet services. The VoIP system is developed to work via
the Internet thus allowing those destinations to have access to a highly
advanced telephone system. The immediate focus is Central and Latin America,
Europe and developed countries in Asia.
8
We have approximately 700 customers. We are marketing our operations on
the Internet and through print advertising, using channels to reach out into the
international markets. Our success will depend on our ability to anticipate and
respond to various factors affecting the industry, including new technologies,
changes in customer preferences, regulatory changes, demographic trends,
economic conditions, and pricing strategies of competitors.
Our VoIP Technology
VoIP uses a standard Internet connection to place phone calls,
bypassing the telephone company network entirely. Major carriers like AT&T are
already setting up VoIP calling plans in several markets around the United
States, and the FCC is looking seriously at the potential ramifications of VoIP
service.
In contrast to circuit switching that has been used by telephone networks
for more than 100 years, data networks simply send and retrieve data as needed.
And, instead of routing the data over a dedicated line, the data packets flow
through a network along thousands of possible paths. This is called packet
switching, where the sending computer chops data into small packets, with an
address on each one telling the network devices where to send them, and sends
the packet to a nearby router, which sends the packet to another router that is
closer to the recipient computer, and so on. When the receiving computer finally
gets the packets (which may have all taken completely different paths to get
there), it uses instructions contained within the packets to reassemble the data
into its original state. Packet switching allows several telephone calls to
occupy the amount of space occupied by only one in a circuit-switched network.
Reliability issues with VoIP include:
o First of all, VoIP is dependent on wall power.
o Many home systems may be integrated into the phone line. Digital video
recorders, digital subscription TV services and home security systems
all use a standard phone line to operate. There is currently no way to
integrate these products with VoIP.
o For emergency 911 calls there is no way to associate a geographic
location with an IP address. There is no way to know which call center
to route the emergency call to and which EMS should respond.
o Because VoIP uses an Internet connection, it is susceptible to all the
problems normally associated with home broadband services. These
factors will affect call quality:
|X| Latency
|X| Jitter
|X| Packet loss
Phone conversations can become distorted, garbled or lost because of
transmission errors. VoIP is susceptible to worms, viruses and hacking.
o All phone calls are subject to the limitations of normal computer
issues.
We sell an analog telephone adaptor (ATA) that allows the user to connect a
standard phone to his Internet connection for use with VoIP. The ATA is an
analog-to-digital converter. It takes the analog signal from a traditional phone
and converts it into digital data for transmission over the Internet.
We also sell IP Phones. These specialized phones look just like normal
phones with a handset, cradle and buttons but instead of having the standard
phone connectors, IP phones have an Ethernet connector. IP phones connect
directly to a router and have all the hardware and software necessary to handle
the IP call.
9
When a call is placed using VoIP, a request is sent to the soft switch
asking which endpoint is associated with the dialed phone number and what that
endpoint's current IP address is. Once the IP address is found, an exchange of
data between the two endpoints can take place. We use the SIP (Session
Initiation) protocol, developed specifically for VoIP applications, for this
communication.
We offer monthly rate plans structured like cell phone plans for $14.95 per
month for home use. On the business end, we offer unlimited plans for $49.95.
Our VoIP plans include:
o Caller ID
o Call waiting
o Call transfer
o Repeat dial
o Return call
o Three-way calling
There are also advanced call-filtering options available. These features use
caller ID information to allow the user make a choice about how calls from a
particular number are handled. The user can:
o Forward the call to a particular number
o Send the call directly to voicemail
o Give the caller a busy signal
With our VoIP service, the user can specify a stutter dial tone and can also
check voicemail via the Web or have .WAV file messages attached to an e-mail
sent to his computer or handheld.
Regulatory Matters
Internet-related regulatory policies are continuing to develop. For
example, the FCC could subject certain services offered by ISPs to regulation as
telecommunications services. Among other things, the FCC could decide to
regulate voice services provided over the Internet, such as VoIP, as
"telecommunications" or a "telecommunications service" even though Internet
access itself might not be regulated. Such a decision could result in our being
subject to universal service fees, access fees and other fees imposed on
regulated telecommunications providers as well as heightened costs of regulatory
compliance. We could be adversely affected by any regulatory change that would
result in the imposition of access charges on ISPs because this would
substantially increase the cost of using the Internet.
State public utility commissions generally have declined to regulate
enhanced or information services. However, some state commissions continue to
review potential regulation of these services. There can be no assurance that
state regulatory authorities will not seek to regulate aspects of these
activities as telecommunications services.
10
Internet Taxation
The Internet Tax Non-Discrimination Act, which was passed by Congress in31, 2006,
5%; November 2004 and signed into law in December 2004, renewed and extended until
November 2007 a moratorium on taxes on Internet access and multiple,
discriminatory taxes on electronic commerce. This moratorium had previously
expired in November 2003. As with the preceding Internet Tax Freedom Act,
"grandfathered" states which taxed Internet access prior to October 1998 may
continue to do so. Certain states have enacted various taxes on Internet access
and/or electronic commerce, and selected states' taxes are being contested on a
variety of bases. However, state tax laws may not be successfully contested, and
future state and federal laws imposing taxes or other regulations on Internet
access and electronic commerce may arise, any of which could increase the cost
of providing Internet services and could materially adversely affect our
business.
Competition
- -----------
The discussion below identifies some of our principal competitors in
the electric vehicle and bicycle areas.
The Reva Electric Car Company, based in Bangalore, India, was
incorporated in 1995 as a joint venture between the Bangalore based Maini Group
and AEVT Inc of Irvindale, California, to manufacture electric vehicles for city
mobility. This company produces a two-door sedan seating two adults in the front
and two children at the back.
ZAP World, headquartered in Santa Rosa, California, is a principal
competitor in electric cars, electric bicycles, electric scooters, seascooters,
and other electric products. ZAP World has developed a two wheel motorbike
similar to the product we are developing.
Powabyke, headquartered in Bath, United Kingdom, offers a wide range of
electric bikes in the UK and worldwide.
EV Global is also a competitor in the electric vehicle arena.
Our telecommunications services also face substantial competition from
other companies which provide VoIP services, most of which have significantly
greater financial resources than we do. VoIP services are available from a wide
range of companies including cable companies, long-distance companies, national
VoIP providers and regional service providers.
Employees
- ---------
As of the date of this report, we have two employees, our President and
CEO, Holly Roseberry, and her assistant. We employ six consultants.
Research and Development Expenditures
- -------------------------------------
We incurred research and development expenditures of $182,088 in the
six-month period ended July 31, 2005, of $66,822 in our fiscal year ended30, 2006, 10%; January 31, 2005,2007, 5%; March 30, 2007, 5%; and of $20,268 in our fiscal year ended JanuaryMay
31, 2004.
Patents and Trademarks
- ----------------------
The Company does not own, either legally or beneficially, any patents
or trademarks.
112007, 10%.
2
Risk Factors
- ------------
You should be particularly aware of the inherent risks associated with our
business plan. These risks include but are not limited to:
General
WE ARE A DEVELOPMENT STAGE BUSINESS
We have had nominimal revenues from joint ventures or sales of our products,
norand have wenot signed any definitive joint venture agreements to commercialize any
of our products. As of July 31, 2005, we had cash on hand of $166,215. As of
July 31, 2005,2007, our liabilities totaled $4,347,505 and primarily consisted of a
loan payable in the amount of $3,000,000 and notes payable to related parties in
the amount of $80,000.$1,537,496. During
the period since our inception on April 12, 2000 to July 31, 2005,2007, we have
incurred operating losses totaling $20,428,808.$44,527,591. On July 31, 2005,2007, we had a working capital deficiency of $4,139,711 and a
stockholders' deficit of $4,054,052.$1,984,776. We expect that we will continue to incur
operating losses in the future. Failure to achieve or maintain profitability may
materially and adversely affect the future value of our common stock.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL
Our current operating funds are less than necessary for
commercialization of our products, and thereforeAlthought we have recently arranged a debt financing, we will need to
obtain additional financing in order to complete our business plan. We do not currently
have any arrangements for financing and we may not be able to find such
financing if required. Market factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us.
WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM OUR INDEPENDENT
AUDITORS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE
OBTAIN ADDITIONAL FUNDING
Our independent auditors have added an explanatory paragraph to their
audit opinions, issued in connection with our financial statements, which states
that our ability to continue as a going concern is uncertain.
Electric Vehicles
WE ARE SUBJECT TO ALL OF THE RISKS OF A NEW BUSINESS
Because we have only recently commenced business operations, we face a
highpotentially higher risk of business failure. We have not earned any significant
revenues as of the date of this report. Potential investors should be aware of
the difficulties normally encountered by new companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the commercialization of our products. These
potential problems include, but are not limited to, unanticipated problems
relating to product development, problems
arranging and negotiating arrangements with joint venture
partners, and additional costs and expenses that may exceed current estimates.
We have no history upon which to base any assumption as to the likelihood that
our business will prove successful, and investors should be aware that there is
a substantial risk that we wouldmay not generate any significant operating revenues
or ever achieve profitable operations. If we are unsuccessful in addressing
these risks, our business will most likely fail.
12
Because we have only recently commenced business operations, we expect to
incur operating losses for the foreseeable future
3
OUR MANAGEMENT HAS LIMITED EXPERIENCE IN PRODUCTS UTILIZING ELECTRIC BATTERY
POWER AND WITH NEGOTIATING COMMERCIAL ARRANGEMENTS FOR SUCH PRODUCTS
Our management has only limited experience in negotiating licenses orand joint
ventures for and commercializingto commercialize the types of products that we are developing. As a result
of this inexperience, there is a higherhigh risk of our
beingwe may be unable to complete our
business plan toand negotiate profitable licenses or joint ventures for our
lithium ion battery powered products. Because of the intense competition for our
planned products, there is substantial risk that we will not successfully
commercialize these products.
WE ARE CURRENTLY IN LITIGATION WITH RV SYSTEMS, LITHIUM HOUSE, CHAZ HABA, GENA
HABA AND WITH A FORMER EMPLOYER OF CHAZ HABA
We have sued RV Systems, Chaz Haba and other related parties and have
terminated the license agreement that was in effect with RV Systems. We are
currently in litigation, with Michael McDermott, as a stockholder of Planet
Electric, Inc. and purportedly on behalf of Planet Electric in the Los Angeles
Superior Court. Charles Haba was one of the founders of Planet Electric and is
the plaintiff in this case along with Lithium House and other entities. If the
relief requested by the plaintiffs in the cross complaint of the defendants in
this suit were granted, we could be liable for damages as requested by
defendants for conversion of Planet Electric assets and conspiracy to convert
such assets. See "ITEM 3-Legal Proceedings" for descriptions of these cases.
OUR PRODUCTS WILL BE HIGHLY REGULATED
Our developmental products, in development, particularly the NEV's, are highly regulated. There isare special safety
standards in effect for vehicles with a possibilitytop speed of up to 25 miles per hour. If
we market vehicles that will compete with passenger cars, such vehicles would be
subject to the full federal safety standards. Otherwise, regulatory review and
compliance process couldmay consume significant time and resources and adversely affect the
timing of our bringing products to market, as well as the profitability of such
products once regulatory approvals are obtained.
OUR ELECTRIC POWERED VEHICLE BUSINESS IS SUBJECT TO SUBSTANTIAL RISKS
The electric battery powered product market is extremely competitive and risky. We
are competing against numerous competitors with substantially greater financial resources than
us, and due to the difficulties of entry into these markets, we may be
unsuccessful and not be able to complete our business plan.
13
WE INTEND TO RELY ON LITHIUM ION BATTERIES WHICH, IF NOT PROPERLY MANAGED, MAY
POSE A FIRE HAZARD.
Another manufacturer of electric motor vehicles has received five reports
of the batteries overheating, three of which caught fire, though no injuries
have been reported. We will have to develop battery management systems that
eliminate the risk of fire from use of lithium ion batteries as a power source.
If we are not able to develop such systems our business will not develop as
planned. If our battery management systems fail, we could be liable to those who
are harmed as a result of such failure.
Telecommunications
WE MAY NOT SUCCESSFULLY ENHANCE EXISTING OR DEVELOP NEW PRODUCTS AND SERVICES IN
A COST-EFFECTIVE MANNER TO MEET CUSTOMER DEMAND IN THE RAPIDLY EVOLVING MARKET
FOR INTERNET COMMUNICATIONS SERVICES.
The market for Internet and telecommunications services is characterized
by rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new service and product introductions. We are currently
focused on developing and evaluating technologies and applications associated
with VoIP services. Our future success will depend, in part, on our ability to
use leading technologies effectively, to continue to develop our technical
expertise, to enhance our existing services and to develop new services that
meet changing customer needs on a timely and cost-effective basis. We may not be
able to adapt quickly enough to changing technology, customer requirements and
industry standards. If we fail to use new technologies effectively, to develop
our technical expertise and new services or to enhance existing services on a
timely basis, either internally or through arrangements with third parties, our
product and service offerings may fail to meet customer needs which would
adversely affect our revenues.
4
OUR TELECOMMUNICATIONS SERVICE OFFERINGS MAY FAIL TO BE COMPETITIVE WITH
EXISTING AND NEW COMPETITORS.
We operate in the Internet services market, which is extremely competitive.
Current and prospective competitors include many large companies that have
substantially greater market presence, financial, technical, marketing and other
resources than we have. Competition is likely to continue increasing,
particularly as large diversified telecommunications companies continue to
provide VoIP services. Because we operate in a highly competitive environment,
the number of subscribers we are able to add may decline, the cost of acquiring
new customers through our own sales and marketing efforts may increase, and/or
the number of customers who discontinue the use of our service (churn) may
increase.
SERVICE INTERRUPTIONS OR IMPEDIMENTS COULD HARM OUR BUSINESS.
Harmful software programs. The networks of our third-party providers are vulnerable to damaging
software programs, such as computer viruses and worms. Certain of these programs
have disabled the ability of computers to access the Internet, requiring users
to obtain technical support in order to gain access to the Internet. Other
programs have had the potential to damage or delete computer programs. The
development and widespread dissemination of harmful programs has the potential
to seriously disrupt Internet usage. If Internet usage is significantly
disrupted for an extended period of time, or if the prevalence of these programs
results in decreased residential Internet usage, our business could be
materially and adversely impacted.
Security breaches.OUR BUSINESS COULD BE HARMED BY SECURITY BREACHES.
We depend on the security of our third-party telecommunications service
providers. Unauthorized or inappropriate access to, or use of, these networks
could potentially jeopardize the security of confidential information of our
customers and of third parties. so in the
future. Users or third parties may assert claims of
liability against us as a result of any failure by us to prevent these
activities. Although we use security measures, there can be no assurance that
the measures we take will be successfully implemented or will be effective in
preventing these activities. Further, the security measures of our third-party
network providers may be inadequate. These activities may subject us to legal
claims, may adversely impact our reputation, and may interfere with our ability
to provide our services, all of which could have a material adverse effect on
our business, financial position and results of operations.
14
Natural disaster or other catastrophic event.NATURAL DISASTER OR OTHER CATASTROPHIC EVENT.
Our operations and services depend on the extent to which our computer equipment
and the computer equipment of our third-party network providers are protected
against damage from fire, flood, earthquakes, power loss, telecommunications
failures, break-ins, acts of war or terrorism and similar events. Interruptions
in our services could have a material adverse effect on our ability to provide
VoIP services to our customers and, in turn, on our business, financial
condition and results of operations.
Network infrastructure.NETWORK INFRASTRUCTURE.
We may experience increases in our telecommunications usage that exceed our
available telecommunications capacity. As a result, users may be unable to
register or log on to use our services, may experience a general slow-down in
their Internet connection or may be disconnected from their sessions.
Inaccessibility, interruptions or other limitations on the ability of customers
to access our services due to excessive user demand, or any failure of our
network to handle user traffic, could have a material adverse effect on our
reputation.
5
GOVERNMENT REGULATIONS COULD FORCE US TO CHANGE OUR BUSINESS PRACTICES.
Changes in the regulatory environment regarding the Internet could cause
our revenues to decrease and/or our costs to increase. The FCC, however, is
examining voice services (such as VoIP). As a result, we could become subject to
FCC and state regulation. The tax treatment of activities on or relating to the
Internet is currently unsettled. A number of proposals have been made at the
federal, state and local levels and by foreign governments that could impose
taxes on the online sale of goods and services and other Internet activities.
Future federal and state laws imposing taxes on the provision of goods and
services over the Internet could make it substantially more expensive to operate
our business.
General
- --------
We are a development stage technology company. We are developing and plan
to market electric powered vehicles and products.
Through a majority-owned subsidiary, we provide highly reliable and
advanced telecommunications services via VoIP system that utilizes the Internet.
Our telecommunications operations are held in Zingo Inc., a publicly-traded
company, in which we hold an approximate 69% equity interest.
Our Electric Battery Pack and Vehicle Technology
- ------------------------------------------------
After the termination of all licensing relationships with RV Systems and
Lithium House, we began developing portable battery power pack technology and
effecting vehicle conversions from conventional power systems to electric power
systems in our own facility which we have purchased in Mooresville, North
Carolina. We plan, once development is completed, to market our own brand of
portable battery power pack systems. We also plan to complete conversions of
four-, three- and two-wheel vehicles, and to further develop the resulting
prototypes for limited commercial production, beginning in 2007.
In our Mooresville, North Carolina, facility we are in the process of
Converting and nearing final testing on Chrysler PT Cruisers, Mini Coopers, a
Chrysler Crossfire and Mercedes' Smart cars. We replace gasoline power systems
with all electric power systems, some including installed solar cells, and
battery management systems. We are also converting some large and small ATV's,
electric bicycles and electric scooters. We have 85 electric scooters in
inventory that are partially converted. We have begun conversions on
three-wheeled vehicles, such as small ATV's and vehicles for handicapped
persons. We are developing a rapid charge system that we anticipate reducing
charge time by 65%.
Our Mooresville facility consists of about 40,000 square feet of space.
Some equipment at the facility includes a metal working lathe, metal welders,
work tables, grinders, a metal cutting machine, several car lifts, power
supplies and chargers. We are also setting up a battery lab.
The Battery Packs We Would Use
The electric vehicles' battery pack performs the same function as the gas
tank in a conventional vehicle: it stores the energy needed to operate the
vehicle.
6
We are working with Kokam (South Korea), other battery suppliers and
several independent engineers to develop the best battery management systems.
Our system interconnects small battery cells with each other optimizing battery
cell balancing in terms of voltage output. In addition, our CAM bus system
allows monitoring of multiple interconnected batteries without separate wiring
for each battery cell. Our battery packs can be produced in a wide variety of
sizes, capacities and voltages as required by the particular product
application.
We use individual lithium polymer cells that have 4.2 volts DC and 100AH
each and are connected in such a manner (in parallel and series) to provide up
to 336 volts DC and 30 KW (thus a battery pack can contain up to 160 individual
cells) depending on the performance required. The battery pack may contain many
"packs" of the cells each in a ABS protection shell for protection against
abrasion and moisture and will have a separate thermal cut off circuit to
prevent over heating and control circuits that will monitor the voltage during
discharge and charging to ensure that the pack does not go below a minimum
voltage or above a maximum.
Electric Motors
We are using a variety of electric motors in our prototypes. We are not
reliant on any single manufacturer of electric motors. There are a large number
of domestic and foreign manufacturers of electric motors, and we anticipate the
motors with the specifications we require will be available at reasonable
commercial prices from a number of these sources.
We believe that an important characteristic of our technology is the
lithium battery power source we intend to use is more efficient and powerful
than other battery power sources. Vehicles utilizing this technology have the
ability to travel far greater distances, can recharge in less time and also
benefit from weight reduction, as compared with vehicles using other battery
powered systems. One of the major historic hurdles facing electric vehicle
manufacturers is that most power sources would not allow the vehicle to travel
over 100 miles before needing to be recharged. We believe that we can produce
electric powered vehicles with a travel range equal to or greater than 200
miles.
A significant difference between electric vehicles and gasoline-powered
vehicles is the number of moving parts. The electric vehicle motor has one
moving part, the shaft, which is very reliable and requires little or no
maintenance, reducing repair costs. Whereas the gasoline-powered vehicle's motor
has numerous moving parts, requiring a wide range of maintenance. The controller
and charger are electronic devices with no moving parts, and they require little
or no maintenance. Electric vehicle batteries are sealed and maintenance free,
However, the life of these batteries is limited, and batteries will require
periodic replacement. New batteries are being developed that will not only
extend the range of electric vehicles, but will also extend the life of the
battery pack which may eliminate the need to replace the battery pack during the
life of the vehicle.
Products Under Development
- --------------------------
We have products under development in the following categories.
We have converted golf carts, a type of neighborhood electric vehicle
(NEV). A NEV is a 4-wheeled vehicle, larger than a go cart but smaller than most
light-duty passenger vehicles. NEV's are usually configured to carry two or four
passengers with a pickup bed. NEV's are defined by the United States National
Highway Traffic Safety Administration as subject to Federal Motor Vehicle Safety
Standard (FMVSS} No. 500. Per FMVSS 500, NEV's have top speeds between 20 and 25
miles per hour and are defined as "Low Speed Vehicles". FMVSS 500 requires that
NEV's be equipped with headlamps, stop lamps, turn signal lamps, tail lamps,
reflex reflectors, parking brakes, rear view mirrors, windshields, seat belts,
and vehicle identification numbers. About 35 states have passed legislation or
regulations allowing NEV's to be licensed and driven on roads that are generally
posted at 35 miles per hour or less. While NEV's were initially used in gated
communities, they have been increasingly used by the general public for school
transportation, shopping and general neighborhood trips. In addition, they are
used at military bases, national parks, commercial airports and for local
government activities.
7
R Car
The Chrysler Crossfire - R-Car - is being re-done to use our new
technology and battery management systems. This car would carry four passengers
and reach speeds of up to 90 miles per hour, with a range of approximately 200
miles. The R Car is subject to Federal approvals in effect for passenger cars,
including safety standards.
ATV's and Lawn and Garden Equipment
We have converted ATV's, including four small two-passenger ATV's and a
four-wheel drive, two-passenger ATV with a truck bed. We also developed what we
view as a next generation ATV with four-wheel independent suspension produced by
a major ATV manufacturer. This is planned to be the first "stealth" (or totally
quiet) ATV. This ATV was displayed at the Globe 2004 exposition in Vancouver,
B.C., Canada. We have also converted some lawn and garden equipment.
Current Joint Venture Activities or Negotiations in Progress
- ------------------------------------------------------------
U.S. Navy
On February 5, 2004 we announced the initiation of a lithium-ion
conversion project with the United States Navy. We have funded the initial 3kw
prototype for this project, and the prototype has been completed and delivered
to the Navy.
New York City Taxi Commission
The NYC Taxi Commission agreed to test a PT Cruser which was delivered
January 2007. The converted PT Cruiser Taxi was driven for two months in New
York City. The project was stopped early due to several factors, the primary
being that an electric vehicle cannot be run 24 hours a day, seven days a week.
Daily down time is required to charge the vehicle. The vehicle has been returned
and the project is completed.
Paratransit
Paratransit, Sacramento, California, a company providing community
transportation services, purchased two converted PT Cruisers. The two vehicles
were delivered in November 2006.
NASA
We have signed a Space Act agreement with NASA and several vehicles are
being tested by NASA at the Kennedy Space Center in Florida.
8
China
We are converting two wheel bicycles using Geely Corporation frames and
will discuss manufacturing these bicycles with Geely Corporation.
Solar House
We are also constructing a "green" home in Calgary, Alberta.
California Highway Patrol
Hybrid Technologies funded a lithium-powered bike to honor officers killed
in the line of duty. This bike, produced by Big Bear Choppers, was displayed
throughout California during the first week of May 2005 at media events honoring
slain troopers, and will be kept in the CHP museum.
Arcadis
In September 2007, we signed a contract to provide a PT Cruiser to
Arcadis, a contractor to the U.S. Environmental Protection Administration.
Canadian Ministry of Transportation
We signed an agreement in June 2007, pursuant to which the Canadian Ministry of
Transportation purchased a Smart Car and PT Cruiser, both of which have been
delivered.
Our Telecommunications Operations
- ---------------------------------
Through our subsidiary, Zingo, Inc., of which we own approximately 69% of
the outstanding common stock, we offer telecommunications services to business
and residential customers utilizing VoIP technology. The strategic initial
objective of our telecommunications operations is to develop a superior
multilevel platform that provides highly reliable and advanced
telecommunications services. We plan to focus our efforts in many parts of the
globe where the area is equipped with broadband access for Internet services.
The VoIP system is developed to work via the Internet thus allowing those
destinations to have access to a highly advanced telephone system. The immediate
focus is Canada, Central, Latin America, Europe and developed countries in Asia.
We have approximately 4,000 customers. We are marketing our operations
both on the Internet and by print advertising, reaching out to international
markets. Our success will depend on our ability to anticipate and respond to
various factors affecting the industry, including new technologies, changes in
customer preferences, regulatory changes, demographic trends, economic
conditions, and pricing strategies of competitors.
Our VoIP Technology
VoIP uses a standard Internet connection to place phone calls, bypassing
the telephone company network entirely. Major carriers like AT&T are already
setting up VoIP calling plans in several markets around the United States, and
the FCC is looking seriously at the potential ramifications of VoIP service. In
contrast to circuit switching that has been used by telephone networks for more
than 100 years, data networks simply send and retrieve data as needed. And,
instead of routing the data over a dedicated line, the data packets flow through
a network along thousands of possible paths. This is called packet switching,
where the sending computer chops data into small packets, with an address on
each one telling the network devices where to send them, then sending the packet
to a nearby router, which forwards the packet to another router that is closer
to the recipient computer, and so on. When the receiving computer finally gets
the packets (which may have all taken completely different paths to get there),
it uses instructions contained within the packets to reassemble the data into
its original state. Packet switching allows several telephone calls to occupy
the amount of space occupied by only one in a circuit-switched network.
9
Reliability or compatibility issues with VoIP include: dependency on wall
electric power; home systems that may be integrated into the phone line such as
Digital video recorders, digital subscription TV services and home security
systems using a standard phone line to operate do not operate or integrate with
VoIP. For emergency 911 calls there is no way to associate a geographic location
with an IP address unless it has been registered. Because VoIP uses an Internet
connection, it is susceptible to all the problems normally associated with home
broadband services. These factors will affect call quality: latency, jitter,
packet loss. Phone conversations can become distorted, garbled or lost because
of transmission errors. VoIP is susceptible to worms, viruses and hacking. Some
experts predict that within a short period of time that "spam over Internet
technology" will be used to produce a large numbers of bogus calls and messages,
and that phone connections could be used to steal identities, alter messages or
crash computers. All phone calls are subject to the limitations of normal
computer issues.
We sell an analog telephone adaptor (ATA) that allows the user to connect
a standard phone to his Internet connection for use with VoIP. The ATA is an
analog-to-digital converter. It takes the analog signal from a traditional phone
and converts it into digital data for transmission over the Internet.
We also sell IP Phones. These specialized phones look just like normal
phones with a handset, cradle and buttons but instead of having the standard
phone connectors, IP phones have an ethernet connector. IP phones connect
directly to a router and have all the hardware and software necessary to handle
the IP call. When a call is placed using VoIP, a request is sent to the soft
switch asking which endpoint is associated with the dialed phone number and what
that endpoint's current IP address is. Once the IP address is found, an exchange
of data between the two endpoints can take place. We use the SIP (Session
Initiation Protocol), developed specifically for VoIP applications, for this
communication.
We offer monthly rate plans structured like cell phone plans for $14.95
per month for home use. On the business end, we offer unlimited plans for
$49.95. Our VoIP plans include:
Caller ID
Call waiting
Call transfer
Repeat dial
Return call
Three-way calling
There are also advanced call-filtering options available. These features
use caller ID information to allow the user make a choice about how calls from a
particular number are handled. The user can: forward the call to a particular
number; send the call directly to voicemail; or give the caller a busy signal.
With our VoIP service, the user can specify a stutter dial tone and can
also check voicemail via the Web or have .WAV file messages attached to an
e-mail sent to his computer or handheld.
10
Regulatory Matters
Internet-related regulatory policies are continuing to develop. For
example, the FCC could subject certain services offered by ISPs to regulation as
telecommunications services. Among other things, the FCC could decide to
regulate voice services provided over the Internet, such as VoIP, as
"telecommunications" or a "telecommunications service" even though Internet
access itself might not be regulated. Such a decision could result in our being
subject to universal service fees, access fees and other fees imposed on
regulated telecommunications providers as well as heightened costs of regulatory
compliance. We could be adversely affected by any regulatory change that would
result in the imposition of access charges on ISPs because this would
substantially increase the cost of using the Internet. State public utility
commissions generally have declined to regulate enhanced or information
services. However, some state commissions continue to review potential
regulation of these services. There can be no assurance that state regulatory
authorities will not seek to regulate aspects of these activities as
telecommunications services.
In June 2006, the FCC ruled that internet phone service companies must
begin paying a percentage of their revenue to a federal program to subsidize
telephone service for rural and low-income customers.
Internet Taxation
The Internet Tax Non-Discrimination Act, which was passed by Congress in
November 2004 and signed into law in December 2004, renewed and extended until
November 2007 a moratorium on taxes on Internet access and multiple,
discriminatory taxes on electronic commerce. This moratorium had previously
expired in November 2003. As with the preceding Internet Tax Freedom Act,
"grandfathered" states which taxed Internet access prior to October 1998 may
continue to do so. Certain states have enacted various taxes on Internet access
and/or electronic commerce, and selected states' taxes are being contested on a
variety of bases. However, state tax laws may not be successfully contested, and
future state and federal laws imposing taxes or other regulations on Internet
access and electronic commerce may arise, any of which could increase the cost
of providing Internet services and could materially adversely affect our
business.
Competition
- -----------
The discussion below identifies some of our principal competitors in the
electric vehicle and bicycle areas.
Daimler Chrysler AG's Global Electric Motorcars LLC sells GEM electric
vehicles with varying passenger capacities.
Miles Automotive Group Ltd., Malibu, California, has commenced sales of
its two-passenger model manufactured in China with a top speed of 25 miles per
hour, and a range of up to 40 miles between charges.
Tesla Motors has begun taking orders on a battery-powered electric sports
car, with a projected top speed of 135 miles per hour.
Wrightspeed Inc., San Dimas, California, is developing an electric sports
car with a target top speed of 135 miles per hour and a targeted range between
charges of 250 miles.
11
Dynasty Electric Cars, Delta, BC, Canada, offers an electric-powered sedan
in various configurations, with a maximum speed of 24 miles per hour and a range
of approximately 30 miles.
The Reva Electric Car Company, based in Bangalore, India, was incorporated
in 1995 as a joint venture between the Bangalore based Maini Group and AEVT Inc
of Irvindale, California, to manufacture electric vehicles for city mobility.
This company produces a two-door sedan seating two adults in the front and two
children at the back. Today the company has more than 1000 cars on Indian roads
and about 600 cars in global markets. This company has the EEC (European
Economic Community) Certification and is currently being exported to UK and
Malta and are being test marketed in other countries.
ZAP World, headquartered in Santa Rosa, California, is a principal
competitor in fuel cells, production electric cars that can go over 25 miles per
hour, electric bicycles, three-wheeled electric scooters, seascooters, off-road
vehicles and other electric products. ZAP's Xebra, a three-four door car, can
travel up to 40 miles per hour with a range of 40 miles between charges.
Powabyke, headquartered in Bath, United Kingdom, offers a wide range of
electric bikes and scooters and is moving to offer lithium power, in the UK and
worldwide.
EV Global, North Hills, California, is also a competitor in the electric
bicycle arena.
Our telecommunications services also face substantial competition from
other companies which provide VoIP services, most of which have significantly
greater financial resources than we do. VoIP services are available from a wide
range of companies including cable companies, long-distance companies, national
VoIP providers and regional service providers.
Employees
- ---------
As of the date of this report, we have 25 employees, including our
President and CEO, Holly Roseberry, and her assistants at the corporate office,
as well as the conversion crew in Mooresville, North Carolina. We have
agreements with five consultants on the engineering side and in Marketing/Media.
Research and Development Expenditures
- -------------------------------------
We incurred research and development expenditures of $1,983,947 in our
fiscal year ended July 31, 2006, and of approximately $1,009,483 in our fiscal
year ended July 31, 2006.
Patents and Trademarks
- ----------------------
The Company has filed provisional patent applications with the U.S. Patent
and Trademark Office ("USPTO") for three of our inventions relating to our
battery management system, cathode material and an ultracapacitor. We have filed
a trademark application with the USPTO for "Hybrid Technologies", and a revised
filing in April 2007, which received an initial refusal office action by the
USPTO staff in May 2007. We plan to appeal this decision.
12
ITEM 2. DESCRIPTION OF PROPERTY.
Our mailing address is 50015841 East Bonanza Road,Charleston, Suite 138-145,230-145, Las Vegas, Nevada,
89110,89142, for which we pay $10$25 per month, on a month to month basis.
We also have an office at 7126 Sophia Ave, Van Nuys CA, for which we pay as rent
the monthly mortgage payment of $2009.58 to the owner of the property,
Sophiahouse Inc. This property isare building a subject of the legal proceeding described
below with RV Systems, etal. See "ITEM 3. Legal Proceedings."home in Calgary Alberta, Canada that will showcase green
technology.
We leased, commencing October 5, 2005,purchased, in May, 2006, a 11,00040,000 square foot facility at 182B
Raceway Dr,158 Rolling Hill in
Mooresville, North Carolina. The lease is for a period of six
months at a monthly rental of $5,000.
ITEM 3. LEGAL PROCEEDINGS.
Other than as described below, we are not a party to any material legal
proceedings and to our knowledge, no such proceedings are threatened or
contemplated. At this time we have no bankruptcy, receivership or similar
proceedings pending.
Litigation against Lithium House, RV Systems, Chaz Haba and Related Parties
On July 2, 2005, we notified RV Systems that it was in material default under
the License Agreement. On October 25, 2005, we filed suit against Lithium House,
RV Systems, Chaz Haba and related parties, in the California Superior Court, Los
Angeles County, seeking recovery of amounts paid under the RV Systems License
Agreement for failure of performance by RV Systems, and for other damages. Our
complaint is based breach of contract and breach of the obligation of good faith
and fair dealing by the defendants, money had and received, fraud and negligent
misrepresentation. We are seeking rescission of the License Agreement between
Hybrid Technologies and RV Systems, Inc., recovery of amounts paid to RV
Systems, Inc. under the License Agreement, approximately $3,100,000, exemplary
damages under Section 3294 of the California Civil Code, as well as other
consequential damages and injunctive relief, and a writ of attachment entitling
Hybrid Technologies to immediate possession of certain prototype vehicles and
inventory, including the solar house adjacent to Lithium House's offices.
15
Securities and Exchange Commission Inquiry
On July 30, 2004, we received a request for voluntary production of
documents and information pursuant to a Securities and Exchange Commission
informal inquiry. The documents requested include those related to our stock
issuances, its major corporate transactions, including the Azra shopping center, the
Queens mineral property and the licensing agreements with RV Systems, and to
its agreements
with consultants and related parties, as well as those relating to potential
joint venture partners and customers. We fully cooperated with the Commission in
response to its request for information.
On February 10, 2006, we received another request for voluntary production
of documents and information pursuant to a Securities and haveExchange Commission
("SEC") informal inquiry, and on April 24, 2006, we received no
further requests.
Planet Electric, Inc. Stockholder Litigation
On October 17, 2003, wea subpoena from the
SEC issued in an investigation initiated by the SEC with respect to the matters
covered by the inquiry and a broad range of other matters. Our President
voluntarily testified and all requested documents were served with a complaint filed on
October 15, 2003, by Michael McDermott, as a stockholder of Planet Electric,
Inc. and purportedly on behalf of Planet Electric in the United States District
Court for the Central District of California. Charles (Chaz) Haba was one of the
founders of Planet Electric, and was associated with that company from until
early 2002. The complaint lists Charles Haba, other individuals, Lithium House,
Inc., Nupow'r LLC, Nu Age Electric, Inc., Dynamic Concepts aka NPDI, and
Whistler Investments, Inc. (now Hybrid Technologies) as defendants. The
complaint sought an injunction prohibiting certain defendants from continuing
their business relationship and transfer of alleged Planet Electric trade
secrets or processes and also seeks damages for: patent infringement against
Charles Haba, companies that Mr. Haba has been associated with since his
involvement with Planet Electric, and us; breach of fiduciary duty against Mr.
Haba; breach of confidential relationship against Mr. Haba; conversion against
Mr. Haba and certain other individual defendants; various business torts against
Mr. Haba, Lithium House, NuPow'r and Nu Age; trade secret misappropriation
against all defendants.
On June 29, 2004, the parties stipulated to dismiss this case.
Charles Haba v. Planet Electric, Inc.
In this action, Charles Haba, is suing for breach of his employment
agreement and breach of a note against his former employer, Planet Electric,
Inc. in the Los Angeles County Superior Court. Planet Electric, Inc. has filed a
cross-complaint against same defendants, including Hybrid Technologies, Inc.,
and the same causes of action as the above-mentioned shareholder derivative
suit. The cross-complaint adds claims for conversion and conspiracy to convert
assets of Planet Electric, Inc. against Whistler Investments, Inc. The
cross-defendants, including Hybrid Technologies, Inc. intend to move for
dismissal of the cross complaint.
16
submitted.
Depository Trust Company Suit
On November 23, 2004, the Company filed a Complaint in the Eighth Judicial
District Court, County of Clark, State of Nevada, sitting in Las Vegas, Nevada,
styled "Whistler Investments, Inc., et al. v. The Depository Trust and Clearing
Corporation, et al.", Case No. A495703. The defendants include The Depository
Trust Company and the National Securities Clearing Corporation. The action
alleges 22 state law claims, including intentional and negligent
misrepresentation, fraud, racketeering, negligence, conversion, interference
with contractual relations and prospective economic advantages and conspiracy. Although the action has been filed, service has not yet been effected on
defendants, and no answer or other pleadingA
motion to dismiss has been filed by defendants. Stones Choppers
On October 12, 2005,Our case is on appeal at the
Company filed a ComplaintNinth Circuit. Briefing is still in the Los Angeles County
Superior Court against Tony Stones, individually and doing business as Stones
Choppers. The action seeks rescission of an agreement between The Company and
defendants for the design/build of a prototype motorcycle. The Company seeks the
return of its $25,000 deposit payment. None of the Defendants has filed a
responsive pleading.progress. A decision is expected in 18-20
months.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to our security holders for a vote during the fourth
quarter of our fiscal year ending July 31, 2005.
17HOLDERS
Not applicable.
13
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our shares of common stock trade and have traded on the NASD OTC Bulletin Board
since March 4, 2002. The OTC Bulletin Board is a network of security dealers who
buy and sell stock. A computer network that provides information on current
"bids" and "asks", as well as volume information, connects the dealers. The
following table sets forth for our last three fiscal years by quarter the high
and low closing prices of our common shares traded on the OTC Bulletin Board:
Period High Low
- ------ ---- ---
March 4, 2002 to April 30, 2002 no trades
May 1, 2002 to July 31, 2002 $1.07 $0.20
August 1, 2002 to October 31, 2002 $1.01 $0.08
November 1, 2002 to January 31, 2003 $0.14 $0.08
February 1, 2003 to April 30, 2003 $0.30 $0.08
May 1, 2003 to July 10, 2003 $0.29 $0.08
July 11, 2003 to July 31, 2003* $4.00 $1.29
August 1, 2003 to October 31, 2003 $7.00 $3.65
November 1, 2003 to January 31, 2004 $8.50 $3.65
February 1, 2004 to March 9, 2004 $12.35 $7.90
March 10, 2004 to April 30, 2004** $7.39 $3.45
May 1, 2004 to July 31, 2004 $17.15 $6.18------ ------
August 1, 2004 to October 31, 2004 $9.85 $5.15$ 9.85 $ 5.15
November 1, 2004 to November 18, 2004 $11.55 $9.21$ 9.21
November 19, 2004 to January 31, 2004***2004(1) $13.45 $8.18$ 8.18
February 1, 2005 to February 28, 2005 $9.55 $8.64$ 9.55 $ 8.64
March 1, 2005 to March 8, 2005**** $9.00 $6.502005(2) $ 9.00 $ 6.50
March 9, 2005 to April 30, 2005***** $7.66 $3.852005(3) $ 7.66 $ 3.85
May 1, 2005 to June 16,14, 2005 $7.81 $5.24$ 7.81 $ 5.24
June 17,15, 2005 to July 31, 2005****** $8.08 $7.062005(4) $ 8.50 $ 7.10
August 1, 2005 to August 30, 2005 $ 9.00 $ 7.50
August 31, 2005 to October 31, 2005(5) $ 8.70 $ 4.00
November 1, 2005 to November 29, 2005 $ 8.94 $ 4.85
November 30, 2005 to January 31, 2006(6) $ 7.60 $ 4.75
February 1, 2006 to February 27, 2006 $14.35 $ 7.62
February 28, 2006 to March 31, 2006(7) $14.05 $ 7.96
March 31, 2006 to April 30, 2006(8) $11.40 $ 8.60
May 1, 2006 to May 30, 2006 $11.20 $ 8.60
May 31, 2006 to July 31, 2006(9) $ 9.43 $ 4.60
August 1, 2006 to October 31, 2006 $ 7.41 $ 3.30
November 1, 2006 to January 31, 2007 (10) $ 5.42 $ 3.52
February 1, 2007 to April 30, 2007 (11)(12) $ 4.77 $ 4.11
May 1, 2007 to July 31, 2007 (13) $ 4.35 $ 2.50
August 1, 2007 to October 19, 2007 $ 2.78 $ 1.85
- -------------
* Following ten-for-one reverse split effective July 11, 2003
** Following three-for-one forward split effective March 10, 2004
***(1) Following three-for-one forward split effective November 19, 2004
****2004. (2)
Following the one-for-ten stock dividend effective February 28, 2005
*****2005. (3)
Following the one-for-ten reverse split effective March 9, 2005
******2005. (4) Following
the one-for-twenty stock dividend effective June 17, 200515, 2005. (5) Following the
one-for-twenty stock dividend effective August 31, 2005. (6) Following the
one-for-twenty stock dividend effective November 30, 2005. (7) Following the
one-for-ten stock dividend effective February 28, 2006. (8) Following the
one-for-twenty stock dividend effective March 31, 2006. (9) Following the
one-for-twenty stock dividend effective May 31, 2006. (10) A one-for-ten stock
dividend was effective November 30, 2006. (11 Following the one-for-twenty stock
dividend effective January 31, 2007. (12) A one-for-twenty stock dividend was
effective March 30, 2007. (13) A one-for-ten stock dividend was effective May
31, 2007.
The above quotations are taken from information provided by Canada StockwatchYahoo and reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Holders of Common Stock
As of July 31, 2005,October 24, 2007, we had 63100 holders of record of our common stock.
Dividends
14
Our current policy is to retain any earnings in order to finance the expansion
of our operations. Our board of directors will determine future declaration and
payment of dividends, if any, in light of the then-current conditions they deem
relevant and in accordance with the Nevada Revised Statutes. At the stockholders
meeting held on March 7, 2005, quarterly stock dividends at the rate of 20%
annually or 5% per quarter were approved.
18
Recent Sales of Unregistered Securities
- -------------- ---------------- ---------- ---- --------------------
Date Title and Amount Purchasers Principal Total Offering Price/
- ---- ---------------- ---------- ---------- --------------
Underwriter Underwriting Discounts
----------- ----------------------
- -------------------- -------------------------------- -------------------------- ---------- -------------------
April 15, 2002 40,000,000 shares of Common Salim S. Rana NA $.01 per share/NA
Stock issued to the vendor of Investments Corp.
the Azra Shopping Center.*
- -------------------- -------------------------------- -------------------------- ---------- -------------------
8/12/03 1,125,000 shares of Common International NA NA
Stock issued in escrow in Business
connection with proposed Consultants GMBH
financing transaction (shares
were subsequently returned to
the Company's treasury)
- -------------------- -------------------------------- -------------------------- ---------- -------------------
12/09/03 1,250 shares of Common Stock** Consultant (Christopher NA $1.12 per share/NA
Gilcher)
- -------------------- -------------------------------- -------------------------- ---------- -------------------
12/09/03 1,250 shares of Common Stock** Consultant (Seth NA $1.12 per share/NA
Farber)
- -------------------- -------------------------------- -------------------------- ---------- -------------------
1/14/04 2,500 shares of Common Stock*** Consultant (Pilot Capital) NA $2.17 per share/NA
- -------------------- -------------------------------- -------------------------- ---------- -------------------
3/16/04 141,177 shares of Common Stock Private Investor**** NA $____ per share/NA
- -------------------- -------------------------------- -------------------------- ---------- -------------------
2/10/05 90,000,000 shares of Common Stock Sterling Capital, Inc. NA $2.17 per share/NA
issued to a Trustee to secure
the Company's obligations to
Sterling Capital, Inc. under
Loan Agreement dated February
20, 2004
- -------------------- -------------------------------- -------------------------- ---------- -------------------
7/12/05 4,000 shares of Common Stock Private Investor**** NA $5.00 per share/NA
- -------------------- -------------------------------- -------------------------- ---------- -------------------
*These shares were issued pursuant to Section 4(2) of the Securities Act to a
limited number of indivicuals and are restricted shares as defined in the
Securities Act. With regard to the shares issued to Salim S. Rana Investments
Corp. ("SSRIC"), the vendor of the Azra Shopping Center, SSRIC is owned by one
individual, Salim R. Rana, an accredited investor, and that therefore the
transaction was exempt from registration under the Securities Act of 1933, as
amended, under section 4(2) thereof, as a transaction not involving any public
offering.
**The shares issued on December 12, 2003 and January 14, 2004 were issued to
individual consultants for consulting services related to research on the
Company's potential business in the lithium power area and potential alliance
partners. The exchange value of their services for the shares issued for such
services was determined by reference to the market price of Hybrid Technologies
common stock. The transactions are viewed as exempt from registration under the
Securities Act of 1933, as amended, under section 4(2) thereof, as a transaction
not involving any public offering.
***The exchange value of the shares issued to Pilot Capital for business
development consulting services was determined by negotiations between Pilot
Capital and Hybrid Technologies. This transaction is viewed as exempt from
registration under the Securities Act of 1933, as amended, under section 4(2)
thereof, as a transaction not involving any public offering.
****Exempt under Rule 506 under the Securities Act.
19
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth as of July 31, 20052007 information with
respect to our common stock issued and available to be issued under outstanding
options, warrants and rights.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
(a) (b) (c)
Plan category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans
approved by security holders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not
approved by security holders 26,500 $6.40 1,464,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Total 26,500 $6.40 1,464,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------ -------------------------- --------------------------- ------------------------
(a) (b) (c)
Plan category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation
plans (excluding
securities reflected in
column (a))
- ------------------ -------------------------- --------------------------- ------------------------
Equity compensation
Plans approved by
security holders
- ------------------ -------------------------- --------------------------- ------------------------
Equity compensation
plans not approved 570,000 $3.55 3,000,000
by security holders
- ------------------ -------------------------- --------------------------- ------------------------
Total 3,000,000
- ------------------ -------------------------- --------------------------- ------------------------
2003, 2005 and 20052006 Restricted Stock Plans
On July 17, 2003, the Board of Directors of the Company adopted the 2003
Restricted Stock Plan (the "Plan"), pursuant to which 1,800,000 shares of common
stock (split- adjusted) were reserved for issuance to eligible participants
under the Plan. All shares have been issued under this plan, the provisions of
which were similar to those of the 2005 Restricted Stock Plan described below.
On April 21, 2005, the Board of Directors of the Company adopted the 2005
Restricted Stock Plan (the "Plan"), pursuant to which 2,000,000 shares of common
stock were reserved for issuance to eligible participants under the Plan. Such
eligible participants include any person who is an employee of or consultant or
advisor to Hybrid Technologies and who provides bona fide services for Hybrid
Technologies, where the services are not in connection with the offer or sale of
securities in a capital raising transaction and where the services do not
directly or indirectly promote or maintain a market for Hybrid Technologies'
common stock. In no case may an award be made under the Plan where the common
stock granted in the award is not eligible for registration pursuant to Form S-8
(or any successor form promulgated for the same general purposes by the
Securities and Exchange Commission) under the Securities Act of 1933, as
amended. All shares have been issued under this plan, with the exception of
14,500 shares subject to outstanding options.
The 2006 Restricted Stock Plan has been adopted by the board with 5,000,000
shares reserved. Options covering 2,000,000 shares were granted to Salim Rana, a
shareholder of the Company, of which options covering 1,206,000 shares have been
exercised. The Plan is administered by the Board of Directors of the Company.
Subject to the express limitations of the Plan, the Board has authority in its
discretion to determine the eligible persons to whom, and the time or times at
which, restricted stock awards may be granted, the number of shares subject to
each award, the time or times at which an award will become vested, the
performance criteria, business or performance goals or other conditions of an
award, and all other terms of the award. The Board also has discretionary
authority to interpret the Plan, to make all factual determinations under the
Plan, and to make all other determinations necessary or advisable for Plan
administration. The Board may prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations, and
actions by the Board are final, conclusive, and binding upon all parties.
2015
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this section.
Results Of Operations for the Year Ended July 31, 20052007
We incurred a net loss of $2,918,739$10,619,757 the six monthsyear ended July 31, 2005,2007, and of
$12,586,255approximately $13,126,909 for the year ended JanuaryJuly 31, 2005,2006, including $7,071,467$7,577,275
in stock based compensation in the year ended JanuaryJuly 31, 2005,2006, relating to our
grant of stock options to consultants during the year, and in the six monthsyear ended
July 31, 2005, license fee and permit expense of $192,755, management and consulting
fees of $538,397,2006, general and administrative costs of $631,543, professional
fees of $1,076,599,$11,440,129, and interest
expense of $325,159. The stock based
compensation of $7,071,467 is based on granting of 855,000 options (adjusted for
two 3:1 forward splits effective March 10, 2004 and November 19, 2004, and the
one-for-ten reverse stock split effective March 9, 2005) with an exercise price
of $.83 (split adjusted).$102,082.
Our net loss for the six-month periodyear ended July 31, 20052007 decreased
substantially from the comparative
period in fiscal 20042006 (from $10,690,517$13,126,909 in 20042006 to $2,918,739approximately $10,619,757 in
2005)2007). This was primarily due to the previously mentioned
stock based compensationdecrease in 2004 recorded at $7,071,467; 2004 licensegeneral and permit
fee expense of $1,710,000, compared with $192,755administrative costs
from $11,440,129 in 2005; and management and
consulting fees of $962,329 in 20042006, as compared with 538,397approximately $9,285,181 in 2005.
Professional fees were higher2007. We
had reduced interest expense in the six-month periodtwelve months ended July 31, 2005,
totaling $1,076,5992007 of
$86,292, as compared with an expense of $121,915 in this categoryapproximately $102,082 in the comparable period in
2004. We also incurred increased interest expense in
the six months ended July 31, 2004 of $325,159 related to the Sterling Capital
$3,000,000 loan and on amounts owing on overdue notes payable to related
parties, as compared with $60,084 in the comparable period in 2004.
21
2006.
PLAN OF OPERATION
During the period since inception on April 12, 2000 to July 31, 2005,2007, we have
incurred operating losses aggregating $20,428,808.$44,527,591. At July 31, 2005,2007, we had a
working capital deficiencysurplus of $4,139,711$577,244 and a stockholders' deficit of $4,054,052.$1,984,776.
The continuation of the Company as a going concern is dependent upon the
continued financial support from our shareholders, our ability to obtain
necessary equity financing to continue operations, and the attainment of
profitable operations. Our auditors have expressed substantial doubt concerning
our ability to continue as a going concern.
As of July 31, 2005,2007, we had cash on hand of $166,215.$3,775. Our liabilities at the same
date totaled $4,347,505.$1,537,496. We do not have sufficient cash on hand or financing in
place to complete commercialization of our planned products.
Electric Vehicles
We have terminated the License Agreement with RV Systems, and on October 25,
2005, we filed suit for rescission of the License Agreement and damages against
Lithium House and RV Systems and related parties. See "Item 3-Legal
Proceedings".Systems.
16
We are now converting vehicles in our own leased facility in Mooresville, North Carolina.
We have a team of highly qualified Engineers who oversee groups of electrical
and mechanical staff. With the purchase of our new facility and the renovations
to the building we are able to work on many projects and vehicles concurrently.
The 40,000 square foot facility has room for both conversions and storage with
the potential for future growth.
Commercial Initiatives
On February 5, 2004 we announced the initiation of a lithium-ion conversion
project with the United States Navy. We have commercial initiativesfunded the initial 3kw prototype
for this project, and the prototype has been completed and delivered to the
Navy. The NYC Taxi Commission agreed to test a PT Cruiser which was delivered
January 2007. The converted PT Cruiser Taxi was driven for two months in China with Geely Corporation.New
York City. The proposed
joint venturevehicle has been returned and the project is completed.
Paratransit, Sacramento, California, a company providing community
transportation services, purchased two converted PT Cruisers. We have signed a
Space Act agreement with Geely hasNASA and several vehicles are being tested by NASA at
the Kennedy Space Center in Florida. We are also constructing a "green" home in
Calgary, Alberta. We signed an agreement in June 2007, pursuant to which the
Canadian Ministry of Transportation purchased a Smart Car and PT Cruiser, both
of which have been drafted. The partydelivered. In September 2007, we signed a contract to the agreement
for Hybrid Technologies would beprovide
a Chinese company owned byPT Cruiser to Arcadis, a Hybrid
Technologies Hong Kong subsidiary. The Chinese company is in the process of
being formed. We have completed two prototypes, the E-Cobra and the Jin Bike. We
have also delivered a prototypecontractor to the U.S. Navy. We are constructing a lithium
power solar house in Van Nuys, California. (This facility is part of the
litigation we initiated against RV Systems and related parties--see "Item 3.
Legal Proceedings".)Environmental Protection
Administration.
For a discussion of our commercial initiatives, please refer to "Current Joint
Venture Negotiations in Progress" above under "Item 1. Description of Business".
Telecommunications Services
We offer telecommunications services to business and residential customers
utilizing VoIP technology. The strategic initial objective of our
telecommunications operations is to develop a superior multilevel platform that
provides highly reliable and advanced telecommunications services. Our
telecommunications operations are conducted through our subsidiary, Zingo, Inc.,
of which we own approximately 69% of the outstanding common stock. We plan to
focus our efforts in many parts of the globe where the area is equipped
broadband access for Internet services. The VoIP system is developed to work via
the Internet thus allowing those destinations to have access to a highly
advanced telephone system. The immediate focus is Canada, Central and Latin
America, Europe and developed countries in Asia.
22
5.2 Liquidity and Capital Resources
Since our incorporation, we have financed our operations almost exclusively
through the sale of our common shares to investors and borrowings. We expect to
finance operations through the sale of equity in the foreseeable future as we
receive minimal revenue from our current business operations. There is no
guarantee that we will be successful in arranging financing on acceptable terms.
On February 24, 2004, we announced receipt of $1 million dollars of a $3 million
dollar non-recourse loan to be collateralized by stock. On April 14, 2004, we
drew down an additional $1,000,000 on this loan, and on April 22, 2004,22,2004, we drew
down the final $1,000,000 of the loan. The lender iswas Sterling Capital, Inc.,
and the loan iswas collateralized by 9,000,000 shares of restricted common stock
(split adjusted). We have, which shares, together with shares issuable by reason of stock
splits and dividends, totaling 12,732,500 shares, were issued 9,000,000 shares of common stock to Sterling
Capital at the maturity of the loan, since the recourse of Sterling Capital in
the event of nonpayment of the loan at maturity was solely to the shares held in
escrow as collateral.
17
We have raised equity capital through issuances of common stock and debt.
During the sixtwelve months ended July 31, 2005,2007, we received proceeds of $589,500$5,076,500
from the exercise of stock options and $200,000 from the issuance of
common stock.options.
At July 31, 2005,2007, we had $166,215$3,775 cash on hand. Our ability to raise
additional capital is affected by trends and uncertainties beyond our control.
On October 29, 2007, we entered into a Loan Agreement with Wyndom Capital
Investments, Inc. (the "Lender"). The Loan Agreement provides for loans to the
Company of up to $4,000,000, with a minimum initial loan of $500,000 the
disbursement of which to us took place on in late October, 2007. The notes
evidencing the installments of the loans bear interest payable monthly in
arrears at the rate of 10% per annum, and mature and are due and payable three
years from the date of issuance. The loans under the Loan Agreement are secured
by shares of our common stock held by the Lender. We are required to issue
shares as collateral at the rate of two and one half shares of our common stock
for each dollar principal amount of the loan advanced to us. If there is a
trading halt in our common stock or we file for bankruptcy or reorganization,
the Lender has full recourse against the Company to collect the unpaid amounts
owing under the Loan Agreement and notes issued pursuant thereto, including a
first priority lien on all of our assets. In the event of the occurrence of
another type of default, which we do not cure in a timely fashion, the Lender,
as its sole recourse, is entitled to take possession for its sole benefit of the
shares of common stock designated as collateral for the principal amount of the
Loan that is in default. After the Lender has disbursed the first $1,000,000
principal amount of the Loan to us, the Lender is entitled to receive a
certificate for the balance of the 7,500,000 shares of common stock representing
the collateral for the $3,000,000 balance of the funds that may be disbursed
under the Loan Agreement. To the extent the $3,000,000 balance of funds are not
delivered, we are entitled to cancel such certificate, with the Lender retaining
the appropriate number of shares as collateral for advances in excess of
$1,000,000.
Our current operating funds and financing facility are less than necessary
for commercialization of our planned products, and therefore we will need to
obtain additional financing in order to complete our business plan. We
anticipate that up to $2,000,000 of additional working capital will be required
over the next 12 months for market introduction of these products through joint
venture partners or otherwise. We do not have sufficient cash on hand to meet
these anticipated obligations.
We do not currently have any arrangements for financing other than the
Wyndom Capital loan agreement, which may not furnish us with all of the capital
that we require, and we may not be able to find suchadditional financing if
required. Obtaining additional financing would be subject to a number of
factors, including investor sentiment. Market factors may make the timing,
amount, terms or conditions of additional financing unavailable to us.
Our auditors are of the opinion that our continuation as a going concern
is in doubt. Our continuation as a going concern is dependent upon continued
financial support from our shareholders and other related parties.
2318
ITEM 7. FINANCIAL STATEMENTS.
HYBRID TECHNOLOGIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
July 31, 2005
24
Hybrid Technologies, Inc.
(A Development Stage Company)
Index to Financial Statements
Report of Independent Auditors 26
Balance Sheets as of July 31, 2005, July 31, 2004 (Unaudited),
and January 31, 2005 27
Consolidated Statements of Operations for the six month periods
ended July 31, 2005 and 2004 (Unaudited), for the years ended
January 31, 2005 and January 31, 2004, and for the period from
Inception through July 31, 2005 28
Consolidated Statement of stockholders' (deficit) for the
period from February 1, 2003 to July 31, 2005 29
Consolidated Statements of cash flows for the six months ended
July 31, 2005 and July 31, 2004 (Unaudited), and for the years
ended January 31, 2005 and January 31, 2004 and for the period
from Inception through July 31, 2005 30
Notes to the financial statements 31
25
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMRegistered Public Accounting Firm
To the Board of Directors and Stockholders of
Hybrid Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Hybrid
Technologies, Inc. (a development stage company) as of July 31, 20052007 and January 31, 2005,2006,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the periodsyears ended July 31, 20052007 and January 31, 20052006, and from April 12, 2000
(Inception) through July 31, 2005.2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of Hybrid Technologies,
Inc. as of July 31, 20052007 and January 31, 2005,2006, and the results of consolidated operations
and cash flows for the periodsyears ended July 31, 20052007 and January 31, 2005,2006, and from April 12,
2000 (Inception) through July 31, 20052007, in conformity with U.S. generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company incurred a net loss of $21,665,102$45,411,768 from April
12, 2000 (Inception) through July 31, 2005. At July 31, 2005, current
liabilities exceeded current assets by $4,139,7112007. This and total liabilities exceeded
total assets by $4,051,675. Theseother factors and others discussed in
Note 2 raise substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
/s/ Mason Russell West, LLCHaynie & Company
Littleton, CO
October 21, 2005
26November 13, 2007
19
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 31, July 31, January 31,
ASSETS 2005 2004 2005
- -----------------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash $ 166,215 $ 611,449 $ 103,718
Accounts receivable 9,392 -- 5,696
Inventories 21,892 -- 18,903
Other current assets 10,295 14,000 11,137
------------ ------------ ------------
TOTAL CURRENT ASSETS 207,794 625,449 139,454
Property and equipment, net 44,151 1,175 27,596
Other assets 43,885 180,000 153,671
------------ ------------ ------------
$ 295,830 $ 806,624 $ 320,721
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -----------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Note payable - related party $ 80,000 $ -- $ 80,000
Current portion of long-term debt 3,000,000 -- --
Accounts payable and accrued expenses 1,267,505 187,404 503,181
Advances from related parties -- 732,670 1,585,767
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 4,347,505 920,074 2,088,948
Long-term debt -- 3,000,000 3,000,000
Commitments and contingencies -- -- --
Minority interest 2,377 -- 2,480
Stockholders' equity (deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized,
no shares issued -- -- --
Common stock, $.001 par value, 270,000,000 authorized
7,683,515 issued and outstanding at July 31, 2005
6,804,133 shares issued and outstanding at January 31, 2005 7,684 1,980 6,804
Additional paid in capital 17,603,366 13,735,195 13,888,852
Deficit accumulated during the development stage (21,665,102) (16,850,625) (18,746,363)
------------ ------------ ------------
(4,054,052) (3,113,450) (4,850,707)
------------ ------------ ------------
$ 295,830 $ 806,624 $ 240,721
============ ============ ============
SEE NOTES TO THE FINANCIAL STATEMENTS
27Consolidated Balance Sheets
July 31, July 31,
ASSETS 2007 2006
- ----------------------------------------------------------------------------------------------------------------
Current assets:
Cash $ 3,775 $ 519,181
Accounts receivable, net of allowance
for doubtful accounts of $139,003
and $2,465 , respectively 1,994 22,620
Inventories 425,775 282,969
Other current assets 60,233 61,799
Advances to related parties 24,505 --
------------------------------
Total current assets 516,282 886,569
Property and equipment, net 2,120,343 2,091,617
Other assets 92,824 1,534,766
------------------------------
$ 2,729,449 $ 4,512,952
==============================
LIABILITIES AND STOCKHOLDERS' DEFICIT
- ----------------------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt $ 241,460 $ 224,442
Accounts payable and accrued expenses 489,788 318,392
Deferred revenues - customer deposits 2,990 26,625
Advances from related parties -- 83,529
------------------------------
Total current liabilities 734,238 652,988
Long-term debt 803,258 1,025,293
Commitments and contingencies -- --
Minority interest 2,377 2,377
Stockholders' equity (deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized,
no shares issued -- --
Common stock, $.001 par value, 50,000,000 authorized 25,895,130 shares
issued and outstanding at July 31, 2006
39,500,511 shares issued and outstanding at July 31, 2007 39,501 25,895
Additional paid in capital 47,364,903 37,598,410
Deficit accumulated during the development stage (45,411,768) (34,792,011)
Accumulated other comprehensive income (7,860) --
------------------------------
1,984,776 2,832,294
------------------------------
$ 2,729,449 $ 4,512,952
==============================
See Notes to the Financial Statements
20
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited Year ended Inception
Six months Six months --------------------------- through
ended ended January 31, January 31, July 31,
July 31, 2005 July 31, 2004 2005 2004 2005
------------- ------------- ------------ ------------ ------------
Costs and expenses:
General and administrative $ 631,543 $ 722,139 $ 1,609,373 $ 116,239 2,411,975
Management and consulting fees 538,397 962,329 1,339,114 178,996 2,070,507
License and permits 192,755 1,710,000 2,070,853 443,400 2,707,008
Other professional fees 1,076,599 121,915 266,005 87,635 1,504,673
Research and development 182,088 60,642 66,822 20,268 269,178
Stock- based compensation -- 7,071,467 7,071,467 4,394,000 11,465,467
------------ ------------ ------------ ------------ ------------
(loss from operations) (2,621,382) (10,648,492) (12,423,634) (5,240,538) (20,428,808)
Other income (expense)
Interest (325,159) (60,084) (203,834) (24,070) (553,063)
Other income 27,699 18,059 24,493 3,384 56,970
------------ ------------ ------------ ------------ ------------
Net (loss) before discontinued operations
and minority interest $ (2,918,842) $(10,690,517) $(12,602,975) $ (5,261,224) $(20,924,901)
Loss from discontinued operations -- -- (757,024)
------------ ------------ ------------ ------------ ------------
(2,918,842) (10,690,517) (12,602,975) (5,261,224) (21,681,925)
Minority interest in net loss 103 -- 16,720 -- 16,823
------------ ------------ ------------ ------------ ------------
Net loss $ (2,918,739) $(10,690,517) $(12,586,255) $ (5,261,224) $(21,665,102)
============ ============ ============ ============ ============
Net (loss) per share before discontinued
operations $ (0.43) $ (1.82) $ (2.20) $ (1.05)
(Loss) per share from discontinued operations $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Net (loss) per share, Basic and Fully diluted $ (0.45) $ (1.82) $ (2.20) $ (1.05)
============ ============ ============ ============
Weighted number of shares 6,856,100 5,887,200 5,725,500 5,006,700
SEE NOTES TO FINANCIAL STATEMENTS
28Development Stage Company
Consolidated Statements of Operations
INCEPTION
Year Ended Year Ended THROUGH
July 31, 2007 July 31, 2006 July 31, 2007
- ----------------------------------------------------------------------------------------------------
Sales $ 1,378,812 $ 390,441 $ 1,769,253
Cost of sales 1,306,471 842,825 2,149,296
------------------------------------------------
Gross Profit (loss) 72,341 (452,384) (380,043)
------------------------------------------------
Costs and expenses:
General and administrative 9,285,181 11,440,129 38,177,932
Research and development 1,009,483 1,983,947 5,969,616
------------------------------------------------
10,294,664 13,424,076 44,147,548
------------------------------------------------
(loss from operations) (10,222,323) (13,876,460) (44,527,591)
Other income (expense)
Interest expense (86,292) (102,082) (741,437)
Interest income 1,191 19,670 20,861
Loss from subsidiaries -- -- --
Loss from sale of other assets (314,381) -- (314,381)
Other income (expenses) 2,048 831,963 890,981
------------------------------------------------
Net (loss) before discontinued operations
and minority interest (10,619,757) (13,126,909) (44,671,567)
Loss from discontinued operations -- -- (757,024)
------------------------------------------------
(10,619,757) (13,126,909) (45,428,591)
Minority interest in net loss -- -- 16,823
------------------------------------------------
Net loss (10,619,757) (13,126,909) (45,411,768)
Other comprehensive income
Foreign currency translation (7,860) -- --
------------------------------------------------
Net comprehensive (loss) $(10,627,617) $(13,126,909) $(45,411,768)
================================================
------------------------------
Net (loss) per share basic and fully diluted $ (0.37) $ (1.22)
==============================
Weighted number of shares 28,393,440 10,753,799
See Notes to Financial Statements
21
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
Deficit
Accumulated
Additional during the
Common stock Paid-in Development Subscription Deferred
Shares Amount Capital Stage receivable compensation Total
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance February 1, 2003 4,360,500 $ 4,361 $ 490,939 $ (898,884) $ -- $ -- $ (403,584)
Issuance of common stock for cash
and note 42,533 42 199,958 -- (50,000) -- 150,000
Non-cash issuance of stock 1,012,500 1,013 (1,013) -- -- -- --
Employee stock based compensation -- -- 4,660,000 -- -- (4,660,000) --
Exercise of options, spit adjusted 707,400 707 588,793 -- -- -- 589,500
Expenses paid with stock 2,250 2 8,748 -- -- -- 8,750
Amortization of deferred
stock compensation -- -- -- -- -- 4,394,000 4,394,000
Net (loss) for the year -- -- -- (5,261,224) -- -- (5,261,224)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance January 31, 2004 6,125,183 $ 6,125 $ 5,947,425 $ (6,160,108) $ (50,000) $ (266,000) $ (522,558)
Return of non-cash issuance (1,012,500) (1,013) 1,013 -- -- -- --
Stock redemption (900,000) (900) 900 -- -- -- --
Employee stock based compensation -- -- 7,071,467 -- -- -- 7,071,467
Exercise of options 1,072,892 1,073 924,222 -- -- -- 925,295
Collection of receivable -- -- -- -- 50,000 -- 50,000
Stock re-issuance 900,000 900 (900) -- -- -- --
Amortization of deferred stock
compensation -- -- -- -- -- 266,000 266,000
Basis of assets acquired less
than purchase price -- -- (54,656) -- -- -- (54,656)
Stock dividend 618,558 619 (619) -- -- -- --
Net (loss) for the year -- -- -- (12,586,255) -- -- (12,586,255)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance January 31, 2005 6,804,133 $ 6,804 $ 13,888,852 $(18,746,363) $ -- $ -- $ (4,850,707)
Employee stock based compensation
Stock issuances
(SEE NOTES 9,10 & 12)
Exercise of options 9,500 10 60,790 -- -- -- 60,800
Sale of stock for cash 4,000 4 19,996 -- -- -- 20,000
Stock issued for related
party advances 500,000 500 3,384,094 -- -- -- 3,384,594
Stock dividend 365,882 366 (366) -- -- -- --
Options issued for expenses -- -- 250,000 -- -- -- 250,000
Net (loss) for the year -- -- -- (2,918,739) -- -- (2,918,739)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance July 31, 2005 7,683,515 $ 7,684 $ 17,603,366 $(21,665,102) $ -- $ -- $ (4,054,052)
============ ============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS
29Development Stage Company
Consolidated Statement of Stockholder's Equity (Deficit)
Deficit
Accumulated
Additional during the
Common stock Paid-in Development Comprehensive
Shares Amount Capital Stage Income Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balance August 1, 2005 7,683,515 7,684 17,603,366 (21,665,102) -- (4,054,052)
Stock issuances
Value of stock options issued -- -- 7,577,255 -- -- 7,577,255
Exercise of options 1,470,500 1,471 9,434,530 -- -- 9,436,001
Stock issued for debt 12,732,500 12,733 2,987,266 -- -- 2,999,999
Stock dividends 4,008,615 4,008 (4,008) -- -- --
Net (loss) for the period -- -- -- (13,126,909) -- (13,126,909)
----------------------------------------------------------------------------------------
Balance July 31, 2006 25,895,130 25,895 37,598,409 (34,792,011) 2,832,293
Stock issuances
Value of stock options issued -- -- 2,103,600 -- -- 2,103,600
Exercise of options 1,430,000 1,430 5,075,070 -- -- 5,076,500
Value of stock issued for services 3,100,000 3,100 2,596,900 2,600,000
Stock issued for debt -- -- -- -- -- --
Stock dividends 9,075,381 9,076 (9,076) -- -- --
Net (loss) for the period -- -- -- (10,619,757) -- (10,619,757)
Foreign currency transactions -- -- -- -- (7,860) (7,860)
----------------------------------------------------------------------------------------
Balance July 31, 2007 39,500,511 $ 39,501 $ 47,364,903 $(45,411,768) $ (7,860) $ 1,984,776
========================================================================================
See Notes to Financial Statements
22
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
unaudited Year ended Inception
Six months Six months -------------------------- through
ended ended January 31, January 31, July 31,
July 31, 2005 July 31, 2004 2005 2004 2005
------------- ------------- ------------ ------------ ------------
Cash (used in) Operating Activities:
Net (loss) for the period $ (2,918,739) $(10,690,517) $(12,586,255) $ (5,261,224) $(21,665,173)
Adjustments to reconcile net (loss) to cash
Depreciation 10,889 2,044 3,718 2,420 21,418
Amortization 150,000 60,000 356,000 -- 506,000
Minority interest in loss (103) -- (16,720) -- (16,823)
Stock-based compensation -- 7,071,467 7,071,467 4,394,000 11,464,787
(Increase) decrease in accounts receivable (3,696) -- (5,696) -- (9,392)
(Increase) decrease in inventories (2,989) -- (18,903) -- (21,892)
(Increase) decrease in prepaid expenses and other
assets 842 (14,000) (11,137) -- (10,295)
Increase (decrease) in accounts payable and accrued expenses 1,014,324 54,386 370,164 111,301 1,547,326
Write off of mineral property -- -- -- -- 5,150
Loss from discontinued operations -- -- -- -- 757,024
------------ ------------ ------------ ------------ ------------
CASH (USED IN) OPERATING ACTIVITIES (1,749,472) (3,516,620) (4,837,362) (753,503) (7,421,870)
Cash (used in) Investing Activities:
Increase in other assets -- -- (160,420) -- (509,670)
Increase in restricted cash (40,215) (40,215)
Purchase of mineral property -- -- -- -- (5,150)
Purchase of property and equipment (28,624) -- (11,479) -- (65,569)
------------ ------------ ------------ ------------ ------------
CASH (USED IN) INVESTING ACTIVITIES (68,839) -- (171,899) -- (620,604)
Cash provided by Financing Activities:
Sale of minority interest in subsidiaries -- -- 19,200 -- 19,200
Proceeds from the exercise of stock options 60,800 876,098 925,295 589,500 1,575,595
Collection of stock receivable -- 50,000 50,000 -- 50,000
Proceeds from the issuance of debt -- 2,920,000 2,920,000 -- 2,920,000
Advances from related parties 1,800,008 31,384 1,029,056 183,327 3,384,594
Proceeds from the issuance of common stock 20,000 -- -- 150,000 259,300
------------ ------------ ------------ ------------ ------------
CASH PROVIDED BY FINANCING
ACTIVITIES 1,880,808 3,877,482 4,943,551 922,827 8,208,689
Net increase (decrease) in cash 62,497 360,862 (65,710) 169,324 166,215
Cash at beginning of period 103,718 169,428 169,428 104 --
------------ ------------ ------------ ------------ ------------
Cash at end of period $ 166,215 $ 530,290 $ 103,718 $ 169,428 $ 166,215
============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTSDevelopment Stage Company
Consolidated Statements of Cash Flows
Inception
through
Year Ended Year Ended April 30,
July 31, 2007 July 31, 2006 2007
- --------------------------------------------------------------------------------------------------------------------
Cash provided (used in) Operating Activities:
Net (loss) for the period $(10,619,757) $(13,126,909) $(45,411,768)
Adjustments to reconcile net (loss) to cash
Depreciation & Amortization 130,476 58,665 716,559
Bad debt expense 176,904 -- 176,904
Gain/loss of sale of other assets 314,381 -- 314,381
Minority interest in loss -- -- (16,823)
Stock-based compensation 4,703,599 7,577,255 23,745,641
(Increase) decrease in accounts receivable (156,278) (13,228) (178,898)
(Increase) decrease in inventories (142,806) (261,077) (425,775)
(Increase) decrease in prepaid expenses and other assets 1,566 (51,504) (60,233)
(Increase) decrease in other assets -- (50,000) (50,000)
Increase (decrease) in accounts payable and accrued expenses 144,771 (922,488) 489,788
Increase in deferred revenue 2,990 -- 2,990
Write off of mineral property -- -- 5,150
Loss from discontinued operations -- -- 757,024
------------------------------------------------
Cash (used in) operating activities (5,444,154) (6,789,286) (19,935,060)
Cash provided (used in) Investing Activities:
(Increase) decrease in other assets (8,811) (1,440,881) (1,493,577)
Proceeds from sale of other assets 1,136,372 1,136,372
Increase in restricted cash -- -- (40,215)
Purchase of mineral property -- -- (5,150)
Purchase of property and equipment (159,202) (806,131) (1,032,082)
------------------------------------------------
Cash (used in) investing activities 968,359 (2,247,012) (1,434,652)
Cash provided (used in) by Financing Activities:
Sale of minority interest in subsidiaries -- -- 19,200
Proceeds from the exercise of stock options 5,076,500 9,436,000 15,292,895
Collection of stock receivable -- -- 50,000
Proceeds from the issuance of debt -- -- 2,920,000
Advances from related parties 3,446,777 2,195,715 8,842,231
Payments of related party advances (4,350,011) (2,112,186) (5,666,997)
Payments of debt (205,017) (130,265) (335,282)
Proceeds from the issuance of common stock -- -- 259,300
------------------------------------------------
Cash provided by financing activities 3,968,249 9,389,264 21,381,347
Effect of exhange rate changes on cash and cash equivalents (7,860) -- (7,860)
------------------------------------------------
Net increase (decrease) in cash (515,406) 352,966 3,775
Cash at beginning of period 519,181 166,215 --
------------------------------------------------
Cash at end of period $ 3,775 $ 519,181 $ 3,775
================================================
See Notes to Financial Statements
23
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTENote 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature of Operations and Summary of Significant Accounting Policies
The summary of significant accounting policies is presented to assist in the
understanding of the financial statements. The financial statements and notes
are the representations of management. These accounting policies conform to
accounting policies generally accepted in the United States of America and have
been consistently applied in the preparation of the financial statements..
NATURE OF OPERATIONS AND ORGANIZATIONstatements.
Nature of operations and organization
Hybrid Technologies, Inc., Inc. (formerly Whistler Investments, Inc.) was
incorporated under the laws of the State of Nevada, April 12, 2000. The Hybrid
Technologies, Inc.'s (the Company) original business was the exploration and
development of mineral interests. The Company abandoned these interests in 2003.
The Company does not have any operating business and is classified as a
development stage company.
The Company is currently pursuing the development and marketing of electric
powered vehicles and products based on the advanced lithium battery technology
developed by Lithium House. (SEE NOTE 11)
On January 19, 2004it has developed. Additionally, one of the Company's subsidiaries is pursuing
the sale and installation of internet based telecommunications. At July 31, 2007
the Company entered into an agreement anddeems itself a Registration
Rights Agreement (the Agreement) with Duchess Private Equities Fund, L.P.
(Duchess). Under the terms of the agreement, the Company may periodically
require Duchess to purchase shares of common stock at below market pricesdevelopment stage company as planned principal
operations have not commenced in exchange for the utilization of a ten million dollar equityits primary line of credit. The
Agreement required the Company to file an SB-2 with the Securities Exchange
Commission to register for resale the shares of common stock subjectbusiness. To date revenues
generated are primarily related to the agreement. The registration statement was required to be filed thirty days after
the January 31, 2004 audited financial statements completed. The registration
statement has not been completed.
BASIS OF CONSOLIDATIONtelecommunications operations.
Basis of consolidation
The consolidated financial statements included the accounts and records of the
Company and its wholly owned subsidiary WhistlerTel,Zingo, Inc. and its majority
controlled subsidiaries,, Global Electric,Hybrid Corp.,
R.-Electric Cat,Car, Co. and, Solium Power Corp. and Hybrid Technologies USA
Distributing Inc. All significant intercompany accounts and transactions have
been eliminated. The Company does not have any special purpose entities.
The following is a listing of the Company's subsidiaries and its ownership
interests
WhistlerTel,Zingo, Inc. 100.00%(consolidated) 69.60%
Global Electric, Corp. (consolidated) 67.60%67.57%
R Electric Car, Co. 71.40%67.57%
Solium Power, Corp 71.40%
CHANGE IN REPORTING YEAR
In 2005, the Company adopted July 31 as its fiscal year. The operating results
and cash flows are presented for the six months ended July 31, 2005. The audited
comparative information represents the results of operations and cash for the
years ended January 31. Unaudited information as of July 31, 2004 and for the
six months then ended is presented for comparative purposes.
31
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED
ESTIMATES67.57%
Hybrid Technologies Distributing Inc. 100.00%
Estimates
The preparation of financial statements prepared in accordance with the
accounting standards generally accepted in the United States of America 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. Actual results could differ from those
estimates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents consist of highly liquid investments, which are
readily convertible into cash with original maturities of three months or less.
24
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1. Nature of Operations and Summary of Significant Accounting Policies -
continued
Summary of Significant Accounting Policies
Financial instruments
The fair value of accounts receivables, accounts payable and accrued expenses
and advances from related parties approximates fair value based on their short
maturities. The fair value of notes payable approximate fair value based the
value of other notes having the same or similar terms, interest rates and
collateral.
Licensing fees
Licensing fees related to Product Licensing Agreements arewere expensed as
incurred.
Accounts receivables
Management considers allThe Company provides credit to customers in the normal course of business. An
allowance for accounts receivable fully collectable at July 31is estimated by management based in part on
the aging of receivables and January 31,
2005.historical transactions. Periodically management
reviews accounts receivable for accounts that appear to be uncollectible and
writes off these uncollectible balances against the allowance accordingly.
Inventories
Inventories are stated at the lower of cost or market. Cost is based on the
specific identification method.
2007 2006
-------------------------
Raw materials and work in progress $323,170 $234,785
Finished goods 102,605 48,184
-------------------------
$425,775 $282,969
=========================
Raw materials and work in progress is related to the Company's planned sales of
electric powered products. Finished goods relate to its telecommunication
operations.
Property and equipment
Property and equipment are recorded at cost. Depreciation of property and
equipment are accounted for by accelerated methods over the following estimated
useful lives
Lives -----------Methods
------------------------------
Building improvements 39 years Straight line
Furniture and fixtures 10 years Accelerated
Software 3-5 years Straight line
Computers 5 years Amortization
Amortization of financing costs included in other assets are over the life of
the related loan, two years.Straight line
Stock based compensation
The Company accountsWe issue stock options to our employees and other certain service providers
under stockholder approved stock option programs that provide the right to
purchase our stock pursuant to stock purchase programs. See note 9 for stock-based awards usingfurther
disclosures and discussions.
Revenue Recognition
Service revenues are recognized at 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 expensetime that service is completed. Product
sales are recorded when title has passed to the exercise price
of the stock is less than the market price of the underlying common stock at the
date of the grant.
32customer.
25
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTENote 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature of Operations and Summary of Significant Accounting Policies -
CONTINUED
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Stock based compensation - continued
Shipping & Handling
Shipping & handling costs related to services and product sales are expensed as
cost of sales.
Advertising
Advertising costs are generally expensed as incurred and are included in general
and administrative expenses. Total advertising expenditures for the years ended
July 31, 2007 and 2006 and inception to July 31, 2007 date amounted to
approximately $282,000, $350,000 and $1,023,000, respectively.
Research and development costs
Research and development costs are charged to expense as incurred.
Concentration of risk
The Company maintains cash deposit accounts and certificates of deposits which
at times may exceed federally insured limits. These accounts have not
experienced any losses and the Company believes it is not exposed to any
significant credit risk related to cash. As of July 31, 2007 and 2006, the
Company had $0 and$391,602, respectively, in excess of the federally insured
limits.
One of the Company's subsidiaries obtains a majority of its operational supplies
from a single vendor. As a result of this concentration, events that may affect
the future ability to purchase from this supplier may cause a material adverse
effect on the ability of the Company to deliver goods and services in this line
of business.
Income taxes
The Company records Income taxes under the provisions of Statement of Financial
Accounting Standards No.123,("SFAS") No. 109, "Accounting for Stock-Based
Compensation, " (SFAS 123) established a fair value based methodIncome Taxes" ("SFAS No.
109"). SFAS No. 109 requires recognition 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 pro-forma netdeferred income (loss) that would have resulted
from the use of the fair value method under SFAS 123.
The Company has recorded stock-based compensation expense in accordance with APB
25 and adopted the disclosure provisions only of SFAS 123.
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities recognized for the expected future income tax consequences, attributable
tobased on enacted
tax laws, of temporary differences between the financial statement carrying amountsreporting and tax bases
of existing assets and liabilities and their respectiveliabilities. SFAS No. 109 also requires recognition of deferred
tax bases and operatingassets for the expected future tax effects of all deductible temporary
differences, loss carry forwards and tax credit carry forwards. Deferred tax
assets and credits are measured using
enactedthen reduced, if deemed necessary, by a valuation allowance for the
amount of any tax ratesbenefits which, more likely than not based on current
circumstances, are not expected to be recovered or settled. The effect on deferredrealized. As a result, no tax assets and liabilities of a change in tax ratesbenefit is
recognizedreflected in the consolidated financialaccompanying statements of operations. Should the Company
achieve sufficient, sustained income in the periodfuture, management may conclude that
includessome or all of the enactment
date.valuation allowance should be reversed (Note 13).
Comprehensive income (loss)
The Company reports comprehensive income (loss)loss in accordance with the requirements of
Statement of Financial Accounting Standards No. 130. For the yearsyear ended JanuaryJuly 31,
2005 and 2004 and inception through January 31, 2005
there are no differences2007, the difference between net income (loss)loss and comprehensive income
(loss).loss is foreign
currency translation. For the year ended December 31, 2006 there is no
difference between net loss and comprehensive loss.
26
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1. Nature of Operations and Summary of Significant Accounting Policies -
continued
Long-lived assets
The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standard No. 144 (SFAS 144) "Accounting for Long-Lived
Assets". The carrying value of long-lived assets areis reviewed on a regular basis
for the existence of facts and circumstances that may suggest impairment. The
Company recognizes an impairment when the sum of undiscounted future cash flows is
less than the carrying amount of the asset. The write down of the asset is
charged to the period in which the impairment occurs.
Research and development costs
Research and development costs are charged to expense as incurred.
Foreign currency translation
The consolidated financial statements are presented in United States dollars in
accordance with Statement of Financial Accounting Standards No. 52, (SFAS 52,52),
"Foreign Currency Translation". Foreign denominated monetary assets are
translated to United States dollars using foreign exchange rates in effect at
the balance sheet date. Non- monetaryNon-monetary items are translated at historical exchange
rates except for items carried at market value which are translated at the rate
of exchange in effect at the balance sheet date. Revenues and expenses are
translated at the average rate of exchange during the period. GainGains or losses
arising on foreign currency transactions are included in the determination of
operating results for the period.
33
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUEDReclassification
Certain reclassifications have been made to the prior year's financial
statements to conform with the current year presentation. These
reclassifications have had no impact on the net equity or income (loss) from
operations.
Recently issued pronouncementsIssued Accounting Pronouncements
In January 2004,June 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.132 "Employers'
Disclosures about Pensions and Other Post-retirement Benefits",FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
amendmentinterpretation of FASB Statement No. 109" (FIN 48), which clarifies the
accounting for uncertainty in tax positions. This Interpretation requires that
we recognize in our financial statements No. 87, 88 and 106.the benefit of a tax position if that
position is more likely than not of being sustained on audit, based on the
technical merits of the position. The Statement revises employers' disclosures
about pension plans and other post retirement benefit plans. Management does not
believe this pronouncementprovisions of FIN 48 become effective as
of the beginning of our 2008 fiscal year, with the cumulative effect of the
change in accounting principle recorded as an adjustment to opening retained
earnings. We are currently evaluating the impact that FIN 48 will have any effect on theour
financial statements of
the Company.statements.
In November 2004,September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
(FAS 157), which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. The provisions of
FAS 157 become effective as of the beginning of our 2009 fiscal year. We do not
expect the adoption of SFAS No. 151, "Inventory Costs an Amendment157 to have a material impact on it consolidated
financial position, results of Accounting Research Bulletin No.43, Chapter 4." This statement provides
clarification for the accounting of abnormal idle facility expense, freight
handling costs, and waste materials. This statement is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005.
Management does not believe this pronouncement will have any effect on the
financial statements of the Company.operations or cash flows.
In December 2004,September 2006, the FASB issued SFAS No.152, "AccountingStatement No. 158, "Employer's Accounting for
Real Estate
Time-Sharing TransactionsDefined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 6687, 88, 106, and 67.132(R)" This
statement references financial accounting(FAS 158). FAS 158 requires that
employers recognize the funded status of their defined benefit pension and reporting guidance for real estate
time- sharing transactionsother
postretirement plans on the balance sheet and recognize as a component of other
comprehensive income, net of tax, the plan-related gains or losses and prior
service costs or
27
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1. Nature of Operations and Summary of Significant Accounting Policies -
continued
credits that is provided in AICPA Statementarise during the period but are not recognized as components of Position
04-02, "Accounting for Real Estate Time-Sharing Transactions". This statement
also states thatnet
periodic benefit cost. We do not expect the guidance for incidental operations and costs incurred to
sell real estate projects does not apply to real estate time-sharing
transactions. This statement is effective with fiscal years beginning after June
15, 2005. Management does not believe thatimplementation of this statement will have any materiala
significant impact on our financial statements.
In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" (SAB 108), which addresses how to quantify the effect of financial
statement errors. The provisions of SAB 108 become effective as of the end of
our 2007 fiscal year. We do not expect the adoption of SAB 108 to have a
significant impact on its real estate operations.our financial statements.
In December 2004,February 2007, the FASB issued SFASStatement No. 153, Exchanges of Non-monetary159, "The Fair Value Option for
Financial Assets - -and Financial Liabilities, including an amendment of Accounting Principles Board OpinionFASB
Statement No. 29." This statement
eliminates the exception115" (FAS 159). FAS 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for non-monetary exchangessimilar types of similar productive assets and
replaces it with a general exception for the exchangeliabilities. The provisions of non-monetary assets
that do not have commercial substance. A non-monetary exchange has commercial
substance, if the future cash flowsFAS 159 become effective as of the entitybeginning of
our 2009 fiscal year. We are expected to significantly
change as a result ofcurrently evaluating the exchange. This statement is effective for non-monetary
exchanges occurring in fiscal years beginning after June 15, 2005.
Management does not believe the application of this pronouncementimpact that FAS 159 will
have any
material effect on theour financial statements of the Company.
NOTEstatements.
Note 2. GOING CONCERNGoing concern
The Company's financial statements are prepared based on the going concern
principle. That principle anticipates the realization of assets and payments of
liabilities through the ordinary course of business. No adjustments have been
made to reduce the value of any assets or record additional liabilities, if any,
if the Company were to cease to exist. The Company's ability to remain a going
concern is dependantdependent upon its ability to raise additional capital as required
and the forbearance of the Company's creditors. There are no guarantees that the
Company will be able to meet its capital needs until as such time as a viable
business is established. Additionally, the lack of capital may limit the
Company's ability to establish a viable business.
NOTENote 3. COMMITMENTS
On October 21, 2003 the original licensing agreement that the Company had
entered into with Nu Age Electric in June 2003 was terminated. At the same time
the Company entered into its current licensing agreements with RV Systems, Inc.
a Nevada corporation for the worldwide rights (with the exception of certain
products in India) to sell, distribute and/or manufacture (or arrange for the
sale of) specified products using the portable power systems ("the Licensed
34
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3. COMMITMENTS - CONTINUED
Technologies") developed by Lithium House. The agreement is for five years and
automatically renews for three years unless terminated by either party with a
ninety day written notice
The Company is required to pay to the Licensor various payments based on the
sale of various products. Pursuant to a letter agreement dated February 3, 2004,
the Company is required to pay a minimum licensing fee of $35,000 per week
($1,820,000 annually).
Remaining minimum annual payments at January 31, 2005 under the terms of the
February 23, 2004 letter are as follows:
Year ending July 31, 2006 $1,326,600
2007 --
----------
$1,326,600
==========
Accounts payable and accrued expenses include unpaid minimum licensing fees of
approximately $775,000. The Company has questioned the validity of the agreement
for failure of the licensor to perform certain requirements under the terms of
the contract including but not limited to delivery of technologies as
represented as having been completed requiring the Company to engage in research
activities in excess of efforts contemplated.
The Company has been negotiating for further modifications to the agreement
and/or reimbursement of the additional research expenditures incurred.
NOTE 4. BUSINESS COMBINATION AND SUBSEQUENT EVENTBusiness combination
Effective December 3, 2004, Whistler Tel, Inc. a wholly-owned subsidiary of the
Company acquired the assets of Trade Winds Telecom, LLC (Trade Winds) a company
owned indirectly by a shareholder of the Company for a cash payment of $20,175
and a note in the amount of $80,000 due in December 2005. The acquisition has
been accounted for as a purchase. Due to the relationship, the assets were
recorded at their historical cost basis. The purchase price in excess of the
cost bases of the assets, approximately $55,000, was charged against additional
paid in capital.
Trade Winds was organized in 2003 and iswas engaged in selling internet based
voice communication products and services to international customers.
Trade Winds had no operations prior to January 31, 2004. Accordingly, the
following unaudited pro-forma summary statement of operations gives effect to
the transaction as hadif Trade Winds had been part of the consolidated group for
the year ended January 31, 2004.
Pro-forma Pro-forma
As reported adjustments (loss)
------------- ------------ -------------
Costs and expenses $ (12,423,635) $ (97,311) $ (12,520,946)
Other income (expense) (179,340) (179,340)
------------- ------------ -------------
(12,602,975) (97,311) (12,700,286)
Minority interest in losses 16,720 16,720
------------- ------------ -------------
Net loss $ (12,586,255) $ (97,311) $ (12,683,566)
============= ============ =============
3528
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTE 4. BUSINESS COMBINATION AND SUBSEQUENT EVENTNote 3. Business combination - CONTINUED
Subsequent to July 31,continued
On Auguest 18, 2005, the Company entered into an agreement whereby the Company
exchanged its 100% ownership of Whistler Tel, Inc. for 80,000,000 shares of
Java KingJavaKingCoffee.
Note 4. Property and equipment
Property and equipment at July 31, consists of:
2007 2006
----------------------------
Building improvements $ 1,270,637 $ 1,155,254
Computer equipment 22,286 --
Furniture and fixtures 115,944 108,261
Office equipment 92,539 92,947
Machinery and equipment 27,389 27,389
Vehicles 73,203 60,979
Software costs 19,993 19,993
Land 700,000 700,000
----------------------------
2,321,991 2,164,823
less accumulated depreciation (201,648) (73,206)
----------------------------
$ 2,120,343 $ 2,091,617
============================
For the years ended July 31, 2007, July 31, 2006 and inception to date
depreciation amounted to approximately $128,137, $60,000 and $158,000,
respectively.
Note 5. Other assets
Other assets as of July 31, consists of:
2007 2006
---------------------------
Property under construction $ -- $1,113,762
Restricted cash 41,224 41,239
Deposits 51,600 329,765
Other notes receivable - net -- 50,000
---------------------------
$ 92,824 $1,534,766
===========================
Property under construction consisted of a solar powered demonstration home in
Calgary, Canada. The following unaudited pro-forma summaryvalue includes the value of the underlying real estate in
addition to construction and conversion costs. The underlying real estate was
purchased and improved by the Company for approximately $1,113,000 and sold for
$639,000 on March 14, 2007.
Note 6. Advances from related parties and related party transactions
During the years ended July 31, 2007 and 2006 the Company received and repaid
additional advances from Del Mar Ventures Corp, a Company owned by Aarif Jamani
(a Company stockholder) of approximately $2,334,000 and $2,408,000, respectively
in 2007, and $2,195,000 and $2,112,000, respectively in 2006. The balance sheets give effect tofor
the transaction with Java King as had the transaction occurred effective February 1,
2004:
July 31, 2005 January 31, 2005
------------------------------------------ ------------------------------------------
Pro-forma Pro-forma Pro-forma Pro-forma
As reported adjustments (loss) As reported adjustments (loss)
------------ ------------ ------------ ------------ ------------ ------------
Current assets $ 200,368 $ 1,233 $ 201,601 $ 139,454 $ 8,735 $ 148,189
Equipment 59,077 -- 59,077 27,597 -- 27,597
Other assets 3,853 -- 3,853 153,671 -- 153,671
------------ ------------ ------------ ------------ ------------ ------------
$ 263,298 $ 1,233 $ 264,531 $ 320,722 $ 8,735 $ 329,457
============ ============ ============ ============ ============ ============
Current liabilities $ 4,456,581 $ 74,936 $ 4,531,517 $ 2,168,948 $ 87,409 $ 2,256,357
Long term debt -- -- -- 3,000,000 -- 3,000,000
Other 2,377 -- 2,377 2,480 -- 2,480
Equity (deficit) (4,195,660) (73,703) (4,269,363) (4,850,707) (48,674) (4,899,381)
------------ ------------ ------------ ------------ ------------ ------------
$ 263,298 $ 1,233 $ 264,531 $ 320,721 $ 38,735 $ 359,456
============ ============ ============ ============ ============ ============
The following unaudited pro forma statements of operations give effect to the
Java King transaction has had it occurred effective February 1, 2003:
Six months ended Year ended January 31,
July 31, 2005 2005
------------------------------------------ ------------------------------------------
As previously
Pro-forma Pro-forma stated Pro-forma Pro-forma
As reported adjustments (loss) pro-forma adjustments (loss)
------------ ------------ ------------ ------------ ------------ ------------
Costs and expenses $ (2,662,800) $ (25,029) $ (2,687,829) $(12,520,946) $ (11,180) $(12,532,126)
Other income (expense) (147,650) -- (147,650) (179,340) -- (179,340)
------------ ------------ ------------ ------------ ------------ ------------
(2,810,450) (25,029) (2,835,479) (12,700,286) (11,180) (12,711,466)
Minority interest 103 -- 103 16,720 -- 16,720
------------ ------------ ------------ ------------ ------------ ------------
Net loss $ (2,810,347) $ (25,029) $ (2,835,376) $(12,683,566) $ (11,180) $(12,694,746)
============ ============ ============ ============ ============ ============
Year ended January 31,
2004
------------------------------------------
Costs and expenses $ (5,420,538) $ (20,035) $ (5,440,573)
Other income (expense) (20,686) -- (20,686)
------------ ------------ ------------
(5,441,224) (20,035) (5,461,259)
Minority interest -- -- --
------------ ------------ ------------
Net loss $ (5,441,224) $ (20,035) $ (5,461,259)
============ ============ ============
36years ended July 31, 2007 and 2006 were approximately $9,940 and $83,500,
respectively.
29
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment consists of:
July 31, January 31,
2005 2005
------------ ------------
Furniture and fixtures $ 33,443 $ 4,819
Software costs 28,095 28,095
Computer equipment 5,211 5,211
------------ ------------
66,749 38,125
less accumulated depreciation (21,418) (10,529)
------------ ------------
$ 45,331 $ 27,596
============ ============
NOTENote 6. OTHER ASSETS
Other assets consist of: July 31, January 31,
2005 2005
------------ ------------
Deferred financing costs $ 240,000 $ 240,000
less accumulated amortization (240,000) (90,000)
------------ ------------
-- 150,000
Restricted cash 40,215 --
Deposits 3,670 3,671
------------ ------------
$ 43,885 $ 153,671
============ ============
NOTE 7. ADVANCES FROM RELATED PARTIES AND RELATED PARTY TRANSACTIONS
During the year ended January 31, 2004, the Company received advances from
related parties totaling approximately $1,235,000 for the payment of day-to-day
operating expenses. Del Mar Venture Corp. is owned by Aarif Jamani, a major
shareholder and Ms. Roseberry is a shareholder and an officer.
During the period ended July 31, 2005, the Company received additional advances
of approximately $1,800,00 for the payment of day to-day operating expenses. At
July 31, 2005, 500,000 shares of stock were issued for all outstanding advances,
$3,384,594. It is anticipated that additional shares will be issued periodically
in the future in exchange for future advances. Advances from related parties consist of:
July 31, January 31
2005 2005
------------ ------------
Advance from Del Mar Venture Corp $ -- $ 1,580,974
Advance from Holly Roseberry -- 4,793
------------ ------------
$ -- $ 1,585,767
============ ============
Advances are reported as currently payable. The advances are not subject to
written agreements and have no specific repayment terms but are deemed due on
demand. Additionally, the advances are not interest bearing.
37
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSrelated party transactions - --------------------------------------------------------------------------------
NOTE 7. ADVANCES FROM RELATED PARTIES AND RELATED PARTY TRANSACTIONS - CONTINUEDcontinued
As discussed in Note 3.3, the Company acquired the major assets of Trade Winds
Telecom, LLC for the payment of approximately $20,000 in cash and the issuance
of an $80,000 note to a company under the control of Aarif Jamani, a major
stockholder
of the Company.
The Company also received and repaid advances from SSRI (owned by a Company
stockholder) for July 31, 2007 and July 31, 2006 in amounts of approximately
$109,000 and $210,000, respectively for 2007 and $302,000 and $281,000,
respectively for 2006. The Company was owed approximately $94,000 and $30 at
July 31, 2007 and 2006, respectively.
During the six monthsyear ended July 31, 2005,2007 the Company received and repaid additional
advances from Salim Rana (a Company stockholder) of approximately $1,800,000 were advanced for operating expenses. On July 27, 2005,$562,500 and
$1,284,800. The balance owed to the Company
issued 500,000 shares of stock in exchange for all oustanding advances.
NOTE 8. NOTE PAYABLE -RELATED PARTY
Note payable at July 31, 2005 and January 31, 2005 consists of:2007 was approximately
$722,300.
Also during the year ended July 31, January2007, the Company received and repaid
additional advances from A & S Holding (owned by a previous president) of
approximately $436,000 and $447,000. The Company was owed approximately $11,000
at July 31, 2005 2005
------------ -------------
10% note payable2007.
Advances owed or receivable are reported as current assets or liabilities,
accordingly. These advances are not subject to the former member of
Trade Winds Telecom, LLC, a company
related by certain common
ownership,
(Seewritten agreements and have no
specific repayment terms but are deemed due on demand and do not interest
bearing.
Note 3) $ 80,000 $ 80,000
============ ============
NOTE 9. LONG-TERM DEBT7. Long-term debt
Long-term debt at July 31, 2005 and January 31, 2005 consists of:
5%2007 2006
--------------------------
8% note payable to Sterling Capital,
Inc. (Sterling)Richard Howard,
payable in April,
2006,monthly installments
of approximately $26,350 including interest,
collateralized by 9,000,000
sharesreal property
due in full on or before June 2011 $ 1,044,718 $ 1,249,735
--------------------------
1,044,718 1,249,735
Less current portion (241,460) (224,442)
--------------------------
$ 803,258 $ 1,025,293
==========================
Principal maturities on continuing operations are as follows as of the Company's
common stock $ 3,000,000 $ 3,000,000
============ ============
The Company has issued 9,000,000 shares of the Company's outstanding stock as
collateral for the above note. The shares are held by a third party pending
return upon payment or transfer to Sterling upon demand for payment. At July 31,
2005 the Company is in technical default of the note for failure to pay interest
when due. As of the date of the report on the financial statements, Sterling has
not declared default and the shares are not deemed outstanding.
If Sterling were to declare default and take possession of the collateral, the
number of shares are sufficient to make Sterling the controlling shareholder.
NOTE 10. STOCKHOLDERS' EQUITY (DEFICIT)
In February, 2005, the Board of Directors authorized a one for ten (10%) stock
dividend. The dividend was reported during the year ended January 31, 2005. On
March 9, 2005, the Board of Directors authorized a one for ten (1-10) reverse
stock split. The financial statements give effect to this reverse split as had
it occurred February 1, 2003.
382007:
2008 $ 241,460
2009 261,502
2010 283,206
2011 258,550
----------
$1,044,718
==========
30
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTE 10. STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUEDNote 8. Stockholders' equity (deficit)
During the year ended JanuaryJuly 31, 2004:2006:
The Company issued 1,012,500 of restricted common shares to RS
International Consultants, GMBH, ("RS") an international business
consulting company pursuant to a $500,000 financing agreement. The
financing agreement did not close and the shares were returned in May
2004.
The Company issued 42,533 shares for $150,000 cash and a $50,000
receivable. The receivable was collected during the year ended January 31,
2005.
The Company issued 2,250 shares for consulting services with a deemed
market value of $8,750.
The Company issued 707,000 shares resulting from the exercise of stock
options totaling $589,500.
During the year ended January 31, 2005:
The Company received the return of shares issued pursuant to the RS
financing agreement.
The Company issued 1,072,892 shares resulting from the exercise of stock
options totaling $706,525.
The Company entered into a Stock Redemption and Re-issuance Agreement on
February 10, 2004 with Salim S. Rana Investment, Corp (SSRIC) whereby
900,000 shares of the Company's common stock (adjusted for splits) was
returned to the Company's treasury at no cost to the Company. The Company
had the ability under the Redemption Agreement, and did, utilize the
shares for proper corporate purposes, including option exercises and
issuances to consultants. Under the terms of the Redemption Agreement, the
Company was obligated to, and did, return the 900,000 shares to SSRIC on
June 3, 2004.
Shares related to a stock dividend declared subsequent to year end were
recorded for the shares that were otherwise issued and outstanding at
January 31, 2005
During the six months ended July 31, 2005:
The Company issued 500,000 shares of stock in exchange for cash advanced
by a related party (See Note 9)
The Company issued 4000 shares of its stock for cash
The Company issued 9,5001,476,000 shares of stock under the terms of options
awarded.
12,732,500 shares previously held as collateral for debt of $3,000,000
were issued. Original pledge was of 9,000,000 shares and accumulated stock
options
that had been awarded (See Note 11)dividends.
The Company issued a five percent stock dividenddividends totaling 4,008,615 shares.
During the year ended July 31, 2007:
The Company issued 1,430,000 shares of stock under the terms of options
awarded.
The Company issued stock dividends totaling 9,075,381 shares.
Note 9. Stock Options and Deferred stock-based compensation
Prior to August 1, 2006, we accounted for our share-based compensation plans
using the intrinsic value method in June 2005.
39accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations, as permitted by Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." Effective August 1, 2006, we adopted the provisions of SFAS No.
123(R), "Share-Based Payment." The adoption of SFAS No. 123(R) resulted in the
recording of compensation expense for employee stock options and employee stock
purchase rights in our financial statements. Such compensation expense is
recognized over the requisite service period based on the fair value of the
options or rights on the date of grant.
Using the modified-prospective transition method, the compensation cost
recognized during the year ended July 31, 2007, included (i) compensation cost
for all share-based payments granted prior to, but not yet vested as of, January
1, 2006, based on the grant date fair value estimated in accordance with the
original provisions of SFAS No. 123, and (ii) compensation cost for all
share-based payments granted subsequent to January 1, 2006, based on the grant
date fair value estimated in accordance with the provisions of SFAS No. 123(R).
Results for prior periods have not been restated.
On November 10, 2005, the FASB issued FASB Staff Position No. FAS 123R-3,
"Transition Election Related to Accounting for Tax Effects of Share-Based
Payment Awards." The Company has elected to adopt the alternative transition
method provided in the FASB Staff Position for calculating the tax effects of
share-based compensation pursuant to SFAS No. 123(R).
The following table reflects the assumptions utilized to value the 2006
stock-based compensation for the year ended July 31, 2007 under SFAS 123R and
using the Black-Scholes valuation model. Among other factors, the Black Scholes
model considers the expected life of the option and the expected volatility of
the Company's stock price in arriving at an option valuation. The risk-free
interest rate is based upon U.S. Treasury Rates for instruments with similar
terms. The expected term of the grants were estimated based upon the Company's
prior average experience. The Company has not paid cash dividends to date and
does not plan to pay cash dividends in the near future. The volatility
assumptions were derived from historical volatilities of competitors whose
shares are traded in the public markets and are adjusted to reflect anticipated
behavior specific to the Company.
31
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTE 10. STOCKHOLDERS' EQUITY (DEFICIT)Note 9. Stock Options and Deferred stock-based compensation - CONTINUED
Additionally,continued
Expected dividend yield 0%
Risk-free interest rate 1 - 5%
Expected volatility 100%
Expected life from the Company has issued 9,000,000 shares of the Company's
outstanding stock as collateral for the above note. The shares are held by a
third party pending return upon payment or transfer to Sterling upon demand for
payment. At July 31, 2005 the Company is in technical default of the note for
failure to pay interest when due. As of thevesting date of the report on the financial
statements, Sterling has not declared default and the shares are not deemed
outstanding. (See Note 9)
If Sterling were to declare default and take possession of the collateral, the
number of shares are sufficient to make Sterling the controlling shareholder.
NOTE 11. STOCK OPTIONS AND DEFERRED STOCK-BASED COMPENSATION.4 - 1 year
The Company established the 2003 Restricted Stock Plan ("the Plan") during the
year ended January 31, 2004 as, well as the 2006 Restricted Stock Plan
established during the year ended July 31, 2006, and filed an S-8 Registration
Statement with the Securities and Exchange Commission that was declared
effective. The Plan allows the Company's Board of Directors to issue up to
1,800,000 common shares for the 2003 Restricted Stock Plan and 5,000,000 common
shares for the 2006 Restricted Stock Plan pursuant to the Plan as compensation
for services to the Company. The Company's Board of Directors has the discretion
to set the price, term vesting schedules and other terms and conditions for
options granted under the plan.
A summary of the Company's stock option activity is follows:
Weighted average
grant date
shares price/share
--------- ----------------
Balance February 1, 2003 1,800,000 $0.833
Options granted -945,000 $0.833
Options cancelled/expired --
---------
Balance January 31, 2004 855,000 $0.833
Weighted average
exercise
shares price share
--------- ----------------
Balance January 31, 2004 855,000
Options granted -855,000 $0.833
Options cancelled/expired --
---------
Balance January 31, 2005 --
=========
Number of
shares
----------
Options granted 945,000
Options exercised during the year
ended January 31, 2004 -707,400
Options granted during the year
ended January 31, 2005 855,000
Options exercised during the year
ended January 31, 2005 -1,092,600
----------
Unexercised options 0
==========
40
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 11. STOCK OPTIONS AND DEFERRED STOCK-BASED COMPENSATION - CONTINUED
In connection with the grant of certain options to employees during the year
ended January 31, 2004, the Company reported deferred stock compensation of
$4,660,000, representing the difference between the intrinsic value of the
common stock and the exercise price at the date of the grant. The deferred
compensation is presented as a reduction of the stockholders' equity and charged
to expense over the periods of required employee services are performed. During
the year ended January 31, 2004, the Company amortized $4,394,000 of deferred
compensation that had been recorded as stock-based compensation and charged to
operations.
In connection with the issuance to certain employees of options in February,
2004, the Company reported deferred stock compensation of $7,020,787
representing the difference between the intrinsic value of the common stock and
the exercise price at the date of the grant. The grant were exercised
immediately and, accordingly, no amount of the stock based compensation was
deferred and there is no significant difference in the reporting between APB 25
and SFAS 123.
The following is the pro-forma information regarding stock-based compensation
required under SFAS 123
Six months Six months Year ended January 31,
ended ended ------------------------------
July 31, 2005 July 31, 2004 2005 2004
------------- ------------- ------------ ------------
Net (loss) as reported $ (2,810,347) $(10,690,517) $(12,439,015) $ (5,261,224)
Add stock based loss compensation included
in net loss -- 7,071,467 7,071,467 4,394,000
Deduct stock-based compensation determined
under fair value method -- (7,071,467) (7,071,467) (4,439,960)
------------ ------------ ------------ ------------
Pro-forma net (loss) $ (2,810,347) $(10,690,517) $(12,439,015) $ (5,307,184)
============ ============ ============ ============
The Company utilized the Black-Scholes model in determining fair value. Among
other factors, the Black Scholes model considers the expected life of the option
and the expected volatility of the Company's stock price in arriving at an
option valuation. For pro-forma purposes, the estimated fair value of the
Company's stock based awards is amortized over the vesting period of the
underlying instruments. For the year ended January 31, 2004, the fair value of
the options granted using Black Scholes was determined using the following
assumptions.
Expected dividend yield 0%
Risk-free interest
rate 1-5%
Expected volatility 100%
Expected life from the vesting date 1 year
The Company established the 2005 Restricted Stock Plan ("the 2005 Plan") in
April, 2005 and filed an S-8 Registration Statement with the Securities and
Exchange Commission that was declared effective. The 2005 Plan allows the
Company's Board of Directors to issue up to 2,000,000 common shares pursuant to
the 2005 Plan as compensation for services to the Company. The Company's Board
of Directors has the discretion to set the price, vesting schedules and other
terms and conditions for options granted under the 2005 Plan.
41During the years ended July 31, 2007 and 2006, the Company awarded 2,000,000 and
1,474,000 options, respectively with an option price of $3.55 and $6.40 per
share for July 31, 2007 and 2006 respectively to various consultants. During the
years ended July 31, 2007 and 2006, 2,000,000 and 1,474,000 options,
respectively, were vested the fair market value of which was determined under
the Black-Scholes formula to be approximately $2,100,000 and $7,578,000 in July
31, 2007 and 2006 and is included in general and administrative expenses.
A summary of the Company's Restricted Stock Plans follows:
Weighted
average
grant date
Authorized options but ungranted Shares price/share
- -------------------------------------- ---------- -----------
Balance August l, 2005 (2005 Plan) 1.464.000 $6.40
Options authorized (2005 Plan) --
Options cancelled/expired (2005 Plan) (1,464,000) $6.40
Balance July 31,2006 --
Options authorized (2006 Plan) 5,000,000 $3.55
Options granted (2006 Plan) (2,000,000) $3.55
Options cancelled/ expired (2O06 Plan) --
----------
Balance July 31, 2007 (2006 Plan) 3,000,000
==========
32
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDevelopment Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NOTE 11. STOCK OPTIONS AND DEFERRED STOCK-BASED COMPENSATIONNote 9. Stock Options and Deferred stock-based compensation - CONTINUED
Duringcontinued
Weighted
average
Number of exercise
Options granted but unexercised Shares price/share
---------- -----------
Balance August 1,2005 21,000 $6.40
Options granted during the periodyear ended July 31, 2005,2006
(2005 Plan) 1,474,000 $6.40
Options exercised or cancelled during the Company awarded 36,000year ended
July 31, 2006 (2005 Plan) (1,480,500) $6.40
Balance July 31,2006 14,500 $6.40
Options cancelled during the year ended July 31, 2007
(2005 Plan) (14,500) $6.40
Options granted during the year ended July 31, 2007
(2006 Plan) 2,000,000 $3.55
Options exercised during the year ended
July 31, 2007 (2006 Plan) (1,430,000) $3.55
----------
Unexercised options with
an option price570,000 $3.55
==========
During the year ended July 31, 2007, total cash and related advances relieved in
return for the exercise of $6.40 per share to three consultants as additional payment
for their services. The fair market value of the options as determined under the Black-Scholes formula was determinedplan amounted to be approximately
$100,000 and is
included in expenses for the six-month period.
Additionally, the Board of Directors awarded an option to Del-Mar Corporation to
exchange the previously advanced funds for 500,000 shares of stock at a value of
approximately $6.76 per share.$4,300,000.
Note 10. Contingencies
The option was immediately exercised. The market
value of the stock was determined to be approximately $7.00 per share. The
difference of approximately $150,000 was recorded as interest expense.
A summary of the Company's 2005 Restricted Stock Plan follows:
Weighted average
Grant date
shares price/share
--------- ----------------
Balance April 22, 2005 2,000,000 $6.740
Options granted -536,000 $6.740
Options cancelled/expired --
---------
Balance July 31, 2005 1,464,000
=========
shares
---------
Options 536,000 $6.74
granted
Options
exercised -509,500 $6.74
---------
Unexercised options 26,500 $6.40
=========
Year ended January 31,
Six months ended Six months ended ------------------------------
July 31, 2005 July 31, 2004 2005 2004
----------------- ------------------ ----------------- ------------
Pro-forma net loss $(2,810,347) $(10,690,517) $(12,439,015) $(5,307,184)
================= ================== ================= ============
Net loss per share (basic and diluted) as reported $(0.41) $(1.82) $(0.06) $(0.04)
Net loss per share (basic and diluted) pro-forma $(0.41) $(1.82) $(0.06) $(0.04)
NOTE 12. CONTINGENCIES
POSSIBLE CHANGE OF CONTROL
As discussed in notes 9 and 10, the Company has issued 9,000,000 shares to a
third party to hold as collateralleases certain real property under the terms of agreementcertain
non-cancelable operating leases. It is expected that in the normal course of
business the lease will be continued or replaced by a similar arrangements.
Future minimum payments under these leases are approximately:
Year ending July 31, 2008 $51,477
Year ending July 31, 2009 45,379
Year ending July 31, 2010 20,110
-------
$96,856
=======
Total rent expenses amount to approximately $73,709, $67,000 for the receipt
of a $3,000,000 note. Atyears ended
July 31, 2005, the Company was in technical default due2007 and 2006, respectively and $144,000 from inception to the failure to pay interest when due. As of the date of the report, the
creditor has not declared default and has not demanded that the collateral be
transferred. If the creditor were to receive the collateral, the creditor would
become the controlling shareholder of the Company.
42
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 12. CONTINGENCIES - CONTINUED
LITIGATIONdate.
Litigation
The Company was served with a complaint on October 2003 by Michael McDermott, as
a stockholder of Planet Electric, Inc. Seekingseeking injunctions against the Company,
Lithium House and other defendants prohibiting their continued business
arrangements and alleged transfer of trade secrets and/or processes. The case
was dismissed by stipulation of the parties in June 2004. One of the individuals
in the abovethis suit has brought an action against Planet Electric, Inc. for breach of
his employment agreement. Planet Electric has filed a cross complaint against
the Company. The cross complaint adds claims for conversion and conspiracy to
convert assets of Planet Electric, Inc. The Company
is unable at this time to determine the ultimate outcome of this matter.
In December 2004, the Company and its subsidiary Global Electric, Corporation
(GEC) was served with a complaint by Electric Global Motorcars, LLC seeking
relief for trademark infringement, unfair competition, Federal Trademark
dilution and other remedies by the use of the Company and GEC of the term
"Global Electric" by the Company and GEC. The Company believes that it hasparties reached a settlement of this matter (although not yet signed) by agreeingin May
2006 that settled all matters.
The Company entered into arbitration with former Company consultant Martin
Koebler and since, Hybrid has been granted relief.
33
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
Notes to change the name from Global Electric to Global Hybrid Corp.
In July 2004 the Company received a request for voluntary production of
documents and information related to a Securities and Exchange Commission (SEC)
informal inquiry. The documents requested include those related to the issuance
of stock and its major corporate transactions, including the Queen's mineral
property and Azra shopping (discontinued in the year ended January 31, 2003) and
its current licensing agreements with RV Systems. Additionally, agreements with
the Company's consultants and related parties, potential partners and joint
venturers was requested.Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 10. Contingencies - continued
Legal Contingencies
The Company is fully co-operatingcurrently involved in response tovarious claims and legal proceedings.
Quarterly, the document request.
LETTER OF CREDITCompany reviews the status of each significant matter and
assesses its potential financial exposure and if the potential loss from any
claim or legal proceeding is considered probable and the amount can be
reasonably estimated, the Company accrues a liability for the estimated loss.
Letter of credit
The Company through its subsidiary has obtained a letter of credit in the amount
of $40,000 from a financial institution to guarantee certain creditors payments.
The financial institution has required the Company maintain deposits totaling
$41,215 be kept on deposit as collateral for the letter of credit and related
fee. This restricted cash is included in other assets.
NOTE 13. (LOSS) PER SHARENote 11. (Loss) per share
The Company accounts for income (loss) per share in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS 128) "Earning per Share". SFAS
requires the presentation of both basic and fully diluted earnings per share
(EPS) on the face of the statement of operations. Basic EPS is computed by
dividing the net income (loss) available to common shareholders (numerator) by
the weighted average common shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period including stock options. The treasury method is used for
computing Diluted EPS, and the average stock price for the period is used in
determining the number of net shares to be purchased from options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-
dilutive.
43
HYBRID TECHNOLOGIES, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 13. INCOME TAXESanti-dilutive. Basic EPS equals diluted EPS due to all potential shares being
anti-dilutive.
Note 12. Income taxes
The Company has deferred tax assets of approximately $7,000,000$17,000,000 and $12,100,000
as a result of the net operating losses incurred through JanuaryJuly 31, 2005.2007 and 2006,
respectively. These deferred tax assets are reduced by a valuation allowance in
an equal amount due to the uncertainty as to whether the net operating losses
will be utilized. NOTE 14. OTHER REQUIRED CASH FLOW DISCLOSURES
Six months Year ended Inception
ended ---------------------------- through
July 31, January 31, January 31, January 31,
2005 2005 2004 2005
---------- ---------- ------------ ------------
Supplemental disclosures of non-cash transactions:
Issuance of common stock for financing transaction $ -- $ -- $ 3,375 $ 3,375
Return of common stock form cancellation
of financing transactions $ -- $ (3,375) $ -- $ (3,375)
Assumption of mortgage payable $ -- $ -- $ -- $ 400,000
Promissory note payable $ -- $ -- $ -- $ 377,960
Expenses settled with stock and/ or options $ 250,000 $ -- $ -- $ 279,821
Notes and mortgages assumed in disposal
of discontinued operations $ -- $ -- $ -- $ (777,960)
Deferred financing costs acquired with debt $ -- $ 80,000 $ -- $ 80,000
Other current assets acquired by issuance of debt $ -- $ 5,633 $ -- $ 4,013
Reduction of additional paid in capital from
from issuance of debt $ -- $ 74,367 $ -- $ 74,367
Shares issued for related party advances $ 3,384,594 $ -- $ -- $ 3,384,594
Other required disclosures:
Interest paid $ -- $ (90,084) $ (24,070) $ (114,154)The statutory tax rate and effective tax rate both equal 35%.
Under current tax laws, the operating losses incurred by the Company will begin
to expire in 2022.
34
HYBRID TECHNOLOGIES, INC.
A Development Stage Company
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 13. Other required cash flow disclosures
Inception
Year Ended Year Ended through
July 31, 2007 July 31, 2006 July 31, 2007
-------------------------------------------
Supplemental disclosures of non-cash transactions:
Fixed assets acquired by the issuance of debt $ -- $1,300,000 $1,300,000
Shares issued for related party advances $ -- $3,000,000 $3,000,000
Other required disclosures:
Interest paid $ 86,292 $ 287,977 $ 374,269
Income taxes paid $ -- $ -- $ -- $ --
44Note 14. Subsequent event
In October 2007, the Company entered into a loan agreement with Wyndom Capital
Investments, Inc. The agreement provides loans up to $4,000,000 with interest
payable monthly at a rate of 10% per annum. Loans under the agreement are
secured by the Company's shares of common stock at a rate of two and one half
shares to each dollar of principal. As of November 12, 2007, the Company has
borrowed $1,000,000 under the loan agreement.
35
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 8A. CONTROLS AND PROCEDURES.
As of the end of the fiscal year ended July 31, 2005,2007, covered by this Form
10-KSB, the Company carried out an evaluation, under the supervision and with
the participation of Holly Roseberry, the Company's Chief Executive Officer and
Principal Financial and Accounting Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as defined in
Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation,
the Chief Executive Officer and Principal Financial and Accounting Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting her to material information relating to the Company (including
its consolidated subsidiaries) required to be included in this Annual Report on
Form 10-KSB. There have been no changes inThe Company has an audit committee of the Company's internal
controls or in other factors which could significantly affect internal controls
subsequentBoard of Directors
enabling us to the date the Company carried out its evaluation.more effectively monitor financial matters and inventory
controls.
ITEM 8B. OTHER INFORMATION.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
Our executive officers and directors and their respective ages as of October 1,
200531,
2007 are as follows:
Name Age Office
- -------------------- ----- ------Position
---- --- --------
Holly Roseberry 54 President,A. Roseberry.... 55 Chief Executive Officer, President and Director
Mehboob Charania 50 Secretary, Treasurer, andCharania...... 51 Director
45
Brian Newman.......... 56 Director
Greg Navone........... 60 Director
Our Board of Directors now consists of four directors. Shaffiq Kotadia
resigned as a director on October 19, 2007 for personal reasons.
The following describesinformation with respect to the principal occupation or
employment of each officer and director, the principal business of the
corporation or other organization in which such occupation or employment is
carried on, and such person's business experience of our directorsduring the past five years,
has been furnished to the Company by the respective officers and executive
officers, including other directorships held in reporting companies:
Ms. Holly Roseberrydirector:
HOLLY A. ROSEBERRY was appointed as our secretary, treasurer and chief financial
officer on February 20, 2002. On November 15, 2002, she resigned from these
positions and was appointed as our president, chief executive officer and as a
director. From 2001 to 2003, she acted as manager for the Azra Shopping Center.
She obtained a Bachelor of Arts degree from Sacred Heart University in
Bridgeport, Connecticut in 1973. Ms. Roseberry was employed from 1993 to 1996 as
human resources manager, and from 1997 to 1999 as business office manager, of
the Las Vegas location of Wards Department Store. Mr. Mehboob CharaniaMs. Roseberry has held the
positions of President, Chief Executive Officer and a Director of our
majority-owned subsidiary, Zingo, Inc. since August 30, 2005.
36
MEHBOOB CHARANIA has acted as our secretary treasurer and chief financial
officer since November 15, 2002. Since June
2001, Mr. Charania has been the owner and operator of Infusion Bistro, a
restaurant located in Calgary, Alberta. From 1998 to 2001, he acted as a manager
at IBM's Calgary office. Mr. Charania has held the position of Secretary and a
Director of our majority-owned subsidiary, Zingo, Inc. since August 30, 2005.
BRIAN NEWMAN graduated with a Bachelor of Commerce degree from the University of
Calgary in 1978, and received a degree as a Chartered Accountant from the
Institute of Chartered Accountants in Alberta in 1982. He has been a director
and President of Brian Newman Professional Corporation, a public accounting firm
located in Calgary, Alberta for the past 25 years. Mr. Newman has served since
September 2004 to the present as a director of Olympia Financial Group, and
since September 2004 to the present has also served as a director of Albury
Resources Ltd. Both of these companies are publicly traded in Canada, but
neither is a reporting company under the Securities Exchange Act of 1934.
GREGORY NAVONE graduated from St. Mary's College in Morgan, California, in 1968,
with a Bachelor of Arts degree. For the past two years, Mr. Navone has been the
owner and President of First Interstate Mortgage, a mortgage banking firm. Since
1987, Mr. Navone has been the owner and President of First Capital Financial.
Both these firms are located in Las Vegas, Nevada. Mr. Navone was appointed a
director of the Company shortly following its incorporation in April 2000, and
served as a director until February, 2002.
Term of Office
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Committees
We do not have recently formed an audit committee, although we intend to establish such a
committee, with Brian Newman, an independent
"financial expert" member as defined in the rules of the Securities and Exchange
Commission.
Corporate Code of Conduct
We are reviewing a proposed corporate code of conduct, which would provide for
internal procedures concerning the reporting and disclosure of corporate matters
that are material to our business and to our stockholders. The corporate code of
conduct would include a code of ethics for our officers and employees as to
workplace conduct, dealings with customers, compliance with laws, improper
payments, conflicts of interest, insider trading, company confidential
information, and behavior with honesty and integrity.
Significant Employees
We have no significant employees other than the officers and directors described
above.
Salim R. Rana, although not a director, officer or employee of the Company, has
worked extensively with our management on developing and commercializing our
planned electric powered vehicles and products, as well on our negotiations with
potential joint venture partners.
Section 16(A) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file. Based on its
review of the copies of such forms received by it, the Company believes that
during the fiscal year ended July 31, 20052007 all such filing requirements
applicable to its officers and directors were complied with.
4637
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information as to the Company's highest
paid executive officers and directors for the Company's fiscal years ended July
31, 20052007 and 2004, and for the six months ended July 31, 2005. No other compensation was paid to any such officer or
director other than the cash compensation set forth below.
Annual Compensation Awards Payouts
- --------------------------------- ------------------------- ------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Comp. Awards Options/ Payouts Comp.
Position * ($) ($) ($) ($) SARs(#) ($) ($)
- -------------- ---- ------ ----- ------ ------ -------- ------- ---------
Holly . 2005 $48,926
Roseberry 2004 $6,225
President **
SUMMARY COMPENSATION TABLE
Name and Year Salary Bonus Stock Option Non-Equity Change in All Other Total
Principal * ($) ($) Awards Awards Incentive Pension Value Compen- ($)
Position** ($) ($) Plan and Nonquali- Sation
Compensation fied Deferred
($) Compensation
Earnings
($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- --------------- ------ ---------- -------- ---------- --------- ---------------- ---------------- ----------- ---------
Holly
Roseberry
President 2006 $ 48,300 $ 48,300
2007 $ 60,500 $ 60,500
Mehboob
Charania,
Director 2007 $ 1,827 $ 1,827
- -----------------
* Years ended July 31, 20052007 and July 31, 2004. Ms. Roseberry's direct
compensation for the six months ended July 31, 2005 was $26,000.2006.
** Holly Roseberry has held the office of President since November 15, 2002. Ms.
Roseberry's functions as President have included, in addition to accounting and
regulatory filing oversight, management and the sale of the Azra shopping
center, general management of our day-to-day operations, working with the
attorneys and accountants for the Company, general oversight of the agreements
with and oversight of consultants to the Company and correspondence with the
Company's transfer agent. Ms. Roseberry, as President and Chief Executive
Officer, received management fees of $1,100 per week through December 31, 2006
and $1,210 per week thereafter in our 2007 fiscal year. Her compensation for
2007 included $12,000 of directors fees paid by Zingo, Inc., our wholly-owned
telecommunications subsidiary.
Option/SAR Grants in Last Fiscal Year
There were no grant of options to purchase our common stock to our
officers or directors in fiscal 2005,2007, and there were no exercises of such
options during or options held at the end of such fiscal year by officers or
directors.
47Directors' Compensation
Commencing June 1, 2006, we have paid Brian Newman, Gregory Navone and Shaffiq
Kotadia directors' fees of $1,000 per month. Ms. Roseberry is compensated as
Chief Executive Officer, and receives no additional directors fees from the
Company for acting as a director. In our fiscal year ended July 31, 2007, Ms.
Roseberry received $12,000 in directors fees from Zingo, Inc., our
majority-owned telecommunications subsidiary.
38
DIRECTOR COMPENSATION
Name Fees Stock Awards Option Non-Equity Change in All Other Total
Earned or ($) Awards Incentive Plan Pension Value Compensation ($)
Paid in ($) Compensation and ($)
Cash ($) Nonqualified
($) Deferred
Compensation
Earnings
($)
(a) (b) (c) (d) (e) (f) (g) (h)
- --------------- ------------ ------------- ------------ ---------------- ---------------- --------------- ------------
Brian Newman $ 12,000 $ 12,000
Gregory Navone $ 12,000 $ 12,000
Shaffiq $ 12,000 $ 12,000
Kotadia
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of October 21, 200524, 2007 by: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) each of our directors, and
(iii)officers and directors as a group. Unless otherwise indicated, the
shareholders listed possess sole voting and investment power with respect to the
shares shown.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock (1)
- ------------- ------------------- ---------------- ----------------
Common Stock Holly Roseberry 3,876 *
President, CEO, Director
5841 E. Charleston, Suite 230-145
Las Vegas, Nevada 89142
All share information in the following table reflects the one-for-ten reverse
splitOfficers and Directors 3,876 *
Directors as a Group that
Consists of out common stock effective March 9, 2005.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock (1)
- -------------- ------------------- ---------------- -----------
Common Stock Salim S. Rana Investments Corp. 3,808,227 20.05%
5001 E. Bonanza Rd., Suite
138-145, Las Vegas,
Nevada 89110 (2)
Common Stock Holly Roseberry 9,719 *
President, CEO, Director
5001 E. Bonanza Rd.,
Suite 138-145
Las Vegas, Nevada 89019
Common Stock All Officers and Directors 9,719 *
as a Group that consists of
two people
Common Stock Sterling Capital Corp. 10,914,755(3) 57.47%
four persons
Eurolink Corporation
35 New Road, Lower Flat PP Box 211
Belize City, Belize 14,691,254 37.2%
Esmeralda Development Ltd.
200-675 West Hastings St.
Vancouver, BC Canada V6B 1N2 2,194,847 5.5%
Rocamar Investments Ltd.
2502-1331 W Georgia St.
Vancouver, BC Canada V6E 4P1 2,343,000 5.9%
- -------------------------
* Less than 1%
(1) As of October 21, 2005,24, 2007, there were 18,993,24339,500,511 shares of our common stock
issued and outstanding.
(2) Salim R. Rana is the President of Salim S. Rana Investments Corp.
(3) Held in escrow pursuant to the Loan Agreement as collateral for the
$3,000,000 loan made by Sterling Capital to the Company.
4839
CHANGE IN CONTROL
With the possible exception of Sterling Capital Corp. in the event of a default
under our loan agreement with them, weWe are not aware of any arrangement that might result in a change in control in
the future.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Acquisition and Disposition of Azra Shopping Center
By an agreement dated April 10, 2002, we acquired from Salim S. Rana Investments
Corp., a private Nevada company ("SSRIC"), a 100% interest in the real property
and all buildings and improvements situated thereon, known as the Azra Shopping
center, located in Las Vegas, Nevada. The purchase price was $4,150,000 and was
paid as follows:
1. We issued 40,000,000 shares of common stock for $0.01 per share;
2. We assumed a first mortgage on the Azra Shopping Center for $3,150,000;
and
3. We issued a promissory note for $600,000 to SSRIC.
The purchase of the Azra shopping center was negotiated with SSRIC and
approved by our Board, based on the Board's view of the possible value of the
Azra shopping center. The Company believes that these were arms-length
negotiations.
We completed the acquisition through our wholly-owned subsidiary,
Whistler Commercial Holding, Inc., on April 15, 2002, with operations
transferring effective May 1, 2002.
On January 1, 2003, we sold the Azra shopping center. In connection
with the disposition of the Azra shopping center, the Company sold the stock,
valued at $100, of Whistler Commercial Holding, Inc., the subsidiary holding
title to the property, for $100 to Kim Larsen, an unrelated third party
purchaser, as an investment property. Mr. Larson assumed the mortgage debt. The
assumption of the mortgage debt represented the purchase price negotiated for
the property, hence the minimal price attributed to the sale of the subsidiary's
stock. The Company then assumed the unpaid balance of $377,960 of the $600,000
note to SSRIC, since the Company's subsidiary was liable on this debt and the
purchaser was not willing to assume the debt to SSRIC in connection with its
purchase of the Azra property.
49
The basis for the Company's decision regarding the sale of the Azra
property and the assumption of debt by the Company in connection with the sale
of this property are that the prospects for the shopping center became much less
favorable, due to the continuing economic decline following the terrorist
attacks on September 11, 2001. The vacancy rate in May 2002 was approximately
10%, and by the end of the year was about 35%. The rents had declined from
approximately $30,000 per month to approximately $26,000 per month, and the
property was losing money.
We incurred a loss of $757,024 during the fiscal year from these
discontinued operations.
During our fiscal year ended JanuaryJuly 31, 2004, SSRIC advanced approximately
$175,000 additionally to the Company. We have repaid this debt and all
subsequent advances by this stockholder as of February 25, 2004.
During the year ended January 31, 2004, interest2007, Ms. Roseberry received $12,000 in
the amount of $24,070
relating to the Azra shopping center debt was paid to SSRIC (see Footnote 5(b)to
the Financial Statements). Since the amount due was not repaid in the required
$200,000 installments due on January 31, 2003 and January 31, 2004, the debt was
subject to simple interest at 10%; by agreement with SSRIC interest was accrued
through October 31, 2003, only and not thereafter.
We entered into a Stock Redemption and Reissuance Agreement (the
"Redemption Agreement")directors fees from Zingo, Inc., dated as of February 10, 2004, with SSRIC, our major
stockholder, pursuant to which SSRIC on February 10, 2004, contributed 1,000,000
shares of our common stock (3,000,000 shares adjusted for the three-for-one
forward split effective March 10, 2004) owned by SSRIC (the "Shares") to our
treasury. At that time, we had only 6,000 authorized but unissued shares of
common stock available for issuance upon exercise of options or for consultants
or potential private investors in the Company. Under the Redemption Agreement,
SSRIC contributed the Shares to the Company's treasury at no cost to the
Company. The Company had the ability under the Redemption Agreement, and did,
utilize the shares for proper corporate purposes, including option exercises and
issuances to consultants. Under the Redemption Agreement, the Company was
obligated to return the Shares, at no cost, to SSRIC upon the first to occur of
the following events: (1) the return to the Company of the certificate for
3,375,000 shares of common stock held improperly by International Business
Consultants GMBH in escrow for a financing that had not closed and had no
prospect of closing, or (2) an increase in the Company's authorized common stock
of at least 3,000,000 shares as contemplated by the Company's information
statement referred to above. On May 20, 2004, International Business Consultants
GMBH redelivered to the Company the certificate for 3,375,000 shares, and our
suit against this company and others associated with it will be withdrawn. Based
on the return of these shares, on June 3, 2004, the Company reissued the
3,000,000 shares contributed to the Company's treasury by SSRIC.
50
majority-owned telecommunications
subsidiary.
ITEM 13. EXHIBITS
- -------------------- --------------------------------------------------------------------------- --------------------------------------------------------------
Exhibit No. Description
- -------------------- --------------------------------------------------------------------------- --------------------------------------------------------------
3.1 Articles of Incorporation of the Company.(Incorporated herein
by reference to Exhibit 3.1 to the Company's Registration
Statement on Form SB-2, filed with the Commission on May 29,
2001.)
3.1a Certificate of Amendment to Articles of Incorporation filed
October 27, 2004. (Incorporated by reference to Exhibit 3.1a
to the Company's Current Report on Form 8-K, filed with the
Commission on November 2, 2004.)
3.1b Form of Restatement of Articles of Incorporation of the
Company. (Incorporated by reference to Exhibit 3.1a to the
Company's Quarterly Report on Form 10-QSB, filed with the
Commission on December 15, 2004.)
3.1c Certificate of Amendment to Articles of Incorporation, filed
effective March 9, 2005. (Incorporated by reference to Exhibit
3.1c to the Company's Annual Report on Form 10-KSB, filed with
the Commission on May 23, 2005.)
3.2 By-Laws of the Company. (Incorporated herein by reference to
Exhibit 3.2 to the Company's Registration Statement on Form
SB-2 filed with the Commission on May 29, 2001.)
4.1 Specimen Common Stock Certificate. (Incorporated herein by
reference to Exhibit 44.1 to the Company's Registration
StatementAnnual Report on
Form SB-2,10-KSB, filed with the Commission on May 29, 2001.November 8, 2006.)
4.2 Whistler Investments, Inc. 2003 Restricted Stock Plan.
(Incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 filed with the
Commission on July 18, 2003.)
51
4.3 Hybrid Technologies, Inc. 2005 Restricted Stock Plan.
(Incorporated herein by reference to Exhibit 4. to the
Company's Registration Statement on Form S-8 filed with the
Commission on April 22, 2005.)
4.4 Promissory Note, dated December 3, 2004, payable to Trade
Winds Telecom, LLC. (Incorporated by reference to Exhibit 4.4
to the Company's Annual Report on Form 10-KSB, filed with the
Commission on May 23, 2005.)
40
10.1 Mineral Claim dated October 2, 2000.(Incorporated herein by
reference to Exhibit 10.1 to the Company's Registration
Statement on Form SB-2 filed with the Commission on May 29,
2001.)
10.2 Mineral Property Staking and Sales agreement, dated September
19, 2000, between Mr. Edward McCrossan and the Company.
(Incorporated herein by reference to Exhibit 10.2 to the
Company's Registration Statement on Form SB-2 filed with the
Commission on May 29, 2001.)
10.3 Office Services Agreement, dated May 1, 2000, between the
Company and Dewey Jones. (Incorporated herein by reference to
Exhibit 10.3 to the Company's Registration Statement on Form
SB-2 filed with the Commission on May 29, 2001.)
10.4 Asset Purchase Agreement dated April 10, 2002 between Salim S.
Rana Investments Corp. and Whistler Investments, Inc.
(Incorporated by reference to Exhibit No. 10.1 to the
Company's Annual Report on Form 10-KSB, filed with the
Commission on May 6, 2002.)
10.5 Agreement dated January 1, 2003 between Whistler Investments,
Inc. and Kim Larsen respecting the disposition of Azra
Shopping Center. (Incorporated by reference to Exhibit 10.1 to
the Company's Amendment No. 1 to its Annual Report on Form
10-KSB filed May 8, 2003.)
10.6 Amendment to Licensing Agreement, dated October 21, 2003,
between Nu Age Electric Inc. and Whistler Investments, Inc.
(Incorporated by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K, filed with the Commission on
November 21, 2003.)
52
10.7 Agreement,dated October 21,2003, by and between RV Systems,
Inc. and Whistler Investments, Inc. (Incorporated by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K,
filed with the Commission on November 21, 2003.)
10.8 Investment Agreement, dated as of January 19, 2004, by and
between Whistler Investments, Inc. and Dutchess Private
Equities Fund, L.P. (Incorporated by reference to Exhibit 10.5
to the Company's Current Report on Form 8-K, filed with the
Commission on January 23, 2004.)
10.9 Registration Rights Agreement,dated as of January 19, 2004, by
and between Whistler Investments, Inc. and Dutchess Private
Equities Fund, L.P. (Incorporated by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K, filed with the
Commission on January 23, 2004.)
10.10 Stock Redemption and Reissuance Agreement, dated as of
February 10, 2004, Between Whistler Investments, Inc. and
Salim S. Rana Investments, Inc. (Incorporated by reference to
Exhibit 10.10 to Amendment No. 1 to the Company's Annual
Report on Form 10-KSB, filed with the Commission on October 4,
2004.)
41
10.11 Letter from City of Austin, Texas, dated February 27, 2004.
(Incorporated by reference to Exhibit 10.11 to Amendment No. 1
to the Company's Annual Report on Form 10-KSB, filed with the
Commission on October 4, 2004.)
10.12 Memorandum of Understanding, dated March 15, 2004, between
Shanghai Geely Metop International and the Global Electric
subsidiary of Whistler Investments, Inc. (Incorporated by
reference to Exhibit 10.12 to Amendment No. 1 to the Company's
Annual Report on Form 10-KSB, filed with the Commission on
October 4, 2004.)
10.13 Loan Agreement, made as of the 20th day of February, 2004,
among Sterling Capital Inc. and Whistler Investments, Inc.
(Incorporated by reference to Exhibit 10.13 to Amendment No. 1
to the Company's Annual Report on Form 10-KSB, filed with the
Commission on October 4, 2004.)
10.14 Letter Agreement, dated February 3, 2004, between Whistler
Investments, Inc. and RV Systems, Inc. (Incorporated by
reference to Exhibit 10.14 to Amendment No. 1 to the Company's
Annual Report on Form 10-KSB, filed with the Commission on
October 4, 2004.)
10.15 Purchase and Sale Agreement, made effective as of the 3rd day
of December, 2004, between WhistlerTel, Inc. and Trade Winds
Telecom, LLC. (Incorporated by reference to Exhibit 10.15 to
the Company's Current Report on Form 8-K, filed with the
Commission on December 8, 2004.)
53
10.16 Bill of Sale and Assignment, dated as of December 3, 2004,
between Trade Winds Telecom LLC and Whistlertel, Inc.
(Incorporated by reference to Exhibit 10.16 to the Company's
Current Report on Form 8-K, filed with the Commission on
December 8, 2004.)
10.17 Agreement and Plan of Reorganization, dated as of August 18,
2005, among the Company, Whistlertel, Inc. and Javakingcoffee,
Inc. (Incorporated by reference to Exhibit 10.17 to the
Company's Current Report on Form 8-K, filed with the
Commission on August 24, 2005.)
10.18 Notice, dated July 2, 2005, from Hybrid Technologies, Inc. To
RV Systems, Inc., (Incorporated by reference to Exhibit 10.18
to the Company's Annual Report on Form 10-KSB, filed herewith.
21with the
Commission on October 26, 2005.)
10.19 Nonreimbursable Space Act Agreement between National
Aeronautics and Space Administration, John F. Kennedy Space
Center and Hybrid Technologies, Inc. (Incorporated by
reference to Exhibit 10.19 to the Company's Quarterly Report
on Form 10-QSB, filed with the Commission on March 17, 2006.
10.20 Agreement dated March 30, 2006 between Paratransit, Inc. and
the Company. (Incorporated herein by reference to Exhibit
10.20 to the Company's Annual Report on Form 10-KSB, filed
with the Commission on November 8, 2006.)
39
10.21 Request for Pilot Approval, submitted May 31, 2006, to New
York City Taxi and Limousine Commission by the Company.
(Incorporated herein by reference to Exhibit 4.1 to the
Company's Annual Report on Form 10-KSB, filed with the
Commission on November 8, 2006.)
10.22 Consulting Agreement, dated March 26, 2007, between Hybrid
Technologies, Inc. and Griffen Trading Company. (Incorporated
by reference to Exhibit 10.22 to the Company's Quarterly
Report on Form 10-QSB, filed with the Commission on June 19,
2007.)
10.23 Loan Agreement, dated as of October 29, 2007, between Wyndom
Capital Investments, Inc. and the Company, Incorporated by
reference to exhibit 10.23 to the company's annual Report
on Form 10-KSB, filed November 13, 2007.
10.24 Form of Note issuuable pursuant to the Loan Agreement, dated
October 29, 2007, between Wyndom Capital Investments, Inc.
and the Company,Incorporated by reference to exhibit 10.24
to the company's annual Report on Form 10-KSB, filed
November 13, 2007.
21. Subsidiaries of Registrant (Filed herewith.Registrant. (Incorporated by reference to
Exhibit 21 to the Company's Annual Report on Form 10-KSB,
filed with the Commission on October 26, 2005.)
31 Certification of Chief Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith.
32 Certification of Chief Executive Officer and Principal
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, filed herewith.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
On November 1, 2007, our independent auditor, Mason Russell Wert, LLC merged
with and changed their name to Haymil & Company.
(1) Aggregate fees for the last two years: 2004-2007-$16,450 2005-26,500 2006-$21,000*20,000
(2) Audit related fees: 2004-2005- NA 2005-2006- NA
(3) Tax fees: 2004-2005- NA 2005-2006- NA
(4) All other fees. NA
(5) Audit committee pre-approval processes, percentages of services approved by
audit committee, percentage of hours spent on audit engagement by persons other
than principal accountant's full time employees. NA
- ----------
*For fiscal year ended January 31, 2005.42
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HYBRID TECHNOLOGIES, INC.
By: /s/ Holly Roseberry
---------------------------------
Holly Roseberry
Chief Executive Officer and Principal Financial Officer
Date: October 26, 2005
54
November 15, 2007
In accordance with the Securities Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ Holly Roseberry
-------------------
Holly Roseberry
President and C.E.O.
(President, Chief Executive Officer
Principal Financial Officer and Director)
Date: October 26, 2005November 15, 2007
By: /s/ Mehboob Charania
-------------------
Mehboob Charania
(Secretary and Director)
Date: October 26, 2005November 15, 2007
By: /s/ Brian Newman
-------------------
Brian Newman
(Director)
Date: November 15, 2007
By: -------------------
Gregory Navone
(Director) Date: November , 2007
EXHIBIT INDEX
10.18 Notice, dated July 2, 2005, from Hybrid Technologies, Inc.
to RV Systems, Inc.
21 Subsidiaries of Registrant.
31 Certification of Chief Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32 Certification of Chief Executive Officer and Principal
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
55
43