**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549


______________





**FORM
      10-KSB**




x
      ANNUAL REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
      ENDED DECEMBER 31, 20006




Commission
      File No.:  333-130768




**ODYNE
      CORPORATION**


(Name
      of
      small business issuer in its charter)






**Delaware**
            
            **13-4050047**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification
                No.)**89
                Cabot Court, Suite
                L**
              **Hauppauge,
                New
                York**
            
            **11788**(Address
                of principal executive
                offices)
            
            (Zip
                Code)




**(631)
      750-1010**


(Issuer's
      telephone number, including area code)




Securities
      registered under Section 12(b) of the Exchange Act: None




______________




Securities
      registered under Section 12(g) of the Exchange Act: **** None




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. £




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 past 90 days.


x
      Yes o
      No




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B 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




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes £ No x .




The
      issuer's revenues for its fiscal year ended December 31, 2006, were
      $242,945.




The
      aggregate market value of the voting and non-voting stock held by non-affiliates
      of the issuer was approximately $24,413,080, based on the closing price of
      $1.76
      per share on March 15, 2007, as quoted by the OTC Bulletin Board.




As
      of
      April 11, 2007, 18,567,418 shares of the issuer's common stock were outstanding.




Transitional
      Small Business Disclosure Format (check one):  Yes £ No x .




**Documents
      Incorporated by Reference:**  **None** .













**ODYNE
      CORPORATION**




**2006
      FORM 10-KSB ANNUAL REPORT**




**TABLE
      OF CONTENTS**




**Page****PART
                  I**Item
                  1.
              
              
              Description
                  of Business
              
              
              1Item
                  2.
              
              
              Description
                  of Property
              
              
              25Item
                  3.
              
              
              Legal
                  Proceedings
              
              
              25Item
                  4.
              
              
              Submission
                  of Matters to a Vote of Security Holders
              
              
              25**Part
                    II**Item
                  5.
              
              
              Market
                  for Common Equity and Related Stockholder Matters
              
              
              25Item
                  6.
              
              
              Management’s
                  Discussion and Analysis or Plan of Operation
              
              
              27Item
                  7.
              
              
              Financial
                  Statements
              
              
              31Item
                  8.
              
              
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              
              
              31Item
                  8A.
              
              
              Controls
                  and Procedures
              
              
              32Item
                  8B.
              
              
              Other
                  Information
              
              
              33**Part
                    III**Item
                  9.
              
              
              Directors,
                  Executive Officers, Promoters, Control Persons and Corporate Governance;
                  Compliance with Section 16(a) of the Exchange Act
              
              
              34Item
                  10.
              
              
              Executive
                  Compensation
              
              
              38Item
                  11.
              
              
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              
              42Item
                  12.
              
              
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              
              
              45Item
                  13.
              
              
              Exhibits
              
              
              45Item
                  14.
              
              
              Principal
                  Accountant Fees And Services
              
              
              46










**PART
      I**




**ITEM
      1. DESCRIPTION OF BUSINESS****.**






O dyne
      Corporation was originally formed as a Subchapter S Corporation in the State
      of
      New York on August 3, 2001. We design, develop, manufacture and install Plug-in
      Hybrid Electric Vehicle propulsion systems for medium and heavy duty trucks
      and
      buses using our proprietary technology.




Pursuant
      to an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”),
      Technology Integration Group, Inc. (“TIG”), through a newly-formed acquisition
      subsidiary, acquired all of our outstanding common stock on October 17, 2006.
      TIG, in exchange for our common stock issued 12,000,000 of its common stock
      directly to our stockholders (the “Share Exchange Transaction”). Following the
      Share Exchange Transaction, the existing stockholders of TIG retained 6,000,000
      shares of the TIG’s outstanding common stock and our stockholders became the
      majority owners of TIG.





Prior
      the
      Share Exchange Transaction, TIG was a publicly-traded corporation with nominal
      operations. TIG, immediately following the Share Exchange Transaction, changed
      its name to Odyne Corporation and continued to carry on the operations our
      company. The Share Exchange Transaction has been accounted for as a reverse
      merger and recapitalization transaction in which the original Odyne is
      deemed to be the accounting acquirer.




**Overview**




Odyne
      Corporation is a clean technology company that develops and manufactures
      propulsion systems for advanced Plug-in Hybrid Electric Vehicles for medium
      and
      heavy-duty trucks and buses by integrating its proprietary electric power
      conversion, electric power control and energy storage systems with a range
      of
      off-the-shelf components including electric motors and storage batteries. Our
      Plug-in Hybrid Electric Vehicle systems are series configuration hybrids that
      offer customers significant advantages when compared to the more familiar
      parallel architecture found in hybrid passenger cars. Our environmentally
      friendly and cost-effective Plug-in Hybrid Electric Vehicle systems allow
      vehicles to operate at lower costs and with lower vehicle
      emissions.









**Alternatively
      Fueled Vehicles**




**General**




We
      compete in the alternatively fueled vehicles market. Alternatively fueled
      vehicles include various types of vehicles that utilize electric and hybrid
      electric technology, hydrogen fuel cell technology, compressed natural gas,
      biodiesel, ethanol, propane and liquefied natural gas, or a combination of
      these
      technologies and fuels. There are more than 1.5 million on-road alternatively
      fueled vehicles of all vehicle classes in use in the United States today,
      growing 9.3% per year since 1995. There are approximately 113,000 medium and
      heavy-duty alternatively fueled trucks and buses in use in the United States
      as
      compared to approximately 1.1 million conventional trucks and buses in these
      classes. Each year in the United States, an estimated 100,000 new medium and
      heavy-duty trucks and buses are sold, each with an estimated average life of
      10
      years.




**Electric
      and Hybrid Electric Vehicles**




Electric
      vehicles and hybrid electric vehicles have emerged as a revolutionary solution
      for improved fuel efficiency and reduced vehicle emissions. Electric vehicles
      operate solely on electric power. Hybrid electric vehicles are capable of
      operating on both electricity and a conventional or alternative power source.




**Plug-in
      Hybrid Electric Vehicles**




Plug-in
      Hybrid Electric Vehicles are powered both by battery power and a conventional
      or
      alternative fuel source and with power taken from a power grid. This reduces
      the
      amount of alternative fuel required to operate a Plug-in Hybrid Electric Vehicle
      when compared to a hybrid electric vehicle. Our technology can be deployed
      in
      electric vehicles, hybrid electric vehicles and Plug-in Hybrid Electric
      Vehicles. Any vehicle, whether it operates on diesel, gasoline or an alternative
      fuel source, can be made a Plug-in Hybrid Electric Vehicle. Plug-in Hybrid
      Electric Vehicles are therefore known as being fuel agnostic. A Plug-in Hybrid
      Electric Vehicle consumes less fuel, requires less maintenance and typically
      has
      a longer lifespan than conventional gas-powered vehicles.




We
      estimate the addressable market for our Plug-in Hybrid Electric Vehicle systems
      in newly-manufactured vehicles, which excludes vehicles that may be retrofitted
      with our Plug-in Hybrid Electric Vehicle systems, to be approximately $1.8
      billion per year. This assumes modest growth in the number of medium and
      heavy-duty trucks and buses and 50% adoption of hybrid electric power at an
      estimated cost of $25,000 to $30,000 per vehicle; this cost target will not
      be
      achieved without substantial unit volume production of hybrid power trains
      Several factors are driving accelerating demand in this market: (i) economic
      and
      political instability in many of the world’s largest oil producing countries
      placing increasing pressures on fuel costs, (ii) attempts to reduce the United
      States’ dependence on foreign oil by displacing imported petroleum with
      electricity generated from domestic fuels and (iii) increasingly stringent
      emissions standards. In addition, initiatives by the federal government,
      including the Energy Policy Act of 2005 and the Clean Efficient Automobiles
      Resulting from Advanced Technologies Act of 2003 support the development and
      use
      of clean technologies. Hybrid electric propulsion offers a highly attractive,
      affordable and user-friendly solution.




**Odyne’s
      Value Proposition**




Our
      Plug-in Hybrid Electric Vehicle solution offers several advantages to
      stand-alone alternatively fueled vehicles and vehicles powered by conventional
      internal combustion engines, including lower vehicle emissions and lower
      operating costs through greater fuel efficiency and lower maintenance costs.
      Our
      Plug-in Hybrid Electric Vehicle system integrates off-the-shelf products,
      advanced control systems and our modular, build-to-order propulsion system.
      This
      combination allows our Plug-in Hybrid Electric Vehicle system to be
      competitively priced while retaining the flexibility to build to customer
      specifications and enabling later modifications to extend the life of a vehicle
      and meet evolving customer needs.




2




Our
      Plug-in Hybrid Electric Vehicle system is designed with a larger battery storage
      device, which allows for a smaller, less expensive engine in the auxiliary
      power
      unit. The engine in the Odyne Plug-in Hybrid Electric Vehicle system operates
      at
      a fixed rpm (revolutions per minute), enhancing vehicle efficiency and
      minimizing engine wear. In addition, our series hybrid propulsion system
      architecture enables operation in “all-electric” mode for a range of 30 to 50
      miles between recharging, as well as in a conventional hybrid electric mode
      where operating ranges can be significantly higher, but vary based on the size
      of the fuel tank. The Plug-in Hybrid Electric Vehicle can be recharged overnight
      by plugging into a high-capacity 220-volt electrical outlet.





To
      protect the value of our Plug-in Hybrid Electric Vehicle system, we have filed
      patent applications to cover our vehicular battery carriers and cooling systems,
      vehicle monitoring and control systems, battery management systems and vehicle
      charging system.




**Business
      and Growth Strategy**




We
      have
      developed a Plug-in Hybrid Electric Vehicle propulsion system for Class 6,
      7 and
      8 trucks and buses that encompasses proprietary battery and thermal management
      technology, unique system architecture and modular/scalable configuration.
      Current and prospective customers for our Plug-in Hybrid Electric Vehicle system
      include municipalities and private fleet operators.





We
      delivered our first two commercial, heavy-duty vehicles during the first quarter
      of 2007. Our third and fourth vehicles, a 24-passenger Champion Defender Bus,
      and a Crane refuse vehicle will be delivered during the second quarter of 2007.
      The bus has been sold to the Town of North Hempstead, New York for use in its
      senior transportation system; the Crane refuse vehicle belongs to the Town
      of
      Hempstead, New York. In addition, funding has been approved for several other
      Plug-in Hybrid Electric Vehicle projects, including seven refuse trucks that
      will be built for the Towns of Hempstead and Oyster Bay, New York.





We
      have
      developed strategic relationships and strategic partnerships to further our
      development and manufacturing of Plug-in Hybrid Electric Vehicle systems for
      medium and heavy-duty vehicles. Long Island Power Authority, the electric
      utility serving southeastern New York, has agreed to work with us to promote
      our
      Plug-in Hybrid Electric Vehicle technology and to collaborate with us on product
      demonstrations. ElDorado National, a subsidiary of Thor Industries, Inc., has
      agreed to supply bus gliders and bodies for the Odyne/LIPA demonstration program
      and future projects. General Electric supplies induction traction drive motors
      to us and has worked with us to select induction motors that can meet a range
      of
      requirements. Bosch Rexroth provides auxiliary power unit induction alternators
      to us. EnerSys supplies the lead-acid batteries used in constructing our Plug-in
      Hybrid Electric Vehicle system. We are also a founding member (and the only
      founding member company that is not a public utility company) in the Plug-In
      Partners National Campaign ( www.pluginpartners.org ),
      a
      national grass-roots campaign created to demonstrate the existing market for
      flexible-fuel Plug-in Hybrid Electric Vehicles. Plug-In Partners members include
      24 of the nation's largest locally-owned and controlled power systems.





Our
      growth strategy is to continue to develop our Plug-in Hybrid Electric Vehicle
      propulsion systems tailored for use with medium and heavy-duty trucks and buses
      while jointly manufacturing and selling plug-in hybrid electric buses and trucks
      with original equipment manufacturers of bus and truck bodies, including
      ground-up builds and modifications of existing vehicles. We intend to expand
      our
      product offerings to include a range of auxiliary power units that work with
      a
      variety of fuels, electric drive motors, electric motor controllers, battery
      chargers and energy storage batteries. As the market for Plug-in Hybrid Electric
      Vehicles expands and we expand our product offerings, we intend to sell Plug-in
      Hybrid Electric Vehicle power system components to medium and heavy-duty vehicle
      fleet manufacturers that sell their vehicles directly to fleet
      owners.




3




We
      are a
      Delaware corporation, incorporated under the laws of New York in 1999 and
      re-incorporated under the laws of Delaware in 2005, that conducts all of our
      operations through our wholly-owned subsidiary, Odyne Corporation. Odyne
      Corporation, incorporated in the State of New York in 2001, is a clean
      technology company that develops and manufactures Plug-in Hybrid Electric
      Vehicle propulsion systems for medium- and heavy-duty trucks and buses. We
      are
      located at 89 Cabot Court, Suite L, Hauppauge, New York 11788. Our telephone
      number is 631 750 1010; our web site is www.odyne.com .




**Industry
      Background and Trends**




**Overview**




The
      United States faces major challenges in meeting the ever-increasing demand
      for
      transportation goods and services while striving to minimize adverse energy,
      environmental and economic impacts. More efficient vehicles are imperative
      to
      meeting these challenges.




New
      emissions standards are forcing current diesel engine and vehicle manufacturers
      to consider complete engine redesigns that utilize alternative transportation
      fuels. New legislation, coupled with rising fuel and labor costs, resulted
      in
      the accelerated development of the alternative fuel industry. The alternative
      fuel industry can be segmented by fuel type, application and vehicle class,
      as
      shown in the diagram below.




**Alternative
      Transportation Fuel Industry Segmentation**




**Alternative
                Transportation Fuels**
            **Applications**
            **Vehicles**Liquefied
                petroleum gas
              Compressed
                natural gas
              Alcohols
                in blends containing at least 85% alcohol
              Hydrogen
              Electricity
              100%
                biodiesel
            Alternatively
                fueled vehicle suppliers
              Alternative
                transportation fuel suppliers
              Alternatively
                fueled vehicle technologies and components
            Automobiles
              Vans
                & minivans
              Light-duty
                trucks
              Medium-duty
                trucks
              Heavy-duty
                trucks
              Buses
              Other




We
      compete in the alternatively fueled vehicles market. Alternatively fueled
      vehicles include various types of vehicles that utilize electric and hybrid
      electric technology, hydrogen fuel cell technology, compressed natural gas,
      biodiesel, ethanol, propane and liquefied natural gas, or a combination of
      these
      technologies and fuels. According to publicly available industry sources, there
      are more than 1,500,000 on-road alternatively fueled vehicles in use in the
      United States today. There are approximately 113,000 medium and heavy-duty
      alternatively fueled trucks and buses in use in the United States as compared
      to
      our estimate of approximately 1,100,000 conventional trucks and buses in these
      classes. Each year in the United States, based on a U.S. government report
      on
      vehicle registrations, an estimated 100,000 new medium and heavy-duty trucks
      and
      buses are sold, each with an estimated average life of ten years.




**Electric
      and Hybrid Electric Vehicles**




Electric
      vehicles and hybrid electric vehicles, or HEVs, have emerged as an appealing
      solution for improved fuel efficiency and reduced vehicle emissions. Electric
      vehicles operate solely on electric power. Hybrid electric vehicles are capable
      of operating on both electricity and a conventional or alternative power source,
      such as diesel fuel. According to estimates of the Energy Information
      Administration of the U.S. Department of Energy, automakers will sell
      approximately 1.1 million hybrid electric vehicles in 2015.




4




**Plug-in
      Hybrid Electric Vehicles**




Plug-in
      Hybrid Electric Vehicles, or PHEVs, are powered both by battery power and a
      conventional or alternative fuel source and with power taken from a power grid.
      Any vehicle, whether it operates on diesel, gasoline or an alternative fuel
      source, can be made a PHEV. PHEVs are therefore known as being fuel agnostic.
      By
“hybridizing” a vehicle, the fuel efficiency of that vehicle is improved. By
      requiring less fuel to perform the same tasks, operating costs and environmental
      emissions are reduced. Moreover, a PHEV vehicle requires less maintenance and
      typically has a longer lifespan than conventional gas-powered vehicles.




Several
      factors are driving accelerating demand in the alternatively fueled vehicle
      market: (i) economic and political instability in many of the world’s largest
      oil producing countries placing increasing pressures on fuel costs, (ii)
      attempts to reduce the United States’ dependence on foreign oil by displacing
      imported petroleum with electricity generated from domestic fuels and (iii)
      increasingly stringent emissions standards. In addition, initiatives by the
      United States federal government, including the Energy Policy Act of 2005 and
      the Clean Efficient Automobiles Resulting from Advanced Technologies Act
      (“CLEAR”) of 2003, support the development and use of clean technologies. Hybrid
      electric propulsion offers a highly attractive, affordable and user-friendly
      solution.




The
      propulsion system of a conventional vehicle consists of an internal combustion
      engine, a transmission and a differential that delivers power to the drive
      wheels. The drive wheels may be the front wheels, the rear wheels or both.
      The
      transmission changes the ratio of the revolutions per minute, or rpm, of the
      internal combustion engine to the rpm of the drive wheels in order to operate
      the internal combustion engine at its most efficient operating rpm. The internal
      combustion engine must be sized to be able to meet peak power requirements;
      the
      peak power requirement is considerably higher than the average power
      requirement. We design hybrid propulsion systems for medium-duty and heavy-duty
      trucks and buses where the peak power requirements are four to five times higher
      than the average power requirements.




The
      engine configuration and the braking system differentiate a PHEV propulsion
      system from conventional propulsion systems. In a PHEV propulsion system, the
      internal combustion engine operates in conjunction with an electric energy
      storage system and an electric motor to deliver power to the drive wheels.
      As
      such, the engine in the auxiliary power unit, which is the primary power source
      of the PHEV, is sized to provide only the average ** power
      requirement. Peak power requirements are provided through the electric motor
      from the stored electric energy system. The internal combustion engine recharges
      the energy storage system during low power driving periods. Low power driving
      periods include both idling and relatively constant speed highway driving.




The
      energy storage system also receives power from a PHEV’s braking system. The
      braking system of a conventional vehicle relies on friction between the brake
      elements to convert kinetic energy of the vehicle to heat, which then dissipates
      into the air and is wasted. The braking system in a PHEV operates the same
      as a
      conventional vehicle, but the electronics in a PHEV convert much of the kinetic
      energy back into electric power that is then stored for future use. This concept
      is called regenerative breaking.




In
      most
      of the currently available HEVs, the internal combustion engine is the only
      source of power. In our PHEV configuration, the operator is able to supplement
      power from the internal combustion engine with electric power from a power
      grid
      by periodically plugging the vehicle in during times that it is not in use.
      This
“Plug-in HEV” capability allows the use of electric power that is considerably
      less expensive than diesel fuel per mile.




5




In
      the
      United States today, much of the vehicular fuel, gasoline or diesel oil is
      imported. Most electricity is generated from domestic fuels. Thus, supplementing
      the diesel fuel with “Plug-in HEV” electric power contributes to national energy
      independence.




The
      table
      compiled by us below outlines the key differences in major drive system
      components between a conventional internal combustion engine system and a series
      PHEV system.




**Comparison
      of Major Drive System Components**





**Component**
            **Internal
                Combustion**
              **Engine
                Drive System**
            **PHEV
                Drive System**Internal
                Combustion Engine
            Yes
            NoAuxiliary
                Power Unit
            No
            YesElectric
                Drive Motor
            No
            YesElectric
                Motor Controller
            No
            YesTransmission
            Yes
            NoBattery
                Charger
            No
            YesStarter
                System
            Yes
            No
                (included in auxiliary power unit)Energy
                Storage Battery
            No
            YesControl
                Network
            No
            Yes




**PHEV
      Advantages**




We
      believe hybrid propulsion lowers the operating costs of vehicles because
      of:




**Greater
      Fuel Efficiency/Lower Emissions** .
      PHEVs
      are more fuel efficient than conventional internal combustion engine vehicles,
      as well as any stand-alone alternatively fueled vehicle. The auxiliary power
      unit provides average power only and the peak requirements, which are
      substantially higher than the average, are provided through the electric motor
      from the stored electric system. The result is that a PHEV uses less fuel with
      lower vehicle emissions. Improvements in fuel efficiency and vehicle emissions
      will vary based on the application; however, we estimate that when the power
      system in a typical transit bus application is changed from conventional diesel
      to HEV, fuel consumption and vehicle emissions will be reduced 30% to 50%.




PHEVs
      enhance the efficiency of internal combustion engines regardless of the type
      of
      fuel used, which we believe makes them more advantageous than other
      alternatively fueled vehicles without a hybrid system. A PHEV system can be
      coupled with an engine operating on gasoline, diesel fuel or any alternative
      fuel. For fleet operators who have already adopted some form of alternatively
      fueled vehicle, we believe a hybrid electric system will further enhance the
      fuel efficiency of that alternatively fueled vehicle and lower its operating
      costs.




Moreover,
      the fuel efficiency of a PHEV can be further enhanced by recharging the energy
      storage battery from utility power when the vehicle is not in operation, thereby
      substituting power from an electric grid for fuel and reducing the overall
      fuel
      consumption of the vehicle.




6




**Less
      Maintenance** .
      We
      believe a PHEV has lower operating costs, and requires less maintenance than
      a
      conventional vehicle. Any HEV, whether it has a series or parallel architecture,
      requires less brake maintenance due to regenerative braking. When the brakes
      are
      applied in a conventional vehicle, the kinetic energy of the vehicle is
      converted to thermal energy (heat) as the temperature of the brake pads is
      raised. This wasted energy raises the operating temperature of the brakes,
      accelerating their wear-out and increasing the associated maintenance costs.
      In
      a PHEV, much of the kinetic energy of the vehicle is converted back into
      electricity and stored in the energy storage battery. This saves both brake
      maintenance and fuel. We believe that the more braking there is in the
      particular application, the greater the potential savings. Further, in a series
      PHEV, there is no transmission, thus saving the costs to maintain and service
      this component in a conventional vehicle.




**The
      Odyne Solution**




Our
      PHEV
      solution offers the advantages of a typical hybrid propulsion system, including
      lower vehicle emissions and lower operating costs through greater fuel
      efficiency and lower maintenance requirements. Our system provides additional
      benefits that are not achieved with the use of other hybrid electric bus and
      truck propulsion systems.




·
            **Lower
                costs*****.***Our system is designed with a larger battery storage device, which
                allows
                for a smaller auxiliary power unit engine that is less expensive.
                Also,
                the engine in our PHEV operates at a fixed rpm, which enhances the
                vehicle’s efficiency and resiliency.




·
            **Electric-only
                operation*****.***We
                use a series hybrid propulsion system architecture, which enables
                operation in electric-only mode as well as in hybrid-electric mode.
                Operating in electric-only mode lowers vehicle emissions further
                and
                enables operation in compliance with a “zero emission” standard where
                mandated or desirable.




**·**
            **Plug-in
                capability*****.***The “Plug-in HEV” capability of our system allows operators to use grid
                electric power as a supplement to the normal vehicle fuel. Grid electric
                power is significantly less expensive per mile than diesel fuel and
                is
                primarily generated from domestic
                fuels.




We
      integrate off-the-shelf products, advanced control systems and our modular,
      build-to-order propulsion system to build our PHEV system. Our modular
      configuration can be optimized and modified to meet a customer’s changing needs
      over time. This modular configuration utilizes off-the-shelf components (such
      as
      electric motors, batteries, bus bodies, and chassis), proprietary technologies
      and components procured through strategic alliances. Accordingly, our PHEV
      system can be:




·
            optimized
                to meet specific customer requirements,




·
            easily
                modified as requirements change to extend the life of the
                vehicle,




·
            rapidly
                serviced because individual components can be swapped out,




·
            highly
                scalable because the same components work with all types of engines,
                regardless of their fuel source, and




·
            flexibly
                configured to maximize energy storage and power production with the
                smallest number of components.




The
      table
      compiled by us below illustrates the annual estimated cost savings in operating
      an Odyne PHEV transit bus as compared to a conventional diesel powered transit
      bus.




7




**Comparison
      of Annual Operating Cost** (1)




**Internal
                Combustion****Engine
                Drive System**
            **Odyne
                PHEV Drive System**Fuel
                Cost
            $20,000
            $
                10,000Electricity
                Cost
            —
            $
                2,500Maintenance
            $
                4,500
            $
                2,000Total
            $24,500
            $14,500




(1)
            Assumes
                (i) 30,000 miles per year of usage, (ii) average fuel efficiency
                of 3 mpg
                for a conventional bus, (iii) $2.00/gallon average cost for diesel
                fuel,
                (iv) $0.10/kw-hr off-peak electric power cost and (v) operating on
                Long
                Island, NY.




The
      long-term projected cost to the vehicle manufacturers of the components used
      in
      a conventional drive system and a PHEV system (excluding the energy storage
      battery) are approximately equal. For a typical medium-duty or heavy-duty
      vehicle, the cost to the end user for the energy storage battery is estimated
      to
      be $12,000 including labor. The expected life of the battery in the northeastern
      United States is three to four years, but will be lower in areas with
      consistently hotter climates. We estimate that a fleet operator can recover
      the
      added purchase cost of the PHEV system in two years or less.





**Business
      and Growth Strategy**




**Products**




We
      provide a hybrid propulsion system consisting of a control area network,
      appropriate driver interface controls and a selection of other major components.




**Odyne
      PHEV Components**










**Our
      PHEV System**




We
      have
      replaced both the internal combustion engine and transmission with a long-life,
      comparably powered, off-the-shelf electric motor. Locomotives and subways are
      currently propelled by electric motors. Electric motors can provide the speed,
      power and reliability to support the continuous duty required for the demanding
      vehicular applications found in trucks and buses. The diagram below illustrates
      our series hybrid propulsion system configuration.




8




**Odyne’s
      Series PHEV Propulsion System Configuration**


*(Heavy-Duty
      PHEV)*







The
      battery and engine/generator combine to provide power to the electric motor
      via
      a traction drive, which also inverts DC to AC as it regulates the power and
      speed of the electric motor. We utilize off-the-shelf AC induction electric
      motors due to their efficiency, cost-effectiveness and reliability. We design
      and manufacture traction drives for AC motors of up to 500 horsepower, as well
      as all of the battery charging, monitoring and auxiliary power unit power
      electronics.




**Series
      Architecture**




HEVs
      are
      currently designed with either series or parallel architectures. A series system
      configuration is better suited to operate in an “all-electric-mode” and/or
“hybrid-mode” and, as a result, better suited for operation in urban and
      suburban environments. Parallel hybrid technology is successfully being deployed
      in smaller passenger vehicles and heavy-duty vehicles (such as long-haul buses
      and trucks) where a larger percentage of travel may be highway
      driving.




In
      a
      series device, there is no direct connection between the internal combustion
      engine and the drive wheels. The internal combustion engine drives a
      generator-charger system to keep the energy storage system charged to the
      appropriate levels. The electric motor is connected directly to the rear wheels
      through the differential. There is no transmission. In a parallel system, the
      internal combustion engine is connected through a transmission to the drive
      wheels. The internal combustion engine also drives a generator-charger to
      maintain the energy storage system. The electric motor is also connected to
      the
      drive wheels through a parallel transmission.




**Comparison
      of HEV Architecture**




Series
                Architecture
            Parallel
                ArchitectureCapacity
                of Electric Motor
            Peak
                Drive Requirement
            LowerTransmission
            None
            ComplexInternal
                combustion engine rpm
            Fixed
            VariableAll-Electric
                Operation
            Yes
            No




9




We
      have
      developed a series hybrid propulsion system architecture that enables a vehicle
      to operate in electric-only mode or in hybrid-electric mode. In addition, the
      series architecture coupled with the larger battery reduces the size of the
      engine required and eliminates the need for a transmission. This, in turn,
      further reduces the maintenance costs of the PHEV.




**Modular
      Configuration**




Our
      propulsion system consists of both proprietary Odyne designed and manufactured
      modules, and commercial off-the-shelf products. The ability to “mix and match”
these components allows a system to be optimized for a particular driving
      profile and to be modified to meet a customer’s changing needs over time. In
      addition, the component/modular configuration allows for scalable manufacturing
      and purchasing of components to achieve attractive gross margins. The table
      compiled by us below indicates the current mix of proprietary and off-the-shelf
      components. Most of the off-the-shelf components are available from multiple
      sources.




**Power
      System Components**




**Module**
            **Proprietary
                (P), Off-the-Shelf (OTS)**Internal
                Combustion Engine
            OTSGenerator
            OTSAuxiliary
                Power Unit
            P
                (Combination of Internal CombustionEngine
                and Generator)Electric
                Drive Motor
            OTSDrive
                Motor Controller
            PBattery
                Charger
            PBatteries
            OTSBattery
                Trays
            PBattery
                Environmental Controls
            PControlled
                Area Network Software
            P




**Fuel
      Agnostic**




Our
      configurable and scalable propulsion system products are available for a variety
      of heavy-duty bus and truck fleet operations in either all-electric
      configurations producing zero emissions, or in hybrid-electric configurations
      with very low emissions. During the vehicle’s usable life, the fleet operator
      can reconfigure the vehicle to all-electric or hybrid operation at any time.
      Since our hybrid propulsion system is fuel agnostic, Odyne-powered hybrid
      vehicles are able to use any fuel by simply selecting the appropriate generator
      module.




**Growth
      Strategy**




Our
      growth strategy is to continue to develop our PHEV propulsion system tailored
      for use with medium and heavy-duty trucks and buses while jointly manufacturing
      and selling PHEV buses and trucks with original equipment manufacturers of
      bus
      and truck bodies. We spent approximately $755,429 in 2006 and $442,993 in 2005
      on research and development activities. Our projects are expected to include
      ground-up builds and modifications of existing vehicles. We intend to expand
      our
      product offerings to include auxiliary power units that work with a variety
      of
      fuels, electric drive motors, electric motor controllers, battery chargers
      and
      energy storage batteries. We then intend to manufacture and sell our PHEV system
      components to vehicle manufacturers that will subsequently sell the vehicles
      to
      fleet owners.




10




**Strategic
      Partnerships and Strategic Relationships**




We
      have
      developed strategic relationships and strategic partnerships to further the
      development and manufacturing of our PHEV system for medium- and heavy-duty
      vehicles.




**Long
      Island Power Authority.** Long
      Island Power Authority, the electric utility serving southeastern New York,
      has
      agreed to work with us to promote our PHEV technology and to collaborate with
      us
      on product demonstrations. Long Island Power Authority has a history of vehicle
      demonstrations programs, which involves the loan of vehicles to various private
      and public organizations and companies for the purpose of having a typical
      operator evaluate and validate electric vehicle and PHEV technology, and to
      familiarize users with the practical applications of electric vehicles. Long
      Island Power Authority is currently in discussions with Long Island
      Bus/Metropolitan Transportation Authority (MTA) to provide it with an
      Odyne-equipped PHEV transit bus, which will be demonstrated on the streets
      of
      Nassau County on a daily basis in regular service.




Through
      the Electric Power Research Institute, Long Island Power Authority is
      participating in the Global Grid Connected Vehicle Project, as well as a variety
      of other electric vehicle programs. In addition, Long Island Power Authority
      has
      played an important role by supporting the Ford TH!NK Program in the Long Island
      counties of Suffolk and Nassau. Long Island Power Authority is a founding member
      of the Plug-In Partners National Campaign.




**ElDorado
      National.** ElDorado
      National, a subsidiary of Thor Industries, Inc., has verbally agreed to supply
      bus gliders and bodies for a Long Island Power Authority/Odyne pre-production
      demonstration program and future projects. After the successful demonstration
      of
      our PHEV hybrid bus, we intend to develop a long-term relationship with
      ElDorado, initially for the supply of bus gliders and bodies by ElDorado to
      us
      and subsequently for the purchase of our propulsion components by ElDorado
      for
      its continued/ongoing bus production.




**General
      Electric.** General
      Electric supplies us with AC induction traction drive motors. General Electric
      has worked with us to select induction motors that can meet the requirements
      of
      a range of vehicles in a wide variety of applications and terrain. The motors
      selected by us and General Electric have extensive use in industrial and
      traction applications worldwide.




**Bosch
      Rexroth Corporation.** Bosch
      supplies us with generators and motors that are used in a range of vehicles
      that
      are currently being deployed. In 2007, we entered into an agreement with Bosch
      Rexroth providing for the purchase of certain motors from them at a
      price to be maintained for one year. In addition, the agreement provides for
      engineering and marketing cooperation.




**Plug-In
      Partners National Campaign.** We
      are a
      founding member (and the only founding member that is not a public utility
      company) in the Plug-In Partners National Campaign ( www.pluginpartners.org ),
      a
      national grass-roots campaign created to demonstrate the existing market for
      flexible-fuel PHEVs. Plug-In Partners includes 24 of the nation's largest
      locally-owned and controlled power systems. ****




**New
      York State Energy Research and Development Authority.** The
      New
      York State Energy Research and Development Authority is a public benefit
      corporation created in 1975 by the New York State Legislature. Approximately
      400
      New York State Energy Research and Development Authority research projects
      help
      the State of New York’s businesses and municipalities with their energy and
      environmental problems. Since 1990, New York State Energy Research and
      Development Authority has successfully developed and brought into use more
      than
      170 innovative, energy-efficient and environmentally beneficial products,
      processes and services. We have received funding to offset some of its research
      and development costs incurred in the development of a PHEV propulsion system
      for a mid-size bus. We intend to continue to work with New York State Energy
      Research and Development Authority to further develop and refine our
      technology.




11




**EnerSys.** EnerSys
      currently supplies a majority of the advanced lead-acid batteries used in
      constructing our PHEV system.




**Nassau
      Suffolk Truck.** We
      entered into a sales and marketing agreement with Nassau Suffolk Truck, a
      leading regional medium and heavy duty truck fleet services firm, located in
      Hauppauge, New York. Under the terms of the agreement, Nassau Suffolk Truck
      will
      be responsible for selling and installing Odyne’s Plug-In Hybrid systems into
      existing vehicles, as well as providing after-sales service. Nassau Suffolk
      Truck’s customers include municipalities, corporations and private companies
      throughout the New York tri-state area. Nassau Suffolk Truck will have exclusive
      coverage in New York City, Long Island, six counties in upstate New York,
      Connecticut and New Jersey.




**Sales
      and Marketing**




**Sales**




We
      delivered our first two commercial, heavy-duty vehicles during the first quarter
      of 2007. Our third and fourth vehicles, a 24-passenger Champion Defender Bus,
      and a Crane refuse vehicle will be delivered during the second quarter of 2007.
      The bus has been sold to the Town of North Hempstead, New York for use in its
      senior transportation system; the Crane refuse vehicle belongs to the Town
      of
      Hempstead, New York. In addition, funding has been approved for several other
      Plug-in Hybrid Electric Vehicle projects, including seven refuse trucks that
      will be built for the Towns of Hempstead and Oyster Bay, New York. We are
      currently in discussions with several large municipalities and fleet operators
      for the purchase of vehicles and component systems based on our PHEV technology,
      although no assurance can be given that such discussions will result in sales.




**Marketing**




There
      is
      currently demand from municipal fleet managers for fuel-efficient HEVs. However,
      based on initial demand and corresponding production costs, PHEVs are likely
      to
      cost almost twice the amount of conventional vehicles. As a result, to induce
      municipal fleet managers and other potential PHEV purchasers to convert to
      PHEVs, the U.S. government has created funding programs that provide purchasers
      with incentives to cover 80% of the incremental costs associated with the
      procurement of PHEVs.





We
      are
      implementing a two-step sales and marketing strategy for our PHEV systems.
      First, we plan to directly target municipal fleet owners for the sale of PHEV
      trucks and buses, which will be developed in conjunction with strategic
      partners. Longer-term, however, we plan to focus on becoming a leading provider
      of PHEV power system components to medium and heavy-duty truck and bus original
      equipment manufacturers.




The
      long-term sales strategy for the power system components will be to sell PHEV
      propulsion kits that consist of Odyne designed and manufactured components
      and
      standard components manufactured by others directly to vehicle manufacturers
      and
      integrators. The components manufactured by others include storage batteries,
      electric drive motors and the engine and generator in the auxiliary power unit.
      Our components and software will be matched to these external components and
      the
      vehicle driving profile to achieve optimum performance.




Sales
      efforts will be focused on two areas. First, our management will interface
      with
      fleet managers, both municipal and private, to increase their awareness of
      the
      benefits and availability of our PHEV technology. These efforts will be focused
      in the Northeast, because that is where our offices are located, and California,
      because of the state’s aggressive posture toward environmental issues.




12




Second,
      we will use direct sales resources as well as vehicle power train distributors
      to sell original equipment manufacturer PHEV power trains to vehicle
      manufacturers and up-fitters. Resources will be required to fund the application
      support, sales personnel, advertising and documentation required for our sales
      initiative.




**Intellectual
      Property**




We
      depend
      on our ability to develop and maintain the proprietary aspects of our technology
      to distinguish our products from our competitors' products.  To protect our
      proprietary technology, we rely primarily on a combination of confidentiality
      procedures, copyright, trademark and patent laws.  It is our policy to
      require employees and consultants to execute confidentiality agreements and
      invention assignment agreements upon the commencement of their relationship
      with
      us.  These agreements provide that confidential information developed or
      made known during the course of a relationship with us must be kept confidential
      and not disclosed to third parties except in specific circumstances and for
      the assignment to us of intellectual property rights developed within the scope
      of the employment relationship.




We
      have
      filed four utility patent applications with the U.S. Patent and Trademark Office
      related to our technology. The patents have not yet been reviewed by the U.S.
      Patent and Trademark Office.  There is no guarantee that such patents will
      issue from the U.S. Patent and Trademark Office.





**Competition**





We
      are
      targeting our product development for use in Class 6, 7 and 8 medium- and
      heavy-duty trucks and buses. Competition in the hybrid power sector remains
      somewhat fragmented, with three different classes of competitors participating
      in this space: vehicle manufacturers, component suppliers and systems companies.
      Nonetheless, competition has increased recently, and we expect this trend to
      continue as the demand for these products increases. We are a systems company
      offering a full range of components required for hybrid-electric vehicles.
      We
      believe we are the only company offering PHEV technology within our target
      market. Below is a brief summary of some of the other companies active in the
      industry.




Several
      vehicle manufactures have announced their intention to produce new HEV passenger
      cars and light trucks including Toyota, Honda, Ford, Daimler Chrysler and
      General Motors. Most of these producers are focusing on the automotive retail
      market and the broader passenger vehicle platforms that it includes. Some of
      these producers, including Daimler Chrysler and General Motors, are also large
      vehicle manufacturers and are focusing on heavy-duty transit bus applications.
      Most vehicle manufacturers are not in direct competition with our PHEV
      technology.




Eaton
      Corporation is a component supplier that appears to be aiming at higher unit
      volume, lighter-duty applications such as Federal Express and United Parcel
      Service delivery vehicles, and public utility company fleets. Eaton has recently
      been selected to provide power systems for two buses to be built by Beiqi Foton
      AUV Bus Company for use in China. Eaton is a diversified industrial manufacturer
      with 2005 sales of approximately $11.1 billion. Allison Transmissions, a major
      manufacturer of automatic transmissions, is developing an electric engine assist
      module that would replace the automatic transmission in a bus or heavy-duty
      truck. BAE has developed a hybrid electric propulsion system for large vehicles
      such as city transit buses, and military and commercial fleets.




A
      number
      of smaller companies also operate in this market. Some of these companies,
      more
      exclusively focused on this market, have developed broader product lines, but
      as
      yet have not achieved deep market penetration. Azure Dynamics Inc. is a Canadian
      public company that is targeting smaller vehicles such as Purolator delivery
      vans and London taxis. Azure also focuses on specific powertrain applications
      for commercial and military vehicle fleets. ISE Research Corporation is a
      private California company that provides electric and hybrid-electric systems
      incorporating many Siemens (itself a competitor in this market) components
      for
      use in heavy-duty bus and truck applications. Enova Systems Inc. is a U.S.
      public company that is targeting a wide range of applications from small
      commercial vehicles to Singapore railroads. Enova is developing electric
      powertrain components in cooperation with the Hyundai Heavy Industry Division
      and focuses on electric, hybrid and fuel cell powered drive systems and related
      sub-systems and component integration. Additionally, some companies, such as
      DRS
      Technologies, Inc., currently focus exclusively on military vehicles.




13




To
      date,
      we have not experienced significant competition when submitting proposals within
      the PHEV marketplace. Moreover, we are distinct in our approach of offering
      original equipment manufacturers a comprehensive series hybrid system comprised
      of energy storage, control/power electronics, electric motors and generators
      and
      advanced control algorithms. Due to significant use of commercial off-the-shelf
      components, which keeps costs competitive and provides a wide range of
      flexibility in application and format, our PHEV systems have potential
      applications for a wide range of bus or truck manufacturers, up-fitters and
      specialty vehicle producers.




**Government
      Regulation**




The
      Environmental Protection Agency and California Air Research Board currently
      regulate the emissions of heavy-duty vehicles such as trucks and buses having
      a
      gross vehicle weight between 8,500 pounds and 33,000 pounds under Environmental
      Protection Agency regulations, and 14,000 pounds and 33,000 pounds under the
      California Air Research Board. These vehicles fall within Classes 6, 7 and
      8.




The
      emissions of these vehicles are determined by testing the engine under Transient
      Federal Test Procedure via an engine dynamometer test cycle and the Supplemental
      Emissions Test, which simulates steady state or highway driving. This differs
      from the methodology used to certify passenger vehicles. Passenger vehicles
      are
      tested and certified for emission compliance whereas heavy-duty vehicle engines
      are certified for compliance.




The
      overall allowable emission levels decreased each year over the ten-year period
      starting in 1988. From 1998 to present (and going into 2010), emissions
      reductions have been mandated to further reduce airborne pollutants by lowering
      the allowable limits for specific by-products, measuring new pollutants (not
      measured before) and by regulating and eventually outlawing the sulfur in diesel
      fuel.





A
      very
      challenging component of the new emissions standards starting in 2007 is the
      drastic reduction (75% less in some cases) of nitrogen oxide, non-methane
      hydrocarbons and particulate matter. New engine “add-on” technology such as
      particulate traps, fuel filters and computerized fuel injection control have
      been created in an attempt to meet the mandates, but more work is required.
      To
      meet the stringent 2007 standards completely, vehicle and engine manufacturers
      are rethinking their current engine and propulsion technology. Major (and
      expensive) redesigns of diesel engine technology, the abandonment of diesel
      for
      gasoline and the use of advanced propulsion systems all represent potential
      alternatives to meeting the new standards.




**Employees**




As
      of
      February 26, 2007, we employed 17 full-time employees and 3 part-time
      employees.




**Organizational
      History**




**Reverse
      Merger and Recapitalization.** On
      October 17, 2006, we completed a “reverse merger” transaction, in which we
      caused PHEV Acquisition Corp., a New York corporation and our newly-created,
      wholly-owned subsidiary (“Merger Sub”), to be merged with and into Odyne
      Corporation, a New York corporation (“Odyne,” or the “Company”). As a result of
      the merger, Odyne became our wholly-owned subsidiary, with Odyne’s former
      shareholders acquiring a majority of the outstanding shares of our common stock.
      The reverse merger was consummated under New York law and pursuant to an
      Agreement of Merger and Plan of Reorganization, dated October 17, 2006 (the
      “Merger Agreement”), as discussed below. A copy of the Merger Agreement was
      included as an exhibit to our Current Report on Form 8-K, dated October 17,
      2006, which was filed with the U.S. Securities and Exchange Commission on
      October 18, 2006. Concurrently with the closing of the merger, we also completed
      a private placement to accredited investors, and received gross proceeds of
      $3,033,000 (including the issuance of 304 units in exchange for our convertible
      debentures that we issued in a previous bridge loan financing transaction and
      79
      units issued in exchange for a release of certain trade accounts payable
      balances) at the closing of the private placement. In subsequent closings,
      additional proceeds were received raising the total amount to
      $5,750,000.




14




**Merger
      Agreement.** Pursuant
      to the Merger Agreement, at closing, we issued 12,000,000 shares of our common
      stock to the former shareholders of Odyne, representing 46.7% of our outstanding
      common stock following the merger and private placement, in exchange for 100%
      of
      the outstanding shares of Odyne common stock.





The
      shares of our common stock issued to former holders of Odyne common stock in
      connection with the merger, and the shares of our series A convertible preferred
      stock and warrants to purchase common stock issued in the private placement,
      were not registered under the Securities Act of 1933 in reliance upon the
      exemption from registration provided by Section 4(2) of that Act and Regulation
      D promulgated under that section, which exempts transactions by an issuer not
      involving any public offering. These securities may not be offered or sold
      in
      the United States absent registration or an applicable exemption from the
      registration requirements. Certificates representing these shares contain a
      legend stating the same.





In
      connection with the merger, we repurchased a total of 87,831,270 shares of
      our
      common stock owned by Cosimo J. Patti and Gerald Wisz for aggregate
      consideration of $100 and then cancelled those shares at the closing of the
      merger. Giving effect to the cancellation of these stockholders’ shares, there
      were 6,000,000 shares of our common stock outstanding before giving effect
      to
      the stock issuances in the merger and private placement. The 6,000,000 shares
      constitute our “public float” prior to the merger.





Under
      Delaware law, we did not need the approval of our stockholders to complete
      the
      merger, as the constituent corporations in the merger were Merger Sub and Odyne,
      each of which is or was a New York corporation. We were not a constituent
      corporation in the merger. The merger and its related transactions were approved
      by the holders of a requisite number of shares of Odyne common stock by written
      consent in lieu of a meeting on October 12, 2006.




**Expansion
      of Board of Directors; Management.** In
      connection with the merger, we amended our by-laws to increase the size of
      our
      board of directors to five members.




Pursuant
      to the Merger Agreement, at the closing of the merger, Roger M. Slotkin and
      Joshua A. Hauser, former directors of Odyne, as well as independent directors
      Bruce E. Humenik, Stanley W. Struble and S. Charles Tabak, were appointed to
      our
      board of directors. In connection with the appointment of these five directors,
      at the closing of the merger, Cosimo J. Patti and Gerald Wisz, the directors
      of
      Technology Integration Group prior to the merger, resigned as directors. At
      the
      closing of the merger, the board of directors appointed Mr. Slotkin as Chief
      Executive Officer, Mr. Hauser as President and Chief Operating Officer, Joseph
      M. Ambrosio as Executive Vice President - Engineering and Chief Technology
      Officer, and Konstantinos Sfakianos as Executive Vice President - Operations,
      each of whom served in a similar position with Odyne. In addition, Daniel
      Bartley was appointed to be our Chief Financial Officer.




15




Following
      the closing of the merger and private placement, the board approved the grant
      of
      stock options to purchase a total of 505,000 shares of our common stock,
      including initial grants of stock options to purchase 50,000 shares of common
      stock to each of the independent directors, Messrs. Humenik, Struble and Tabak,
      for serving on the board of directors. The board also approved the grant of
      stock options to purchase 150,000 shares of our common stock to Mr. Bartley
      for
      serving as our Chief Financial Officer. All of the foregoing stock options
      vest
      in three equal increments on each of October 17, 2008, 2009 and
      2010.




**Accounting
      Treatment; Change of Control.** The
      merger is being accounted for as a reverse merger and recapitalization since
      the
      shareholders of Odyne own a majority of the outstanding shares of our common
      stock immediately following the merger. Odyne is deemed to be the accounting
      acquirer in the merger and, consequently the transaction is treated as a
      recapitalization of Odyne NY. Accordingly, the assets and liabilities and the
      historical operations that are reflected in the financial statements are those
      of Odyne and will be recorded at the historical cost basis of Odyne. Except
      as
      described in the previous paragraphs, no arrangements or understandings exist
      among present or former controlling stockholders with respect to the election
      of
      members of our board of directors and, to our knowledge, no other arrangements
      exist that might result in a change of control of our company. Further, as
      a
      result of the issuance of the 12,000,000 shares of our common stock in the
      merger, and cancellation of other shares, a change in control of our company
      occurred on the date of the consummation of the merger. We will continue to
      be a
“small business issuer,” as defined under the Securities Exchange Act of 1934,
      following the merger.




**Private
      Placement.** In
      connection with the merger, we completed the closing of a private placement
      of a
      total of 5,750 units, each unit consisting of one share of our series A
      convertible preferred stock, par value $.001 per share, and a detachable,
      transferable warrant to purchase shares of common stock, at a purchase price
      of
      $1,000 per unit, to purchasers that qualified as accredited investors, as
      defined in Regulation D, pursuant to the terms of a Confidential Private
      Placement Memorandum dated July 27, 2006, as supplemented by the First
      Supplement thereto dated October 6, 2006. Each share of series A convertible
      preferred stock is initially convertible into 1,334 shares of common stock
      at
      any time. Each warrant entitles the holder to purchase 667 shares of common
      stock at an exercise price of $1.00 per share through October 16, 2010, subject
      to redemption provisions based on the trading price of our common
      stock.





**Lock-Up
      Agreements.** In
      connection with the private placement, former Odyne shareholders who now hold
      in
      the aggregate 12,000,000 shares of our common stock, entered into “lock-up”
agreements with us. The lock-up agreements provide that their shares may not
      be,
      directly or indirectly, publicly sold, subject to a contract for sale or
      otherwise transferred for a period of 12 months after the closing of the merger.
      After 12 months from the merger closing date, and at three-month intervals
      thereafter, the stockholders will be permitted to sell 12.5% of their initial
      holdings for each three-month period, provided that our common stock maintains
      a
      minimum trailing 30-day average trading price of $2.50 per share or more. After
      24 months from the merger closing date, and at three-month intervals thereafter,
      the stockholders will each be permitted to sell up to 12.5% of their initial
      holdings per three-month period, regardless of the trading price. All lock-up
      provisions expire 36 months from the merger closing date.





**Registration
      Rights.** In
      connection with the private placement, we agreed with investors in the private
      placement to use our commercially reasonable best efforts to file a shelf
      registration statement with the U.S. Securities and Exchange Commission covering
      the resale of all shares of common stock underlying the series A convertible
      preferred stock and warrants issued in connection with the private placement
      within 180 days after the closing of the private placement. We are obligated
      to
      maintain the effectiveness of the registration statement from its effective
      date
      through and until 12 months after the effective date. We also agreed to use
      our
      best efforts to have the registration statement declared effective by the SEC
      as
      soon as possible and to respond to any SEC comments within 20 business days
      after receiving comments. In the event the registration statement is not filed
      with the SEC on or prior to the 180 th day
      after the closing of the private placement or in the event that we do not
      respond to SEC comments within 20 days after receiving the comments, the total
      number of shares of series A convertible preferred stock subscribed to in the
      private placement and covered by the registration statement for each named
      selling stockholder will be increased by 2% per month for each month (or portion
      thereof) that the registration statement is not filed, provided that the
      aggregate increase may not exceed 20%.




16




**ITEM
      1A. RISK FACTORS.**




**Risks
      Related to Our Business and Industry**







**We
      may not be able to implement Section 404 of the Sarbanes-Oxley Act on a timely
      basis.**





The
      SEC,
      as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
      generally requiring each public company to include a report of management on
      the
      company's internal controls over financial reporting in its annual report on
      Form 10-KSB that contains an assessment by management of the effectiveness
      of
      the company's internal controls over financial reporting beginning in the year
      ended December 31, 2007. In addition, the company's independent registered
      accounting firm must attest to and report on management's assessment of the
      effectiveness of the company's internal controls over financial reporting.
      This
      requirement will first apply to our annual report on Form 10-KSB for the fiscal
      year ending December 31, 2008. We have not yet developed a Section 404
      implementation plan. We have in the past discovered, and may in the future
      discover, areas of our internal controls that need improvement. How companies
      should be implementing these new requirements including internal control reforms
      to comply with Section 404's requirements and how independent auditors will
      apply these requirements and test companies' internal controls, is still
      reasonably uncertain. We expect that we may need to hire and/or engage
      additional personnel and incur incremental costs in order to complete the work
      required by Section 404. We can not guarantee that we will be able to complete
      a
      Section 404 plan on a timely basis. Additionally, upon completion of a Section
      404 plan, we may not be able to conclude that our internal controls are
      effective, or in the event that we conclude that our internal controls are
      effective, our independent accountants may disagree with our assessment and
      may
      issue a report that is qualified. Any failure to implement required new or
      improved controls, or difficulties encountered in their implementation, could
      negatively affect our operating results or cause us to fail to meet our
      reporting obligations.




**We
      are still in an early stage of development and have earned limited revenues
      to
      date.**





We
      are an early-stage company. Since our inception, we have engaged primarily
      in
      research and product development, testing, the establishment of strategic
      alliances and marketing. Our products are at various stages in the development
      cycle. We have earned limited revenues to date and have supported our operations
      primarily through cash flow from product sales, engineering services,
      development grants and cost-sharing programs and debt and private equity
      investment. Our operations are subject to all of the risks inherent in the
      establishment of a new business enterprise. Our likelihood of success must
      be
      considered in light of the problems, expenses and delays frequently encountered
      in connection with a new business and the development of new products and new
      technology.





**We
      have a limited operating history, which limits the information available to
      you
      to evaluate our business, and have a history of operating losses and uncertain
      future profitability.**





We
      were
      formed in August 2001 and have generated $1,465,842 in revenue, including
      research and development grants, from inception through December 31, 2006,
      while
      incurring an operating loss of $ 3,162,220 during that period. There is limited
      operating and financial information to evaluate our historical performance
      and
      our future prospects. We face the risks and difficulties of an early-stage
      company including the uncertainties of market acceptance, competition, cost
      increases and delays in achieving business objectives. There can be no assurance
      that we will succeed in addressing any or all of these risks or that our efforts
      will generate significant revenue or achieve future profitability. The failure
      to do so would have an adverse effect on our business, financial condition
      and
      operating results.




17




**We
      have no experience manufacturing our products on a large-scale commercial basis
      and may be unable to do so.**





To
      date,
      we have focused primarily on research, development and low volume manufacturing
      and have no experience manufacturing our products on a large-scale commercial
      basis. We delivered our first two Plug-in Hybrid Electric Vehicles in the first
      quarter of 2007. We do not know whether or when we will be able to develop
      efficient, low-cost manufacturing capabilities and processes that will enable
      us
      to manufacture our products in commercial quantities while meeting the quality,
      price, engineering, design and production standards required to successfully
      market our products. Our failure to develop such manufacturing processes and
      capabilities could have an adverse effect on our business, financial condition
      and results of operations. Even if we are successful in developing our
      manufacturing capabilities and processes, we do not know whether we will do
      so
      in time to meet the requirements of our customers.




**Because
      hybrid technology is new and evolving, its future growth or ultimate market
      size
      is difficult to predict. Our business will not grow or may grow less rapidly
      if
      the use of hybrid technology does not continue to grow.**





Our
      industry is in the early stages of market acceptance of products and related
      services and is subject to rapid and significant technological change. Because
      of the new and evolving nature of hybrid technology, it is difficult to predict
      the size of the market, the rate at which the market for our products and
      services will grow or be accepted, if at all, or whether emerging technologies
      will render our services less competitive or obsolete. If the market for our
      products and services fails to develop or grows less rapidly than anticipated,
      our business would be significantly impacted.




**If
      our products and services do not achieve market acceptance, we may not achieve
      our revenue and earnings goals in the time projected, or at all.**





If
      we are
      unable to operate our business as contemplated by our business model or if
      the
      assumptions underlying our business model prove to be unfounded, we could fail
      to achieve our revenue and earnings goals within the time we have projected,
      or
      at all, which would have a detrimental effect on our business. As a result,
      the
      value of your investment could be significantly reduced or completely lost.




**Failure
      of our Plug-in Hybrid Electric Vehicle demonstrations could negatively impact
      demand for our products.**




We
      are
      currently demonstrating our Plug-in Hybrid Electric Vehicle system. We may
      encounter problems and delays during these demonstrations for a number of
      reasons, including the failure of our technology or the technology of third
      parties. Many of these potential problems and delays are beyond our control.
      Any
      problem or perceived problem with our demonstrations could harm our reputation
      and impair market acceptance of, and demand for, our products.




**Our
      operating results will be harmed if we are unable to manage and sustain our
      growth.**





Our
      business is unproven on a large scale and actual operating margins may be less
      than expected. If we are unable to scale capacity efficiently, we may fail
      to
      achieve expected operating margins, which would have an adverse effect on our
      operating results.




18




**Delays
      in the development of our Plug-in Hybrid Electric Vehicle technology would
      have
      a material impact on our commercialization schedule.**




If
      we
      experience delays in meeting our development goals or if our products exhibit
      technical defects or fail to meet cost or performance goals, our
      commercialization schedule will be delayed. In this event, potential users
      of
      our Plug-in Hybrid Electric Vehicle system may resort to alternative
      technologies. Delays could allow our competitors to gain market advantages.
      Despite our efforts, we cannot assure you that we will meet our
      commercialization schedule.




**We
      may need to secure additional funding to complete our product development and
      commercialization plans, as well as maintain our current operating structure,
      and we may be unable to raise additional capital.**




Our
      cash
      requirements depend on numerous factors, including the extent of future research
      and development activities, our ability to commercialize our products and market
      acceptance of our products. We expect to devote substantial capital resources
      to
      further our research and development initiatives, develop a manufacturing
      infrastructure, develop manufacturing processes and maintain our current
      operating structure. We also expect to devote substantial capital resources
      to
      expand our marketing and sales activities. Additional funds may be required
      to
      achieve commercialization of our Plug-in Hybrid Electric Vehicle system. We
      may
      be unable to secure additional funding, or funding on acceptable terms, to
      pursue our commercialization plans. If adequate funds are unavailable to satisfy
      either short-term or long-term capital requirements, we may be required to
      limit
      our operations in a manner inconsistent with our business plan, which could
      adversely affect operations in future periods.




**If
      we are unable to obtain grants from the federal government to fund current
      and
      future projects, we may not be able to fund research and development or
      production, which could materially harm our operating results.**





.
      We have
      received non-refundable development funding from various governmental and/or
      energy related agencies, including Long Island Power Authority, the Electric
      Power Research Institute, and the Greater Long Island Clean Cities Coalition.
      In
      2006, we received $12,500 from such grants. Several of our current and proposed
      projects for certain municipalities have been, or are expected to be, funded
      by
      such programs. We cannot assure you that we will be able to obtain grants funded
      by government programs in the future. The loss of existing grants or the failure
      to earn new grants would harm our ability to fund future research and
      development and production, which would have an adverse effect on our operating
      results.




**Our
      products and services may become obsolete if we do not effectively respond
      to
      rapid technological change on a timely basis.**





Our
      products and services are new and our business model is evolving. Our products
      and services depend on the needs of our customers and their desire to utilize
      hybrid technology. Since the hybrid industry is characterized by evolving
      technologies, uncertain technology and limited availability of standards, we
      must respond quickly to new research findings and technological changes
      affecting our customers. We may not be successful in developing and marketing
      on
      a timely and cost-effective basis new or modified products that respond to
      technological changes, evolving customer requirements and
      competition.




19




**We
      may have difficulty managing change in our operations as a result of limited
      management personnel and resources.**




We
      continue to undergo rapid change in the scope and breadth of our operations
      as
      the development of our Plug-in Hybrid Electric Vehicle system advances. Such
      rapid change is likely to place a significant strain on our senior management
      team and other resources. We will be required to make significant investments
      in
      our engineering, logistics, financial and management information systems and
      to
      motivate and effectively manage our employees. Our business, prospects, results
      of operations and financial condition could be harmed if we encounter
      difficulties in effectively managing the process of implementing such
      changes.




**If
      we fail to recruit and retain qualified senior management and other key
      personnel, we will not be able to execute our business
      plan.**





Our
      business plan requires us to hire a number of qualified personnel, as well
      as
      retain our current key management employees. We must attract leading talent
      to
      be able to execute our business strategy. Presently, our senior executive
      officers are Roger M. Slotkin, Chief Executive Officer, Joshua A. Hauser,
      President and Chief Operating Officer, Daniel Bartley, Chief Financial Officer,
      Joseph M. Ambrosio, Executive Vice President - Engineering and Chief Technology
      Officer, and Konstantinos Sfakianos, our Executive Vice President - Operations.
      The loss of the services of one or more of our senior executives or our
      inability to find the additional managers we require for any reason could impair
      our ability to execute our business plan.




**If
      we fail to protect our intellectual property, our current competitive strengths
      could be eroded and we could lose customers, market share and
      revenues.**





Our
      viability will depend on our ability to develop and maintain the proprietary
      aspects of our technology to distinguish our products and services from our
      competitors’ products and services. To protect our proprietary technology, we
      rely primarily on a combination of confidentiality procedures, copyright,
      trademark and patent laws.




The
      process of seeking patent, industrial design and trademark protection can be
      time consuming and expensive. We
      cannot
      assure you that
      patents, industrial design registrations or trademark registrations will issue
      from currently pending or future applications or any new patents, industrial
      design registrations or trademark registrations that may be issued will be
      sufficient in scope or strength to provide meaningful protection or any
      commercial advantage to us. We
      cannot
      assure you that
      any pending or future patent, industrial design or trademark applications will
      be granted in respect of our technology and business, or that any pending or
      future patents, industrial design registrations or trademark registrations
      will
      not be challenged, invalidated, ignored, circumvented or otherwise rendered
      unenforceable, or that the rights granted under such patents, industrial design
      registrations or trademark registrations will provide meaningful protection
      or
      competitive advantages to us.





Similarly, we
      cannot
      assure you that
      common law trademark rights, copyright, trade secret and non-disclosure
      agreements and other contractual provisions will provide meaningful protection
      or any commercial advantage to us, or that our existing or future common law
      trademark rights, copyrights, trade secrets and non-disclosure agreements and
      other contractual provisions will not be challenged, invalidated, ignored,
      circumvented or otherwise rendered unenforceable, or that the rights arising
      under our existing or future common law trademark
      rights, copyrights, trade secrets and non-disclosure agreements and other
      contractual provisions will provide meaningful protection or any commercial
      advantage to us.





Despite
      our efforts to protect our proprietary rights, unauthorized parties may attempt
      to copy aspects of our products and services or obtain and use information
      that
      we regard as proprietary. Unauthorized use of our proprietary technology could
      harm our business. Litigation to protect our intellectual property rights can
      be
      costly and time-consuming to prosecute, and we cannot assure you that we will
      be
      able to enforce our rights or prevent other parties from developing similar
      technology or designing around our intellectual property.




20




**Although
      we believe that our products and services do not and will not infringe upon
      the
      patents or violate the proprietary rights of others, it is possible such
      infringement or violation has occurred or may occur which could have a material
      adverse effect on our business.**





In
      the
      event that products and services we sell are deemed to infringe upon the patents
      or proprietary rights of others, we could be required to modify our products
      and
      services or obtain a license for the manufacture and/or sale of such products
      and services. In such event, we cannot assure you that we would be able to
      do so
      in a timely manner, upon acceptable terms and conditions, or at all, and the
      failure to do any of the foregoing could have a material adverse effect upon
      our
      business. Moreover, we cannot assure you that we will have the financial or
      other resources necessary to enforce or defend a patent infringement or
      proprietary rights violation action. In addition, if our products and services
      or proposed products and services are deemed to infringe or likely to infringe
      upon the patents or proprietary rights of others, we could be subject to
      injunctive relief and, under certain circumstances, become liable for damages,
      which could also have an adverse effect on our business.




**We
      face competition from other companies developing hybrid
      technology.**





There
      are other companies in the hybrid electric area developing technologies. The
      major automotive manufacturers are targeting passenger vehicles and light-duty
      vehicles and their technology could potentially be applied to medium-duty and
      heavy-duty commercial vehicles as well. We
      cannot
      assure you that
      our competitors will not be able to duplicate our technology or provide products
      and services similar to ours more efficiently. Many of the potential competitors
      in
      the market are also organizations with access to significant resources that
      may
      be applied to research and development of hybrid electric vehicle and PHEV technologies. Other clean vehicle technologies are also progressing and their
      arrival may change the relative economics of the technology solutions. Although
      hybrid technology can potentially improve the efficiency of all technologies
      in
      the area, we
      cannot
      assure you that
      we will have a role in new technologies that emerge.





**Our
      business plan includes dependence upon products developed by third parties
      and
      our inability to successfully integrate our technology with third parties’
products or secure resources from third parties could adversely affect our
      business.**





To
      be commercially useful, our technology for hybrid electric vehicles and Plug-in
      Hybrid Electric Vehicles must, to a certain extent, be integrated into products
      manufactured by third parties. There are no guarantees that third parties will
      continue to manufacture appropriate products or, if they do manufacture such
      products, that they, or the customers who purchase such products, will choose
      to
      use our technology. Any integration, design, manufacturing or marketing problems
      encountered by third parties could adversely affect the market for our control
      systems technology and our financial results.





Our
      strategy is to effectively utilize the resources that exist in the automotive
      sector and, accordingly, our internal resources are focused on core product
      development and related activities. We substantially depend upon third parties
      for several critical elements of our business plan, including, but not limited
      to, product and component manufacturing and assembly, technological development
      and testing. We
      cannot
      assure you that
      such third parties
      resources will continue to be suitable, available and affordable or in a
      position to assist us in achieving our objectives. While
      we have entered into relationships with suppliers of some key components for
      our
      products, we do not know when or whether we will secure supply relationships
      for
      all required components and subsystems for our Plug-in
      Hybrid Electric Vehicle system, or whether such relationships will be on terms that will allow us to
      achieve our objectives. Our business, prospects, results of operations and
      financial condition could be harmed if we fail to secure relationships with
      entities that can develop or supply the required components for our products
      and
      provide the required distribution and servicing support.




21




**We
      use a variety of components in our businesses, and significant shortages or
      price increases could increase operating costs and adversely affect the
      competitive position of our products.**





The
      major
      component requirements for our Plug-in Hybrid Electric Vehicle system include
      batteries, semiconductors and electric drive motors. We utilize off-the-shelf
      components for each of our major requirements and are not significantly
      dependent on any one or a few suppliers. Significant shortages of such
      components could affect the prices we pay for such components, which could
      adversely affect our results of operations.





**Changes
      in government policies and regulation, including environmental policies, could
      affect our business.**





To
      date, the markets targeted by us have been influenced by government regulation,
      including environmental laws, regulations and policies emerging in various
      parts
      of the United States. There can be no guarantee that these laws, regulations
      and
      policies will not change. Changes in these laws, regulations and policies could
      result in decreased interest and demand in our target markets for hybrid
      electric vehicles and Plug-in Hybrid Electric Vehicles. In addition, we
      cannot
      assure you that
      changes in these laws, regulations and policies or their application will not
      require further expenditures by us to further develop our
      technology.





**A
      malfunction of our product could subject us to product liability or tort
      claims.**





A
      malfunction or the inadequate design of our products could result in product
      liability or other tort claims. Accidents involving our products could lead
      to
      personal injury or physical damage. Any liability for damages resulting from
      malfunctions could be substantial and could materially adversely affect our
      business and results of operations. In addition, a well-publicized actual or
      perceived problem could adversely affect the market's perception of our
      products. This could result in a decline in demand for our products, which
      would
      adversely affect our financial condition and results of operations.





**Risks
      Related to Our Common Stock**




**Because
      we became public through a “reverse public offering,” we may not be able to
      attract the attention of major brokerage firms** .




Additional
      risks are associated with Odyne becoming public through a “reverse public
      offering.” For example, security analysts of major brokerage firms may not
      provide coverage of us since there is no incentive to brokerage firms to
      recommend the purchase of our common stock. We cannot assure you that brokerage
      firms will want to conduct any public offerings on our behalf in the
      future.




**Our
      common stock may be considered a “penny stock” and may be difficult to
      sell.**




The
      SEC
      has adopted regulations which generally define “penny stock” to be an equity
      security that has a market or exercise price of less than $5.00 per share,
      subject to specific exemptions. The market price of our common stock may be
      below $5.00 per share and therefore may be designated as a “penny stock”
according to SEC rules. This designation requires any broker or dealer selling
      these securities to disclose certain information concerning the transaction,
      obtain a written agreement from the purchaser and determine that the purchaser
      is reasonably suitable to purchase the securities. These rules may restrict
      the
      ability of brokers or dealers to sell our common stock and may affect the
      ability of our stockholders to sell their shares. In addition, since our common
      stock is currently quoted on the OTC Bulletin Board, our stockholders may find
      it difficult to obtain accurate quotations of our common stock and may find
      few
      buyers to purchase the stock or a lack of market makers to support the stock
      price.




22




**A
      significant number of the shares of our common stock are eligible for sale,
      and
      their sale could depress the market price of our common
      stock.**





Sales
      of
      a significant number of shares of common stock in the public market could harm
      the market price of our common stock. We issued 12,000,000 shares of common
      stock in the merger and 12,319,454 shares of common stock (assuming conversion
      of the series A convertible preferred stock and exercise of the warrants) in
      the
      private placement. The shares of common stock issuable upon conversion of the
      series A convertible preferred stock and exercise of the warrants (including
      warrants issued to our placement agents) are to be included in a shelf
      registration statement required to be filed with the SEC. The shares issued
      in
      the merger are restricted under federal securities laws and are subject to
      lock-up agreements that provide for periodic releases of shares following the
      first anniversary and through the third anniversary of the closing of the
      merger. Upon their release under the lock-up agreements, these shares will
      generally be salable under SEC Rule 144. Sales of common stock either pursuant
      to the shelf registration statement or Rule 144 are likely to have a depressive
      effect on the market of our common stock.




**Our
      officers and directors have significant voting power and may take actions that
      may not be in the best interests of other stockholders.**





Our
      executive officers and directors control in excess of 46% of our voting
      securities. If these stockholders act together, they will be able to exert
      significant control over our management and affairs requiring stockholder
      approval, including approval of significant corporate transactions. This
      concentration of ownership may have the effect of delaying or preventing a
      change in control and might adversely affect the market price of our common
      stock. This concentration of ownership may not be in the best interests of
      all
      of our stockholders.




**We
      may engage in additional financing that could lead to dilution of existing
      investors.**





We
      have
      relied on equity financing, debt financing and governmental funding to carry
      on
      our business to date, which has consisted primarily of internal and
      customer-related product development, the negotiation of strategic alliances
      and
      marketing activities. Any future financings by us may result in substantial
      dilution of the holdings of existing stockholders and could have a negative
      impact on the market price of our common stock. Furthermore, we cannot assure
      you that such future financings will be possible.





**We
      do not anticipate paying dividends in the foreseeable future; you should not
      buy
      our stock if you expect dividends.**





We
      currently intend to retain our future earnings to support operations and to
      finance expansion and, therefore, we do not anticipate paying any cash dividends
      on our capital stock in the foreseeable future. You should not buy our stock
      if
      you are expecting to receive cash dividends.





**Cautionary
      Language Regarding Forward-Looking Statements and Industry
      Data**




This
      report contains “forward-looking statements” within the meaning of the Private
      Securities Litigation Reform Act of 1995 that involve risks and uncertainties,
      many of which are beyond our control. Our actual results could differ materially
      and adversely from those anticipated in such forward-looking statements as
      a
      result of certain factors, including those set forth in this report. Important
      factors that may cause actual results to differ from projections include, but
      are not limited to, for example:




23




●  adverse
      economic conditions,




●  inability
      to raise sufficient additional capital to operate our business,




●  unexpected
      costs, lower than expected sales and revenues, and operating
      defects,




●  adverse
      results of any legal proceedings,




●  the
      volatility of our operating results and financial condition,




●  inability
      to attract or retain qualified senior management personnel, and




●  other
      specific risks that may be referred to in this report.




All
      statements, other than statements of historical facts, included in this report
      regarding our strategy, future operations, financial position, estimated revenue
      or losses, projected costs, prospects and plans and objectives of management
      are
      forward-looking statements. When used in this report, the words “will,” “may,”
“believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “plan” and
      similar expressions are intended to identify forward-looking statements,
      although not all forward-looking statements contain such identifying words.
      All
      forward-looking statements speak only as of the date of this report. We
      undertake no obligation to update any forward-looking statements or other
      information contained herein. Stockholders and potential investors should not
      place undue reliance on these forward-looking statements. Although we believe
      that our plans, intentions and expectations reflected in or suggested by the
      forward-looking statements in this report are reasonable, we cannot assure
      stockholders and potential investors that these plans, intentions or
      expectations will be achieved. We disclose important factors that could cause
      our actual results to differ materially from our expectations under “Risk
      Factors” and elsewhere in this report. These cautionary statements qualify all
      forward-looking statements attributable to us or persons acting on our
      behalf.




Information
      regarding market and industry statistics contained in this report is included
      based on information available to us that we believe is accurate. It is
      generally based on academic and other publications that are not produced for
      purposes of securities offerings or economic analysis. Forecasts and other
      forward-looking information obtained from these sources are subject to the
      same
      qualifications and the additional uncertainties accompanying any estimates
      of
      future market size, revenue and market acceptance of products and services.
      We
      have no obligation to update forward-looking information to reflect actual
      results or changes in assumptions or other factors that could affect those
      statements. See “Risk Factors” for a more detailed discussion of uncertainties
      and risks that may have an impact on our future results.




We
      undertake no obligation to publicly update forward-looking statements. You
      are
      advised to carefully read the “Risk Factors” set forth above in this report and
      any further disclosures we make on related in our Form 10-QSB and 8-K reports
      to
      the SEC, and our press releases. You should understand that it is not possible
      to predict or identify all factors that may affect future results. Consequently,
      you should not consider the “Risk Factors” set forth in Part II of this 2006
      Form 10-KSB to be a complete discussion of all potential risks or
      uncertainties *.*





24




**ITEM
      2. DESCRIPTION OF PROPERTY.**




We
      currently have a lease for approximately 10,000 rentable square feet of office
      and manufacturing space at our corporate headquarters in Hauppauge, New York.
      The lease provides for monthly rental payments of approximately $7,000 and
      increases approximately 3% per year on July 1 of each year. The lease expires
      in
      June 2009. We believe our leased space is adequate for us at this time.




**ITEM
      3.  LEGAL PROCEEDINGS****.**




No
      legal
      proceedings or claims are currently pending or threatened against us or involve
      us.




**ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS****.**




We
      did not submit any matters to a vote of security holders in the fourth quarter
      of the fiscal year ended December 31, 2006, except for the approval by written
      consent of the holders of a majority of our outstanding common stock to amend
      our certificate of incorporation to change our corporate name and to amend
      our
      stock option plan (see Item 11, Security Ownership of Certain Beneficial Owners
      and Management and Related Stockholder Matters - Equity Compensation Plan
      Information) in connection with our reverse merger transaction in October
      2006.




**PART
      II**





**ITEM
      5.  MARKET FOR COMMON EQUITY , RELATED STOCKHOLDER
      MATTERS****AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**




**Market
      Information**




Our shares of common stock are quoted and listed for trading on the OTC Bulletin Board under the symbol
      ODYC. OB. Our symbol prior to the closing of our reverse merger transaction on October
      17,
      2006, was TING. OB; however, there was no trading of our stock prior to the
      closing of such transaction.




25




The
      following table sets forth the high and low closing prices for our common stock
      for the periods
      indicated as reported by the OTC Bulletin Board:




Year
                ended December 31,Quarter
            
            2006
            
            2005High
            
            Low
            
            High
            
            LowFirst
            
            
            —
            
            
            —
            
            
            —
            
            
            —Second
            
            
            —
            
            
            —
            
            
            —
            
            
            —Third
            
            
            —
            
            
            —
            
            
            —
            
            
            —Fourth
            
            
            —
            
            
            —
            
            
            —
            
            
            —Fourth
                (October 18 to December 31, 2006)
            
            $
            2.85
            
            
            1.60
            
            
            —
            
            
            —




For
      the period from January 1, 2007 to March 16, 2007, the high and low closing
      prices for our common stock were $2.40 and $1.63, respectively. On March 15,
      2007, the closing price of our common stock, as reported by the OTC Bulletin
      Board, was $1.76 per share.




The
      market information for the year ended December 31, 2006 begins
      on October 17, 2006 following the closing date of our reverse merger
      transaction. Prior to such time, pricing information related only to Technology
      Integration Group, Inc.




These
      bid prices represent prices quoted by broker-dealers on the OTC Bulletin Board.
      The quotations reflect inter-dealer prices, without retail mark-up, mark-down
      or
      commissions, and may not represent actual transactions.




As
      of March 13, 2007, there were approximately 48 holders of record of our common
      stock. However, we believe that there are significantly more beneficial holders of
      our
      common stock as many beneficial holders hold their stock in “street
      name.”




**Dividend
      Policy**




We
      do not expect to pay a dividend on our common stock in the foreseeable future.
       The payment of dividends on our common stock is within the discretion of
      our board of directors ,
      subject to our certificate of incorporation .
      We intend to retain any earnings for use in our operations and the expansion
      of
      our business. Payment of dividends in the future will depend on our future
      earnings, future capital needs and our operating and financial condition, among
      other factors.




**Recent
      Sales of Unregistered Securities**





There
      were no sales of unregistered securities other than as reported in prior reports
      on Form 10-KSB, 10-QSB or 8-K. In addition, see Item 1, Description of Business
      - Organizational History, for information concerning our October 2006 reverse
      merger and concurrent private placement transactions.





We
      did not repurchase any shares of our common stock in the fourth quarter of
      2006,
      other than in connection with our reverse merger as disclosed under Item 1,
      Description of Business - Organizational History; Merger Agreement.





26





**ITEM
      6.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION** **.**




We
      completed a reverse merger transaction on October 17, 2006, in which we caused
      PHEV Acquisition Corp., a New York corporation and our newly-created,
      wholly-owned subsidiary, to be merged with and into Odyne Corporation, a New
      York corporation (Odyne New York). Until the merger, we engaged in the business
      of providing
      marketing, communications and technical integration advice to small and
      medium-sized businesses ,
      which
      we discontinued following the merger and succeeded to the business of Odyne
      New
      York. The directors and management of Odyne New York thereupon became our
      directors and management. On October 17, 2006, we changed our corporate name
      from Technology Integration Group Inc. to Odyne Corporation.




Since
      our future business will be that of Odyne New York only, the information in
      this
      Annual Report is that of Odyne New York as if Odyne New York had been the
      registrant for all the periods presented in this report. Management’s Discussion
      and Analysis or Plan of Operation presented in this Item 6 and the audited
      consolidated financial statements presented in Item 7 of this report include
      those of Odyne New York prior to the reverse merger, as these provide the most
      relevant information for us on a continuing basis.




For
      accounting purposes, Odyne New York was the acquirer in the reverse merger
      transaction, and consequently the transaction is treated as a recapitalization
      of that company. Odyne New York’s financial statements are our historical
      financial statements.




The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our financial statements and related notes included
      under Item 7 of this report.





**Results
      of Operations - Year Ended December 31, 2006 Compared to December 31,
      2005**





**Net
      Loss**




Our
      net
      loss in 2006 was $ 2,009,968 compared to $694,909 in 2005, an increase of
      $1,315,059.





**Revenues**




The
      company engages in two primary sources of revenue generating activities,
      r evenues
      from fixed-price contracts and revenue from and time and material contracts. Revenues
      were $242,945 and $285,598 for the years ended December 31, 2006 and 2005,
      respectively, a decrease of $ $ 42,653 or 14.9%. The decrease resulted from
      a
      reduction in revenue from time and materials contracts that was not entirely
      offset by our increase in fixed-price contract revenue.





Revenues
      from fixed-price contracts are recognized on the percentage-of-completion
      method, measured by the percentage of costs incurred to date to estimated total
      cost for each contract. We consider expended cost to be the best available
      measure of progress on these contracts. Revenues generated from fixed-price
      contracts amounted to $ 239,519 and $ 46,543 for the years ended December 31,
      2006 and December 31, 2005 respectively.





Revenues
      from time and materials contracts are billed, including profit, as incurred,
      based on a fixed labor rate plus materials. Revenues generated from time and
      materials contracts amounted to $
      3,426 and $ 239,055 for the years ended December 31, 2006 and December 31,
      2005
      respectively.




27




**Cost
      of Revenues**





Cost
      of revenues on fixed -price contracts includes direct contract costs such as
      materials, labor, subcontract labor, payroll, payroll taxes, insurance and
      other
      sundry direct costs, and indirect contract costs such as travel, supplies,
      repairs and depreciation. Provisions for estimated losses on contracts in
      progress are made in the period in which such losses are determined. Cost of
      revenues from time and materials contracts includes labor and materials.





Cost
      of
      revenues for the years ended December 31 2006 and 2005 were $410,213 and
      $208,186 respectively, an increase of $202,027, or 97%. This increase resulted
      from a significant shift in our revenue sources from primarily time and
      materials contracts to primarily fixed-price contracts. This shift resulted
      in $
      163,465 higher material costs being incurred in connection with our revenue
      activities.




**Research
      and Development Expense**




Research
      and development expenses were $755,429 and $442,993 for the years ended December
      31, 2006 and 2005 respectively, an increase of $312,436, or 70.5%. This
      increased spending, primarily labor and material cost, was incurred to further
      develop our PHEV technology that is incorporated into our products. During
      the
      year ended December 31, 2006, we received $ 80,428 in research and development
      funding from the New York State Energy Research Development Authority (NYSERDA)
      that is subject to repayment under a royalty agreement based on future
      shipments. During the year ended December 31, 2005, we received $160,465 in
      similar funding.





**General
      and Administrative Expenses**




General
      and administrative expenses for the years ended December 31 2006 and 2005 were
      $758,283 and $296,448 respectively, an increase of $461,835, or 155.8%. This
      increase included a $
      225,872
      increase in professional fees, primarily incurred in connection with our reverse
      merger and related SEC filings, a $ 144,183 increase in general and
      administrative salaries, a $ 49,108 increase in insurance cost and a $ 45,907
      increase in travel expenses incurred in connection with revenue promotion
      activities.





**Other
      Income and expense**




Interest
      income in 2006 was $14,610 and $ -0- for years ended December 31, 2006 and
      2005
      respectively. This increase resulted from interest earned on the funds we
      received in connection with our private placement. Interest expense was $343,598
      and $32,880 for the years ended December 31, 2006 and December 31 2005
      respectively, an increase of $310,718. The Increase in interest expense resulted
      primarily from non-cash interest charges of $ 303,000 incurred in connection
      with our convertible debentures including $ 250,0000 resulting from the
      beneficial conversion features contained therein.




**Liquidity
      and Capital Resources**





At
      December 31, 2006, our current assets exceeded our current liabilities by
      $2,969,858 with a ratio of current assets to current liabilities of
      approximately 5.9 to 1.0. At December 31, 2006, cash on hand was $3,083,942,
      an
      increase of $3,083,442 from December 31, 2005.





*Net
      Cash Used in operating Activities:* Net cash
      used in operating activities totaled $
      1,237,106 for the year ended December 31, 2006 as compared to $ $ 55,385 for
      the
      year ended December 31, 2005. This increase resulted primarily from our net
      loss
      from operations of $, 1,680,980. Additionally, as part of our increased level
      of
      operating activity which occurred as a result of the reverse merger, we used
      cash to increase our inventory by $ 127,593 and increased the amount of our
      pre
      paid expenses, primarily insurance, by $ 103,482. Operating activities, that
      increased the level of cash, also included an increase in accounts payable
      of $
      182,018 and an increase in accrued expenses and other liabilities of $ 113,248.
      The Company also received customer deposits totaling $ 150,000.




28




*Net
      cash used in Investing activities:* We ** invested
      $ 95,572 in property and equipment during the year ended December 31, 2006
      as
      compared to no investments in property and equipment during the year ended
      December 31, 2005.




*Net
      Cash Provided by Financing Activities:* Net
      cash
      provided from financing activities during the year ended December 31, 2006
      included $ 4,355,319 of net proceeds from our issuance of Series a Convertible
      Preferred stock, proceeds from convertible debentures of $ 250,000 and loans
      from officers in the amount of $ 73,000. The Company used cash in financing
      activities to pay down officers loans in the amount of $ 139,725, pay capital
      lease obligations of $ 6,644 and pay net credit line activity in the amount
      of $
      115,830. Total cash provided by financing activities during the 12 months ended
      December 31, 2005, was $ 66,923 of which $ 74,050 resulted from loans from
      officers, the payment of capital lease obligations in the amount of $ 3,171
      and
      net credit line payments of $ 3,956.





We
      have
      no commitments to invest in capital improvements and no contractual obligations
      to invest in research and development, although we do expect to make significant
      investments in both of these areas.





The
      Company believes that the completion of its Private Placement and
      recapitalization of liabilities due to officers/stockholders has substantially
      improved its overall liquidity. However, the Company will still be required
      to
      devote all of its capital resources to pursuing its research and development
      initiatives, developing its manufacturing infrastructure and penetrating
      possible markets Plug-in Hybrid Electric Vehicle system. The Company will need
      to raise substantial additional funds to achieve commercialization of its
      Plug-in Hybrid Electric Vehicle system and continue the pursuit of its business
      plan.





The
      Company has taken certain measures to conserve its liquidity while it continues
      the effort to develop its technology. Management believes that the Company's
      current [illegible] of capital resources is sufficient to sustain the business
      through December 31, 2007. However, there can be no assurance that the
      Company will be successful in its efforts to fully commercialize its Plug-in
      Hybrid Electric Vehicle system or that the commercialization of this technology
      will actually improve its operating results. Additionally, there can be no
      assurance that unforeseen circumstances will not have a material affect on
      the
      business that could require it to raise additional capital or take other
      measures to sustain operations in the event that outside sources of capital
      are
      not available. The Company has not secured any commitments for new financing
      at
      this time nor can it provide any assurance that new capital will be
      available to it on acceptable terms, if at all. The Company can also not
      provide any assurance that even it is successful in efforts to raise additional
      capital, that that the proceeds of any such financing transaction will enable
      the Company to develop its business to a level in which it is actually
      generating operating profits and positive cash flows.




**Impact
      of Inflation**





We
      expect
      to be able to pass inflationary increases for raw materials and other costs
      on
      to our customers through price increases, as required, and do not expect
      inflation to be a significant factor in our business.





**Seasonality**





Although
      our operating history is limited, we do not believe our products are
      seasonal.




29




**Off-Balance
      Sheet Arrangements**





There
      are
      no off-balance sheet arrangements between us and any other entity that have,
      or
      are reasonably likely to have, a current or future effect on our financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that is
      material to stockholders.




**Critical
      Accounting Policies and Estimates.**





The
      preparation of our consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to exercise its judgment. We exercise considerable judgment
      with respect to establishing sound accounting polices and in making estimates
      and assumptions that affect the reported amounts of our assets and liabilities,
      our recognition of revenues and expenses, and disclosures of commitments and
      contingencies at the date of the financial statements.





On
      an ongoing basis, we evaluate our estimates and judgments. Areas in which we
      exercise significant judgment include, but are not necessarily limited to,
      recording revenue and cost and cost of sales under production contracts using
      the percentage of completion method, establishing loss reserves of contracts
      in
      progress when necessary, equity transactions (compensatory and financing),
      and
      allocating costs among different cost centers and departments within our
      Company. We have adopted certain polices with respect to our recognition of
      revenue that we believe are consistent with the guidance provided under
      Securities and Exchange Commission Staff Accounting Bulletin No.
      104





We
      base our estimates and judgments on a variety factors including our historical
      experience, knowledge of our business and industry, current and expected
      economic conditions, the composition of our products and the regulatory
      environment. We periodically re-evaluate our estimates and assumptions with
      respect to these judgments and modify our approach when circumstances indicate
      that modifications are necessary.





While
      we
      believe that the factors we evaluate provide us with a meaningful basis for
      establishing and applying sound accounting policies, we cannot guarantee that
      the results will always be accurate. Since the determination of these estimates
      requires the exercise of judgment, actual results could differ from such
      estimates.





A
      description of significant accounting polices that require us to make estimates
      and assumptions in the preparation of our consolidated financial statements
      is
      as follows:




*Revenue
      Recognition:* We
      derive a significant portion of our revenues from production contracts that
      we
      account for using the percentage of completion method. Accordingly, we make
      estimates of costs to complete these contracts that we us a basis for recording
      revenue.





We
      apply the revenue recognition principles set forth under AICPA Statement of
      Position ("SOP") 81-2 “Accounting for Production Type Contracts” and Securities
      and Exchange Commission Staff Accounting Bulletin ("SAB") 104 "Revenue
      Recognition" with respect to our revenue.




*Income
      Taxes.* We
      are required to determine the aggregate amount of income tax expense or loss
      based upon tax statutes in jurisdictions in which we conduct business. In making
      these estimates, we adjust our results determined in accordance with generally
      accepted accounting principles for items that are treated differently by the
      applicable taxing authorities. Deferred tax assets and liabilities, as a result
      of these differences, are reflected on our balance sheet for temporary
      differences, loss and credit carry forwards that will reverse in subsequent
      years. We also establish a valuation allowance against deferred tax assets
      when
      it is more likely than not that some or all of the deferred tax assets will
      not
      be realized. Valuation allowances are based, in part, on predictions that
      management must make as to the Company’s results in future periods. The outcome
      of events could differ over time which would require us to make changes in
      our
      valuation allowance.




30




*Share
      Based Payments and Other Equity Transactions:*  The
      Company applies SFAS No. 123R “Share Based Payment.” This statement is a
      revision of SFAS Statement No. 123, and supersedes APB Opinion No. 25, and
      its
      related implementation guidance. SFAS 123R addresses all forms of share based
      payment (“SBP”) awards including shares issued under employee stock purchase
      plans, stock options, restricted stock and stock appreciation rights. Under
      SFAS
      123R, SBP awards result in a cost that is measured at fair value on the awards’
grant date, based on the estimated number of awards that are expected to vest.
      The Company adopted the modified prospective method with respect to accounting
      for its transition to SFAS 123(R) and measured unrecognized compensation cost.
      Under this method of accounting, we are required to estimates the fair value
      of
      share based payment that we make to our employees by developing assumption
      regarding expected holding terms of stock options, volatility rates, and
      expectation of forfeitures and future vesting that can significantly impact
      the
      amount of compensation cost that we recognize in each reporting period.





We
      are
      also required to apply complex accounting principles with respect to accounting
      for financing transactions that we have consummated in order to finance the
      growth of our business. These transactions, which generally consist of
      convertible debt and equity instruments, require us to use significant judgment
      in order to assess the fair values of these instruments at their dates of
      issuance, which is critical to making a reasonable presentation of our financing
      costs and how we finance our business.








**ITEM
      7.  FINANCIAL STATEMENTS****.**




Our
      audited financial statements for the year ended December 31, 2006 are included
      as a separate section of this Annual Report beginning on page F-1.




**ITEM
      8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE****.**




On
      November 20, 2006, we terminated Most & Company, LLP, or Most, as our
      independent registered public accounting firm. Most audited our financial
      statements for the fiscal year ended June 30, 2006. The reason for the
      replacement of Most was that, following the merger, the former shareholders
      of
      Odyne own a majority of the outstanding shares of our common stock. Odyne is
      our
      primary business unit, and the current independent registered public accountants
      of Odyne is the firm of Marcum & Kliegman LLP. We believe that it is in our
      best interest to have Marcum & Kliegman LLP continue to work with our
      business, and we therefore retained Marcum & Kliegman LLP as our new
      independent registered public accounting firm effective as of November 20,
      2006.
      Marcum & Kliegman LLP is located at 655 Third Avenue, 16th Floor, New York,
      New York 10017.




The
      appointment of Marcum & Kliegman LLP was recommended and approved by our
      board of directors. During our two most recent fiscal years, and the subsequent
      interim period prior to November 20, 2006, we did not consult Marcum &
Kliegman LLP regarding either: (i) the application of accounting principles
      to a
      specified transaction, completed or proposed, or the type of audit opinion
      that
      might be rendered on Odyne’s financial statements, or (ii) any matter that was
      either the subject of a disagreement as defined in Item 304(a)(1)(iv) of
      Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of
      Regulation S-K.




31




Most’s
      report on our financial statements for each of the past two fiscal years ended
      June 30, 2005 and 2006, did not contain any adverse opinion or disclaimer of
      opinion and was not qualified as audit scope or accounting principles.




During
      the two most recent fiscal years ended June 30, 2005 and 2006, and the interim
      period from the date of the last audited financial statements to November 20,
      2006, (i) there were no disagreements between us and Most on any matter of
      accounting principles or practices, financial statement disclosure or auditing
      scope or procedure which, if not resolved to the satisfaction of Most, would
      have caused Most to make reference to the subject matter of the disagreement
      in
      connection with its reports and (ii) there were no “reportable events,” as
      described in Item 304(a)(1)(iv) of Regulation S-B of the Securities Exchange
      Act
      of 1934, as amended, or the Exchange Act. The decision to replace Most was
      not
      the result of any disagreement between us and Most on any matter of accounting
      principle or practice, financial statement disclosure or audit procedure. Our
      board of directors deemed it in our best interest to change independent auditors
      following the closing of the merger transaction.




**ITEM
      8A. CONTROLS AND PROCEDURES** **.**




As
      of
      December 31, 2006, the Company carried out an evaluation, under the
      supervision and with the participation of members of our management, including
      the Company’s Chief Executive Officer and the Company’s Chief Financial Officer,
      of the effectiveness and operation of the Company’s disclosure controls and
      procedures. Based upon that evaluation, the Company’s Chief Executive Officer
      and the Chief Financial Officer have concluded that the Company’s disclosure
      controls and procedures were not effective as of December 31, 2006, based
      on their evaluation of these controls and procedures required by paragraph
      (b) of Exchange Act Rules 13a-15 and 15d-15.




**DISCLOSURE
      CONTROLS AND INTERNAL CONTROLS**




Disclosure
      controls are procedures that are designed with the objective of ensuring that
      information required to be disclosed in our reports filed under the Securities
      Exchange Act of 1934, as amended, such as this Report, is recorded, processed,
      summarized and reported within the time periods specified in the SEC’s
      rules and forms. Disclosure controls are also designed with the objective
      of ensuring that such information is accumulated and communicated to our
      management, including our Chief Executive Officer and Chief Financial Officer,
      as appropriate, to allow timely decisions regarding required disclosure.
      Internal controls are procedures which are designed with the objective of
      providing reasonable assurance that our transactions are properly authorized,
      recorded and reported and our assets are safeguarded against unauthorized or
      improper use, to permit the preparation of our financial statements in
      conformity with generally accepted accounting principles.




We
      have
      identified certain matters that constitute material weakness (as defined under
      the Public Company Accounting Oversight Board Auditing Standard No. 2) in
      our internal controls over financial reporting.




The
      material weaknesses that we have identified relate to the fact that that our
      overall financial reporting structure, internal accounting information systems,
      and current staffing levels are not sufficient to support the complexity of
      our
      financial reporting requirements. We have retained an outside consulting firm
      to
      assist us in this area but this may not be a viable long-term solution to remedy
      our deficiency.




32




**ITEM
      8B. OTHER INFORMATION** .




None.




33




**PART
      III**




**ITEM
      9.****DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16****(a)
      OF THE EXCHANGE ACT.**




**Directors
      and Executive Officers**




The
      following table shows the positions held by our board of directors and executive
      officers, and their ages as March 16, 2007:




**Name**
            
            **Age**
            
            **Position**Roger
                M. Slotkin
            
            54
            
            Chief
                Executive Officer and DirectorJoshua
                A. Hauser
            
            61
            
            President,
                Chief Operating Officer and DirectorJoseph
                M. Ambrosio
            
            37
            
            Executive
                Vice President-Engineering and Chief Technology OfficerKonstantinos
                Sfakianos
            
            36
            
            Executive
                Vice President-OperationsDaniel
                Bartley
            
            46
            
            Chief
                Financial OfficerBruce
                E. Humenik
            
            58
            
            DirectorStanley
                W. Struble
            
            60
            
            DirectorS.
                Charles Tabak
            
            74
            
            Director





The
      principal occupations for the past five years (and, in some instances, for
      prior
      years) of each of our directors and executive officers are as
      follows:




***Roger
      M. Slotkin*** has
      served as our Chief Executive Officer and as a member of our board of directors
      since October 2006, and in similar positions with Odyne since May 2003. Mr.
      Slotkin has over 35 years of general business management and consulting
      experience, including extensive experience in the management of technology
      and
      industrial companies in both the public and private sectors. Mr. Slotkin has
      effectively managed businesses in several industries, including aerospace,
      textiles, lumber, precision metal works, chemicals, electronics, and business
      services, among others. Moreover, he has worked with publicly-traded and
      privately-held companies on various corporate financings, including
      reorganizations and exchange offers, and has extensive experience working with
      technology companies on rapid deployment of emerging technologies. Since 2001,
      he has been a Managing Partner of the Beachhead Group, a boutique consulting
      firm specializing in corporate turnaround and start-up company management and
      since 1983 he has been President and founder of RS Management, Ltd., a business
      development firm providing divisional spin-off and general management consulting
      services. From 1994 to 2001, he served as Chairman and Chief Executive Officer
      of Xtal Technologies, Ltd., a manufacturer of crystal, filter and magnetics
      products, and as Chairman and Chief Executive Officer of Apace, Inc., a
      manufacturer and designer of military, space level and commercial servo motor
      drive electronics; from 1989 to 1994, he served as Chairman and Chief Executive
      Officer of AP Industries, Inc., a privately owned holding company that owned
      several operating companies including Lee Myles Transmission and Struthers-Dunn;
      from 1983 to 1990, President and Chief Executive Officer of The NBA Group,
      Inc.,
      a third party administrator of self-insurance health plans; and from 1979 to
      1983, President of LSIS, Inc., a self-insurance administrator of health plans,
      disability plans and workers compensation plans. Mr. Slotkin received a B.S.
      degree in Management and Finance from Long Island University.




34




***Joshua
      A. Hauser*** has
      served as our President and Chief Operating Officer and as a member of our
      board
      of directors since October 2006, and joined Odyne in July 2004 as Senior Vice
      President, Business Development and Finance and as a director and in June 2006
      became its President and Chief Operating Officer. He brings over 30 years
      experience in industrial and military electronics. From 1967 to 1984, he held
      various positions, including Vice President of Manufacturing, Vice President
      of
      Operations and General Manager at Lambda Electronics, a division of Veeco
      Instruments Inc. Veeco Instruments designed and manufactured electronic power
      supplies and instrumentation used primarily in semiconductor processing. From
      1984 to 1989, he was Executive Vice President and Director of Veeco Instruments
      Inc., a New York Stock Exchange listed company; from 1989 to 1996, he was
      Managing Director of Unitech plc, a London Stock Exchange listed company that
      manufactured and designed electronic power supplies and control system
      components; and from 1996 to 1999, he was President of Siebe Power Controls,
      a
      division of Siebe plc, a London Stock Exchange listed company. Siebe plc was
      a
      diversified manufacturer of environmental and process control systems, control
      system components and other electronic subsystems including electronic power
      supplies. Mr. Hauser has previously served on the board of directors of Veeco
      Instruments Inc., NEMICLambda KK, a Japanese based manufacturer of electronic
      power supplies (Tokyo Stock Exchange), and Unitech plc. Since leaving Siebe
      plc
      in April 1999, Mr. Hauser has managed a successful management consulting
      business. He is currently also a director of Transistor Devices, Inc., a
      manufacturer of electronic power supplies and power systems. Mr. Hauser received
      B.S. and M.S. degrees in Electrical Engineering from Columbia University. He
      is
      presently a member of the Dean’s Engineering Council at Columbia
      University.




***Joseph
      M. Ambrosio*** has
      served as our Executive Vice President - Engineering, Chief Technology Officer
      since October 2006, and in similar positions with Odyne, of which he was
      co-founder, since August 2001. Mr. Ambrosio has over 12 years of experience
      in
      the alternative fuel transportation industry and substantial experience in
      printed circuit board production, quality control and industrial engineering.
      He
      co-founded Neocon Technologies in 1995 (which ceased operations in 2000) and
      Odyne Corporation in August 2001 with Konstantinos Sfakianos. Mr. Ambrosio’s
      experience in the alternative-fuel transportation industry includes design,
      development, and integration of a variety of liquid and gaseous fuel systems,
      battery energy and thermal management, auxiliary power unit systems for PHEVs
      (fuel cell, micro turbine, internal combustion engine), and testing procedures.
      He has authored six technical reports published by the Electric Power Research
      Institute on battery energy and thermal management for heavy and light duty
      electric vehicles. In addition to EV/PHEV system integration and research and
      development, Mr. Ambrosio has worked closely with electric utilities such as
      LILCO, Con Edison, NYPA and NYSEG, along with organizations such as the Electric
      Power Research Institute in alternative fuel vehicle development and drive
      system development and support programs. Mr. Ambrosio currently serves as
      Treasurer of the Greater Long Island Clean Cities Coalition. He received a
      B.S.
      degree in Mechanical Engineering from New York Institute of Technology and
      has
      been an active member of the Society of Automotive Engineers for 10
      years.




***Konstantinos
      (Gus) Sfakianos*** has
      served as our Executive Vice President - Operations since October 2006, and
      in a
      similar position with Odyne, of which he was co-founder, since August 2001.
      Mr.
      Sfakianos has over 10 years of experience in the alternative fuel transportation
      industry, specifically EVs and HEVs and battery energy storage systems. He
      co-founded Neocon Technologies in 1995 and Odyne Corporation in August 2001
      with
      Mr. Ambrosio. Mr. Sfakianos has worked with organizations such as Blue Bird
      Corporation, Westinghouse/Northrop Grumman, Solectria, TDM (Ford subcontractor),
      Chrysler, Exide Europe, Baker Electric, GNB, Ovonics, HPower and many more.
      Some
      of his technical accomplishments include the development of several unique
      and
      application specific battery energy storage systems, charging algorithms, and
      EV/PHEV systems control design. As co-founder of Neocon Technologies, he was
      responsible for all EV field service, in house production of energy storage
      systems and general operations. At Odyne, Mr. Sfakianos is responsible for
      all
      product regulatory standards and certifications. Mr. Sfakianos received a B.S.
      degree in Mechanical Engineering, with a concentration in Energy Systems, from
      New York Institute of Technology.




35




***Daniel
      Bartley*** has
      served as our Chief Financial Officer since October 2006. Mr. Bartley has over
      22 years of consulting and financial accounting experience. From June 2004
      through April 2006, Mr. Bartley served as Vice President-Controller of Levitz
      Home Furnishings, Inc., a specialty retailer of home furnishings. From 1992
      through May 2004, Mr. Bartley served as President of Bartley & Associates,
      Ltd., a financial consulting firm that specialized in advising businesses in
      asset purchase transactions, financial advisory services and financial reporting
      systems. From 1989 through 1992, Mr. Bartley served as Controller of General
      Utilities, Inc., a company that operated in the fuel industry and home security
      industries. From 1984 through 1989, Mr. Bartley served as a Supervising
      Consultant for the Emerging Business Department of Deloitte, LLP where he was
      responsible for financial statement audits and advisory services for early
      stage
      companies. Mr. Bartley received a B.S. degree in accounting from Long Island
      University and M.A. in Theology from the Seminary of the Immaculate Conception.
      Mr. Bartley is a Certified Public Accountant.





***Bruce
      E. Humenik*** has
      served as a member of our board of directors since October 2006. Mr. Humenik
      has
      more than 30 years of management experience in the electric and gas utility
      industry, including, corporate planning, finance, marketing, research and
      development and customer service. Since 1995, Mr. Humenik has been a Senior
      Vice
      President at Applied Energy Group, Inc., a provider of consulting services
      to
      energy companies. During his time with Applied Energy Group, Inc., Mr. Humenik
      has worked on consulting projects with the Long Island Power Authority, Keyspan,
      El Paso Electric Company and Bermuda Electric Light Company, Ltd., among others.
      From 1970 until 1995, Mr. Humenik worked for Long Island Lighting Company,
      where
      he served as a Manager of Conservation Services. Mr. Humenik received a B.S.
      degree in Electrical Engineering from Manhattan College and an M.B.A. from
      Long
      Island University.





***Stanley
      W. Struble*** has
      served as a member of our board of directors since October 2006. Mr. Struble
      has
      37 years of experience in sales and marketing with Snap-on Tools Company, a
      manufacturer and marketer of tools, diagnostics and equipment solutions for
      professional tool users. Mr. Struble has held a number of positions with Snap-On
      Tools Company including Eastern Division Vice President (2004 to 2006), Eastern
      Regional Manager (1999 to 2004) and Northeast Regional Manager (1992 to 1998).
      Mr. Struble received a B.S. degree in Business Administration from New England
      College.





***S.
      Charles Tabak*** has
      served as a member of our board of directors since October 2006. Mr. Tabak
      has
      more than 50 years of business experience in varying positions. From 1991 to
      August 2004, Mr Tabak served as Chief Executive Officer and General Counsel
      for
      Arc Medical & Professional Personnel, Inc., a privately owned and operated
      staffing company that provided temporary and permanent medical personnel
      placements as well as DNA genetic testing services. From 1969 to 1990, Mr.
      Tabak
      served as a principal and as Executive Vice President and General Counsel to
      Channel Home Centers Inc., a multi state retailer of home improvement products.
      From 1964 to 1969, Mr. Tabak served as Director of Finance for the JJ Newberry
      Co., which owned and operated over 1,000 retail stores and restaurants. From
      1959 to 1964, Mr. Tabak served as assistant in-house counsel, Director of
      Internal audit- Expense Controller and Director of Accounts for Bloomingdale’s,
      a division of Federated department stores that owned and operated retail
      department stores. From 1957 to 1959, Mr. Tabak served as a Senior staff Auditor
      for Ernst & Ernst, then a Big 8 worldwide accounting firm. Mr. Tabak
      received a B.S. degree in accounting, as well as a J.D. degree from New York
      University. Mr. Tabak is admitted to practice law in the State of New York
      and
      before the U.S. Supreme Court.




36




All
      directors hold office until the next annual meeting of stockholders and the
      election and qualification of their successors. Officers are elected annually
      by
      the board of directors and serve at the discretion of the board.




**Board
      Committees**




We
      have
      not previously had an audit committee, compensation committee or nominations
      and
      governance committee. On October 17, 2006, the board of directors authorized
      the
      creation of such committees, in compliance with established corporate governance
      requirements.




***Audit
      Committee*** *.* We
      established an Audit Committee of the board of directors, which is chaired
      by
      Mr. Tabak, who is considered an independent director with the financial
      sophistication to hold such position, and includes Messrs. Humenik and Struble.
      The Audit Committee’s duties are to recommend to the board of directors the
      engagement of independent auditors to audit our financial statements and to
      review our accounting and auditing principles. The Audit Committee reviews
      the
      scope, timing and fees for the annual audit and the results of audit
      examinations performed by the internal auditors and independent public
      accountants, including their recommendations to improve the system of accounting
      and internal controls. The Audit Committee is at all times to be composed
      exclusively of directors who are, in the opinion of the board of directors,
      free
      from any relationship which would interfere with the exercise of independent
      judgment as a committee member and who possess an understanding of financial
      statements and generally accepted accounting principles.




***Compensation
      Committee*** *.* We
      established a Compensation Committee of the board of directors, which is chaired
      by Mr. Humenik, and includes Messrs. Struble and Tabak. The Compensation
      Committee reviews and approves our salary and benefits policies, including
      compensation of executive officers. The Compensation Committee also administers
      our stock option plans, and recommends and approves grants of stock options
      under that plan.




***Nominations
      and Governance Committee*** . **** We
      established a Nominations and Governance Committee of the board of directors,
      which is chaired by Mr. Struble, and includes Messrs. Humenik and Tabak. The
      purpose of the Nominations and Governance Committee is to select, or recommend
      for our entire board’s selection, the individuals to stand for election as
      directors at the annual meeting of stockholders and to oversee the selection
      and
      composition of committees of our board. The Nominations and Governance
      Committee’s duties also include considering the adequacy of our corporate
      governance and overseeing and approving management continuity planning
      processes.




**Indebtedness
      of Directors and Executive Officers**




None
      of
      our directors or executive officers or their respective associates or affiliates
      is indebted to us.




**Family
      Relationships**




There
      are
      no family relationships among our directors and executive officers.




**Legal
      Proceedings**




As
      of the
      date of this report, there is no material proceeding to which any of our
      directors, executive officers, affiliates or stockholders is a party adverse
      to
      us.




37




**2006
      Equity Incentive Plan**




The
      purpose of our 2006 Equity Incentive Plan, formerly the 2005 Non-Statutory
      Stock
      Option Plan (the “2006 Plan”), is to enable us to attract, retain and motivate
      key employees, directors and, on occasion, consultants, by providing them with
      stock options. Awards granted under the 2006 Plan may be either incentive stock
      options, as defined in Section 422A of the Internal Revenue Code of 1986,
      non-qualified stock options, performance shares, stock appreciation rights,
      restricted stock, restricted stock units, bonus shares or dividend equivalents.
      Pursuant to the 2006 Plan, awards to purchase an aggregate of 3,000,000 shares
      of common stock may be granted under the 2006 Plan and, on March 6, 2007, stock
      options to purchase 525,000 shares of common stock were outstanding;
      505,000 stock options with an exercise price of $.75 per share and
      20,000 stock options with an exercise price of $1.65 per share. The
      $.75 stock options vest and become exercisable in three equal increments on
      each
      of October 17, 2008, 2009 and 2010. The $1.65 options vest and become
      exercisable in three equal increments on each of March 1, 2009, 2010 and 2011.
      The aggregate number of shares of common stock subject to options, stock
      appreciation rights, performance stock and bonus shares granted to any one
      employee during any calendar year, may not exceed 300,000 shares. The aggregate
      fair market value of common stock with respect to incentive stock options that
      are exercisable for the first time by any employee may not exceed $100,000
      during any calendar year.




The
      2006
      Plan will be administered by the compensation committee of the board of
      directors, or by the board of directors as a whole. The board of directors
      has
      the power to determine the terms of any award granted under the 2006 Plan,
      including the exercise price, the number of shares subject to the award and
      conditions of exercise. Stock options granted under the 2006 Plan are generally
      not transferable, and each stock option is generally exercisable during the
      lifetime of the optionee only by such optionee. The exercise price of all
      incentive stock options granted under the 2006 Plan must be at least equal
      to
      the fair market value of the shares of common stock on the date of the grant.
      With respect to any participant who owns stock possessing more than 10% of
      the
      voting power of all classes of our stock, the exercise price of any incentive
      stock option granted must be equal to at least 110% of the fair market value
      on
      the grant date. The term of all incentive stock options under the 2006 Plan
      may
      not exceed ten years, or five years in the case of 10% owners. The board of
      directors, pursuant to an authorizing resolution, has the power to terminate
      the
      2006 Plan at any time and for any reason.




**Section 16(a)
      Beneficial Ownership Reporting Compliance**




We
      do not have securities registered under Section 12 of the Exchange Act and,
      accordingly, our directors, officers and affiliates are not required to file
      reports under Section 16(a) of the Exchange Act.




**Code
      of Ethics**




Our
      board of directors has adopted a code of ethics, which applies to all our
      directors, officers and employees. Our code of ethics is intended to comply
      with
      the requirements of Item 406 of Regulation S-B.





Our
      code of ethics is posted on our Internet website at www.odyne.com. We will
      provide our code of ethics in print without charge to any stockholder who makes
      a written request to: Chief Financial Officer, Odyne Corporation, 89 Cabot
      Court, Suite L, Hauppauge, New York 11788. Any waivers of the application,
      and
      any amendments to, our code of ethics must be made by our board of directors.
      Any waivers of, and any amendments to, our code of ethics will be disclosed
      promptly on our Internet website, www.odyne.com.





**ITEM
      10.  EXECUTIVE COMPENSATION.**




The
      following table sets forth, for the most recent fiscal year, all cash
      compensation paid, distributed or accrued, including salary and bonus amounts,
      for services rendered to us by our Chief Executive Officer and four other
      executive officers in such year who received or are entitled to receive
      remuneration in excess of $100,000 during the stated period and any individuals
      for whom disclosure would have been made in this table but for the fact that
      the
      individual was not serving as an executive officer as at December 31,
      2006:




38




**Summary
      Compensation Table**





Name
                and Principal Position
            Year
            Salary
              ($)
            Bonus
              ($)
            Stock
                Awards
              ($)
            Option
                Awards
              ($)
            Non-Equity
                Incentive Plan Compensation
              (4)
            Nonqualified
                Deferred Compensation Earnings
              ($)
            All
                Other Compe-nsation
              ($)
            Total
                ($)(a)
            (b)
            (c)
            (d)
            (e)
            (f)
            (g)
            (h)
            (i)
            (j)Roger
                M. Slotkin
              Chief
                Executive Officer
            2006
              2005
            40,923
            —
            —
            —
            —
            —
            —
            40,923Joshua
                A. Hauser
              President
                and Chief Operating Officer
            2006
              2005
            40,923
              0
            —
            —
            —
            —
            —
            —
            40,923
              0Joseph
                M. Ambrosio
              Executive
                Vice President - Engineering and Chief Technology Officer
            2006
              2005
            59,323
              4,000
            —
            —
            —
            —
            —
            —
            59,323
              4,000Konstantinos
                Sfakianos
              Executive
                Vice President - Operations
            2006
              2005
            59,323
              4,000
            —
            —
            —
            —
            —
            —
            59,323
              4,000Daniel
                Bartley
              Chief
                Financial Officer(1)
            2006
            22,230
            —
            —
            3,500
            —
            —
            —
            25,730


(1)  Mr.
      Bartley joined our company in October 2006




39




**Outstanding
      Equity Awards at Fiscal Year-End**




Option
                Awards
            Stock
                AwardsName
            Number
                of Securities Underlying Unexercised Options (#)
                Exercisable
            Number
                of Securities Underlying Unexercised Options (#)
                Unexercisable
            Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options (#)
            Option
                Exercise Price
              ($)
            Option
                Expiration Date
            Number
                of Shares or Units of Stock That Have Not Vested
              (#)
            Market
                Value of Shares or Units of Stock That Have Not Vested
              ($)
            Equity
                Incentive Plan Awards: Number of Unearned Shares, Units or Other
                Rights
                That Have Not Vested
              (#)
            Equity
                Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                Units or
                Other Rights That Have Not Vested
              ($)(a)
            (b)
            (c)
            (d)
            (e)
            (f)
            (g)
            (h)
            (i)
            (j)Daniel
                Bartley
            0
            150,000
            —
            .75
            Oct.
                2016
            —
            —
            —
            —Bruce
                E. Humenik
            0
            50,000
            —
            .75
            Oct.
                2016
            —
            —
            —
            —Stanley
                W. Struble
            0
            50,000
            —
            .75
            Oct.
                2016
            —
            —
            —
            —S.
                Charles Tabak
            0
            50,000
            —
            .75
            Oct.
                2016
            —
            —
            —
            —




These
      options vest and become exercisable in three equal increments on each of October
      17, 2008, 2009 and 2010.




40




**Compensation
      of Directors**




Directors
      are expected to timely and fully participate in all regular and special board
      meetings, and all meetings of committees that they serve on. We currently
      compensate non-management directors through stock options granted under our
      stock option plan and a cash stipend for each meeting attended.




Each
      of
      our non-management directors, Messrs. Humenik, Struble and Tabak, received
      initial grants of stock options to purchase 50,000 shares of our common stock
      for serving on our board of directors. The stock options vest and become
      exercisable in three equal increments on each of October 17, 2008, 2009 and
      2010. Messrs. Slotkin and Hauser, as members of management, do not receive
      separate compensation for serving as directors.




The
      table
      below summarizes the compensation that we paid to non-management directors
      for
      the fiscal year ended December 31, 2006.




**Director
      Compensation**




Name
            Fees
                Earned or Paid in Cash ($)
            Stock
                Awards
              ($)
            Option
                Awards
              ($)
            Non-Equity
                Incentive Plan Compensation
              (4)
            Nonqualified
                Deferred Compensation Earnings
              ($)
            All
                Other Compensation ($)
            Total
                ($)(a)
            (b)
            (e)
            (f)
            (g)
            (h)
            (i)
            (j)Bruce
                E. Humenik
            1,000
            —
            1,167
            —
            —
            —
            2,167Stanley
                W. Struble
            1,000
            —
            1,167
            —
            —
            —
            2,167S.
                Charles Tabak
            1,000
            —
            1,167
            —
            —
            —
            2,167




**Employment
      Agreements**




Odyne
      entered into employment agreements with Roger M. Slotkin, Joshua A. Hauser,
      Joseph M. Ambrosio and Konstantinos Sfakianos effective September 1, 2006,
      which
      we assumed at the closing of the merger. The employment agreements require
      each
      of the executives to devote all of their time and attention during normal
      business hours to our business as our Chief Executive Officer, President and
      Chief Operating Officer, Executive Vice President - Engineering and Chief
      Technology Officer, and Executive Vice President - Operations, respectively.
      The
      employment agreements for Messrs. Slotkin and Hauser have a term of one year
      and
      may be renewed for an additional term of one year upon the mutual agreement
      of
      us and the executive. The employment agreements for Messrs. Ambrosio and
      Sfakianos have a term of three years. The employment agreements provide that
      each executive will receive an annual salary of $140,000 during the first year
      of the term with increases equal to 5% of such salary on each anniversary of
      the
      effective date of the employment agreement. In addition, each executive is
      entitled to (a) receive a cash bonus in an amount determined by the compensation
      committee of the board of directors if we meet or exceed certain mutually agreed
      upon performance goals and (b) participate in our stock option
      plan.




41




The
      employment agreements provide for termination of an executive’s employment
      without any further obligation on our part upon the death or disability of
      the
      executive or for cause. In the event that an executive’s employment is
      terminated without cause or for good reason, we are obligated to pay such
      executive his salary for the remainder of the term. Termination for cause means
      termination as a result of (w) willful and material malfeasance, dishonesty
      or
      habitual drug or alcohol abuse by the executive related to or affecting the
      performance of his duties, (x) continuing and intentional breach,
      non-performance or non-observance of any of the terms or provisions of the
      employment agreement, but only after the failure of the executive to cure the
      breach within ten days of receipt of notice from us, (y) conduct which the
      board
      determines could reasonably be expected to have a material adverse effect on
      us,
      but only after the failure of the executive to cease such conduct within ten
      days of receipt of notice from us, or (z) the executive's conviction of a
      felony, any crime involving moral turpitude related to or affecting the
      performance of the executive’s duties or any act of fraud, embezzlement, theft
      or willful breach of fiduciary duty against us. Good reason means (i) material
      breach of our obligations under the employment agreement, (ii) any decrease
      in
      the executive's salary during the term of the executive’s employment (except for
      decreases that are in conjunction with decreases in executive salaries
      generally), or (iii) (a) in the case of Messrs. Slotkin and Hauser, a reduction
      in their duties or authority inconsistent with the duties and authority of
      an
      executive officer and (b) in the case of Messrs. Ambrosio and Sfakianos, any
      material reduction in their duties or authority.





The
      employment agreements also contain covenants (a) restricting the executive
      from
      engaging in any activity competitive with our business during the term of the
      employment agreement and in the event of termination for cause or without good
      reason, for a period of one year thereafter, (b) prohibiting the executive
      from
      disclosing confidential information regarding us, and (c) soliciting our
      employees, customers and prospective customers during the term of the employment
      agreement and for a period of one year thereafter.







**ITEM
      11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS.**




The
      following table sets forth information regarding the number of shares of our
      common stock beneficially owned on December 31, 2006, by:




**•**
            each
                person who is known by us to beneficially own 5% or more of our common
                stock;


**•**
            each
                of our directors and executive officers; and


**•**
            all
                of our directors and executive officers as a group.




Beneficial
      ownership is determined in accordance with the rules of the SEC and generally
      includes voting or investment power with respect to securities.  Shares of
      our common stock which may be acquired upon exercise of stock options or
      warrants which are currently exercisable or which become exercisable within
      60
      days after the date indicated in the table are deemed beneficially owned by
      the
      options.  Subject to any applicable community property laws, the persons or
      entities named in the table above have sole voting and investment power with
      respect to all shares indicated as beneficially owned by them.




42




**Name
                and Address of****Beneficial
                Owner****(1)**
            
            **Shares
                Beneficially Owned**
            
            **Percentage
                of**
              **Common
                Stock**(2)Roger
                M. Slotkin(3)
            
            
            3,528,310
            
            
            19.5
            %Joshua
                A. Hauser
            
            
            1,842,259
            
            
            10.2
            %Joseph
                M. Ambrosio
            
            
            3,231,194
            
            
            18.0
            %Konstantinos
                Sfakianos
            
            
            3,378,740
            
            
            18.8
            %Daniel
                Bartley(4)
            
            
            --
            
            
            *Stanley
                W. Struble(5)
            
            
            --
            
            
            *Bruce
                E. Humenik(5)(6)
            
            
            40,020
            
            
            *S.
                Charles Tabak(5)(7)
            
            
            48,024
            
            
            *All
                directors and executive officers as a group
            
            
            12,068,547
            
            
            66.3
            %







*Represents
      less than 1%.





(1)
            The
                address of each person is c/o Odyne Corporation, 89 Cabot Court,
                Suite L.,
                Hauppauge, New York 11788.





(2)
            The
                calculation in this column is based upon 18,000,000 shares of common
                stock
                outstanding on December 31, 2006 (which excludes outstanding shares
                of
                series A convertible preferred stock, convertible into 7,670,500
                shares of
                common stock at any time). The shares of common stock underlying
                stock
                options and warrants are deemed outstanding for purposes of computing
                the
                percentage of the person holding such stock options but are not deemed
                outstanding for the purpose of computing the percentage of any other
                person.





(3)
            Includes
                66,700 shares of common stock issuable upon the conversion of 50
                shares of
                series A convertible preferred stock and 33,350 shares of common
                stock
                issuable upon the exercise of warrants.


(4)
              Excludes
                  stock options to purchase 150,000 shares of common stock at an
                  exercise
                  price of $.75 per share, vesting in three equal increments on each
                  of
                  October 17, 2008, 2009 and 2010.
 (5)
                Excludes
                    stock options to purchase 50,000 shares of common stock at an
                    exercise
                    price of $.75 per share, vesting in three equal increments on
                    each of
                    October 17, 2008, 2009 and 2010.





(6)
            Represents
                26,680 shares of common stock issuable upon the conversion of 20
                shares of
                series A convertible preferred stock and 13,340 shares of common
                stock
                issuable upon the exercise of
                warrants.





(7)
            Represents
                32,016 shares of common stock issuable upon the conversion of 24
                shares of
                series A convertible preferred stock and 16,008 shares of common
                stock
                issuable upon the exercise of
                warrants.




43




Except
      as otherwise set forth above, the address of each of the persons listed is
      c/o
      Odyne Corporation, 89 Cabot Court, Suite L, Hauppauge, New York
      11788.




**Change
      in Control**




There
      are no arrangements currently in effect which may result in our "change in
      control," as that term is defined by the provisions of Item 403(c) of Regulation
      S-B.




**Equity
      Compensation Plan Information**




Our
      2006
      Equity Incentive Plan, formerly known as the 2005 Non-Statutory Stock Option
      Plan, was approved by a written consent of the holders of a majority of our
      outstanding common stock. In connection with our reverse merger transaction,
      the
      2005 Non-statutory Stock Option Plan was amended and restated on October 17,
      2006 to, among other things, change the name of the plan and increase the number
      of shares reserved for awards pursuant to the plan. There are 3,000,000 shares
      reserved for issuance under the Plan. Based on our common stock outstanding
      as
      of April 12, 2007, 2,475,000 stock options are available for issuance under
      our 2006 Equity Incentive Plan and, as of March 6, 2007, there are outstanding
      stock options to purchase 525,000 shares of our common stock.




The
      following table provides information as of December 31, 2006 with respect to
      the
      shares of common stock that may be issued under our existing equity compensation
      plan.




**Equity
      Compensation Plan Information**





Plan
                category
            Number
                of shares of common stock to be issued upon exercise of outstanding
                options, warrants and rights
              (a)
            Weighted-average
                exercise price of outstanding options, warrants and rights
              (b)
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))
              (c)Equity
                compensation plans approved by security holders
            505,000
            $0.75
            2,495,000Equity
                compensation plans not approved by security holders
            —
            —
            —Total
            505,000
            $0.75
            2,495,000





44




**ITEM
      12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS****,
      AND DIRECTOR INDEPENDENCE.**




**Related
      Party Transactions**





In
      connection with our reverse merger transaction, the following relating party
      transactions took place:





We
      had a
      total of approximately $281,000 in principal amount of unsecured loans
      outstanding from Roger M. Slotkin ($102,300), Joshua A. Hauser ($82,600),
      Konstantinos Sfakianos ($62,400) and Joseph M. Ambrosio ($33,400). Interest
      accrued on these loans at a rate of 8% per annum, compounded monthly based
      on a
      360-day year. On October 17, 2006, accrued interest in the amount of $43,559
      was
      forgiven, $140,000 of principal amount of the unsecured loans was converted
      to
      our equity and $139,725 was repaid from the proceeds of the private
      placement.




We
      had a
      total of approximately $624,000 of deferred compensation due to Roger M. Slotkin
      ($167,000), Joshua A. Hauser ($167,000), Konstantinos Sfakianos ($145,000)
      and
      Joseph M. Ambrosio ($145,000), which was forgiven on October 17,
      2006.




We
      had
      outstanding bank and credit card debt of approximately $181,000, which was
      personally guaranteed by Messrs. Sfakianos and Ambrosio. We repaid this debt
      from the proceeds of the private placement and the personal guarantees were
      released.





Mr.
      Slotkin purchased 50 shares of series A convertible preferred stock and
      associated warrants in the private placement, on the same terms as other
      investors. In March 2007, Mr. Slotkin converted his preferred shares into common
      stock in accordance with the terms of such preferred stock. Mr. Tabak
      participated in the convertible debenture financing and purchased approximately
      24 shares of series A convertible preferred stock and associated warrants in
      the
      private placement on the same terms as other investors. Mr. Humenik purchased
      20
      shares of series A convertible preferred stock and associated warrants in the
      private placement, on the same terms as other investors.




**Director
      Independence**





Each
      of
      Bruce E. Humenik, Stanley W. Struble and S. Charles Tabak is an “independent”
director, as such term is defined in Rule 10A-3(b)(1) under the Securities
      Exchange Act of 1934, and serves on each of our Audit, Compensation and
      Nominations and Governance Committees. See Item 9, Directors, Executive
      Officers, Promoters, Control Persons and Corporate Governance; Compliance with
      Section 16(a) of the Exchange Act - Board Committees, for more information
      on
      the independence of our directors.




**ITEM
      13.  EXHIBITS****.**




(a)**Exhibits.**




The
      exhibits listed in the following Exhibit Index are filed as part of this Annual
      Report.




Exhibit
        Number and Description






2.1
            Agreement
                and Plan of Merger, dated October 17, 2006, between Technology Integration
                Group, Inc., PHEV Acquisition Corp. and Odyne Corporation.
                (1)





3.1
            Certificate
                of Amendment of Certificate of Incorporation of Technology Integration
                Group, Inc. (changing name to Odyne Corporation).
                (2)





3.2
            Certificate
                of Designations, Preferences and Rights of Series A Convertible Preferred
                Stock of Odyne Corporation. (2)




45




3.3
            By-laws
                of Odyne Corporation. (2)





4.1
            Form
                of Warrant to Purchase Common Stock for the investors in the October
                2006
                private placement. (2)





10.1
            Form
                of Subscription Agreement by and among Odyne Corporation and the
                investors
                in the October 2006 private placement.
                (2)





10.2
            Employment
                Agreement, dated as of September 1, 2006, between Roger M. Slotkin
                and
                Odyne Corporation. (2)





10.3
            Employment
                Agreement, dated as of September 1, 2006, between Joshua A. Hauser
                and
                Odyne Corporation. (2)





10.4
            Employment
                Agreement, dated as of September 1, 2006, between Joseph M. Ambrosio
                and
                Odyne Corporation. (2)





10.5
            Employment
                Agreement, dated as of September 1, 2006, between Konstantinos Sfakianos
                and Odyne Corporation. (2)





10.6
            Manufacturer’s
                Agreement, dated as of July 20, 2005, between the Town of North Hempstead
                and Odyne Corporation. (2)





14.1
            Code
                of Business Conduct and Ethics.


21.1
                Subsidiaries
                    of Odyne Corporation.
 31.1
                  Certification
                      of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act
                      of
                      2002.
 31.2
                    Certification
                        of C.F.O. Pursuant to Section 302 of the Sarbanes-Oxley Act
                        of
                        2002. 
 32.1
                      Certificate
                          Pursuant to 18 U.S.C. Section 1350, Section 906 of the
                          Sarbanes-Oxley Act
                          of 2002. ________________


(1)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K,
                dated October 17, 2006, and filed with the U.S. Securities and Exchange
                Commission on October 18, 2006.





(2)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K,
                dated October 17, 2006, and filed with the U.S. Securities and Exchange
                Commission on October 25, 2006.




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES** .




**Audit
      Fees**





For
      the year ended December 31, 2006, we incurred audit fees totaling $105,000,
      payable to Marcum & Kliegman LLP, our independent registered public
      accounting firm.





For
      the years ended December 31, 2006 and 2005, we incurred audit fees totaling
      $4,784 and $-0-, respectively, payable to Most & Company, LLP, our former
      independent registered public accounting firm.




46




**Audit
      Related Fees**





None.





**Tax
      Fees**





For
      the years ended December 31, 2006 and 2005, we incurred no tax fees to Marcum
      & Kliegman LLP or Most & Company, LLP.





**All
      Other Fees**





None.





**Pre-Approval
      Policy and Procedures**





The
      Audit Committee has adopted policies for the pre-approval of audit and non-audit
      services for the purpose of maintaining the independence of our independent
      auditors. We may not engage our independent auditors to render any audit or
      non-audit service unless either the service is approved in advance by the Audit
      Committee or the engagement to render the service is entered into pursuant
      to
      the Audit Committee’s pre-approval policies and procedures.




47




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this Report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




Dated:
               April 12, 2007
            ODYNE
              CORPORATIONBy:
            /s/ Roger
              M.
              SlotkinRoger
                M. Slotkin
              Chairman
                  and Chief Executive Officer(principal executive
                officer)


By:
              /s/ Daniel
                BartleyDaniel
                    Bartley
                Chief
                      Financial Officer
                  (principal
                    financial and accounting
                    officer)


In
      accordance with the 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.





**Name**
            
            **Title**
            
            **Date**/s/
                Roger M. Slotkin
            
            Chairman
                and Chief Executive Officer
            
            April
                12, 2007Roger
                M. Slotkin
            
            (principal
                executive officer)/s/
                Joshua A. Hauser
            
            President,
                Chief Operating Officer and Director
            
            April
                12, 2007Joshua
                A. Hauser/s/
                Daniel Bartley
            
            Chief
                Financial Officer
            
            April
                12, 2007Daniel
                Bartley
            
            (principal
                financial and accounting officer)/s/
                Bruce E. Humenik
            
            Director
            
            April
                12, 2007Bruce
                E. Humenik/s/
                Stanley W. Struble
            
            Director
            
            April
                12, 2007Stanley
                W. Struble/s/
                S. Charles Tabak
            
            Director
            
            April
                12, 2007S.
                Charles Tabak









ODYNE
        CORPORATION AND SUBSIDIARY
 (FORMERLY
        TECHNOLOGY INTEGRATION GROUP, INC.)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
  
 ODYNE
          CORPORATION AND SUBSIDIARY
 CONSOLIDATED
          FINANCIAL STATEMENTS
 
 DECEMBER
          31, 2006 and 2005
 
 
 ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 
 
 ODYNE
          CORPORATION AND SUBSIDIARY
  PageREPORT
                      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  
                  
                  F-1FINANCIAL
                      STATEMENTSConsolidated
                      Balance Sheet
                  
                  
                  F-2Consolidated
                      Statements of Operations
                  
                  
                  F-3Consolidated
                      Statements of Stockholders’ (Deficiency) Equity
                  
                  
                  F-4Consolidated
                      Statement of Cash Flows
                  
                  
                  F-5NOTES
                      TO FINANCIAL STATEMENTS
                  
                  
                  F-6
                      - F-26
  
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
          the
          Audit Committee of the
 Board
          of
          Directors and Stockholders
 of
          Odyne
          Corporation and Subsidiary
 
 We
          have audited the accompanying consolidated balance sheet of Odyne Corporation
          and Subsidiary (the “Company”) as of December 31, 2006, and the related
          consolidated statements of operations **,** changes in stockholders’ (deficiency) equity and cash flows for each of the two
          years in the period ended December 31, 2006. These consolidated financial
          statements are the responsibility of the Company’s management. Our
          responsibility is to express an opinion on these consolidated financial
          statements based on our audits.
 
 We
          conducted our audits 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
          consolidated financial statements are free of material misstatement. The
          Company is not required to have, nor were we engaged to perform, an audit
          of its
          internal control over financial reporting. Our audit included consideration
          of
          internal control over financial reporting as a basis for designing audit
          procedures that are appropriate in the circumstances, but not for the purpose
          of
          expressing an opinion on the effectiveness of the Company’s internal control
          over financial reporting. Accordingly, we express no such opinion. An
          audit also includes examining, on a test basis, evidence supporting the
          amounts
          and disclosures in the consolidated financial statements, 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 consolidated financial position of Odyne
          Corporation and Subsidiary as of December 31, 2006, and the consolidated
          results
          of their operations and their cash flows for each of the two years in the
          period ended December 31, 2006 in conformity with United States generally
          accepted accounting principles.
 
  New
          York,
          New York
 April
          4,
          2007
  F-1




**ODYNE
        CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
        BALANCE SHEET**
 **December
        31, 2006**
  ASSETSCURRENT
                  ASSETSCash
              
              $
              3,083,942Cash
                  - restricted
              
              
              227,583Accounts
                  receivablen, net
              
              
              24,090Inventory
              
              
              132,593Prepaid
                  insurance
              
              
              111,535Total
                  current assets
              
              
              3,579,743Property
                  and equipment, net
              
              
              98,797Intangible
                  assets - patents
              
              
              14,000Other
                  assets
              
              
              10,000TOTAL
                  ASSETS
              
              $
              3,702,540LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              249,254Accrued
                  payroll and other operating expenses
              
              
              119,375Customer
                  deposits
              
              
              150,000Billings
                  in excess of costs incurred on contracts in progress
              
              
              57,500Accrued
                  losses on contracts in progress
              
              
              26,939Current
                  maturities of capital lease obligations
              
              
              6,817Total
                  current liabilities
              
              
              609,885Capital
                  lease obligations, net of current maturities
              
              
              4,962Development
                  funding subject to repayment
              
              
              240,894TOTAL
                  LIABILITIES
              
              
              855,741COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITYPreferred
                  stock, $0.001 par value, 4,994,000 shares authorized, 0 shares
                  issued and
                  outstanding
              
              
              -Series
                  A Convertible Preferred Stock, $0.001 par value; 6,000authorized;5,750shares issued and outstanding, liquidation rights $ 1,000 per
                  share
              
              
              6Common
                  stock, $0.001 par value per share;95,000,000
                  sharesauthorized;18,000,000shares issued and outstanding
              
              
              18,000Additional
                  paid-in-capital
              
              
              6,669,870Accumulated
                  deficit
              
              
              (3,841,077
              )TOTAL
                  STOCKHOLDERS' EQUITY
              
              
              2,846,799TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              3,702,540
  *The
        accompanying footnotes are an integral part of these consolidated financial
        statements*
  F-2
  **ODYNE
        CORPORATION AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 For
                    the Years Ended
                  December
                    31,2006
                
                2005SALES
                
                $
                242,945
                
                $
                285,598COST
                    OF SALES
                
                
                410,213
                
                
                208,186GROSS
                    PROFIT (LOSS)
                
                
                (167,268
                )
                
                77,412OPERATING
                    EXPENSESResearch
                    and development
                
                
                755,429
                
                
                442,993General
                    and administrative
                
                
                758,283
                
                
                296,448TOTAL
                    OPERATING EXPENSES
                
                
                1,513,712
                
                
                739,441LOSS
                    FROM OPERATIONS
                
                
                (1,680,980
                )
                
                (662,029
                )OTHER
                    INCOME (EXPENSE)Interest
                    income
                
                
                14,610
                
                
                -Interest
                    (expense)
                
                
                (343,598
                )
                
                (32,880
                )TOTAL
                    OTHER EXPENSE
                
                
                (328,988
                )
                
                (32,880
                )NET
                    LOSS
                
                
                (2,009,968
                )
                
                (694,909
                )Deemed
                    dividends on Series A Convertible Preferred Stock
                
                
                (3,230,791
                )
                
                -NET
                    LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
                
                $
                (5,240,759
                )
                $
                (694,909
                )NET
                    LOSS PER COMMON SHARE - BASIC AND DILUTED
                
                $
                (0.40
                )
                $
                (0.06
                )WEIGHTED
                    AVERAGE NUMBER OF COMMONSHARES
                    OUTSTANDING- BASIC AND DILUTED
                
                
                13,250,000
                
                
                12,000,000
  The
        accompanying footnotes are an integral part of
        these consolidated financial statements
  F-3
  **ODYNE
        CORPORATION AND SUBSIDIARY** CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY For
            the
            Years Ended December 31, 2006 and 2005
 Convertible
                    Preferred StockSeries
                    A
                
                Common
                    StockShares
                
                Amount
                
                Shares
                
                Amount
                
                Additional
                    Paid-in Capital
                
                Excess
                    of Liabilities over Assets
                
                Accumulated
                    Deficit
                
                TotalBalance
                    at January 1, 2005
                
                
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                (2,034,839
                )
                $
                -
                
                $
                (2,034,839
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (694,909
                )
                
                
                
                
                (694,909
                )Balance
                    at December 31, 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,729,748
                )
                
                -
                
                
                (2,729,748
                )**Share
                    Exchange Transaction and Recapitalization:**Beneficial
                    conversion feature of convertible debentures
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                250,000
                
                
                
                
                
                
                
                
                250,000Contribution
                    of loans payable to officers upon completion ofshare
                    exchange transaction
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                183,559
                
                
                
                
                
                
                
                
                183,559Cancellation
                    of liability, reinstatement of shares subject to mandatory redemption
                
                
                
                
                
                
                
                
                12,000,000
                
                
                12,000
                
                
                1,766,496
                
                
                (12,000
                )
                
                
                
                
                1,766,496Reclassification
                    of S Corp accumulated deficit and excess of liabilities over
                    assets to
                    additional paid-in capital uponshare
                    exchange transaction
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,141,430
                )
                
                2,741,748
                
                
                1,399,682
                
                
                -Shares
                    outstanding
                
                
                
                
                
                
                
                
                6,000,000
                
                
                6,000
                
                
                (6,000
                )
                
                
                
                
                
                
                
                -Contribution
                    of compensation payable to officers upon completion ofshare
                    exchange transaction
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                623,314
                
                
                
                
                
                
                
                
                623,314**Private
                    Placements Transactions:**Series
                    A convertible preferred stock issued in private placement for
                    cash, net of
                    offering costs of $998,676
                
                
                5,354
                
                
                6
                
                
                
                
                
                
                
                
                4,355,313
                
                
                
                
                
                
                
                
                4,355,319Series
                    A Convertible Preferred stock exchanged for convertible
                    debentures
                
                
                304
                
                
                -
                
                
                
                
                
                
                
                
                303,570
                
                
                
                
                
                
                
                
                303,570Series
                    A Convertible Preferred stock issued in settlement of accounts
                    payable
                
                
                13
                
                
                -
                
                
                
                
                
                
                
                
                13,475
                
                
                
                
                
                
                
                
                13,475Series
                    A Convertible Preferred stock issued for services
                
                
                79
                
                
                -
                
                
                
                
                
                
                
                
                79,000
                
                
                
                
                
                
                
                
                79,000Deemed
                    dividend relating to beneficial conversion feature embedded in
                    Series A
                    Convertible Preferred stock
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,230,791
                
                
                
                
                
                (3,230,791
                )
                
                -**Changes
                    resulting from ongoing operations:**Share
                    based payments
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                11,782
                
                
                
                
                
                
                
                
                11,782Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (2,009,968
                )
                
                (2,009,968
                )Balance
                    at December 31, 2006
                
                
                5,750
                
                $
                6
                
                
                18,000,000
                
                $
                18,000
                
                $
                6,669,870
                
                $
                -
                
                $
                (3,841,077
                )
                $
                2,846,799
  The
        accompanying footnotes are an integral part of
        these consolidated financial statements
  F-4
  ODYNE
          CORPORATION AND SUBSIDIARY
 CONSOLIDATED
            STATEMENTS OF CASH FLOWS
  For
                    the Years Ended December 31,2006
                
                2005CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (2,009,968
                )
                $
                (694,909
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activitiesDepreciation
                    and amortization
                
                
                19,103
                
                
                11,487Provision
                    for bad debts
                
                
                -
                
                
                3,000Non
                    -cash interest
                
                
                303,570Share
                    based payments
                
                
                11,782
                
                
                -Series
                    A Convertible Preferred Stock issued for services
                
                
                79,000Deferred
                    rent
                
                
                (1,732
                )
                
                (2,921
                )Changes
                    in operating assets and liabilities:Cash
                    - Restricted
                
                
                (227,583
                )Accounts
                    receivable
                
                
                66,574
                
                
                (73,326
                )Inventory
                
                
                (127,593
                )
                
                -Prepaid
                    expenses and other current assets
                
                
                (103,482
                )
                
                496Accounts
                    payable
                
                
                182,018Accrued
                    payroll and other operating expenses
                
                
                113,248
                
                
                60,097Customer
                    deposits
                
                
                150,000
                
                
                -Billings
                    in excess of costs incurred on contracts in progress
                
                
                (8,725
                )
                
                66,225Accrued
                    losses on contracts in progress
                
                
                26,939
                
                
                -Deferred
                    compensation payable to officers
                
                
                231,995
                
                
                391,320Development
                    funding subject to repayment
                
                
                57,748
                
                
                183,146NET
                    CASH USED IN OPERATING ACTIVITIES
                
                
                (1,237,106
                )
                
                (55,385
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESPayment
                    of patent costs
                
                
                -
                
                
                (14,000
                )Purchases
                    of property and equipment
                
                
                (95,572
                )
                
                -NET
                    CASH USED IN INVESTING ACTIVITIES
                
                
                (95,572
                )
                
                (14,000
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESNet
                    proceeds from issuances of Series A Convertible Preferred
                    Stock
                
                
                4,355,319
                
                
                -Proceeds
                    from issuances of Convertible Debentures
                
                
                250,000
                
                
                -Proceeds
                    of loans made to the Company by officers
                
                
                73,000
                
                
                74,050Repayment
                    of loans payable to officers
                
                
                (139,725
                )
                
                -Capital
                    lease payments
                
                
                (6,644
                )
                
                (3,171
                )Net
                    repayment under lines of credit
                
                
                (115,830
                )
                
                (3,956
                )NET
                    CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                4,416,120
                
                
                66,923NET
                    INCREASE IN CASH
                
                
                3,083,442
                
                
                (2,462
                )CASH–
                    beginning of year
                
                
                500
                
                
                2,962CASH–
                    end of year
                
                $
                3,083,942
                
                $
                500
  SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATIONCash
                    paid during the year for:Interest
                
                $
                10,397
                
                $
                11,840Non-cash
                    investing and financing activities:Equipment
                    financed under capital lease obligations
                
                
                11,906
                
                
                -Series
                    A Convertible Preferred Stock exchanged for convertible debentures
                
                
                303,570
                
                
                -Contribution
                    of loans payable to officers upon completion of share exchange
                    transaction
                
                
                183,559
                
                
                -Contribution
                    of compensation payable to officers upon completion of share
                    exchange
                    transaction
                
                
                623,314
                
                
                -Recapitalization
                    of excess of liabilities over assets into stockholders equity
                    concurrentwith
                    share exchange transaction
                
                
                2,729,748Series
                    A Convertible Preferred Stock exchanged for accounts payable
                
                
                13,475
 The
        accompanying footnotes are an integral
        part of these consolidated financial statements
  F-5
 ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 **NOTE
          1 -** **The
          Company**
 
 Organization
 The
          financial statements presented are those of Odyne Corporation (the “Company” or
“Odyne”), which was originally formed as a Subchapter S Corporation in the State
          of New York on August 3, 2001. The Company designs, develops, manufactures
          and
          installs Plug-in Hybrid Electric Vehicle (“PHEV”) propulsion systems for medium
          and heavy duty trucks and buses using its proprietary technology.
 
 Merger
          of Technology Integration Group , Inc. and Odyne Corporation
 Pursuant
          to an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”),
          Technology Integration Group, Inc. (“TIG”), through a newly-formed acquisition
          subsidiary, acquired all of the outstanding common stock of the Company
          on
          October 17, 2006. TIG, in exchange for the Company stock, issued 12,000,000
          shares of its common stock directly to the Company’s stockholders (the “Share
          Exchange Transaction”). Following the Share Exchange Transaction, the existing
          stockholders of TIG retained 6,000,000 shares of the TIG’s outstanding common
          stock and the Company’s stockholders became the majority owners of TIG. TIG was
          incorporated in the State of Delaware on February 3, 1999.
  Prior
          the
          Share Exchange Transaction, TIG was a publicly-traded corporation with
          nominal operations of its own. TIG, immediately following the Share Exchange
          Transaction, changed its name to Odyne Corporation and continued to carry
          on the
          operations of the Company. The Share Exchange Transaction has been accounted
          for
          as a reverse merger and recapitalization transaction in which the original
          Odyne
          is deemed to be the accounting acquirer. Accordingly, the accompanying
          consolidated financial statements present the historical financial position,
          results of operations and cash flows of Odyne, adjusted to give retroactive
          effect to the recapitalization of Odyne into TIG.
  **NOTE
          2 -** **Liquidity
          and Capital Resources**
  The
          Company’s incurred operating losses in the amounts of $1,680,980 and $662,029
          for the years ended December 31, 2006 and 2005, respectively. The Company’s
          accumulated deficit amounts to $3,841,077 at December 31, 2006. The Company
          also
          used $1,237,106 of cash in its operating activities during the year ended
          December 31, 2006.
 
 As
          more fully described in Note 11, the Company received gross proceeds of
          $5,354,595 (net proceeds of $4,355,319 after the payment of $998,676 in
          transaction expenses) in a private placement (the “Private Placement”) of 5,750
          Units (the “Units”). The Company also received $250,000 from its issuance of
          convertible debentures (the “Convertible Debentures”) that the holders exchanged
          for Units upon the first closing of the Private Placement in October 2006
          (Notes
          10 and 12). Upon the completion of the Share Exchange transaction, the
          Company
          also effectuated a recapitalization of certain indebtedness to
          officers/stockholders into permanent capital, including (i) $1,766,496
          for the
          fair value of common stock subject to mandatory redemption under a stockholders
          agreement that was terminated at the time of the Share Exchange Transaction,
          (ii) $623,314 of deferred compensation payable to certain officers/stockholders
          and (iii) $183,559 of loans payable to officers (Note 9).
 
 The
          Company used a portion of the proceeds received in the Private Placement
          Transaction to repay $115,830 of indebtedness due under previously existing
          credit lines with banks and to fund its shortages of working capital.
 
 The
          Company believes that the completion of its Private Placement and
          recapitalization of liabilities due to officers/stockholders has substantially
          improved its overall liquidity. However, the Company will still be required
          to
          devote all of its capital resources to pursuing its research and development
          initiatives, developing its manufacturing infrastructure and penetrating
          possible markets for its PHEV propulsion system. The Company will need
          to raise
          substantial additional funds to achieve commercialization of its PHEV
          system and continue the pursuit of its business plan.
  F-6
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 The
          Company has taken certain measures to conserve its liquidity while it continues
          the effort to develop its technology. There can be no assurance that the
          Company
          will be successful in its efforts to fully commercialize its PHEV propulsion
          system or that the commercialization of this technology will actually improve
          its operating results. Management believes that the Company has sufficient
          capital resources to sustain the business through December 31, 2007.
 Additionally, there can be no assurance that unforeseen circumstances will
          not have a material affect on the business that could require it to raise
          additional capital or take other measures to sustain operations in the
          event
          that outside sources of capital are not available. The Company has not
          secured
          any commitments for new financing at this time nor can it provide any assurance
          that new capital will be available to it on acceptable terms, if at all.
          The Company can also not provide any assurance that even it is successful
          in
          efforts to raise additional capital, at the proceeds of any such financing
          transactions will enable it to develop its business to a level in which it
          is actually generating operating profits and positive cash flows.
  **NOTE
          3 -** **Summary
          of Significant Accounting Policies**
 
 Principles
          of Consolidation
 The
          consolidated financial statements include the accounts of the Odyne Corporation
          and its wholly-owned subsidiary. All significant inter-company accounts
          and
          transactions have been eliminated.
 
 Use
          of
          Estimates
 The
          preparation of financial statements in conformity with accounting principles
          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 and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those estimates.
          These estimates and assumptions include revenue recognition reserves and
          write-downs related to receivables and inventories, the recoverability
          of
          long-term assets, deferred taxes and related valuation allowances and valuation
          of equity instruments.
 
 Cash
          and Cash Equivalents
 The
          Company considers all highly liquid investments purchased with an original
          maturity of three months or less to be cash equivalents. Cash equivalents
          may be
          invested in money market funds, commercial paper, and certificates of deposits.
          Cash equivalents are carried at cost, which approximates fair value.
 
 Concentration
          of Credit Risk
 Financial
          instruments that potentially subject the Company to significant concentrations
          of credit risk consist of cash, cash equivalents and accounts receivable.
          The
          Company maintains its cash accounts at high quality financial institutions
          with
          balances, at times, in excess of federally insured limits. As of December
          31,
          2006, the Company had cash balances in excess of federally insures limits
          of
          approximately $3,112,000. Management believes that the financial institutions
          that hold the Company’s deposits are financially sound and have minimal credit
          risk.
  F-7
 ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 Accounts
          Receivable
 The
          Company has a policy of reserving for uncollectible accounts based on its
          best
          estimate of the amount of probable credit losses on its existing accounts
          receivable. Account balances deemed to be uncollectible are charged to
          the
          allowance for doubtful accounts after all means of collection have been
          exhausted and the potential for recovery is considered remote. The Company’s
          customers include municipal governments, public utilities and not-for-profit
          organizations. The Company’s credit losses to date have been minimal.
          Accordingly, the Company
          established a $3,000 allowance for doubtful accounts during the year ended
          December 31, 2006.
 
 Inventory
 Inventories
          include raw material and assembled parts. Inventories are stated at the
          lower of
          cost, determined by the first-in first out (“FIFO”) method, or market.
 
 Revenue
          and Cost Recognition
 
 Fixed
          Price Production Contracts
 Revenues
          from fixed-price production contracts are recognized on the
          percentage-of-completion method, measured by the percentage of costs incurred
          to
          date to estimated total costs for each contract. The Company considers
          expended
          cost to be the best available measure of progress on these contracts. Revenues
          generated from fixed-price contracts amounted to $ 239,519 and $ 46,543
          for the
          years ended December 31, 2006 and December 31, 2005 respectively. Cost
          of
          revenues earned on fixed-price contracts includes direct contract costs
          such as
          materials, labor, subcontract labor, payroll, payroll taxes, insurance
          and other
          sundry direct costs, and indirect contract costs such as travel, supplies,
          repairs and depreciation. Provisions for estimated losses on contracts
          in
          progress are made in the period in which such losses are determined. For
          the
          year ended December 31, 2006 the Company recorded a provision for losses
          on
          contracts in progress of $26,939. No loss reserve on contracts in progress
          was
          deemed necessary for the year ended December 31, 2005.
 
 Making
          estimates about revenue recognition and cost estimates on the company’s
          production contracts requires management to exercise significant judgment.
          It is
          at least reasonably possible that the estimate of the effect on the financial
          statements of a condition, situation, or set of circumstances that existed
          at
          the date of the financial statements, which management considered in formulating
          its estimate could change in the near term due to one or more future confirming
          events. Accordingly, the actual results regarding estimates of the Company’s
          revenue and cost associated with long-term contracts could differ materially
          from the Company’s estimates.
 
 Accounts
          receivable represents progress billings that the Company rendered in the
          course
          of performing the work under contract. Billings in excess of costs and
          estimated
          earnings on uncompleted contracts, which amounted to $57,500 at December
          31,
          2006, are presented as liabilities in the accompanying balance
          sheet.
  Time
          and Materials Contracts
 Revenues
          from time and materials contracts are billed, including profits, as incurred
          based on a fixed labor rate plus materials. Revenues generated from time
          and
          materials contracts amounted to $
          3,426 and $ 229,055 for the years ended December 31, 2006 and December
          31, 2005
          respectively. Cost
          of revenues from time and materials contracts includes labor and materials.
  The
          Company will be obligated to provide a one-year product warranty with respect
          to
          a contract it entered into in 2005. As of December 31, 2006, the product
          was not
          completed. Accordingly, no provision for warranty costs has been
          recorded.
  F-8
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 Research
          and Development
 Research
          and development expenses include costs incurred for the experimentation,
          design
          and testing of the Company’s PHEV technology. Such costs are expensed as
          incurred. Research and development cost includes direct costs such as materials,
          labor,
          subcontract labor, payroll, payroll taxes, insurance and other sundry direct
          costs, and indirect costs such as travel, supplies, repairs and
          depreciation.
 
 The
          Company has received non-refundable development funding from various
          governmental and/or energy related agencies, including Long Island Power
          Authority, the Electric Power Research Institute, New York State Energy
          Research
& Development Authority and the Greater Long Island Clean Cities Coalition.
          They are funded, in part, by third parties and expensed as
          incurred.
 
 Research
          and development expenses, net of non-refundable development funding, for
          the
          years ended December 31, 2006 and 2005 were as follows:
 
 2006
                
                2005Total
                    research and development expense
                
                $
                767,929
                
                $
                523,505Less:
                    reimbursements
                
                
                (12,500
                )
                
                (80,512
                )Net
                    Research and Development Expense
                
                $
                755,429
                
                $
                442,993
 
 Property
          and Equipment
 Property
          and equipment, including assets acquired under capital leases, are stated
          at
          cost less accumulated
          deprecation and amortization .
          Depreciation is computed using the straight-line method over the estimated
          useful lives of the respective assets. Leasehold improvements are being
          amortized on a straight-line basis over the lesser of the term of the related
          lease or the estimated useful lives of the assets. Equipment
          and furniture and fixtures are depreciated over estimated useful lives of 3
          years.
 
 Upon
          retirement or sale, the cost and related accumulated depreciation are removed
          from the balance sheet and the resulting gain or loss is reflected in
          operations. Maintenance and repairs are charged to operations as
          incurred
 
 Intangible
          Assets - Patents
 Costs
          incurred to obtain patents are amortized over the remaining legal life
          of the
          patent or its economic useful life, if shorter. Patent costs are reviewed
          for
          impairment annually or whenever events or changes in business circumstance
          indicate the carrying value of the assets may not be recoverable. Impairment
          losses are recognized if future cash flows of the related assets are less
          than
          their carrying values.
 
 Income
          Taxes
 The
          Company accounts for income taxes under Statement of Financial Accounting
          Standard No. 109, “Accounting for Income Taxes,” (“SFAS 109”). SFAS No. 109
          requires the recognition of deferred tax assets and liabilities for both
          the
          expected impact of differences between the financial statements and tax
          basis of
          assets and liabilities and for the expected future tax benefit to be derived
          from tax loss and tax credit carry forwards. SFAS No. 109 additionally
          requires
          the establishment of a valuation allowance be
          established when it is more likely than not that all or a portion of deferred
          tax assets will not be realized. Furthermore, SFAS No. 109 provides
          that it is difficult to conclude that a valuation allowance is not needed
          when
          there is negative evidence such as cumulative losses in recent years. Therefore,
          cumulative losses weigh heavily in the overall assessment. Accordingly the
          Company has recorded a full valuation allowance against its net
          deferred tax assets. In addition, the Company expects to provide a
          full valuation allowance on future tax benefits until it can sustain a
          level of profitability that demonstrates its ability to utilize the assets,
          or other significant positive evidence arises that suggests its ability to
          utilize such assets. The future realization of a portion of the reserved
          deferred tax assets related to tax benefits associated with the exercise
          of
          stock options, if and when realized, will not result in a tax benefit in
          the
          consolidated statement of operations, but rather will result in an increase
          in
          additional paid in capital. The Company will continue to re-assess
          reserves on deferred income tax assets in future periods on a quarterly
          basis.
  F-9
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 Prior
          to
          the Share Exchange Transaction, the Company’s stockholders elected for the
          Company to be treated as an “S” corporation under subchapter “S” of the Internal
          Revenue Code and as a small business corporation under similar provisions
          of the
          New York State income tax code applicable to corporations. Accordingly,
          no
          income tax provision had been recorded prior to the Share Exchange Transaction
          as any income earned or losses incurred and any tax credits were reported
          by the
          stockholders in their individual federal and state income tax
          returns.
 
 Fair
          Value of Financial Instruments
 The
          carrying amounts reported in the balance sheet for accounts receivable,
          accounts
          payable, prepaid expenses and accrued expenses, approximate fair value
          based on
          the short-term maturity of these instruments. The carrying amount for
          development funding subject to repayment is the maximum amount that would
          be
          repaid upon the occurrence of certain events as specified in the funding
          agreement which approximates fair value.
 
 Stock
          Based Compensation
 The
          Company has adopted SFAS No. 123(R) “Share Based Payment”
(“SFAS 123(R)”). This statement is a revision of SFAS Statement
          No. 123, and supersedes APB Opinion No. 25, and its related
          implementation guidance. SFAS 123(R) addresses all forms of share based
          payment (“SBP”) awards including shares issued under employee stock purchase
          plans, stock options, restricted stock and stock appreciation rights. Under
          SFAS 123(R), SBP awards are measured at fair value on the awards’
grant date, based on the estimated number of awards that are expected to
          vest
          and results in a charge to operations.
 
 Non-Employee
          Stock Based Compensation
 The
          Company accounts for equity instruments issued to non-employees in accordance
          with the provisions of SFAS No. 123(R) and Emerging Issues Task Force
          (“EITF”)Issue No. 96-18, “Accounting for Equity Instruments That are Issued
          to Other Than Employees for Acquiring, or in Conjunction with Selling,
          Goods or
          Services,” (“EITF 96-18”) which requires that such equity instruments are
          recorded at their fair value on the measurement date. The measurement of
          stock-based compensation is subject to periodic adjustment as the underlying
          equity instrument vests. Non-employee stock-based compensation charges
          are being
          amortized over the term of the related service period.
 
 Net
          Loss Per Share
 Net
          loss per share is presented under SFAS No. 128 “Earnings Per Share." (“SFAS
          128”) Under SFAS 128, basic net loss per share is computed by dividing net
          loss
          per share available to common stockholders by the weighted average shares
          of
          common stock outstanding for the period and excludes any potential dilution.
          Diluted earnings per share reflect the potential dilution that would occur
          upon
          the exercise or conversion of all dilutive securities into common stock.
          The
          computation of loss per share for the years ended December 31, 2006 and
          2005
          excludes potentially dilutive securities because their inclusion would
          be
          anti-dilutive. Loss per share retroactively
          includes 12,000,000 shares of common stock issued to the former stockholders
          of
          Odyne in the Share Exchange Transaction.
  F-10
 ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
  Shares
          of common stock issuable upon conversion or exercise of potentially dilutive
          securities at December 31, 2006 are as follows:
  Series
                    A Convertible Preferred Stock
                
                
                7,670,500Warrants
                
                
                4,648,
                    893Options
                
                
                505,000Total
                
                
                12,824,393
  Convertible
          Instruments
 The
          Company evaluates and accounts for conversion options embedded in its
          convertible instruments in accordance with SFAS No. 133 “Accounting
          for Derivative Instruments and Hedging Activities” (“SFAS 133”) and EITF
          00-19 “Accounting for Derivative Financial Instruments Indexed to, and
          Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”).
 
 SFAS 133
          generally provides three criteria that, if met, require companies to bifurcate
          conversion options from their host instruments and account for them as
          free
          standing derivative financial instruments in accordance with EITF 00-19.
          These
          three criteria include circumstances in which (a) the economic
          characteristics and risks of the embedded derivative instrument are not
          clearly
          and closely related to the economic characteristics and risks of the host
          contract, (b) the hybrid instrument that embodies both the embedded
          derivative instrument and the host contract is not remeasured at fair value
          under otherwise applicable generally accepted accounting principles with
          changes
          in fair value reported in earnings as they occur and (c) a separate
          instrument with the same terms as the embedded derivative instrument would
          be
          considered a derivative instrument subject to the requirements of SFAS 133.
          SFAS 133 and EITF 00-19 also provide an exception to this rule when the
          host instrument is deemed to be conventional (as that term is described
          in the
          implementation guidance to SFAS 133 and further clarified in EITF 05-2 “The
          Meaning of “Conventional Convertible Debt Instrument” in Issue No. 00-19).
 
 The
          Company accounts for convertible instruments (when it has determined that
          the
          embedded conversion options should not be bifurcated from their host
          instruments) in accordance with the provisions of EITF 98-5 “Accounting for
          Convertible Securities with Beneficial Conversion Features,” (“EITF 98-5”) and
          EITF 00-27 “Application of EITF 98-5 to Certain Convertible Instruments.”
Accordingly, the Company records when necessary discounts to convertible
          notes
          for the intrinsic value of conversion options embedded in debt instruments
          based
          upon the differences between the fair value of the underlying common stock
          at
          the commitment date of the note transaction and the effective conversion
          price
          embedded in the note. Debt discounts under these arrangements are amortized
          over
          the term of the related debt to their earliest date of redemption. The
          Company
          also records when necessary deemed dividends for the intrinsic value of
          conversion options embedded in preferred shares based upon the differences
          between the fair value of the underlying common stock at the commitment
          date of
          the note transaction and the effective conversion price embedded in the
          note.
 
 Preferred
          Stock
 The
          Company applies the guidance enumerated in SFAS No. 150 “Accounting
          for Certain Financial Instruments with Characteristics of both Liabilities
          and
          Equity ”(“SFAS150”) and “Classification and Measurement of Redeemable
          Securities,” (“EITF Topic D-98”) when determining the classification and
          measurement of preferred stock. Preferred shares subject to mandatory redemption
          (if any) are classified as liability instruments and are measured at fair
          value
          in accordance with SFAS 150. All other issuances of preferred stock are
          subject to the classification and measurement principles of EITF Topic
          D-98.
          Accordingly the Company classifies conditionally redeemable preferred shares
          (if
          any), which includes preferred shares that feature redemption rights that
          are
          either within the control of the holder or subject to redemption upon the
          occurrence of uncertain events not solely within the Company’s control, as
          temporary equity. At all other times, the Company classifies its preferred
          shares in stockholders’ equity.
  F-11
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 The
          Company’s preferred shares do not feature any redemption rights within the
          holders control or conditional redemption features not within the Company’s
          control as of December 31, 2006. Accordingly all issuances of preferred
          shares are presented as a component of stockholders equity.
 
 Recent
          Accounting Pronouncements
 In
          February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
          Financial Instruments - an amendment of FASB Statements No. 133 and 150.” 
SFAS No. 155 (a) permits fair value remeasurement for any hybrid financial
          instrument that contains an embedded derivative that otherwise would require
          bifurcation, (b) clarifies that certain instruments are not subject to
          the
          requirements of SFAS 133, (c) establishes a requirement to evaluate interests
          in
          securitized financial assets to identify interests that may contain an
          embedded
          derivative requiring bifurcation, (d) clarifies what may be an embedded
          derivative for certain concentrations of credit risk and (e) amends SFAS
          140 to
          eliminate certain prohibitions related to derivatives on a qualifying
          special-purpose entity.  SFAS 155 is applicable to new or modified
          financial instruments in fiscal years beginning after September 15, 2006,
          though
          the provisions related to fair value accounting for hybrid financial instruments
          can also be applied to existing instruments. Early adoption, as of the
          beginning
          of an entity’s fiscal year, is also permitted, provided interim financial
          statements have not yet been issued. The Company is currently evaluating
          the
          potential impact, if any, that the adoption of SFAS 155 will have on its
          consolidated financial statements.
 
 In
          March
          2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
          Assets
          (SFAS No. 156). SFAS No. 156 amends SFAS No. 140 “Accounting for Transfers and
          Servicing of Financial Assets and Extinguishments of Liabilities,” to require
          all separately recognized servicing assets and servicing liabilities to
          be
          initially measured at fair value, if practicable. SFAS No. 156 also permits
          services to subsequently measure each separate class of servicing assets
          and
          liabilities at fair value rather than at the lower of cost or market. For
          those
          companies that elect to measure their servicing assets and liabilities
          at fair
          value, SFAS No. 156 requires the difference between the carrying value
          and fair
          value at the date of adoption to be recognized as a cumulative effect adjustment
          to retained earnings as of the beginning of the fiscal year in which the
          election is made. SFAS No. 156 is effective for the first fiscal year beginning
          after September 15, 2006. The Company is currently evaluating the potential
          impact, if any, that the adoption of SFAS 156 will have on its consolidated
          financial statements.
 
 In
          June
          2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for
          Uncertainty in Income Taxes. FIN 48 prescribes a recognition threshold
          and
          measurement attribute for the financial statement recognition and measurement
          of
          a tax position taken or expected to be taken in a tax return. FIN 48 also
          provides guidance on derecognition, classification, interest and penalties,
          accounting in interim periods, disclosure, and transition. FIN 48 is effective
          for fiscal years beginning after December 15, 2006. The Company has not
          yet
          completed its analysis of the impact that FIN 48 may have on its
          financial condition, results of operations, cash flows or
          disclosures.
 
 In
          September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS
          157"). This Standard defines fair value, establishes a framework for measuring
          fair value in generally accepted accounting principles and expands disclosures
          about fair value measurements. SFAS 157 is effective for financial statements
          issued for fiscal years beginning after November 15, 2007 and interim periods
          within those fiscal years. The adoption of SFAS 157 is not expected to
          have a
          material impact on the Company's financial position, results of operations
          or
          cash flows.
 
 F-12
 
  ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 In
          September 2006, the Securities and Exchange Commission issued Staff Accounting
          Bulletin (“SAB”) 108, “Considering the Effects of Prior Year Misstatements when
          Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB
          108 provides guidance on how prior year misstatements should be taken into
          consideration when quantifying misstatements in current year financial
          statements for purposes of determining whether the current year’s financial
          statements are materially misstated. SAB 108 is effective for the first
          fiscal
          year ending after November 15, 2006. The adoption of SAB 108 did not impact
          the Company’s financial statements.
  In
          December 2006, the FASB issued FSP EITF 00-19-2 “Accounting for Registration
          Payment Arrangements” (“FSP EITF 00-19-2”). FSP EITF 00-19-2 addresses an
          issuer’s accounting for registration payment arrangements. This pronouncement
          specifies that the contingent obligation to make future payments or otherwise
          transfer consideration under a registration payment arrangement, whether
          issued
          as a separate agreement or included as a provision of a financial instrument,
          should be separately recognized and accounted for as a contingency in accordance
          with SFAS 5 “Accounting for Contingencies.” FSP EITF 00-19-2 amending previous
          standards relating to rights agreements became effective on December 21,
          2006
          with respect to arrangements entered into or modified beginning on such
          date and
          for the first fiscal year beginning after December 15, 2006 with respect
          to
          those arrangements entered into prior to December 21, 2006. The Company
          is in
          the process of evaluating the impact of the adoption of this statement
          on the
          Company’s results of operations and financial condition.
 
 In
          February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
          Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides companies
          with an option to report selected financial assets and liabilities at fair
          value
          and establishes presentation and disclosure requirements designed to facilitate
          comparisons between companies that choose different measurement attributes
          for
          similar types of assets and liabilities. SFAS 159 is effective for fiscal
          years
          beginning after November 15, 2007. The Company is in the process of
          evaluating the impact of the adoption of this statement on the Company’s results
          of operations and financial condition.
  In
          November 2006, the EITF reached a final consensus in EITF Issue 06-6 “Debtor’s
          Accounting for a Modification (or Exchange) of Convertible Debt Instruments”
(“EITF 06-6”).  EITF 06-6 addresses the modification of a convertible debt
          instrument that changes the fair value of an embedded conversion option
          and the
          subsequent recognition of interest expense for the associated debt instrument
          when the modification does not result in a debt extinguishment pursuant
          to EITF
          96-19, “Debtor’s Accounting for a Modification or Exchange of Debt
          Instruments.”  The consensus should be applied to modifications or
          exchanges of debt instruments occurring in interim or annual periods beginning
          after November 29, 2006.  The Company does not expect the adoption of EITF
          06-6 to have a material impact on its consolidated financial position,
          results
          of operations or cash flows.
  In
          November 2006, the FASB ratified EITF Issue No. 06-7, “Issuer’s Accounting for a
          Previously Bifurcated Conversion Option in a Convertible Debt Instrument
          When
          the Conversion Option No Longer Meets the Bifurcation Criteria in FASB
          Statement
          No. 133, Accounting for Derivative Instruments and Hedging Activities” (“EITF
          06-7”). At the time of issuance, an embedded conversion option in a convertible
          debt instrument may be required to be bifurcated from the debt instrument
          and
          accounted for separately by the issuer as a derivative under FAS 133, based
          on
          the application of EITF 00-19. Subsequent to the issuance of the convertible
          debt, facts may change and cause the embedded conversion option to no longer
          meet the conditions for separate accounting as a derivative instrument,
          such as
          when the bifurcated instrument meets the conditions of Issue 00-19 to be
          classified in stockholders’ equity. Under EITF 06-7, when an embedded conversion
          option previously accounted for as a derivative under FAS 133 no longer
          meets
          the bifurcation criteria under that standard, an issuer shall disclose
          a
          description of the principal changes causing the embedded conversion option
          to
          no longer require bifurcation under FAS 133 and the amount of the liability
          for
          the conversion option reclassified to stockholders’ equity. EITF 06-7 should be
          applied to all previously bifurcated conversion options in convertible
          debt
          instruments that no longer meet the bifurcation criteria in FAS 133 in
          interim
          or annual periods beginning after December 15, 2006, regardless of whether
          the
          debt instrument was entered into prior or subsequent to the effective date
          of
          EITF 06-7. Earlier application of EITF 06-7 is permitted in periods for
          which
          financial statements have not yet been issued. The Company is currently
          evaluating the impact of this guidance on its consolidated financial position,
          results of operations or cash flows
  F-13
  ODYNE
            CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
  Other
          accounting standards that have been issued or proposed by the FASB or other
          standards-setting bodies that do not require adoption until a future date
          are
          not expected to have a material impact on the consolidated financial statements
          upon adoption.
 
 **NOTE
          4 -** **Cash**
 
 Cash
          -
          Restricted
 The
          Merger Agreement requires the Company to use $250,000 of the proceeds from
          its
          Private Placement during the twelve months following the closing toward
          establishing a comprehensive capital markets initiative. The funds are
          currently
          being held in a trust account by Sovereign Bancorp Ltd. (“Sovereign”)
          established specifically for this purpose. In the event one or a series
          of
          warrant redemptions result in additional proceeds to the Company of at
          least
          $1,500,000, the Company shall deposit an additional $200,000 in trust,
          to be
          held by Sovereign, and to be used for additional capital markets initiatives
          during the twelve months following the warrant redemption. At December
          31, 2006,
          the restricted cash account balance was $227,583.
  **NOTE
          5 -** **Property
          and Equipment**
 
 Property
          and equipment consist of the following as of December 31, 2006:
 
 Equipment
                
                $
                89,181Furniture
                    and fixtures
                
                
                28,393Leasehold
                    improvements
                
                
                26,398143,972Less:
                    accumulated depreciation andamortization
                
                
                (45,175
                )Property
                    and Equipment, Net
                
                $
                98,797
 
 Property
          and equipment includes $22,000 of assets financed under capital lease
          obligations. Depreciation and amortization amounted to $19,103 and $11,487
          for
          the years ended December 31, 2006 and 2005, respectively.
 
 **NOTE
          6 -** **Capital
          Leases Obligations**
 
 The
          Company leases equipment under capital leases in which the present value
          of the
          minimum lease payments was calculated using discount rates ranging from
          9% to
          18% over three-year terms. A summary of capital lease obligations that
          remain at
          December 31, 2006 is as follows:
  F-14
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 Total
                    obligations under capital leases
                
                $
                11,779Less:
                    current portion of lease obligations
                
                
                6,817$
                4,962
 
 Minimum
          lease payments due in years subsequent to December 31, 2006 are as
          follows:
 
 For
                    Years Ending December 31,
                
                
                Amount2007
                
                $
                7,6472008
                
                
                4,5572009
                
                
                679Total
                    minimum lease payments
                
                
                12,883Less:
                    amount representing interest
                
                
                1,104Present
                    Value of Minimum Lease Payments
                
                $
                11,779
 
 **NOTE
          7 -** **Development
          Funding Subject to Repayment**
 
 The
          Company entered into a contract in which it received development funding
          from
          the New York State Energy Research & Development Authority in the amount of
          $80,428 and $160,465 during for the years ended December 31, 2006 and 2005,
          respectively. Funding received under the terms of this agreement is subject
          to
          repayment based on a percentage of sales of the related invention or discovery
          as defined under the terms of the agreement. The obligation terminates
          upon the
          earlier of fifteen (15) years from the date of the first sale or, depending
          on
          whether the seller is a New York State manufacturer, upon repayment of
          the
          amount of funds received under the agreement or if seller is not a New
          York
          State manufacturer, upon repayment of three times the amount of funds received
          under the agreement. Development funding subject to repayment was $240,894
          at
          December 31, 2006.
 
 **NOTE
          8 -** **Related
          Parties**
 
 Concurrent
          with the Share Exchange Transaction, certain of the Company’s
          officers/stockholders contributed to additional paid in capital (i) $183,559
          loans (including accrued interest of $43,559) and (ii), $623,314 of accrued
          officers’ salaries earned through August 31, 2006.
 
 An
          officer/director purchased 50 Units in the Private Placement. Two directors
          purchased an aggregate of 44 Units in the Private Placement, including
          24 Units
          exchanged for $20,000 bridge notes. These transactions were made on terms
          identical to those offered to unrelated parties.
 
 
 **NOTE
          9 -** **Convertible
          Debentures**
 
 During
          the period of June 2006 through October 2006, the Company issued $250,000
          of
          Convertible Debentures with warrants (the “Debenture Warrants”) to purchase
          66,666 shares of common stock at an exercise price of $.75 per share. A
          Director
          of the Company participated in this transaction by purchasing Convertible
          Debentures in the aggregate principal amount of $20,000.
  
 The
          Debenture Warrants feature a cashless exercise provision which permits
          the
          holder to net share settle these instrument for the number of shares issuable
          upon exercise less such number of shares equal to the exercise price of
          the
          Debenture Warrants based on the then fair value of the stock. The Debenture
          Warrants also provide for standard anti-dilution rights including stock
          splits,
          stock dividends, recapitalization and similar transactions in the event
          that the
          Company subsequently issues additional instruments providing for the purchase
          of
          its equity securities at prices more favorable than the exercise price
          of the
          Debenture Warrants.
  F-15
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 The
          Convertible Debentures featured contractual interest at the rate of 10%
          per
          annum with the full amount of principal payable on the earlier of December
          31,
          2006 or the date in which the Company completes the Private Placement described
          in Note 11. The Convertible Debentures agreement also stipulated that these
          instruments would become convertible, at the option of the holder, into
          shares
          of the Company’s common stock at a conversion price of $.375 per share if its
          was determined prior to December 31, 2006 that the Private Placement described
          in Note 11 would not be completed. Conversely, the agreement provided for
          the
          Debentures to automatically convert into the Units to be issued in the
          Private
          Placement upon the completion of such transaction.
 
 The
          Company evaluated the conversion option embedded in the Convertible Debentures
          to determine whether, in accordance with SFAS 133 such conversion option
          should
          be bifurcated from the convertible debentures and accounted for as a
          free standing derivative financial instrument. The Company determined that
          since
          the conversion option could only be realized by the holder by exercising
          such
          option and receiving the entire amount of the proceeds in a fixed number
          of
          shares or cash at the Company’s option, that the instrument is deemed
          conventional. Accordingly, the conversion feature was accounted for as
          an
          embedded conversion option.
 
 The
          Company determined, in accordance with Accounting Principles Board (“APB”)
          Opinion No. 14, “ Accounting
          for Convertible Debt and Debt Issued with Stock Purchase Warrants” (“APB 14”),
          that $24,177 of the proceeds received in the financing transaction should
          be
          allocated to the Debenture Warrants and the remaining amount of the proceeds,
          which amounted to $225,823, should be allocated to the Convertible Debentures.
          The Company further determined that the effective conversion price embedded
          in
          the Convertible Debentures, (based on this allocation) amounts to $.34
          per
          share. The fair value of the Company's common stock on the respective
          commitment dates within this financing transaction amounted to $.75 per
          share. Accordingly, the Convertible Debentures were fully discounted at the
          time of their respective issuances by crediting additional paid in capital
          since
          the conversion is deemed to be beneficial.
 
 On
          October 17, 2006, the Convertible Debentures were converted into 304 Units
          upon
          the first closing of the Private Placement described in Note 11, which
          represents a 120% contractual exchange premium stipulated in the Convertible
          Debenture Agreement. The excess of the Units exchanged for the Convertible
          Debentures, which amounted to $53,570, is recorded as interest expense
          in the
          accompanying statement of operations for the year ended December 31, 2006.
          Aggregate noncash interest expense resulting from the Convertible Debentures
          amounted to $303,570 including $250,000 for the discounting of these instruments
          at their respective commitment dates and the $53,570 exchange premium described
          above.
 
 **Note
          10- Commitments** **and Contingencies**
 
 Operating
          Lease
 The
          Company conducts its operations from a single facility, under a non-cancelable
          operating lease expiring in June 2009 requiring minimum monthly payments
          that
          increase from $5,544 to $7,708 over the term of the lease.
 
 Future
          minimum rental payments under the above non-cancelable operating lease
          are as
          follows:
  F-16
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 For
                    the Year Ending
                  December
                    31,
                
                Amount2007
                
                $
                87,9502008
                
                
                90,9412009
                
                
                46,252$
                225,143
 
 Rent
          expense amounted to $45,932 and $28,710, for the years ended December 31,
          2006
          and December 31, 2005, respectively. Rent expense includes $5,312
          and ($2,920) for the effects of recording rent expense on a straight line
          basis over the term of the lease during the years ended December 31, 2006
          and
          December 31, 2005, respectively.
 
 Consulting
          and Royalty agreements
 In
          October of 2006, the Company entered into an agreement with one of its
          outside
          engineering labor providers whereby it committed to paying for a minimum
          of 100
          hours per month through December of 2008. Hourly rates charged under the
          contract are $ 80 per hour in 2007 and $ 85 per hour in 2008. In May of
          2005,
          the Company entered into a royalty agreement with the same party that requires
          the Company to pay royalties for sales of vehicles containing certain
          proprietary source code used in the Company's PHEV system. Royalty fees
          range
          from $ 75 per vehicle to $ 850 per vehicle depending on annual volume.
          The
          Company can purchase these source codes for $ 165,000 in 2007 and $ 181,500
          in
          2008. The Company did not deliver any of these vehicles during the year
          ended
          December 31, 2006.
 
 Employment
          Agreements
  In
          October of 2006, the Company entered into employment agreements with its
          Chief
          Executive Officer, President and Chief Operating Officer, Executive Vice
          President - Engineering and Chief Technology Officer, and Executive Vice
          President - Operations, respectively. The employment agreements for Chief
          Executive Officer and President have a term of one year and may be renewed
          for
          an additional term of one year upon the mutual agreement of the Company
          and the
          executive. The employment agreements for the Engineering and Chief Technology
          Officer, and Executive Vice President - Operations, have a term of three
          years.
          The employment agreements provide that each executive will receive an annual
          salary of $140,000 during the first year of the term with increases equal
          to 5%
          of such salary on each anniversary of the effective date of the employment
          agreement. In addition, each executive is entitled to (a) receive a cash
          bonus
          in an amount determined by the compensation committee of the board of directors
          if the Company meets or exceeds certain mutually agreed upon performance
          goals
          and (b) participate in the company’s stock option plan. In October of 2006, the
          Company also entered into a one year employment agreement with its chief
          engineer that provides for an annual salary of $ 140,000 and participation
          in
          the Company’s stock option plan.
 
 The
          employment agreements provide for termination of an executive’s employment
          without any further obligation upon the death or disability of the executive
          or
          for cause. In the event that an executive’s employment is terminated without
          cause or for good reason, the Company is obligated to pay such executive
          his
          salary for the remainder of the term.
  F-17
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 Recent
          Contracts
 
 The
          Company recently received the following sales orders:
 
 The
          Company is committed to delivering three PHEV systems to a third party
          who will
          install them in a municipality’s vehicles. The total purchase order is for $
          240,000 for which the company received a $ 100,000 deposit.
 
 The
          Company is committed to installing a PHEV system in a customer provided
          vehicle
          and making additional changes to the vehicle as specified by the customer
          in the
          statement of work. The total price for the Statement of work is $ 111,000
          for
          which the Company is awaiting receipt of a $ 55,000 deposit.
 
 The
          Company committed to provide a trailer-mounted system to a customer that
          utilizes components from it’s PHEV system in accordance with a Statement of
          Work. The total statement of work is $107,285 which is payable upon completion.
 
 The
          Company does not anticipate that any of these projects are likely
          to result in a loss. However, making estimates about revenue recognition
          and cost estimates on production contracts requires management to exercise
          significant judgment. It is at least reasonably possible that the estimate
          of
          the effect on the financial statements of a condition, situation, or set
          of
          circumstances that existed at the time an estimate is formulated could
          change in the near term due to one or more future confirming events.
          Accordingly, the actual results regarding estimates of the company’s revenue and
          cost associated with these commitments could differ materially from its
          estimates.
   Research
          and Development Contract
 
 On
          March
          30, 2006 the Company signed a Research and Development Contract Extension
          with
          NYSERDA to develop and install a PHEV system into a refuse vehicle provided
          by a
          third party. The Company’s obligation under this agreement is to design and
          install the system and to provide NYSERDA with regular status reports.
          NYSERDA
          will provide funding up to an additional $161,046 for this effort. NYSERDA
          is entitled to a 1.5 % royalty on future sales of vehicles weighing up
          to 33,000
          pounds that utilize the Company’s PHEV propulsion system. The maximum royalty
          obligation that is payable under this agreement is limited to the amount
          of
          funding received and will be recorded as a liability at the time such funding
          is
          received.
  
 **NOTE
          11 -** **Stockholders’
          Equity**
 
 Authorized
          Capital
 The
          Company is authorized to issue up to 95,000,000 shares of common stock and
          5,000,000 shares of preferred stock of which 6,000 shares have been
          designated as Series A Convertible Preferred stock.
  F-18
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 Description
          of Common Stock
 Each
          share of common stock has the right to one vote. The holders of common
          stock are
          entitled to dividends when funds are legally available and when declared
          by the
          Board of Directors.
 
 Description
          of Preferred Stock
 The
          Company is authorized to issue up 5,000,000 shares of “blank check” Preferred
          Stock, par value $.001 per share, of which 6,000 shares have been designated
          as
          Series A Convertible Preferred Stock
 
 Holders
          of the Series A Convertible Preferred stock are entitled, at any time,
          to
          convert their shares of Series A Convertible Preferred stock into common
          stock,
          without any further payment. Each share of Series A Convertible Preferred
          stock
          is initially convertible into 1,334 shares of common stock. The number
          of shares
          of common stock issuable upon conversion of the Series A Convertible Preferred
          stock is subject to adjustment upon the occurrence of certain events, including,
          among others, a stock split, reverse stock split or combination of the
          Company’s
          common stock, an issuance of common stock or other securities as a dividend
          or
          distribution on the common stock, a reclassification, exchange or substitution
          of the common stock or a capital reorganization. In the event of a subsequent
          issue of common stock for cash consideration at a price less than $.75
          per
          share, the conversion rate will be that number of shares of common stock
          equal
          to $1,000 divided by the price per share at which the common stock is issued.
 
 Upon
          a
          merger or consolidation of the Company with or into another Company, or
          any
          transfer, sale or lease by the Company of its common stock or assets, the
          Series
          A Convertible Preferred stock will be treated as common stock for all purposes,
          including the determination of any assets, property or stock to which holders
          of
          the Series A Convertible Preferred stock are entitled to receive, or into
          which
          the Series A Convertible Preferred stock is converted, by reason of the
          consummation of such merger, consolidation, sale or lease.
 
 Holders
          of Series A Convertible Preferred stock are entitled to vote their shares
          on an
          as-converted to common stock basis, and shall vote together with the holders
          of
          the common stock, and not as a separate class.
 
 In
          the
          event of voluntary or involuntary liquidation, dissolution or winding-up
          of the
          Company, holders of Series A Convertible Preferred stock will be entitled
          to
          receive out of the Company’s assets available for distribution to its
          stockholders, before any distribution is made to holders of Company common
          stock, liquidating distributions in an amount equal to $1,000 per share.
          After
          payment of the full amount of the liquidating distributions to which the
          holders
          of the Series A Convertible Preferred stock are entitled, holders of the
          Series
          A Convertible Preferred stock will receive liquidating distributions pro
          rata
          with holders of common stock, based on the number of shares of common stock
          into
          which the Series A Convertible Preferred stock is convertible at the conversion
          rate then in effect. The Series A Convertible Preferred Stock holders do
          not
          have redemption rights.
 
 Holders
          of the Series A Convertible Preferred stock will not be entitled to receive
          dividends except to the extent that dividends are declared on the common
          stock.
          Holders of the Series A Convertible Preferred stock are entitled to receive
          dividends paid on the common stock based on the number of shares of common
          stock
          into which the Series A Convertible Preferred stock are convertible on
          the
          record date of such dividend.
 
 If
          the
          closing bid price of the Company’s common stock is above $5.00 per share for a
          period of thirty consecutive trading days, then each share of the Series
          A
          Convertible Preferred stock automatically converts into the number of shares
          of
          common stock at the conversion rate then in effect.
  F-19
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 Share
          Exchange Transaction
 As
          described in Note 1 the Company completed a Share Exchange Transaction
          on
          October 17, 2006. Prior to the completion of the Share Exchange Transaction,
          the
          Company’s four principal stockholders owned, in the aggregate 10,588 shares of
          the Company’s stock which, under the terms of a stockholders agreement dated
          January 1, 2004, was subject to mandatory redemption upon the death of
          any such
          stockholder at a redemption price of $167 per share. In accordance with
          SFAS
          150, the Company presented these shares in its balance sheet as an excess
          of
          liabilities over assets since such shares were subject to a mandatory redemption
          requirement. The stockholders agreement was terminated upon the completion
          of
          the Share Exchange Transaction. Accordingly, upon completion of the Share
          Exchange Transaction, the excess of liabilities over assets was reclassified
          as
          permanent capital to reflect their recapitalization into TIG common stock.
          In
          addition, the Company reclassified the amount of its accumulated deficit,
          which
          represents losses incurred in periods in which the Company maintained its
          status
          as a Subchapter S Corporation, into additional paid in capital.
 
 The
          Share
          Exchange Transaction was treated as a recapitalization for accounting purposes
          since the Company was deemed to be the accounting acquirer in this transaction.
          TIG had 6,000,000 shares of common stock outstanding at the time of the
          Share
          Exchange Transaction.
 
 Contributions
          to Capital
 As
          described in Notes 2 and 9, certain of
          the Company’s officers/stockholders contributed to additional paid in capital
          (i) $183,559 loans (including accrued interest of $43,559) and (ii), $623,314
          of
          accrued officers’ salaries earned through August 31, 2006.
  Private
          Placement of Series A Convertible Preferred Stock
 
 Pursuant
          to a Confidential Private Placement Memorandum dated July 27, 2006, the
          Company
          initiated a proposed $5,000,000 Private Placement which would, for each
          $1,000
          Unit purchased, result in the issuance of (i) one share of Series A Convertible
          Preferred Stock and (ii) warrants (“Investor Warrants”) to purchase 667 shares
          of the Company’s common stock with a contractual terms of four years. The
          minimum amount of the Series A Convertible Preferred Financing was $3,500,000
          (“Minimum Amount”) and the maximum amount was $5,000,000. As described in Note
          10, the
          Convertible Debenture holders were mandatory obligated to exchange their
          Convertible Debentures for such number of units that would result in a
          120%
          exchange premium over the principal value of the Convertible
          Debentures.
 
 The
          Company has agreed to file a registration statement with the Securities
          and
          Exchange Commission on or before 180 days after each closing date. The
          registration rights stipulated in the investor subscription agreements
          provide
          the payment of liquidated damages payable in such number of shares of common
          stock equal to 2% of the registerable shares up to a maximum of 20%
 
 As
          a
          component of the Series A Convertible Preferred stock, holders were issued
          Investor Warrants to purchase a total of 3,835,271 **** shares
          of
          common stock at an exercise price of $1.00 per share expiring on October
          16,
          2010. The Company determined that the preferred stock was issued with an
          effective beneficial conversion feature for which it recorded a deemed
          dividend
          of $3,230,791an allocation of the proceeds to the relative fair values
          of the
          preferred stock and the warrants.
 
 The
          Investor Warrants may be redeemed in whole or in part by the Company upon
          30
          days written notice, at a price of $.05 per share, provided (i) the average
          closing price of the common stock exceeds $3.00 per share for a period
          of 20
          consecutive trading days ending within 15 days prior to the date on which
          the
          notice of redemption is given and the registration statement to be filed
          by the
          Company registering the common stock issued pursuant to the private placement
          is
          then effective or (ii) that the Company reports revenues in accordance
          with
          generally accepted accounting principles of at least $3.0 million for the
          four
          full reporting quarters subsequent to the closing and the resale registration
          statement to be filed by the Company registering the common stock issued
          in the
          private placement is then effective.
  F-20
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 The
          Investor Warrants contain provisions that protect the holders against dilution
          by adjustment of the purchase price in certain events, such as stock dividends,
          stock splits, and other similar events. Prior to exercise, the Investor
          Warrants
          do not confer upon holders any voting or any other rights as a stockholder.
          All
          of the Investor Warrants issued in these transactions are exercisable by
          the
          holders at any time.
 
 The
          Company evaluated whether in accordance with the provisions of SFAS 150
          and EITF
          Topic D-98, the Series A Convertible Preferred contained any features that
          permit the holder to settle such for shares for cash. The Company determined,
          based on the rights and privileges specified in the certificate of designation
          that there are currently no provisions that would permit the holders to
          redeem
          these shares for cash that are not solely with the Company’s control. The
          Company performs a classification assessment at each reporting date to
          determine
          whether a reclassification of these shares may be necessary.
 
 The
          Company also evaluated the conversion option embedded in the Series A
          Convertible Preferred stock to determine whether, in accordance with SFAS
          133
          such conversion option should be bifurcated from its host instrument and
          accounted for as free standing derivative financial instrument. The Company
          determined that the conversion option meets the clearly and closely related
          criteria provide for in paragraph 61(l) of the implementation guidance
          in
          Appendix to SFAS 133. Accordingly, the conversion feature was accounted
          for as
          an embedded conversion option.
 
 Commencing
          October 17, 2006 through December 13, 2006, the Company issued 5,750 Units
          to
          investors including (i) 5,354.Units issued for cash in three separate closings,
          (ii) 304 issued to the Convertible Debenture holders as described in Note
          10,
          (iii) 13 issued in settlement of certain trade accounts payable, and (iv)
          70
          issued to a non-employee for corporate finance advisory services.
 
 The
          Company completed its first closing of 3,033 Units on October 17, 2006.
          This
          closing included 2,651 units issued for gross proceeds amounting to $2,650,500
          (net proceeds of $ $2,148,375 after the payment of transaction expenses
          amounting to $ 502,125). This closing resulted in the issuance of 3,033
          shares
          of Series A Convertible Preferred stock convertible into 4,046,022 share
          of
          common stock plus Investor Warrants to purchase up to 2,023,011 shares
          of common
          stock at an exercise price of $1.00 per share.
 
 The
          Company also issued at the time of this closing 303.57 Units in exchange
          for the
          Convertible Debentures described in Note 10. This exchange resulted in
          the
          issuance of 303,570 shares of Series A Convertible Preferred stock convertible
          into 404,962 shares of common stock plus Investor Warrants to purchase
          up to
          202,481 shares of common stock at an exercise price of $1.00 per share.
 
 The
          fair
          value of Investor Warrants issued in this closing amounted to $ 2,023,011
          using
          the Black-Scholes option-pricing model with the following assumptions:
          fair
          value of common stock $ .75 , term of 4 years, volatility range of 65.36
          %
          risk-free interest rate of 4.73 %, and, dividend yield of 0.
 
 The
          Company determined, based upon an allocation of the proceeds to the fair
          values
          of the Series A Preferred Stock and Investor Warrants in this closing,
          that the
          effective conversion price embedded in the Series A Convertible Preferred
          Shares
          amounts to $.35 per share. Accordingly, the Company recorded a deemed dividend
          in the amount of $ 513,821 based upon the effective conversion price embedded
          in
          the preferred shares times the number of shares issuable upon conversion.
  F-21
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 On
          October 17, 2006, the Company also issued 79 Units with a fair volume of
          79,000as stock based compensation to a non-employee for corporate finance
          advisory services. The Units were fully vested and non-forfeitable at the
          date
          of issuance
 
 The
          Company completed its second closing of 2,366.97 Units on October December
          6,
          2006. This closing included 2,355 units issued for gross proceeds amounting
          to $ 2,366,970 (net proceeds of $2,095,560 after the payment of transaction
          expenses amounting to $ 259,910). This closing resulted in the issuance
          of
          2,366,970 shares of Series A Convertible Preferred stock convertible into
          3,157,538 share of common stock plus Investor Warrants to purchase up to
          1,587,768 shares of common stock at an exercise price of $1.00 per share.
 
 The
          Company also issued at the time of this closing 11.5 Units in settlement
          of
          $11,500 of trade accounts payable. This exchange resulted in the issuance
          of
          11,500 shares of Series A Convertible Preferred stock convertible into
          15,341
          shares of common stock plus Investor Warrants to purchase up to 7,670 shares
          of
          common stock at an exercise price of $1.00 per share.
  The
          fair
          value of Investor Warrants issued in this closing amounted to $ 2,934,561
          using
          the Black-Scholes option-pricing model with the following assumptions:
          fair
          value of common stock $ 2.50, term of 4 years, volatility range of 66.64
          %
          risk-free interest rate of 4.44 %, and, dividend yield of 0.
 
 The
          Company determined, based upon an allocation of the proceeds to the fair
          values
          of the Series A Preferred Stock and Investor Warrants in this closing,
          that the
          effective conversion price embedded in the Series A Convertible Preferred
          Shares
          amounts $. 1.86 per share. Accordingly, the Company recorded a deemed dividend
          in the amount of $ 2,366,970 based upon the effective conversion price
          embedded
          in the preferred shares times the number of shares issuabel upon conversion.
 
 The
          Company completed its third closing of 350 Units on October December 13,
          2006.
          This closing included 348 units for gross proceeds amount to $ 348,025
          (net
          proceeds of $ 320,025 after the payment of transaction expenses amounting
          to $
          28,000). This closing resulted in the issuance of 350,000 shares of Series
          A
          Convertible Preferred stock convertible into 466,900 share of common stock
          plus
          Investor Warrants to purchase up to 223,450 shares of common stock at an
          exercise price of $1.00 per share.
 
 The
          Company also issued at the time of this closing 1.98 Units in settlement
          of $
          $1,980 of trade accounts payable. This exchange resulted in the issuance
          of
          1,980 shares of Series A Convertible Preferred stock convertible into 2,641
          shares of common stock plus Investor Warrants to purchase up to 13,206
          shares of
          common stock at an exercise price of $1.00 per share.
 
 The
          fair
          value of Investor Warrants issued in this closing amounted to $ 295,631
          using
          the Black-Scholes option-pricing model with the following assumptions:
          fair
          value of common stock $ 1.85, term of 4 years, volatility range of 66.82
          %
          risk-free interest rate of 4.50 %, and, dividend yield of 0.
 
 The
          Company determined, based upon an allocation of the proceeds to the fair
          values
          of the Series A Preferred Stock and Investor Warrants in this closing,
          that the
          effective conversion price embedded in the Series A Convertible Preferred
          Shares
          amounts $ 1.27 per share. Accordingly, the Company recorded a deemed dividend
          in
          the amount of $ 350,000 based upon the effective conversion price embedded
          in
          the preferred shares times the number of shares issuabel upon conversion.
  F-22
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 The
          placement agents received warrants to purchase an aggregate of 512,958
          shares of
          common stock at an exercise price of $.75 per share expiring on October
          16,
          2010. In connection with the transaction, the Company also issued four-year
          warrants to purchase 234,019 shares of the Company’s common stock to consultants
          at an exercise price of $.75 per share. The fair value of these warrants
          was
          $183,340 which was treated as a cost of the private placement. Additional
          expenses incurred in connection with these closings amounted to an aggregate
          of
          $208,641. These expenses were accounted for as a reduction of the offering
          prceeds by recording a charge to additional paid in capital.
 
 **NOTE
          12 -** **2006
          Equity Incentive Plan**
 
 The
          2006
          Equity Incentive Plan (the “Plan”) was adopted by the Company’s Board of
          Directors on October 16, 2006 and approved by the Company’s stockholders on
          October 17, 2006. The Plan is intended to provide a means whereby the Company
          may, through the grant of awards to employees, consultants and non-employee
          directors, attract and retain individuals whose services are considered
          valuable
          to the Company. Under the Plan, the Company is authorized to issue Incentive
          Stock Options intended to qualify under Section 422 of the Code, non-qualified
          options, SARS, restricted stock, bonus shares and dividend
          equivalents.
 
 Options
          Granted Pursuant to 2006 Equity Incentive Plan
 On
          October 16, 2006, the Company granted options to purchase an aggregate
          of
          505,000 shares of its common stock to certain employees, directors and
          advisors
          of the Company at an exercise price of $.75 per share. These options, which
          include 405,000 shares granted to employees and directors and 100,000 shares
          to
          non-employees pursuant to the terms of certain consulting agreements, vest
          over
          four years and feature a contractual term of ten years.
 
 The
          fair
          value of the awards granted to the non-employees for services was estimated
          at
          the date of grant using the Black-Scholes option pricing model with the
          following assumptions: fair value of common stock $ .75, term of 2 years,
          volatility range of 65.36 % risk-free interest rate of 4.77 %, and, dividend
          yield of 0. The expected term of the non-employee awards is deemed to the
          equal
          to the term of the related consulting agreements.
  The
          fair
          value of the awards granted to employees and directors was estimated at
          the date
          of grant using the Black-Scholes option pricing model with the following
          assumptions: fair value of common stock $ .75, term of 4 years, volatility
          range
          of 65.36 % risk-free interest rate of 4.77 %, and, dividend yield of 0.
          The
          expected term of the non-employee awards is deemed to the equal to the
          term of
          the related consulting agreements.
 
 The
          risk-free interest rate is based on the U.S. Treasury yield curve in effect
          at
          the time of grant. The Company has not paid dividends to date and does
          not
          expect to pay dividends in the foreseeable future due to its accumulated
          deficit
          and limited capital resources. Accordingly, expected dividends yields are
          currently zero. The volatility rate was developed based on rates obtained
          for
          similar companies whose shares are publicly traded and have sufficient
          trading
          history upon which to develop a reasonable estimate. The Company has limited
          historical data upon which to base an expected term. Accordinlgy, the expected
          term of four years represents management’s best estimate of the period of time
          in which grantees would likely hold their options until realizing the benefit
          through their exercise.
 
 The
          Company only recently adopted its Plan and has only made one grant under
          its
          plan to date. Accordingly, the Company has no historical data upon which
          to
          develop its expectations. However, based upon the specific grantees involved,
          the Company has assumed that 80% of the options granted on October 16,
          2006 will
          vest annually. The Company will prospectively monitor employee terminations,
          exercises and other factors that could affect its expectations relating
          to the
          vesting of options in future periods. The Company will adjust its assumptions
          relating to its expectations of future vesting and the terms of options
          at such
          times that additional data indicates that changes in these assumptions
          are
          necessary.
  F-23
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 A
          summary
          of option activity for the year ended December 31, 2006 is as
          follows:
 
 **Options**
                
                **Shares**
                
                **Weighted-**
                  **Average**
                  **Exercise**
                  **Price**
                
                **Weighted-**
                  **Average**
                  **Remaining**
                  **Contractual**
                  **Term**Outstanding
                    at January 1, 2006
                
                
                -
                
                $
                -
                
                
                -Granted
                
                
                505,000
                
                
                .75
                
                
                9.8ExercisedForfeited
                    or expiredOutstanding
                    at December 31, 2006
                
                
                505,000
                
                
                .75
                
                
                9.8Exercisable
                    at December 31, 2006
                
                
                -
                
                $
                -
                
                
                -
 
 
 At
          December 31, 2006, the aggregate intrinsic value of options outstanding,
          based
          on the December 29, 2006 closing price of the Company’s common stock ($1.61 per
          share) amounted to $434,000. There were no options exercisable at December
          31,
          2006. As described above the company expects eighty percent of these stock
          options to vest annually.
 
 The
          weighted-average grant-date fair value of all stock options granted during
          the
          year ended December 31, 2006 amounted to $ .42 per share. The aggregate
          fair
          value of all awards granted during the period amounted to $ 212,150 during
          the
          year ended December 31, 2006. There have not been any exercises of stock
          options
          to date and options have vested to date.
 
 As
          of
          December 31, 2006, there was $ 200,368 of unrecognized compensation cost
          related
          to non-vested share-based compensation arrangements. These costs are expected
          to
          be recognized over a weighted-average period of 3.6 years.
  **NOTE
          13 -** **Income
          Taxes**
 
 The
          Company, prior to the Share Exchange Transaction, was organized as a Subchapter
          S Corporation for Federal income tax purposes and under similar provisions
          for
          state income tax purposes in the jurisdictions in which it operates.
          Accordingly, losses incurred by the Company during the period of January
          1, 2006
          through October 16, 2006 are being reported by the principal stockholders
          of the
          Company for that period on their individual income tax returns. The Company’s
          pass-through loss for the period of January 1, 2006 through October 16,
          2006
          amounted to approximately $1,400,000 (including $250,000 of non-cash interest
          that would be considered a permanent difference for income tax purposes).
          Accordingly, the Company has not recognized any income tax benefit in the
          accompanying financial statements resulting from losses incurred for the
          period
          of January 1, 2006 through October 16, 2006.
 
 At
          December 31, 2006, the Company has federal and state net operating loss
          carryforwards available to offset future taxable income, if any, of
          approximately $535,000 expiring at various times through 2026. The Company’s
          determination of the amount of its net operating loss carryforwards (“NOL’s”) includes
          approximately $50,000 associated TIG that arose prior to the completion
          of the
          share exchange transaction. These NOL’s may
          be subject to a substantial limitation under the “Change of
          Ownership” provisions under Section 382 of the Internal Revenue Code and similar
          state provisions. Such limitations are likely to result in the expiration
          of
          these net operating losses prior to their utilization.
 
 F-24
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 The
          tax
          effects of significant temporary differences which give rise to the Company’s
          deferred tax assets and liabilities are as follows:
 
 Net
                    Operating Losses
                
                $
                210,000Contracts
                    Loss Reserve
                
                
                10,000Accrued
                    Expenses and other
                
                
                8,000Stock
                    Based Compensation
                
                
                5,000233,000Valuation
                    Allowance
                
                
                (233,000
                )Net
                    Deferred Tax Asset
                
                $
                -0-
 
 The
          Company’s recorded income benefit, net of the change in the valuation allowance
          for each of the period presented, is as follows:
 
 CurrentFederal
                
                $
                -State
                
                
                --DeferredFederal
                
                
                (183,000
                )State
                
                
                (30,000
                )(213,000
                )Change
                    in valuation allowance
                
                
                213,000$
                -
 
 Pursuant
          to SFAS No. 109 “Accounting for Income Taxes,” management has evaluated the
          recoverability of the deferred income tax assets and the level of the valuation
          allowance required with respect to such deferred income tax assets. After
          considering all available facts, the Company fully reserved for its deferred
          tax
          assets because it is more likely than not that their benefit will not be
          realized in future periods. The Company will continue to evaluate its deferred
          tax assets to determine whether any changes in circumstances could affect
          the
          realization of their future benefit. If it is determined in future periods
          that
          portions of the Company’s deferred income tax assets satisfies the realization
          standard of SFAS No. 109, the valuation allowance will be reduced
          accordingly.
 
 A
          reconciliation of the expected Federal statutory rate of 34% to the Company’s
          actual rate as reported for each of the periods presented is as
          follows:
 
 Expected
                    statutory rate
                
                
                -34
                %State
                    income tax rate, net of Federal benefit
                
                
                -5
                %Permanent
                    Differences:S
                    Corporation losses
                
                
                27
                %Non-cash
                    interest charges
                
                
                1
                %-11
                %Valuation
                    allowance
                
                
                11
                %-
 
 F-25
 ODYNE
              CORPORATION
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 
 **NOTE
          14 - Major** **Customers**
 
 The
          Company had two customers to which sales amounted to 10% or more of its
          total
          sales for the year ended December 31, 2006. Net sales to these customers
          represent approximately 66% and 26% of total sales for the year then ended.
          As
          of December 31, 2006, accounts receivable due from these customers amounted
          to
          $12,117.
  The
          Company had two customers to which sales amounted to 10% or more of its
          total
          sales for the year ended December 31, 2005. Net sales to these customers
          represent approximately 84% and 10% of total sales for the year then ended.
          As
          of December 31, 2005, accounts receivable due from these customers amounted
          to
          $45,741.
 
 **NOTE
          15 -** **Subsequent
          Events**
 
 a.
          Subsequent to December 31, 2006, the Company issued warrants to non-employers
          for services to purchase 75,000 shares of its common stock at prices ranging
          from $ 1.60 to 1.99 for consulting services.
  **Grant
                    Date**
                
                **Number
                    of Shares**
                
                **Exercise********Price**
                
                **Expiration
                    Date**
                
                **Unit
                    Fair Value**
                
                **Total
                    Fair Value**1/25/2007
                
                
                50,000
                
                $
                1.60
                
                
                1/25/2009
                
                $
                .81
                
                $
                40,5002/5/2007
                
                
                25,000
                
                $
                1.99
                
                
                2/5/2011
                
                $
                1.01
                
                $
                25,250
 
 The
          fair
          value of thse awards was estimated at the date of grant using the Black-Scholes
          option pricing model with the following weighed average assumptions: fair
          value
          of common stock $1.73; volatility rate 65.36%; risk free interest rate
          4.77%; expected term 2 years; dividend yield 0.
  b.
          On
          January 22, 2007 one of the placement agents in the Private Placement exercised
          its cashless exercise provision with respect to 400,902 warrants it received
          as
          consideration in the Private Placement, and received 267,268 shares of
          common
          stock of the Company.
 
 c. On February 16, 2007 a holder 125 shares of Series A Convertible Preferred
          stock
          exercised the conversion option which resulted in the issuance of 166,750
          shares
          of the Company’s Common Stock.
 
 d.
          On February 19, 2007 an officer holding 50 shares of Series A Convertible
          Preferred stock exercised the conversion option which resulted in the issuance
          of 66,700 shares of the Company’s Common Stock.
  e.
          On March 1, 2007, an investor holding 50 shares of
          Series A Convertible Preferred Stock exercised the conversion option which
          resulted in the issuance of 66,700 shares of the Company's common
          stock.
  f.
          On March 1, 2007, the Company issued 20,000 stock
          options to a newly hired employee at an exercise price of $1.65, which
          was equal
          to the fair value of the stock on the date of grant. The fair value of
          the award
          amounted to $15,800, which was priced using Black-Scholes option pricing
          model with the same assumptions described in item a. above.
 
 F-26