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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-K

[X] Annual Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934

FOR THE YEAR ENDED December 31, 2014

OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the transition period from _________ to ___________

Commission File Number000-53459

HYBRID COATING TECHNOLOGIES
INC.(Exact name of registrant as specified in its charter)

|NEVADA                                           | 20-3551488                          
|------------------------------------------------ | ------------------------------------
|(State of other jurisdiction of incorporation or | (IRS Employer Identification Number)
|organization)                                    |                                     

950 John Daly Blvd. Suite 260 Daly City, CA
94015(Address of principal executive offices)

(650) 491-3449(Registrant'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:
Common Stock, $ 0.001 par value

Indicate by check mark if the Registrant is a well-known
seasoned issuer as defined in Rule 405 of the Securities Act. Yes [ ] No[ x ]

Indicate by check mark if the Registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act. Yes[ ] No[ x ]

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes[ x ] No[ ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.[ ]

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Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check
one):

|Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting company [ 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 aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $1,642,586 based on
the closing price of $0.10 for the common stock on June 30, 2014, the
last business day of the registrants most recently completed second fiscal
quarter.

Number of shares outstanding of the registrant's class of
common stock, as of April 15, 2015was 56,280,652.

TABLE OF CONTENTS

|         |                                                                                                                            | Page
|-------- | -------------------------------------------------------------------------------------------------------------------------- | ----
|PART I   |                                                                                                                            |     
|         | Special Note Regarding Forward
      Looking Statements                                                                    | 3   
|Item 1   | Description of
      Business                                                                                              | 4   
|Item 1A. | Risk Factors                                                                                                               | 14  
|Item 2   | Description of
      Property                                                                                              | 18  
|Item 3.  | Legal Proceedings                                                                                                          | 18  
|Item 4.  | Mine Safety
      Disclosures                                                                                              | 18  
|         |                                                                                                                            |     
|PART II  |                                                                                                                            |     
|Item 5.  | Market for Common Equity, Related
      Stockholder Matters and Small Business Issuer Purchases of Equity
      Securities | 19  
|Item 6.  | Selected
      Financial Data                                                                                              | 20  
|Item 7   | Management Discussion and
      Analysis of Financial Condition and Results of Operations                                  | 20  
|Item7A   | Quantitative and
      Qualitative Disclosures about Market Risks                                                          | 24  
|Item 8.  | Financial Statements and
      Supplementary Data                                                                          | 25  
|Item 9.  | Changes in and
      Disagreements with Accountants on Accounting and Financial Disclosure                                 | 26  
|Item 9A. | Controls And Procedures                                                                                                    | 26  
|         |                                                                                                                            |     
|PART III |                                                                                                                            |     
|Item 10. | Directors,
      Executive Officers and Corporate Governance                                                               | 28  
|Item 11  | Executive Compensation                                                                                                     | 33  
|Item 12  | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters                 | 35  
|Item 13  | Certain Relationships and Related
      Transactions, and Director Independence                                            | 36  
|Item 14  | Principal
      Accountant Fees and Services                                                                               | 37  
|Item 15  | Exhibits                                                                                                                   | 38  

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report includes
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. All
statements, other than statements of historical fact, contained in this Annual
Report constitute forward-looking statements. In some cases you can identify
forward-looking statements by terms such as "may," "intend," "might," "will,"
"should," "could," "would," "expect," "believe," "estimate," "anticipate,"
"predict," "project," "potential," or the negative of these terms and similar
expressions intended to identify forward-looking statements.

Forward-looking statements are
based on assumptions and estimates and are subject to risks and uncertainties.
We have identified in this Annual Report some of the factors that may cause
actual results to differ materially from those expressed or assumed in any of
our forward-looking statements. There may be other factors not so identified.
You should not place undue reliance on our forward-looking statements. As you
read this prospectus, you should understand that these statements are not
guarantees of performance or results. Further, any forward-looking statement
speaks only as of the date on which it is made and, except as required by law,
we undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which it is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances. New factors
emerge from time to time that may cause our business not to develop as we expect
and it is not possible for us to predict all of them. Factors that may cause
actual results to differ materially from those expressed or implied by our
forward-looking statements include, but are not limited to, those described
under the heading "Description of Business and Risk Factors" under Item 1, as
well as the following:

Hybrid Coating Technologies Inc.s
anticipated cash needs and estimates regarding its capital expenditures, as well
as its capital requirements and need for additional financing;

Hybrid Coating Technologies Inc.s
ability to maintain its production capacity, staff complement and manufacturing
performance in a cost-effective way;

Hybrid Coating Technologies Inc.s
ability to identify and retain personnel for the continued manufacturing and
sale of the Nanotech Products;

Hybrid Coating Technologies Inc.s
ability to successfully commercialize its products including the Green
Polyurethane products and to develop and commercialize new products and
services;

Hybrid Coating Technologies Inc.s
ability to maintain current strategic relationships and develop relationships
with new strategic partners;

Hybrid Coating Technologies Inc.s
ability to maintain its relationship with its current manufacturing
partners;

Hybrid Coating Technologies Inc.s
ability to maintain its rights pursuant to the Licensing Agreement:

Hybrid Coating Technologies Inc.s
competitive position and its expectations regarding competition from other paint
manufacturers and suppliers; and

Anticipated trends and challenges in
Hybrid Coating Technologies Inc.s business and the markets in which it
operates.

-3-

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PART I

ITEM 1. DESCRIPTION OF OUR BUSINESS

Our Business

On August 30, 2010, Hybrid Coating Technologies Inc. (the
Company) consummated an August 16, 2010 Stock Purchase Agreement (the Stock
Purchase Agreement) with Nanotech Industries International Inc., (Nanotech) a
Nevada corporation located in Daly City, California. A previous January 31, 2010
agreement with Nanotech Industries Inc. (NTI), a related party of Nanotech,
was terminated on August 16, 2010 prior to its effectiveness.

Under the terms of the Stock Purchase Agreement, the Company
agreed to acquire all of the issued and outstanding shares of capital stock of
Nanotech (Nanotech Shares) from the holders of the Nanotech Shares (Nanotech
Shareholders). In consideration for the purchase of the Nanotech Shares from
the Nanotech Shareholders (the  Nanotech Acquisition), the Company issued an
aggregate of 3,381,003 shares (the Shares) of the Companys common stock,
$0.001 par value per share (Common Stock), to the Nanotech Shareholders. In
addition, certain shareholders of the Company agreed to have 1,028,000 of their
shares cancelled as part of the transaction. This transaction was closed on
August 30, 2010.

Upon completion of all required regulatory filings, the Company
appointed the senior management of Nanotech to the board of the Company.

As a result of the Nanotech Acquisition, Nanotech is now a
wholly owned subsidiary of the Company. The Company intends to pursue the
business of its Nanotech subsidiary and assume and execute Nanotech's business
plan as its sole business. (See Incorporation and Business of Nanotechbelow).

The products manufactured and sold by the Company (Nanotech
Products) comprise both:

|(1) | coatings and raw binder ingredients comprised of Green
      Polyurethane Monolithic Floor Coating and Green Polyurethane Binder and
      hereinafter referred to as Coating Products.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                            
|(2) | sealants and adhesives comprised of Green Polyurethane
      and hereinafter referred to as Sealant Products.                                                                           

The Company was granted the right to manufacture and sell the
Nanotech Products pursuant to an agreement (Licensing Agreement) entered into
between the Company and Nanotech Industries Inc. (NTI), the holder of the
proprietary rights to the license and intellectual property required for the
manufacturing of the Nanotech Products. The Nanotech Products will target the
coatings, adhesives, sealants and elastomers (C.A.S.E.) market in North
America, Europe and Russian Territory ( including the Russian Federation,
Belorussia, Kazakhstan Republic) with an option to sell in Asia and the rest of
the world pursuant to the terms of the Licensing Agreement.

NTI and the Company are related parties by virtue of common
ownership and control. NTI is privately-held.

The Company and the Registrant, as referred to herein,
includes Hybrid Coating Technologies Inc. and/or its wholly owned subsidiary,
Nanotech.

-4-

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Incorporation and Business of Nanotech

The Company was incorporated under the laws of the State of
Nevada on July 8, 2010. On July 12, 2010, the Company entered into the Licensing
Agreement (Initial Licensing Agreement) for the manufacturing and sale of the
Coating Products, an alternative, non-isocyanate polyurethane, including
coatings and raw binder ingredients comprised of Green Polyurethane Monolithic
Floor Coating and Green Polyurethane Binder. The Nanotech Coating Products will
be sold to the coatings andadhesives market in North America, with options to
sell to Europe, South America, Asia and the rest of the world.

Initial Licensing AgreementNote 1

The terms of the Initial Licensing Agreement are as
follows:

|(i)   | The Company was granted, effective June 12, 2010,
      manufacturing and sale rights (North American Licensing Rights) for the
      Coating Products on an exclusive basis for a 36-month period (Exclusivity
      Period) for the territory of North America. In consideration for the
      North America Licensing Rights, Nanotech paid NTI (Licensor) a one-time
      licensing fee of $500,000 and a royalty of 5% of future gross Coating
      Products sales.                                                                                       
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(ii)  | Within the Exclusivity Period, the Company shall have the
      option (American- European Option) to acquire perpetual and exclusive
      licensing rights for all of North America, South America and Europe
      (Perpetual American-European Licensing Rights). Should the Company wish
      to exercise the American-European Option, the Company shall issue to NTI
      an aggregate number of shares of common stock of the Company which shall
      give NTI, immediately upon such issuance of shares, a 52.5% ownership
      stake in the Company.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(iii) | Should the Company exercise the American-European Option,
      the Company shall then have an additional option to obtain perpetual and
      exclusive Licensing Rights for all of Asia and the rest of the world
      (Asia Option). Should the Company exercise the Asia Option, the Company
      shall issue to NTI an aggregate number of shares of common stock of the
      Company which shall give NTI, immediately upon such issuance of shares, an
      additional 10% ownership stake in the Company.                                                

Note 1: The Initial Licensing Agreement was originally filed in
a Current Report on Form 8-K on August 30, 2010 and the amended version (as
described above) was refiled in a Current Report on Form 8-K on October 18,
2011. In the original filing the Licensing Rights included not only the Coating
Products but Sealant Products as well. Also, for the Asia option the territory
was for Asia only and later changed to Asia and the rest of the world.

Subsequent Licensing Agreements and Amendments

|(i) | On March 17, 2011, the Company and NTI amended the
      agreement to now include the territory of the Customs Union of Belorussia,
      Kazakhstan Republic and Russian Federation (the Russian Territory), on
      an exclusive basis for a period of ten years from the date of the signing
      of this amendment. In exchange for the right to manufacture and sell in
      the Russian Territory, the Company shall pay to the Licensor an ongoing
      royalty of 7.5% of gross Coating Products sales in the Russian Territory,
      and a one-time royalty fee of $150,000 (paid as of December 31,
    2011).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5-

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|(ii)  | On July 7, 2011, a second amendment was made to the
      agreement granting the Company an option (the Option) for a period of
      six months from the signing of this amendment to manufacture and sell
      Coating Products in the territory of the European Continent on an
      exclusive basis for a period of five years from the date the option is
      exercised, after which time the European Right shall continue perpetually
      on a non-exclusive basis. In exchange for this Option, the Company shall
      pay to the Licensor a one-time royalty fee of $1,250,000 payable within 24
      months of the exercise of the Option. On November 29, 2011, the Company
      exercised the Option, the payment for which is being financed by NTI. The
      Company recorded the royalty fee of $1,250,000 as a related liability in
      Note Payable-related party.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(iii) | On October 18, 2011, the Company and NTI entered into a
      second licensing agreement (Sealant Agreement) granting the Company an
      option (Sealant Option) to be exercised within six months of the signing
      of the Sealant Agreement, for the manufacturing and sale of the Sealant
      Products, for the following :                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(iv) On December 6, 2011, the Company notified NTI of its
intent to exercise the Sealant Option. To date, the Company has not issued the
Sealant Shares and the Sealant Option has expired. The Company intends to
renegotiate the Sealant Option once the Company has determined it has commercial
viability.

(v) On June 28, 2013, the Company and NTI entered into a third
licensing agreement whereby NTI granted the Company an extension of thirty-six
months on the Exclusivity Period (as defined in the Licensing Agreement), which
has been extended to July 12, 2016.

(vi) On December 13, 2013, the Company and NTI entered into a
fourth licensing agreement agreeing to modify the definition of Licensor
Products to include polyurethane foam for the textile industry in addition to
environmentally safe coatings.

(vii) On March 31, 2014, the Company and NTI entered into a
fifth licensing agreement agreeing to modify the definition of Licensor Products
to include synthetic leather, sealants and adhesives (Added Applications).In
consideration for the Added Applications, the Company shall pay the Licensor an
amount equal to US $2,000,000 , to be paid within 36 (thirty-six) months of the
execution of this Fifth Amendment Agreement. Should the Company not pay the
Consideration within the deadline, the Company shall lose all rights to the
Added Applications, and the Added Applications shall be removed from the
Licensor Product definition.

(viii) On April 9, 2014, the Company and NTI signed a sixth
amendment extending the terms of the note from 24 months to 42 months making it
payable by May 29, 2015.

(ix) On May 6, 2014, the Company and NTI signed a seventh
amendment modifying the Products definition to include spray foam insulation for
consideration of $500,000 payable within twelve months of execution of this
amendment.

(x) On August 19 2014, the Company and NTI signed an eight
amendment expanding the definitionof the Exclusivity Shares for various
territories to include warrants at the sole discretion of the Licensor, which
warrants shall include a cashless exercise and be exercisable at a price per
share equal to the Common Stock par value and expiring 10 years from the date of
issuance and which, .if so issued, shall be issued in the form of Warrant
pursuant to Regulation D, or in the form of Warrant pursuant to Regulation
S.

-6-

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(xi) On September 10, 2014, the Company and NTI signed a ninth
amendment expanding the definitionof the licensing fees and
consideration to include payment in shares of the Companys Common Stock and/or
warrants at the sole discretion of the Company, which shares shall have a fair
market value calculated as the closing price reported by the over-the-counter
market for the previous trading day and, which warrants shall include a cashless
exercise and be exercisable at a price per share equal to the Common Stock par
value and expiring 10 years from the date of issuance.

On September 10, 2014, the Company issued 8,113,116 shares to NTI for proceeds of $ 872,160 that was applied to the debt to NTI for some of
the licenses above. NTI now owns 18% of the Company based on the issued and
outstanding shares of the Company at December 31, 2014.

Further information concerning the historical business of
Nanotech, the business acquired by the Company in the Acquisition, is set forth
below.

Overview

The Company is an early stage company and has only just begun
to implement its business plan. The likelihood of success of the Company must be
considered in light of the expenses, complications and delays frequently
encountered in connection with the establishment and expansion of new business
and the competitive environment in which the Company will operate. The Company's
long-term viability, profitability and growth will depend upon successful
commercialization of the Nanotech Products and the development and
commercialization of new products and services relative to its business plan. As
a development stage company, the Company has little or no relevant operating
history upon which an evaluation of its performance can be made. Such
performance must be considered in light of the risks, expenses and difficulties
frequently encountered in establishing new products, services and markets.

Business Model

The Companys business model is based on a two-tier strategy,
which includes direct sales and licensing. The Companys ultimate goal is to
license its proprietary Green Polyurethane formulation to national and/or
global coatings formulators and then focus on rolling out the commercialization
of other Green Polyurethane applications such as adhesives and sealants. In
order to achieve this, the Company is proving the validity of its products
through direct sales and is therefore targeting large distributors and multiple
client bases. The Company intends to focus within the Coatings, Adhesives,
Sealants and Elastomers (C.A.S.E.) segment specifically for large industrial and
commercial coatings applications where Green Polyurethane has a natural
competitive advantage over other polyurethane ("PU") and epoxy coatings due to
its superior chemical resistance and environmentally safe properties with
reduced health risks. Some of the target applications for Green Polyurethane
products include:

- Industrial and commercial buildings;
- Civil applications for tunnels and bridges;
- Private and public garages;
- Chemical and food processing plants;
- Warehouses;
- Monolithic floorings for civil, industrial and military engineering;
- Marine and Aeronautic applications;
- Industrial equipment for dairy and liquid fertilizer processing plants and
  delivery systems;
- Military facilities and equipment; and
- Protective coatings inside industrial and commercial pipes.

-7-

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In addition to the above, the Companys business plan includes
plans to:

- Increase the number of contractors and applicators contacted;
- Contact paint formulators and offer Green Polyurethane Binder for their
  proprietary formulations; and
- Establish distribution channels utilizing existing distribution hubs.

Competitive Strengths

The Company believes that its competitive strengths include the
following:

Product Advantage.Green Polyurethane is the first ever
chemical platform based on modified hybrid polyurethane that is produced using
pending patented proprietary methods which completely eliminate the use of toxic
isocyanates resulting in a substitute for conventional polyurethane. This
results in a product that is hundreds of times less toxic than conventional
polyurethane and which has superior chemical and mechanical properties.

2 Times Wear Resistance & Excellent Adhesion

- Wear resistance is 25-30 (mgs./1000 cycles) or 2 times better than most
  premium polyurethane coatings
- Adhesiveness - 10-30% higher (depends on substrate)

High Gloss, Self-Priming - Achieve Any Thickness in One Coat

- Green Polyurethanes 100% solids, specific curing formulation can be
  applied with only one layer at any thickness in specific environments (some
  substrates in poor condition may need a primer) compared to conventional
  polyurethane brands which normally require 2 or 3 layers
- Does not require careful drying of substrates (compared to conventional
  polyurethane coatings)

Increased Resistance to Chemical Degradation & Corrosion

- Maintains an extended period of corrosion protection, more reliability due
  to its non-porous coating structure, and better durability than conventional
  coatings
- Assures more effective protection against aggressive media
- Unlike conventional polyurethanes, Green Polyurethane is indifferent to
  moisture and does not require special moisture controlled conditions in the
  manufacturing process

Safe & Easy curing in Cold, Hot or Sunny Conditions

- Hardens at ambient temperatures
- UV and low temperature curing applications available (36-77 oF) (2-25 oC)

Increased Hydrolytic Stability

Maintains stability against chemical decomposition upon contact
with water through an intramolecular hydrogen bond formed during its curing,
thereby improving hydrolytic stability well above that of conventional
polyurethanes making it virtually water proof.

Wider Range of Applications

- There are circumstances where traditional polyurethanes cannot be used due
  to their decomposition toxicity during a fire event (reversion to isocyanate
  components).

-8-

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Tested Product and Technology.The Green Polyurethane
technology has been tested, is proven, is commercial ready and currently in use.
The Green Polyurethane technology has undergone rigorous testing by the Polymer
Institute, GmbH, a well-recognized analytical firm for qualifying materials for
use in the flooring industry and Assured Testing Services of Pennsylvania.

Testing by the Polymer Institute and Assured Testing Services
confirmed Green Polyurethanes claims in regard to its structural and chemical
properties and its suitability for use in the flooring industry. In addition,
floor coating samples were rigorously tested and were found to perform
successfully in accordance with The American Society for Testing and
Materials.

Cost Savings.The Company can offer substantial savings
to clients in the flooring installation industry due to the unique combination
of multiple properties in one coating of Green Polyurethane paint. Typically,
concrete floors are painted using a primer, base and topcoat, resulting in the
need for three different types of coatings for one application, which can be
time consuming and costly. By using the Green Polyurethane formulation the
number of layers can be reduced to only one or two, as Green Polyurethane does
not require a primer, has excellent stand-alone adhesion and, in most cases,
would not require a top coat due to its excellent mechanical properties. In
addition, its zero isocyanate, approximate zero volatile organic compound (VOC)
safety features, allows it to be applied without the interruption of business
due to public exposure, creating an additional 30-60% savings on application
costs for customers.

Management Team.The Companys management team possesses
a diverse set of industry skills and operating experience and a record of
success in the scientific R&D, nanotechnology, management, marketing, sales
and finance industries.

Growth Strategy

The Companys business growth model includes a two-pronged
strategy of direct sales and licensing. The Companys ultimate goal is to
license its proprietary formulation to national or global coatings formulators.
In order to achieve this it is proving the validity of its products through
direct sales.

The Company has developed marketing tools, brochures,
one-sheets, and a user-friendly website to market its products directly to
contractors and applicators of high end coatings and paint. The Company has also
participated in high visibility trade shows to highlight the unique qualities of
Green Polyurethane including the European Coatings Show (March 2011) and World
of Concrete (February 2011 and 2012). From these trade shows, internet and
direct marketing campaigns, the Company has attracted hundreds of prospective
clients. Flooring applications done for some of these clients in Montreal, San
Jose, Bergen County, New Jersey and New York have allowed the Company to prove
that its product can live up to the high standards and safety features
advertised.

The Companys marketing and direct coating sales/application
efforts have attracted over 50 established regional and global coatings
distributors and formulators who are either testing samples of Green
Polyurethane, applying for final pilot samples of the material prior to
ordering commercial quantities or negotiating licensing contracts.

The $3.5 billion European Union (EU) polyurethane coatings
market (JCT CoatingsTech | November 1, 2007 | Challener, Cynthia) is of
particular interest to the Company because of the high demand and the overhaul
of the EUs chemical regulatory system. REACH (Registration, Evaluation &
Authorization and Restriction of Chemicals) regulations were drafted in 1998 and
finally adopted and put into force in June 2007. A major shift in this system
will be placing a greater burden of proof on the industry that chemicals are
safe. Substances of very high concern must be authorized under REACH and their
use may be subject to restrictions. Isocyanates used in making polyurethane are
highly toxic and require expensive worker safety and handling procedures. A
general movement towards greener products combined with the REACH regulations
has accelerated projected growth in the EU market for less toxic
alternatives.

-9-

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In addition to the above, the Company plans to:

- Increase the number of contractors and applicators contacted;
- Contact paint formulators and offer Green Polyurethane® Binder for their
  proprietary formulations;
- Establish distribution channels utilizing existing distribution hubs; and
- Sub-license technology in certain geographic areas

The Company intends to work with GBK Gmbh Global Regulatory
Compliance , a global regulatory compliance consultancy firm, first in the EU
marketplace and then in other markets to educate targeted government agencies
responsible for setting standards for hazardous chemicals used in coatings.

Educating Regulatory Authorities.The Companyintends to educate regulatory agencies of the existence of an alternative to
hazardous isocyanate-based polyurethane. The US Environmental Protection Agency
(EPA) has shown strong interest in Green Polyurethane and has supported the
efforts to manufacture and distribute Green Polyurethane products in the US and
have suggested linking the Green Polyurethane technology to the EPAs new
website for spray polyurethane foam.

Maintain and Increase Cost and Operational Advantages.The Companys strategy is to avoid large capital investments in
manufacturing and instead rent facilities and equipment from its strategic
partners. Management estimates that the Company can outsource the manufacture of
up to 20,000 tons per year.

Subsidiaries

Nanotech Industries International, Inc. (Nanotech) is a
wholly owned subsidiary of Hybrid Coating Technologies Inc. (collectively the
Company) and is the source of the Companys operations.

Legislation and Government Incentives

Current global trends toward more environmentally sound
products and new legislative restrictions on the use of hazardous materials and
their chemical by-products pose formidable obstacles to polyurethane
manufacturers. The EU has already begun to take action against isocyanates by
passing recent legislation that banned the addition of any new manufacturing
capacities of isocyanates. Governmental health agencies and workers unions
throughout Europe are beginning to actively speak out against the dangers of
isocyanates in the workplace in order to protect and lobby for workers safety.
On September 2007 the president of FATIPEC (Federation of the Paints, Varnishes,
Lacquers and Printing Inks Industries Technologists' Associations of Continental
Europe) along with the Oil & Color Chemists' Association reported that new
EU safety regulations have been put into place which includes a tenfold lowering
of the concentration limits of isocyanates in all paints.

In addition, the EPA has recently developed a new Action Plan
causing any company that produces products with free isocyanates to report any
health related incidents related to the isocyanate exposure of its workers and
any consumers using its products.

These measures are similar to recent EU actions, which preceded
the banning of any Do-It-Yourself (DIY) consumer products with free isocyanates.
These new regulations will afford the Company the opportunity to gain new
ground.

Manufacturing

Overview

The Company intends to establish full commercial-scale
manufacturing for both of its products at Adhpro Adhesives in Magog, Quebec and
Simpson Coatings in California through non-exclusive toll manufacturing
agreements.

-10-

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The Companys strategy is to avoid large capital investments in
manufacturing and to outsource the manufacturing of the Company products to
third-party manufacturers. At current capacity, the Company can manufacture
20,000 tons per year.

Third Party Manufacturing Partners

Adhpro Adhesives Inc.

Adhpro is an industrial premium quality adhesives manufacturer
based out of Magog, Quebec Canada. Adhpros products are manufactured from the
highest quality raw material to meet customers exact needs. Established since
1990, Adhpro is a young company that is expanding its skills from coast to
coast.

Simpson Coatings Group Inc.

Simpson Coatings Group Inc. is a manufacturer of a wide variety
of paints and lacquers for over fifty years based out of San Francisco,
California. Simpson Coatings is a leader and respected principal in nearly every
major coating paint category and a broadening list of specification products
selling to firms of every description. The company is also a member of the
National Paint and Coatings Association, Inc. and through this membership is
kept current with all the latest specifications and their amendments.

Due to its long history, qualifications and production capacity
Simpson Coatings is positioned as the primary source of production for the
United States and its president is a Board member of Nanotech Industries, Inc.
(NTI).

Research and Development

The Company does not foresee spending any capital on research
and development. The Company has a renewable Licensing Agreement with NTI to
sell the Nanotech Products. Any and all research and development for the
Nanotech Products is conducted by NTI.

Intellectual Property Protection

Several formulations of Green Polyurethane technology are
patent and know-how protected through control of the manufacturing process. The
underlying patents of Green Polyurethane (often referred to as HNIPU or NIPU)
have been filed with the U.S Registrar of Patents and are held by NTI and cover
the composition of and method for producing Green Polyurethane.

Name of Patent
    Filed in USA (No.
      & Date)Liquid oligomer composition containing
      hydroxylamine adducts and method of manufacturing thereof
    12/315,580 04/12/2008Nanostructured Hybrid Oligomer Composition
    12/381,626 03/13/2009Epoxy-Amine Composition Modified with
      Hydroxyalkyl Urethane Method of producing hybrid
      polyhydroxyurethane network on the base of carbonated- epoxydated
      unsaturated fatty acid triglycerides
    12/383,589 03/26/2009
      09/20/2010


-11-

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In addition, with respect to proprietary knowledge that is not
patentable and processes for which patents are difficult to enforce, the Company
relies on trade secret protection and confidentiality agreements to safeguard
its interests. Many elements of the manufacturing process used by the Company
may involve proprietary knowledge, technology or data that is not covered by
patents or patent applications, including technical processes, equipment
designs, algorithms and procedures.

Facilities and Employees

Hybrid Coating Technologies Inc.s principal office is located
in Daly City, California, U.S.A.

As of December 31, 2014, Hybrid Coating Technologies Inc. had 2
employees.

Competition

To date, the Company is unaware of any other non isocyanate
polyurethane product and as such does not have any direct competition. However,
it still must compete against major companies manufacturing and supplying toxic
PU based paints and coatings. Large members of this market are BASF, Sherwin
Williams, PPG, Benjamin Moore, AKZO Nobel, Rust-Oleum and Sika AG. The Companys
products, however, offer these competitors a cost-effective and attractive green
alternative to their existing coating formulations and this is why almost all of
the top 10 formulators in the world have sought out the Company to learn about
Green Polyurethane.

Environmental Matters

The Company is not aware of any pending or threatened
environmental investigation, proceeding or action by foreign, federal, state or
local agencies, or third parties involving its current operations.

Description of the Industry

According to the Center for the Polyurethanes, the industry is
generally broken up into the following segments:

- C.A.S.E. (Binders, Coatings, Adhesives, Sealants and Elastomers)
- Thermoplastics (highly elastic, flexible and abrasion resistant
  polyurethane)
- Rigid Foam (used as packaging material, building insulation, etc.)
- Flexible Foam (in bedding, furniture, car interiors, and running shoes)

The total available market for the Company within the
polyurethane and coatings industries is currently estimated at $136 billion and
comprised of three segments as follows:

- Polyurethane According to plastemart.com, a well-known online
  authority in the coatings market, As per Research and Markets, the global
  market for polyurethanes was estimated at 13,650.00 kilo tons in 2010 and is
  expected to reach 17,946.20 kilo tons by 2016, growing at a CAGR of 4.7% from
  2011 to 2016. In terms of revenue, the market was estimated to be worth US$33
  billion in 2010 and is expected to reach US$55 billion by 2016, growing at a
  CAGR of 6.8% from 2011 to 2016.

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- Global Paints & Coatings According to Datamonitors 2010
  paints & coatings Global Industry Guide, the global paints & coatings
  market grew by 8.6% in 2010 to reach a value of $103 billion with a volume of
  35MM Tons. In 2015, the global paints & coatings market is forecast to
  have a value of $142 billion, an increase of 37.3% since 2010. This market
  comprises three segments: Decorative, Industrial and Automotive, Specialty and
  Other. HCTs focus is on Specialty and Other, which comprises 23% of the
  market.
- Nano Coatings- The market for nanocoatings was $2.1 billion in 2009
  and projected to reach $3.3 billion in 2010 and $17.9 billion in 2015 with a
  five-year CAGR of 39.5% (BCC research, Jan. 2010).

Total Serviceable Market (TSM)

The total serviceable market is currently estimated at $32
billion as follows:

- Polyurethane Out of the total $33BB global paints & coatings
  market, 25% or $8.25 billion accounts for binders, coatings & adhesives,
  available for the Company to service.
- Global Paints & Coatings Out of the total $103 billion
  polyurethane market 23% or $23.7 billion accounts for specialty and other,
  available for the Company to service.
- NanoCoatings- Out of the total $3 billion nanocoatings market, the
  Company anticipates servicing 5% or $150 million.

The only polyurethane markets for which it would not be
economical to use Green Polyurethane are certain foams, which are produced at
very low costs for furniture. However, Green Polyurethane can still be used for
other polyurethane based foam products on a competitive basis. Green
Polyurethane could also replace up to 20% of the high-end epoxy
flooring/coating market.

2014 Progress and 2015 Outlook and Beyond

The Company commenced work on its spray foam insulation
product.

The company entered into advanced discussions with a Fortune
500 company for the development and commercialization of a product based on the
companys technology and subsequently entered into an agreement during the first
quarter of 2015

The company filed a new patent for coatings of hardwood floors

On March 13, 2015 the Department of Toxic Substances Control of
California selected isocyanates out of a list of 1,100 toxic components as an
area of focus with the goal of ridding products of isocyanates within 24 months.

The Company is presently in discussions with several large
industry players and expects to enter into commercialization agreements with
some potential partners during 2015 and is targeting to generate revenues and
profit for its fiscal year of 2016.

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ITEM 1A. RISK FACTORS

Risks Related to Our Business, Products and the Green
Polyurethane Industry

Risks Related to Hybrid Coating Technologies Inc.s Business
Operations

We have a limited operating history.

The Company was incorporated on July 8, 2010 and has limited or
no operating history. As such historical operating results may not provide a
meaningful basis for evaluating the business, financial performance and
prospects. You should consider the Companys business, operations and prospects
in light of the risks, expenses and challenges faced as an early-stage
company.

Our business, and therefore our results of operations and
financial condition, may be adversely affected by the current disruption in the
global credit markets and instability of financial systems.

The recent disruption in the global credit markets, the
re-pricing of credit risk and the deterioration of the financial and real estate
markets generally, particularly in the U.S. and Europe, have all contributed to
a reduction in consumer spending and a decline in the overall U.S. and world
economy. Although the recent disruptions were initially in the housing,
financial and insurance sectors, this deterioration has further expanded to the
general economy and various sectors. Tight credit, increased unemployment and
reduced consumer confidence have had negative effects on demand in the consumer
market and consequently for our product and service offerings. In addition, some
economists are predicting that the U.S. economy, and possibly the global
economy, has entered into a prolonged recession or even a depression as a result
of the foregoing factors. Such a prolonged downturn in the U.S. or global
economy could have a material adverse effect on our business in a number of
ways, including lower product demand and lower sales, which could have a
material adverse effect on our liquidity, results of operations and financial
condition.

The intellectual property used by the Company has limited
protection.

The process of seeking patent, industrial design and trademark
protection can be time consuming and expensive and there can be no assurance
that patents, industrial design registrations or trademark registrations will
issue from future applications or that the existing intellectual property rights
used by the Company 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. There can
be no assurance that any pending or future patent, industrial design or
trademark applications will be granted in respect of the technology used by The
Company or that any existing, pending or future patents, industrial design
registrations or trademark registrations will not be challenged, invalidated,
ignored, circumvented or otherwise rendered unenforceable.

The Companys future success depends on its ability to
increase its client base and distribution channels

We will initially sell the Nanotech Products primarily to
end-users within North America. If we are unable to successfully increase our
client base and expand our distribution channels, our revenues and future
prospects may be materially harmed. As we seek to grow our sales by entering new
markets, our ability to increase market share and sales will depend
substantially on our ability to expand our distribution channels by identifying,
developing and maintaining relationships with manufacturers and distributors. We
may be unable to enter into relationships with resellers in the markets we
target or on terms and conditions favorable to us, which could prevent us from
entering these markets at all or in accordance with our current plans. Our
ability to enter into and maintain relationships with resellers will be
influenced by factors beyond our control, including the relationships between
these resellers and our competitors and market acceptance of our products.

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Our dependence on third party manufacturers for the
manufacturing of all the Nanotech Products could prevent us from delivering our
products to our customers within required timeframes, which could result in
order cancellations and loss of market share.

We obtain all of the Nanotech Products using third party
manufacturers and assemblers and using materials and components procured from a
limited number of third-party suppliers. If we fail to develop or maintain our
relationships with these or other suppliers, we may be unable to manufacture our
products or our products may be available only at a higher cost or after a long
delay, which could prevent us from delivering our products to our customers
within required time frames which may, in turn, result in order cancellations
and loss of market share. The failure of a supplier to supply materials and
components in a timely manner, or to supply materials and components that meet
our quality, quantity and cost requirements could impair our ability to
manufacture our products or increase their component costs, particularly if we
are unable to obtain substitute sources of these materials and components on a
timely basis or on terms acceptable to us.

Highly Competitive Industry

Many of the companies with which the Company will compete have
significantly greater financial and other resources than the Company.
Additionally, other companies which at present are not in competition with the
Company may also enter into this industry, thereby directly competing with the
Company.

Uncertain Acceptance and Maintenance Of Company Brand

The Company believes that the establishment and maintenance of
a brand identified with the Companys services is critical to attracting and
expanding its customer base. While the Company is confident that its services
and brand name(s) will provide an excellent foundation for developing brand
awareness, no assurance can be given that such branding efforts will be
successful. Promotion of brand awareness among users will depend, among other
things, on the Companys success in its marketing efforts and the usability of
its services, none of which can be assured.

Significant Growth Places a Strain on Resources

If the Company is unable to manage growth effectively, business
could be adversely affected. The Company expects to experience significant
growth, both internally and through possible acquisitions and partnerships. This
anticipated future growth may place a significant strain on its resources. As
part of this growth, the Company will need to expand on its operational and
financial systems, procedures and controls.

The Company may require additional capital in the future
and no assurance can be given that such capital will be available at all or
available on acceptable terms.

The Company does not currently generate sufficient revenue from
operations to cover operating expenses and is not profitable. If the Company is
not able to significantly increase operating revenue and achieve profitability,
it may require additional equity or other means of debt financing to maintain
business operations, fund expansions or complete strategic acquisitions. There
can be no assurances that The Company will be able to obtain additional
financial resources on favorable commercial terms or at all. Failure to obtain
such financial resources could affect plans for sustainability and growth, or
result in the Company being unable to satisfy obligations as they become due,
either of which could have a material adverse effect on the Companys business
and financial condition.

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The Company has no history of significant profit and no
assured foreseeable earnings.

The Company has no history of significant profit. The Company
expects to continue to incur losses in the very near future, and there can be no
assurance that it will ever be profitable as it expects operating expenses to
increase as its client base and distribution channels are expanded. The
Companys ability to reach and sustain profitability depends on a number of
factors including, but not limited to, the availability of financing and the
continued availability of third party manufacturers.

The Companys business depends substantially on the
continuing efforts of its executive officers, and its business may be severely
disrupted if the Company loses their services. In addition, if the Company is
unable to attract, train and retain technical personnel, the Companys business
may be materially and adversely affected.

The Companys future success depends substantially on the
continued services of its executive officers. If one or more of the Companys
executive officers are unable or unwilling to continue being employed by us, the
Company may not be able to replace them readily, if at all. Therefore, the
Companys business may be severely disrupted, and it may incur additional
expenses to recruit and retain new officers.

Recruiting and retaining capable personnel is vital to the
Companys success. If the Company is unable to retain and attract qualified
employees, the Companys business may be materially and adversely affected.

Our ability to increase market share and sales depends on
our ability to successfully expand our distribution channels.

We will sell the Company Products to companies within North
America. If we are unable to successfully expand our distribution channels and
client base significantly, our revenues and future prospects will be materially
harmed. As we seek to grow our sales by entering existing and new markets in
some of which we have little experience selling coatings, adhesive and sealant
products, our ability to increase market share and sales will depend
substantially on our ability to expand our distribution channels by identifying,
developing and maintaining relationships with resellers both within and outside
of North America. We may be unable to enter into relationships with resellers in
the markets we target or on terms and conditions favorable to us, which could
prevent us from entering these markets or entering these markets in accordance
with our plans.

The Company is delinquent in its payroll tax remittances.

The Company is delinquent on its state and federal payroll tax
remittances. The State of California has issued a Notice of State Tax Lien
against the property and rights owned by the Company covering interest and
penalties for non-payment of payroll remittances.

Risks Related to the Common Stock

The Company may conduct further offerings in the future,
in which case your shareholdings will be diluted.

Since inception, both the Registrant and the Company have
relied on equity sales of Common Stock and issuances of convertible debt and
warrants convertible or exercisable into shares of Common Stock to fund
operations. The Registrant may conduct further equity and/or convertible debt
offerings in the future to finance current projects or to finance subsequent
projects that it decides to undertake. If Common Stock is issued in return for
additional funds, or upon conversion or exercise of outstanding convertible
debentures or warrants, the price per share could be lower than that paid by
existing common stockholders. The Registrant anticipates continuing to rely on
equity sales of Common Stock and issuances of convertible debt and/or warrants
convertible or exercisable into shares of Common Stock in order to fund its
business operations. If the Registrant issues additional shares of Common Stock,
your percentage interest in the Registrant will be lower. This condition, often
referred to as dilution, could result in a reduction in the per share value of
your shares of Common Stock.

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The Company may exercise its American-European Option and
additionally its Asia Option in the Licensing Agreement which will result in
your shareholdings being significantly diluted.

On December 6, 2011, the Company notified NTI of its intent to
exercise the Sealant Option. To date, the Company has not issued the Sealant
Shares and the Sealant Option has expired. The Company intends to renegotiate
the Sealant Option with NTI in the future.

Should the Company exercise the American-European Option or
also exercise the Asia Option, (as defined in the Licensing Agreement), this
will result in a significant issuance of Common Stock in return for Perpetual
Licensing Rights (as defined in the Licensing Agreement). This share issuance
will also result in a change of control and NTI will own 52.5% of the Companys
outstanding Common Stock in return for the exercise of the American-European
Option (and an additional 10% of the Companys outstanding Common Stock in the
event the Company also exercises the Asia Option). On December 6, the Company
exercised its Sealant option which entitles NTI to 15% of the outstanding shares
in the Company when effective. As a result, NTI will have substantial influence
over all matters requiring stockholder approval, including the election of
directors and the approval of significant corporate transactions such as
mergers, tender offers and the sale of all or substantially all of the assets.
The interests of NTI could conflict with or differ from your interests as a
holder of common shares. For example, the concentration of ownership held by NTI
could delay, defer or prevent a change of control of the Company or impede a
merger, takeover or other business combination which you may view favorably.

The Registrant does not anticipate paying dividends in
the future.

The Registrants current policy is to retain earnings to
finance the development of new lines of products and to otherwise reinvest in
our business. Therefore, the Registrant does not anticipate paying cash
dividends in the foreseeable future. The Registrants dividend policy will be
reviewed from time to time by the Board of Directors in the context of its
earnings, financial condition and other relevant factors. Until the Registrant
pays dividends, which it may never do, its shareholders will not be able to
receive a return on shares of Common Stock unless they sell them.

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ITEM 2. DESCRIPTION OF PROPERTY

We do not own any real property or any rights to acquire any
real property. Our head office is located at 950 John Daly Blvd. Suite 260, Daly
City, CA 94015. The lease is on a month-to-month basis at $3,750 per month.

ITEM 3. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is
a party or to which any of our property is subject and to the best of our
knowledge, no such actions against us are contemplated or threatened.

ITEM 4. MINE SAFETY DISCLOSURES

No applicable.

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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Common Stock is quoted on the OTC Bulletin Board. Our
shares were first traded on the OTC Bulletin Board on July 10, 2009, under the
name Allora Minerals, Inc., (OTCBB: ALRL). On August 12, 2009, the change of
the Registrants name to Epod Solar Inc. was approved by the NASD, and we were
issued the new trading symbol EPDS. On July 27, 2011, the Company changed its
name to Hybrid Coating Technologies Inc., and on September 7, 2011, that change
was approved by the Nevada Secretary of State and the Company was issued a new
trading symbol HCTI.ob. The following table indicates the high and low bid
prices of our common stock obtained during the periods indicated:

|               |   | For the year ended |  |   | For the year ended | 
|-------------- | - | ------------------ |  | - | ------------------ | 
|               |   | December 31, 2014  |  |   | December 31, 2013  | 
|               |   | High               |  |   | Low                | 
|First Quarter  | $ | 0.11               |  | $ | 0.04               | 
|Second Quarter | $ | 0.19               |  | $ | 0.07               | 
|Third Quarter  | $ | 0 40               |  | $ | 0.10               | 
|Fourth Quarter | $ | 0.79               |  | $ | 0.25               | 

The range of high and low price quotes of our common stock as
set out in the table above is as quoted on the OTC Bulletin Board. The market
quotations provided reflect inter-dealer prices, without retail markup,
mark-down or commission and may not represent actual transactions.

The number of holders of record of our shares of our common
stock as of December 31, 2014 was 296 shareholders.

Penny Stock Rules

The United States Securities and Exchange Commission (SEC)
has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks are generally equity securities with
a price of less than $5.00, other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system; provided, that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure document prepared by the
SEC, which: (a) contains a description of the nature and level of risk in the
market for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker's or dealer's duties to the customer and of
the rights and remedies available to the customer with respect to a violation of
such duties or other requirements of securities laws; (c) contains a brief,
clear, narrative description of a dealer market, including bid and ask prices
for penny stocks and significance of the spread between the bid and ask price;
(d) contains a toll-free telephone number for inquiries on disciplinary actions;
(e) defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (f) contains such other information and in such
form as the SEC shall require by rule or regulation.

The broker-dealer also must, prior to effecting any transaction
in a penny stock, provide the customer with: (a) bid and offer quotations for
the penny stock; (b) the compensation of the broker-dealer and its salesperson
in the transaction; (c) the number of shares to which such bid and ask prices
apply, or other comparable information relating to the depth and liquidity of
the market for such stock; and (d) monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that, prior to a transaction in a penny stock that is not
otherwise exempt from those rules, the broker-dealer must: (a) make a special
written determination that the penny stock is a suitable investment for the
purchaser; and (b) receive from the purchaser his or her written acknowledgement
of receipt of the determination and a written agreement to the transaction.

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These disclosure requirements may have the effect of reducing
the trading activity in the secondary market for our common stock and therefore
stockholders may have difficulty selling those securities.

Dividend Policy

We have never declared or paid any cash dividends on our common
stock. We currently intend to retain future earnings, if any, to finance the
expansion of our business. As a result, we do not anticipate paying any cash
dividends in the foreseeable future.

Sale of Unregistered Securities

On August 30, 2010, the Company closed on the acquisition from
Nanotech, a corporation formed pursuant to the laws of Nevada of all of the
issued and outstanding shares of capital stock of Nanotech held by the holders
of the Nanotech Shares. The purchase price for the Nanotech Acquisition
consisted of 3,381,003 shares of common stock, $0.001 par value per share of the
Registrant, issued to Nanotech Shareholders. In addition, certain shareholders
of the Company agreed to have 1,028,000 of their shares cancelled as part of the
transaction.

ITEM 6. SELECTED FINANCIAL DATA

N/A

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS

This Management's Discussion and Analysis (MD&A) is
designed to assist investors in understanding the nature and the importance of
the changes and trends, as well as the risks and uncertainties associated with
the Company's operations and financial position. Some sections of this MD&A
contain forward-looking statements that, because of their nature, necessarily
involve a number of known and unknown risks and uncertainties, including
statements regarding our capital needs, business strategy and expectations. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, forward-looking
statements can be identified by terminology such as may, will, should,
expect, plan, intend, anticipate, believe, estimate, predict,
potential or continue, the negative of such terms or other comparable
terminology. The Company's actual and future results could therefore differ
materially from those indicated or underlying these forward-looking statements.
In evaluating these statements, you should consider various factors, including
the risks discussed below, and, from time to time, in other reports filed by the
Company with the SEC. See Risk Factors and Special Note Regarding Forward
Looking Statements.

Although the Company deems the expectations reflected in these
forward-looking statements to be reasonable, the Company cannot provide any
guarantee as to the materialization of the expectations reflected in these
forward-looking statements.

Basis of Presentation

This MD&A on the Company's operating results and cash flows
for the fiscal year ended December 31, 2014 as well as its financial position at
December 31, 2014, should be read in conjunction with the consolidated financial
statements and accompanying notes contained in this report.

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Company Overview

Headquartered in Daly City, California, Hybrid Coating
Technologies Inc.s (formerly Epod Solar Inc.) (HCT) core business is that of
its wholly-owned subsidiary, Nanotech Industries International Inc.
(Nanotech). This business is the manufacturing and sale of alternative
non-toxic (isocyanate-free) polyurethane, Green Polyurethane. The products
manufactured and sold by Nanotech (Nanotech Products) include coatings and raw
binder ingredients (Green Polyurethane® Monolithic Floor Coating and Green
Polyurethane Binder). Nanotech was granted the right to manufacture and sell
the Nanotech Products pursuant to an agreement (Licensing Agreement) entered
into between Nanotech and NTI (Nanotech Industries Inc.) the holder of the
proprietary rights to the license and intellectual property required for the
manufacturing of the Nanotech Products. The Nanotech Products will target the
coatings, adhesives, sealants and elastomers (C.A.S.E.) market in North
America, with options to sell in Europe, South America and Asia, pursuant to the
terms of the Licensing Agreement. (see Note 4 to consolidated financial
statements and Item 1 Description of Business) .

Off-Balance Sheet Arrangements

N/A

Going Concern

The Companys consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. The Company has incurred net losses of $22,623,063 since inception.
This condition raises substantial doubt about the Companys ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of these uncertainties.

There are no assurances that the Company will be able to either
(1) achieve a level of revenues adequate to generate sufficient cash flow from
operations; or (2) obtain additional financing through either private placement,
public offerings and/or bank financing necessary to support The Company's
working capital requirements. To the extent that funds generated from operations
and any private placements, public offerings and/or bank financing are
insufficient, the Company will have to raise additional working capital. No
assurance can be given that additional financing will be available, or if
available, will be on terms acceptable to the Company. If adequate working
capital is not available the Company may be required to curtail its
operations.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued
accounting pronouncements to have a significant impact on the Companys results
of operations, financial position or cash flows.

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Operating Results for the Fiscal Year Ended December 31,
2014 and 2013

Results of Operations

We have had no significant operating revenues for the year
ended December 31, 2014, save for samples sales of $29,370. Our activities to
date have been financed from the proceeds of share subscriptions, proceeds from
convertible debentures and notes issued and from loans from related and other
parties and trade payables. During the year ended December 31, 2014, revenues
from our operations were $29,370 compared to $37,281 for the year ended December
31, 2013.

For the year ended December 31, 2014, we incurred a total net
loss of $5,834,287 including non-cash charges of $1,677,656 from stock-based
compensation, intangible asset amortization of $808,735, amortization of debt
discounts of $112,156, interest expense of $750,508, loss on extinguishment of
debt of $2,174,408, and a gain in the fair value of the derivative liability of
$930,345, with all non-cash charges totaling $4,593,118. Also incurred were other
general and administrative expenses of $1,269,941, gain on foreign currency of
$1,396, cost of sales of $1,994 and other interest expense of $450,233.

General and administrative expenses totaled $2,947,597 for the
year ended December 31, 2014, as compared to $2,921,059 for the year ended
December 31, 2013, representing a 1% increase from the prior year. Included in general administrative expenses are the following:

|                                        |   | Year ended December 31, 2014 |  |   |           | 
|--------------------------------------- | - | ---------------------------- |  | - | --------- | 
|                                        |   | 2014                         |  |   | 2013      | 
|                                        |   |                              |  |   |           | 
|Professional Fees                       | $ | 933,391                      |  | $ | 873,144   | 
|Payroll                                 |   | 89,492                       |  |   | 170,087   | 
|Stock-based compensation (non-cash)     |   | 1,677,656                    |  |   | 1,609,709 | 
|Rent, supplies and general office costs |   | 98,038                       |  |   | 97,678    | 
|Lab fees and supplies                   |   | 29,682                       |  |   | 25,179    | 
|Travel and trade shows                  |   | 119,339                      |  |   | 145,262   | 
|                                        |   |                              |  |   |           | 
|Total                                   | $ | 2,947,597                    |  | $ | 2,921,059 | 

General and Administration expenses analysis

Professional fees were $933,391 for the year ended December 31,
2014 compared to $873,144 for the year ended December 31, 2013. The Company
continues to use consultants for financing, sales and marketing purposes with a
slight increase in the current year as a result. Payroll was $89,492 for the year
ended December 31, 2014 compared to $170,087 for the year ended December 31,
2013. Payroll decreased due to a reduction in full-time employees from two
employees to one, specifically senior management who were remunerated through
stock based compensation. Stock-based compensation was $1,677,656 for the year
ended December 31, 2014 compared to $1,609,709 for the year ended December 31,
2013. Stock-based compensation increased by 4% due to payments to management and
other consultants for services through the issuance of shares. Rent and general
office costs was $98,038 in 2014 a slight reduction from $97,678 for the prior
year due to minor increases in administrative costs. Lab fees and supplies was
$29,682 for the year ended December 31, 2014 compared to $25,179 for the year
ended December 31, 2013. Lab fees and supplies increased due to higher material
use in testing and sample making in 2014. There was an 18% reduction in travel
and trade shows which was $119,939 for the year ended December 31, 2014 from
$145,262 for the prior year period due to fewer shows attended.

-22-

---

Amortization and depreciation was $808,735 for the year ended
December 31, 2014 compared to $182,023 in the year ended December 31, 2013. Two
new licenses were acquired in 2014 which resulted in higher amortization in the
year ended December 31, 2014 compared to December 31, 2013.

During the year ended December 31, 2014, we recorded a gain of
$930,345 on the change in fair value of derivative liabilities related to our
convertible notes payable, compared to a loss of $264,366 during the year ended
December 31, 2013. The change in derivative liability was primarily a result of
the decrease in our stock price during the year ended December 31, 2014.

During the year ended December 31, 2014, we recorded $862,664
in interest expense compared to $921,096 during the year ended December 31,
2013. Interest expense was higher in the prior years period due to the Company
extending the maturity dates of several of its notes payable. In order to obtain
these extensions the Company had issued additional shares of its common stock
which resulted in the recording of additional interest expense.

During the year ended December 31, 2014, we recorded a loss on
the extinguishment of debt in the amount of $2,174,086 compared to $1,282,836
during the year ended December 31, 2013. The loss was a result of paying off
accounts payable-related parties and other debt through the issuance of shares
at a lower value than the fair value of the shares.

During the year ended December 31, 2013, we recorded a loss on
warrant modifications of $241,697 compared to $0 in December 31, 2014. The
Company extended the expiration date and reduced the exercise price of certain
Series A warrants that had been issued to third parties. The modification of the
terms resulted in a change in the fair value of the warrants which was recorded
as a loss on modification and an increase in additional paid-in capital.

Liquidity and Capital resources

We had no cash and cash equivalents at December 31, 2014 and
2013. The Company had a working capital deficit of $6,187,437 as of December 31,
2014. We do not have sufficient cash on hand to fund operations. We believe that
we will need approximately $1,600,000 to fund our operations over the next 12
months.

The ability of the Company to continue its operations is
dependent on the successful execution of management's plans, which include the
expectation of raising debt or equity based capital, with some additional
funding from other traditional financing sources, including term notes, until
such time that funds provided by operations are sufficient to fund working
capital requirements. The Company may need to incur additional liabilities with
related parties to sustain the Companys existence.

In 2013, the Company received approximately $969,000
(approximately $708,000 from related parties) in short-term loans and repaid
approximately $467,000.

In 2014, the Company received approximately $1,544,000
(approximately $1,286,000 from related parties) in short-term loans and repaid
approximately $721,000.

Principal Cash Flows for the Fiscal Year Ended December
31, 2014

Operating activities used cash flows of $394,127.  This increase in use of cash relates primarily to the net loss incurred during
2014 after adjusting for non-cash expenses.

Financing activities provided cash flows of $394,127,
primarily as a result of receipt of funds such as $1,285,974 in shareholder
loans and $258,000 in proceeds from convertible debentures. In addition, the
Company repaid $420,800 of the note payable - related party, and repaid $727,218
on loans payable  shareholders.

-23-

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISKS

Convertible Debt

The fair market value of our 10% senior secured convertible
debentures is subject to interest rate risk, market price risk and other factors
due to the convertible feature of the debentures. The fair market value of the
debentures will generally increase as interest rates fall and decrease as
interest rates rise. In addition, the fair market value of the debentures will
generally increase as the market price of our common stock increases and
decrease as the market price falls. The interest and market value changes affect
the fair market value of the debentures but do not impact our financial
position, cash flows or results of operations due to the fixed nature of the
debt obligations.

-24-

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Hybrid Coatings Technology Inc.(A Development Stage Company)

Consolidated Financial Statements December 31, 2014

-25-

---

Hybrid Coatings Technology Inc.(A Development Stage Company)

Consolidated Financial Statements

|Contents                                                      |     
|------------------------------------------------------------- | ----
|                                                              |     
|Report of Independent Registered Public
      Accounting Firm | F-1 
|Consolidated Balance Sheets                                   | F-2 
|Consolidated Statements of Operations                         | F-3 
|Consolidated Statements of Stockholders Deficit               | F-4 
|Consolidated Statements of Cash Flows                         | F-7 
|Notes to Consolidated Financial Statements                    | F-11

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Hybrid Coating Technologies
Inc.
Daly City, CA

We have audited the accompanying consolidated balance sheets of
Hybrid Coating Technologies, Inc. as of December 31, 2014 and 2013, and the
related consolidated statements of operations, stockholders deficit and cash
flows for the years then ended. Hybrid Coating Technologies Inc.s management is
responsible for these financial statements. Our responsibility is to express an
opinion on these 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 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 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 financial position of
Hybrid Coating Technologies Inc. as of December 31, 2014 and 2013, and the
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been
prepared assuming that Hybrid Coating Technologies Inc. will continue as a going
concern. As discussed in Note 1 to the consolidated financial statements, Hybrid
Coating Technologies Inc. has suffered recurring losses from operations and has
a working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Managements plans in regard to these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

|/s/ GBH CPAs, PC
|----------------
|                
|GBH CPAs, PC    
|www.gbhcpas.com 
|Houston, Texas  
|April 15, 2015  

---

|Hybrid Coatings Technology Inc. 
|--------------------------------
|Consolidated Balance Sheets     
|As of December 31, 2014 and 2013

|                                                                                                                                                         |   | December 31 |   |   | December 31 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|ASSETS                                                                                                                                                   |   | 2014        |   |   | 2013        |  
|                                                                                                                                                         |   |             |   |   |             |  
|                                                                                                                                                         |   |             |   |   |             |  
|Intangible assets, net of accumulated
      amortization                                                                                                 | $ | 2,136,205   |   | $ | 444,940     |  
|                                                                                                                                                         |   |             |   |   |             |  
|TOTAL ASSETS                                                                                                                                             | $ | 2,136,205   |   | $ | 444,940     |  
|                                                                                                                                                         |   |             |   |   |             |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                    |   |             |   |   |             |  
|Current liabilities                                                                                                                                      |   |             |   |   |             |  
|Bank overdraft                                                                                                                                           | $ | 5,552       |   | $ | 7,706       |  
|Accounts payable and accrued liabilities                                                                                                                 |   | 667,295     |   |   | 564,289     |  
|Accounts payable and accrued
      liabilities-related parties                                                                                           |   | 348,731     |   |   | 491,178     |  
|Deferred revenue                                                                                                                                         |   | 20,000      |   |   | 20,000      |  
|Stock payable                                                                                                                                            |   | 15,000      |   |   | 15,000      |  
|Senior secured convertible debentures                                                                                                                    |   | 200,000     |   |   | 200,000     |  
|Convertible notes, net of unamortized
      discount of $160,748                                                                                         |   | 119,363     |   |   | -           |  
|Loans payable, net of unamortized discount of $0 and $5,455,
      respectively                                                                          |   | 977,500     |   |   | 972,045     |  
|Loans payable shareholders, net of
      unamortized discounts and premiums of $0 and $21,980, respectively                                             |   | 1,944,504   |   |   | 1,343,562   |  
|Note payable  related party                                                                                                                             |   | 1,889,491   |   |   | 682,451     |  
|Total current
      liabilities                                                                                                                          |   | 6,187,437   |   |   | 4,296,231   |  
|Convertible debentures                                                                                                                                   |   | 1,342,696   |   |   | 1,396,858   |  
|Derivative liability                                                                                                                                     |   | 181,723     |   |   | 816,488     |  
|Total liabilities                                                                                                                                        |   | 7,711,856   |   |   | 6,509,577   |  
|Commitments and contingencies                                                                                                                            |   |             |   |   |             |  
|STOCKHOLDERS DEFICIT                                                                                                                                    |   |             |   |   |             |  
|Series A preferred stock, $500 par value,
      1,000,000 shares authorized, 0 shares issued and outstanding                                             |   | -           |   |   | -           |  
|Series B preferred stock, $500 par value, 1,000,000 shares
      authorized, 0 shares issued and outstanding                                             |   | -           |   |   | -           |  
|                                                                                                                                                         |   |             |   |   |             |  
|Common stock, $0.001 par value, 150,000,000 shares
      authorized, 44,126,829 shares and 11,167,513 shares issued and
      outstanding , respectively |   | 44,127      |   |   | 11,168      |  
|Additional paid-in capital                                                                                                                               |   | 17,003,285  |   |   | 10,712,971  |  
|                                                                                                                                                         |   |             |   |   |             |  
|Accumulated deficit                                                                                                                                      |   | (22,623,063 | ) |   | (16,788,776 | )
|Total stockholders deficit                                                                                                                              |   | (5,575,651  | ) |   | (6,064,637  | )
|                                                                                                                                                         |   |             |   |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                              | $ | 2,136,205   |   | $ | 444,940     |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

|Hybrid Coatings Technology Inc.               
|----------------------------------------------
|Consolidated Statements of Operations         
|For the Years Ended December 31, 2014 and 2013

|                                                                             |   | Year ended        |   |   | Year ended        |  
|---------------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                                             |   | December 31, 2014 |   |   | December 31, 2013 |  
|                                                                             |   |                   |   |   |                   |  
|Revenues                                                                     | $ | 29,370            |   | $ | 37,281            |  
|Cost of sales                                                                |   | 1,994             |   |   | 37,650            |  
|Gross profit                                                                 |   | 27,376            |   |   | (369              | )
|Operating expenses                                                           |   |                   |   |   |                   |  
|General and administrative                                                   |   | 2,947,597         |   |   | 2,921,059         |  
|Amortization of intangible asset                                             |   | 808,735           |   |   | 182,023           |  
|Total operating expenses                                                     |   | 3,756,332         |   |   | 3,103,082         |  
|Loss from operations                                                         |   | (3,728,956        | ) |   | (3,103,451        | )
|Other income (expense)                                                       |   |                   |   |   |                   |  
|Warrant modification expense                                                 |   | -                 |   |   | (241,697          | )
|Loss on extinguishment of debt                                               |   | (2,174,408        | ) |   | (1,282,836        | )
|Change in fair value of derivative liabilities                               |   | 930,345           |   |   | (264,366          | )
|Gain on foreign currency translation                                         |   | 1,396             |   |   | 2,070             |  
|Interest expense                                                             |   | (862,664          | ) |   | (921,096          | )
|Total other income (expense)                                                 |   | (2,105,331        | ) |   | (2,707,925        | )
|Net loss                                                                     | $ | (5,834,287        | ) | $ | (5,811,376        | )
|                                                                             |   |                   |   |   |                   |  
|Basic and diluted net loss per common share                                  | $ | (0.24             | ) | $ | (0.70             | )
|Basic and diluted weighted average number
      of common shares outstanding |   | 23,937,853        |   |   | 8,257,277         |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

|Hybrid Coatings Technology Inc.               
|----------------------------------------------
|Statement of Stockholders Deficit            
|For the Years Ended December 31, 2014 and 2013

|                                                                                                  |  | Number of  |  |   |        |  |   |                 |   |   |             |   |   |            |  
|------------------------------------------------------------------------------------------------- |  | ---------- |  | - | ------ |  | - | --------------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                  |  | Shares     |  |   |        |  |   | Additional      |   |   | Accumulated |   |   |            |  
|                                                                                                  |  | Issued     |  |   | Amount |  |   | paid-in capital |   |   | Deficit     |   |   | Total      |  
|Balance, December 31, 2012                                                                        |  | 6,503,568  |  | $ | 6,504  |  | $ | 6,651,428       |   | $ | (10,977,400 | ) | $ | (4,319,468 | )
|Issuance of shares for services rendered                                                          |  | 349,303    |  |   | 349    |  |   | 138,136         |   |   | -           |   |   | 138,485    |  
|Issuance of shares for interest payments on
      Convertible Debentures                          |  | 420,567    |  |   | 421    |  |   | 140,456         |   |   | -           |   |   | 140,877    |  
|Issuance of warrants for services                                                                 |  | -          |  |   | -      |  |   | 1,385,379       |   |   | -           |   |   | 1,385,379  |  
|Imputed interest on note payable-related
      party                                              |  | -          |  |   | -      |  |   | 133,464         |   |   | -           |   |   | 133,464    |  
|Issuance of warrants to landlord for payment of accounts
      payable and prepaid rent           |  | -          |  |   | -      |  |   | 202,095         |   |   | -           |   |   | 202,095    |  
|Exercise of warrants                                                                              |  | 375,000    |  |   | 375    |  |   | -               |   |   | -           |   |   | 375        |  
|Issuance of shares for cash-less exercise of warrants                                             |  | 688,060    |  |   | 688    |  |   | (688            | ) |   | -           |   |   | -          |  
|Issuance of shares to SSCD holders for
      payment of interest                                  |  | 100,000    |  |   | 100    |  |   | 37,900          |   |   | -           |   |   | 38,000     |  
|Issuance of shares for interest payment on loans payable -
      shareholders                     |  | 43,863     |  |   | 44     |  |   | 13,040          |   |   | -           |   |   | 13,084     |  
|Issuance of warrants for interest payment
      on loans payable - shareholders                   |  | -          |  |   | -      |  |   | 68,131          |   |   | -           |   |   | 68,131     |  
|Issuance of shares for payment on accounts
      payable and accrued liabilities-related parties  |  | 2,287,000  |  |   | 2,287  |  |   | 891,325         |   |   | -           |   |   | 893,612    |  
|Issuance of warrants for payment on loans payable -
      shareholders                            |  | -          |  |   | -      |  |   | 623,665         |   |   | -           |   |   | 623,665    |  
|Fair value of 110,000 warrants issued
      with loans payable                                    |  | -          |  |   | -      |  |   | 23,705          |   |   | -           |   |   | 23,705     |  
|Fair value of 100,000 warrants issued with loans
      payable shareholders                       |  | -          |  |   | -      |  |   | 31,588          |   |   | -           |   |   | 31,588     |  
|Modification of Series A warrants                                                                 |  | -          |  |   | -      |  |   | 241,697         |   |   | -           |   |   | 241,697    |  
|Issuance of shares for amended Convertible Debentures                                             |  | 400,152    |  |   | 400    |  |   | 131,650         |   |   | -           |   |   | 132,050    |  
|Net loss                                                                                          |  |            |  |   |        |  |   |                 |   |   | (5,811,376  | ) |   | (5,811,376 | )
|Balance, December 31, 2013                                                                        |  | 11,167,513 |  | $ | 11,168 |  | $ | 10,712,971      |   | $ | (16,788,776 | ) | $ | (6,064,637 | )
|Issuance of shares to related parties for
    payment on accounts payable and accrued liabilities |  | 18,695,000 |  |   | 18,695 |  |   | 3,135,955       |   |   | -           |   |   | 3,154,650  |  
|Issuance of shares for services rendered                                                          |  | 3,507,804  |  |   | 3,508  |  |   | 490,629         |   |   | -           |   |   | 494,137    |  
|Issuance of warrants for services rendered                                                        |  | -          |  |   | -      |  |   | 691,863         |   |   | -           |   |   | 691,863    |  
|Exercise of warrants                                                                              |  | 325,000    |  |   | 325    |  |   | -               |   |   | -           |   |   | 325        |  
|Valuation of vested warrants                                                                      |  | -          |  |   | -      |  |   | 491,656         |   |   | -           |   |   | 491,656    |  
|Issuance of shares to landlord for payment of accounts
      payable and prepaid rent             |  | 418,604    |  |   | 419    |  |   | 45,627          |   |   | -           |   |   | 46,046     |  
|Issuance of shares for cash-free exercise
      of warrants                                       |  | 872,711    |  |   | 873    |  |   | (873            | ) |   | -           |   |   | -          |  
|Imputed interest on note payable-related party                                                    |  | -          |  |   | -      |  |   | 241,856         |   |   | -           |   |   | 241,856    |  
|Issuance of shares  for payment on note
      payable-related party                               |  | 8,113,116  |  |   | 8,113  |  |   | 884,330         |   |   | -           |   |   | 892,443    |  
|Issuance of shares for interest payment on
      Senior Secured Convertible Debentures            |  | 100,000    |  |   | 100    |  |   | 29,700          |   |   | -           |   |   | 29,800     |  
|Issuance of shares for interest payment on shareholder loan
      and loan payable                |  | 340,312    |  |   | 340    |  |   | 55,517          |   |   | -           |   |   | 55,858     |  
|Issuance of shares for interest payment on
      convertible debentures                           |  | 432,454    |  |   | 432    |  |   | 131,618         |   |   | -           |   |   | 132,050    |  
|Issuance of shares as payment for payroll liabilities
      included in accounts payable          |  | 154,315    |  |   | 154    |  |   | 92,435          |   |   | -           |   |   | 92,590     |  
|Net loss                                                                                          |  | -          |  |   | -      |  |   | -               |   |   | (5,834,287  | ) |   | (5,834,287 | )
|Balance, December 31, 2014                                                                        |  | 44,126,829 |  | $ | 44,127 |  | $ | 17,003,285      |   | $ | (22,623,063 | ) | $ | (5,575,651 | )

The accompanying notes are an integral part of these
consolidated financial statements.

---

|Hybrid Coatings Technology Inc.               
|----------------------------------------------
|Consolidated Statements of Cash Flows         
|For the Years Ended December 31, 2014 and 2013

|                                                                                  |   | Year ended       |   |   | Year ended       |  
|--------------------------------------------------------------------------------- | - | ---------------- | - | - | ---------------- | -
|                                                                                  |   | December 31,2014 |   |   | December 31,2013 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |                  |   |   |                  |  
|Net loss                                                                          | $ | (5,834,287       | ) | $ | (5,811,376       | )
|Adjustments to reconcile net loss to net
      cash used in operating activities: |   |                  |   |   |                  |  
|Stock-based compensation                                                          |   | 1,677,656        |   |   | 1,643,459        |  
|Amortization of intangible asset                                                  |   | 808,735          |   |   | 182,023          |  
|Warrant modification expense                                                      |   | -                |   |   | 241,697          |  
|Loss on extinguishment of debt                                                    |   | 2,174,408        |   |   | 1,282,836        |  
|Change in fair value of derivative
      liability                                |   | (930,345         | ) |   | 264,366          |  
|Fair value on derivative liability that exceeds face
      value of debt          |   | 69,419           |   |   | -                |  
|Gain on foreign currency                                                          |   | (1,396           | ) |   | (2,070           | )
|Interest paid through issuance of
      common shares                             |   | 23,255           |   |   | 90,043           |  
|Interest imputed from notes payable -related party                                |   | 241,856          |   |   | 133,464          |  
|Amortization of debt discounts                                                    |   | 112,156          |   |   | 297,803          |  
|Change in operating assets and liabilities:                                       |   |                  |   |   |                  |  
|Prepaid expenses and other current assets                                         |   | 11,250           |   |   | -                |  
|Accounts payable and accrued liabilities                                          |   | 363,109          |   |   | 362,330          |  
|Accounts payable and accrued liabilities related parties                          |   | 890,057          |   |   | 799,945          |  
|Deferred revenue                                                                  |   | -                |   |   | 20,000           |  
|Net cash used in operating activities                                             |   | (394,127         | ) |   | (495,480         | )
|                                                                                  |   |                  |   |   |                  |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |   |                  |   |   |                  |  
|                                                                                  |   |                  |   |   |                  |  
|Repayment of bank overdraft                                                       |   | (2,154           | ) |   | (6,615           | )
|Proceeds from issuance of convertible notes                                       |   | 258,000          |   |   | -                |  
|Proceeds from exercise of warrants                                                |   | 325              |   |   | 375              |  
|Proceeds from loans payable-shareholders                                          |   | 1,285,974        |   |   | 708,846          |  
|Repayments from loans payable-shareholders                                        |   | (727,218         | ) |   | (360,696         | )
|Proceeds from loans payable                                                       |   | -                |   |   | 260,000          |  
|Repayments of note payable - related party                                        |   | (420,800         | ) |   | (106,430         | )
|Net cash provided by financing activities                                         |   | 394,127          |   |   | 495,480          |  
|                                                                                  |   |                  |   |   |                  |  
|INCREASE (DECREASE) IN CASH                                                       |   | -                |   |   | -                |  
|                                                                                  |   |                  |   |   |                  |  
|CASH, BEGINNING OF PERIOD                                                         |   | -                |   |   | -                |  
|CASH, ENDING OF PERIOD                                                            | $ | -                |   | $ | -                |  

---

|Hybrid Coatings Technology Inc.               
|----------------------------------------------
|Consolidated Statements of Cash Flows         
|For the Years Ended December 31, 2014 and 2013

|Supplemental disclosure of cash flow information                                       |   |           |  |   |         | 
|-------------------------------------------------------------------------------------- | - | --------- |  | - | ------- | 
|Cash paid during the period for:                                                       |   |           |  |   |         | 
|Interest paid                                                                          | $ | 52,733    |  | $ | 122,140 | 
|Income taxes                                                                           | $ | -         |  | $ | -       | 
|Non-cash financing transactions:                                                       |   |           |  |   |         | 
|Acquisition of intangible asset through
      issuance of note payable                 | $ | 2,500,000 |  | $ | -       | 
|Discount arising from loans payable -shareholders                                      | $ | -         |  | $ | 31,588  | 
|Reclassification of accrued interest to
      convertible debentures                   | $ | -         |  | $ | 76,358  | 
|Discount arising from loans payable                                                    | $ | -         |  | $ | 23,705  | 
|Reclassification of note payable to
      accounts payable                             | $ | -         |  | $ | 11,600  | 
|Reclassification of accounts payable to convertible note                               | $ | 25,000    |  | $ | -       | 
|Reclassification of accounts payable
      related party to loans payable shareholders | $ | 25,560    |  | $ | -       | 
|Common stock issued and payable for accounts payable                                   | $ | 92,590    |  | $ | -       | 
|Common stock issued and payable for
      interest accrual                             | $ | 32,603    |  | $ | 170,049 | 
|Common stock issued for settlement of accounts payable
      -related party            | $ | 1,046,571 |  | $ | 780,900 | 
|Common stock issued for principal and
      interest accrual on Convertible Debentures | $ | 55,692    |  | $ | -       | 
|Common stock issued for Senior Secured Convertible
      Debentures                    | $ | 29,800    |  | $ | -       | 
|Common stock issued for payment on note
      payable-related party                    | $ | 872,160   |  | $ | -       | 
|Cashless exercise of warrants                                                          | $ | 873       |  | $ | 688     | 
|Warrants issued to pay shareholder loan                                                | $ | -         |  | $ | 125,022 | 
|Warrants issued for settlement of rent liability and
      prepaid rent                | $ | -         |  | $ | 116,250 | 

The accompanying notes are an integral part of these
consolidated financial statements.

---

|Hybrid Coatings Technology Inc.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|December 31, 2014 and 2013                

NOTE 1  NATURE OF BUSINESS AND GOING CONCERN

Nature of Business OverviewHybrid Coating
Technologies Inc. (the Company, HCT), was incorporated in the State of
Nevada on July 8, 2010.

Our operations are now
focused on the manufacturing and sale of Green Polyurethane, including Green
Polyurethane Monolithic Floor Coating and Green Polyurethane Binder, an
alternative non-toxic (isocyanate-free) polyurethane.

Going ConcernThe Company remains highly dependent
upon funding from non-operational sources. The Companys consolidated financial
statements have been presented on the basis that it is a going concern, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company has incurred net losses of approximately
$22,623,000 since inception, and has a working capital deficit of  $6,187,437 as of December 31, 2014. These conditions raise substantial doubt
about the Companys ability to continue as a going concern. The consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of these
uncertainties.

There are no assurances that the Company will be able to either
(1) achieve a level of revenues adequate to generate sufficient cash flow from
operations; or (2) obtain additional financing through either private placement,
public offerings and/or bank financing necessary to support the Company's
working capital requirements. To the extent that funds generated from operations
and any private placements, public offerings and/or bank financing are
insufficient, the Company will have to raise additional working capital. No
assurance can be given that additional financing will be available, or if
available, will be on terms acceptable to the Company. If adequate working
capital is not available the Company may be required to curtail or cease its
operations.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation- The financial statements
of the Company have been prepared in accordance with generally accepted
accounting principles in the United States of America and are presented in US
dollars. The Companys fiscal year end is December 31.

Principles of Consolidation- The consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiary, Nanotech. All significant inter-company balances and transactions
have been eliminated in the consolidated financial statements.

Use of EstimatesThe preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make certain 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 revenue and expenses during the reported period. Actual results could differ
from those estimates.

Cash and Cash Equivalents The Company
maintains various cash balances in two financial institutions located in Daly
City, California. These balances are fully insured by the Federal Deposit
Insurance Corporation, which insures up to $250,000. On occasion, balances may
temporarily exceed such coverage. The Company considers all highly liquid debt
instruments, which could include commercial paper and certificates of deposits,
with an original maturity of three months or less to be cash equivalents.
Investments with maturities greater than three months and less than on year are
classified as short term investments.

Intangible Assets -Intangible assets are
comprised of intellectual property which is amortized on a straight-line basis
over the assets respective life, ranging from 24 months to 120 months.
Intellectual property with a perpetual life in not amortized.

---

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

Impairment of Long-Lived AssetsLong-lived assets to be held and used are reviewed for impairment on an
annual basis or whenever events or changes in circumstances indicate that the
carrying amount of such asset may not be recoverable. The determination of
recoverability of long-lived assets is based on an estimate of undiscounted
future cash flows resulting from the use of the asset or its disposition.
Measurement of an impairment loss for long-lived assets that management expects
to hold and use is based on the fair value of the asset. Long-lived assets to be
disposed of are reported at the lower of carrying amount or net realizable
value.

Revenue RecognitionRevenue is
recognized when persuasive evidence of an arrangement exists, goods are
delivered, sales price is determinable, and collection is reasonably assured.

Sales to one customer comprised 87% of the Companys total
sales for the year ended December 31, 2014. Sales to one customer comprised 51%
of the Companys total sales for the year ended December 31, 2013.

Income TaxesIncome taxes are provided
for the tax effects of transactions reported in the financial statements and
consist of taxes currently payable plus deferred taxes. Deferred income taxes
are provided for the estimated income tax effect of temporary differences
between the financial statement and tax bases of assets and liabilities.
Deferred tax assets are also provided for certain tax loss carryforwards and tax
credit carryforwards. A valuation allowance is established to reduce deferred
tax assets when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. As long as the Company is categorized
as a development stage company, the net amount of any potential deferred tax
assets will be off-set by such valuation allowance. Deferred income taxes are
measured using the enacted tax rates that are assumed will be in effect when the
asset and liability basis differences reverse and/or when the tax loss
carryforwards and tax credit carryforwards are utilized.

A tax benefit from an uncertain position is recognized if it is
"more likely than not" that the position is sustainable, based upon its
technical merits. The tax benefit of a qualifying position is the largest amount
of tax benefit that is greater than 50 percent likely of being realized upon
ultimate settlement with a taxing authority having full knowledge of all
relevant information. As of December 31, 2014 and 2013, the Company had not
recorded any tax benefits from uncertain tax positions.

Fair ValueASC 820 defines fair value,
establishes a framework for measuring fair value and enhances disclosures about
fair value measurements. It defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. ASC 820 also
establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. The standard describes three levels of inputs that may be used to
measure fair value:

Level 1: Observable inputs such as quoted prices (unadjusted)
in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable
for the asset or liability, either directly or indirectly. These include quoted
prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities that are not active; and model-driven
valuations whose inputs are observable or whose significant value drivers are
observable. Valuations may be obtained from, or corroborated by, third-party
pricing services.

Level 3: Unobservable inputs to measure fair value of assets
and liabilities for which there is little, if any market activity at the
measurement date, using reasonable inputs and assumptions based upon the best
information at the time, to the extent that inputs are available without undue
cost and effort.

As of December 31, 2014 and 2013, the significant inputs to the
Companys derivative liability calculation were Level 3 inputs.

---

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)

The following table sets forth a reconciliation of changes in
the fair value of financial assets and liabilities classified as Level 3 in the
fair value hierarchy:

Significant Unobservable Inputs**(Level 3)**Year Ended December 31,2014
    
    
    2013Beginning balance
    $
    816,488
    
    $
    166,721Total (gains) losses
    
    (930,345
    )
    
    264,366Settlements
    
    -
    
    
    (99,412
    )Additions
    
    295,580
    
    
    484,813Ending balance
    $
    181,723
    
    $
    816,488Change in unrealized gains(losses) included
      in earnings relating to derivatives still held as of December 31, 2014 and
      2013
    $
    930,345
    
    $
    (264,366
    )


Stock-Based CompensationFor stock and
stock options awarded in return for services rendered, the expense is measured
at the grant-date fair value of the award and recognized as compensation expense
on a straight-line basis over the service period, which is the vesting period.
The Company estimates forfeitures that it expects will occur and records expense
based upon the number of awards expected to vest.

Earnings (Loss) perShare -Basic net loss
per share amounts are computed by dividing the net loss by the weighted average
number of common shares outstanding over the reporting period. In periods in
which the Company reports a net loss, dilutive securities are excluded from the
calculation of diluted net loss per share amounts as the effect would be
anti-dilutive.

For the years ended December 31, 2014 and 2013, the following
share equivalents related to convertible debt and warrants to purchase shares of common stock were excluded
from the computation of diluted net loss per share, as the inclusion of such
shares would be anti-dilutive:

|                 |  | Year Ended December 31, | 
|---------------- |  | ----------------------- | 
|                 |  | 2014                    | 
|Convertible debt |  | 6,085,278               | 
|Stock warrants   |  | 10,034,928              | 
|                 |  | 16,120,206              | 

Recently Issued Accounting PronouncementsThe Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.

Subsequent Events The Company has
evaluated all transactions occurring between December 31, 2014,

through the date of issuance of the consolidated financial statements for
disclosure consideration.

NOTE 3 INTANGIBLE ASSETS

On July 12, 2010, the Company entered into a licensing
agreement (the Licensing Agreement) with Nanotech Industries, Inc., (NTI or
Licensor, a privately-held entity deemed a related party by virtue of common
ownership and control), for the rights to manufacture and distribute
environmentally safe coatings (Coating Products) using NTIs technology. As
per the Licensing Agreement, the Company has a three-year exclusivity for all of
North America and has the option to obtain rights for the rest of the world on
an exclusive perpetual basis, in exchange for the issuance of stock to equal
62.5% of the Companys total shares. If this option is exercised, NTI would
obtain voting control of the Company. On June 28, 2013, a third amendment was
made to the Licensing Agreement extending this exclusivity period by 36 months
to July 12, 2016.

As part of this Licensing Agreement, the Company agreed to pay
NTI a one-time licensing fee of $500,000 and a 5% royalty on gross Coating
Product sales within North America. The $500,000 cost basis of capitalized
license rights

---

NOTE 3  INTANGIBLE ASSETS (contd)

(North American Rights) is being amortized over a three-year
life. On November 22, 2011, the Company sold the Canadian portion of its North
American Rights for $150,000 to a related party; Hybrid Coatings Canada Inc., a
company whose CEO is a shareholder of, and consultant to, the Company. The
proceeds of the sale were recorded as a reduction of the carrying value of the
asset, with no gain or loss.

At December 31, 2014 and 2013, management determined, through
independent valuation, that the fair value of the North American Rights exceeded
the carrying value and no impairment adjustment was deemed necessary. The amount
of amortization of the North American Rights for the years ended December 31,
2014 and 2013 was $0 and $36,463, respectively.

On March 17, 2011 the Company and NTI amended the Licensing
Agreement to now include the territory of the Customs union of Belorussia,
Kazakhstan Republic and Russian Federation (the Russian Territory), on an
exclusive basis for a period of ten years from the date of the signing of this
amendment. In exchange for the right to manufacture and sell Coating Products in
the Russian Territory (Russian Rights), the Company shall pay to the Licensor
an ongoing royalty of 7.5%, and a one-time royalty fee of $150,000 (paid during
2011). These capitalized license rights will be amortized over a ten-year
period. The amount of amortization for the years ended December 31, 2014 and
2013 was $4,800 for both years, respectively. At December 31, 2011, the fair
value, through independent valuation of the Russian Rights was determined to be
$44,000. As this was determined to be a permanent impairment in value the
carrying value of the Russian Rights was reduced by $94,750 and the associated
loss was recorded. At December 31, 2014 and 2013 management determined, through
independent valuation, that the fair value of the Russian Rights exceeded the
carrying value and no further impairment adjustment was deemed necessary.

On July 7, 2011, a second amendment was made to the Licensing
Agreement granting the Company an option (the Option) for a period of six
months from the signing of this amendment to manufacture and sell Coating
Products in the territory of the European Continent (European Rights) on an
exclusive basis for a period of five years from the date the option is
exercised, after which time the European Rights shall continue perpetually on a
non-exclusive basis. Upon exercise of this Option, the Company shall pay to the
Licensor a one-time royalty fee of $1,250,000 payable within 24 months of the
exercise of the Option. On November 29, 2011, the Company exercised the Option,
the financing for which was provided by NTI and is recorded in notes payable 
related party. The Company has repaid $567,549 to Nanotech related to the option
as of December 31, 2012. The license rights shall be amortized over a five year
period.

At December 31, 2011, management determined, through
independent valuation, the fair value of the European Rights was $692,000,
requiring an impairment charge of $537,167. At December 31, 2014 and 2013,
management determined, through independent valuation, that the fair value of the
European Rights exceeded the carrying value and no further impairment adjustment
was deemed necessary. The Company recorded $140,760 of amortization expense for
the years ended December 31, 2014 and 2013.

On October 18, 2011, the Company and NTI entered into a second
Licensing Agreement (Second Agreement) granting the Company an option (Sealant
Option) to be exercised within six months of the signing of the Licensing
Agreement, for the manufacturing and sale of environmentally safe adhesives and
sealants (Sealant Products) as follows:

| | 1. | The Company shall issue to NTI a one-time licensing fee
      (Sealant Shares), an aggregate number of shares of the Companys
      restricted common stock which shall give NTI, immediately upon such
      issuance of shares, an incremental 15% (fifteen percent) ownership stake
      in the Company.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                
| | 2. | The Company shall pay to NTI a royalty of 7.5% (seven and one
      half percent) of gross revenue from the sale of the Sealant Products
      (Royalty) for the duration of this Agreement.                                                                                                                 

On December 6, 2011, the Company notified NTI of its intent to
exercise the Sealant Option. To date, the Company has not issued the Sealant
Shares and the Sealant Option has expired. The Company intends to renegotiate
the Sealant Option once the Company has determined it has commercial
viability.

On June 28, 2013, the Company and NTI entered into a third
amendment to the Licensing Agreement whereby NTI granted the Company an
extension of thirty-six months on the exclusivity period to July 12, 2016.

On December 13, 2013, the Company entered into a fourth
amendment to the Licensing Agreement, whereby the license to sell and
manufacture the Licensors products has been expanded to include polyurethane
foam for the textile industry.

---

NOTE 3  INTANGIBLE ASSETS (contd)

On March 31, 2014, the Company and NTI entered into a fifth
amendment to the Licensing Agreement, whereby the license to sell and
manufacture Licensors products has been expanded to include synthetic leather,
sealants and adhesives (Added Applications). In consideration for the Added
Applications, the Company shall pay the Licensor an amount equal to US
$2,000,000 (two million USD) (Consideration), to be paid within 36 months of
the execution of this Fifth Amendment Agreement (Deadline). Should the Company
not pay the Consideration within the Deadline, the Company shall lose all rights
to the Added Applications. To date the company has not paid any consideration
pertaining to the Added Applications.

On April 9, 2014, the Company signed a sixth amendment to the
Licensing Agreement with NTI extending the terms of the note from 24 months to
42 months making it payable by May 29, 2015.

On May 6, 2014, the Company signed a seventh amendment to the
Licensing Agreement with NTI whereby the license to sell and manufacture
Licensors products has been expanded to include spray foam insulation (SFI
Application). In consideration for the SFI Application:

| | 1) | The Company shall pay the Licensor an amount equal to US
      $500,000 (Consideration) by May 6, 2015. Should the Company not pay the
      Consideration within the Deadline, the Company shall lose all rights to
      the SFI Application.                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) | The Company shall issue to NTI an aggregate number of
      shares of common stock which shall give NTI , immediately upon such
      issuance of shares an additional 15% ownership stake in the Company (15%
      Share Issuance, Exclusivity Shares), to be issued to the Licensor
      within 24 months of the execution of this Seventh Amendment Agreement
      (Issuance Deadline). Should the 15% Share Issuance not be issued within
      the Issuance Deadline, the Company shall lose the exclusivity to the
      manufacturing and sale for the SFI Application and shall solely retain
      such rights to the SFI Application on a non-exclusive
  basis.

On August 19, 2014, the Company signed an eighth amendment to
the Licensing Agreement with NTI whereby the parties amended the Agreement to
expand the definition of the Exclusivity Shares for various territories the
whole as set forth below, to include warrants at the sole discretion of the
Licensor, which warrants shall include a cashless exercise and be exercisable at
a price per share equal to the common stock par value and expiring 10 years from
the date of issuance.

On September 10, 2014, the Company signed a ninth amendment to
the Licensing Agreement with NTI whereby the parties amended the Agreement (and
subsequent Amendments) to expand the definition of certain licensing fees and
consideration, to include payment in shares of the Companys common stock and/or
warrants at the sole discretion of the Company, which shares shall have a fair
market value calculated as the closing price reported by the over-the-counter
market for the previous trading day (Shares) and, which warrants shall include
a cashless exercise and be exercisable at a price per share equal to the Common
Stock par value and expiring 10 years from the date of issuance. As of November
19, 2014, the Exclusivity Shares have not been issued.

Also on September 10, 2014, the Company issued 8,113,116 shares
valued at $892,443 based on the market price on the date of grant as payment for
the Spray Foam Insulation License and European License, the Company applied
$500,000 against the amounts owing for the SFI Application purchase and $372,160
for European License, and the remaining $20,283 as a loss on settlement of debt.
NTI now owns 18% of the Company based on the issued and outstanding shares of
the Company at December 31, 2014.

Intangible assets activity is as follows for the years ended
December 31, 2014 and 2013:

2014
    
    
    2013Net intangible asset, beginning of year
    $
    444,940
    
    $
    626,963Purchases
    
    2,500,000
    
    
    -Less: current amortization
    
    (808,735
    )
    
    (182,023
    )Net intangible asset, end of year
    $
    2,136,205
    
    $
    444,940


---

NOTE 3  INTANGIBLE ASSETS (contd)

A summary of the licenses acquired to date from NTI is as
follows:

License Rights
      Overview
    Licensed Region
    Term (date) of License
    Original Cost
    Carrying Value at
      December 31, 2014
    Carrying Value at December
      31, 2013A
    Coating Products
    North America
    12-Jun-10 6 years
    $500,000
    $0
    $0B
    Coating Products
    Russian Territory
    17-Mar-11 10 years
    $150,000
    $29,600
    $34,400C
    Coating Products
    European Continent
    07-Jul-11 5 years
    $1,250,000
    $269,780
    $410,540D
    Spray Foam Insulation
    North America, European Continent and
      Russian Territory
    06-May-16 2 years
    $500,000
    $336,825
    $0E
    Added Applications including synthetic
      leather, sealants and adhesives
    North America, European Continent and
      Russian Territory
    31-Mar-17 3 years
    $2,000,000
    $1,500,000
    $0TOTAL
    
    
    
    $4,400,000
    $2,136,205
    $444,940


The balance of intangible assets is as follows as of December
31, 2014 and 2013:

2014
    
    
    2013Intangible assets
    $
    3,618,083
    
    $
    1,118,083Less, accumulated amortization
    
    (1,481,878
    )
    
    (673,143
    )Intangible assets, net
    $
    2,136,205
    
    $
    444,940


NOTE 4LOANS PAYABLE

Loans payable include a loan from a non-related party that was
issued for $75,000 on November 16, 2010 and was repayable on May 16, 2011 with a
10% premium. This $7,500 premium has been amortized and on April 29, 2011, the
lender converted $55,000 of this debt to convertible debentures. The balance at
December 31, 2014 and 2013 was $27,500, and the loan is currently in default.
The Company has not received any notices from the loan holder with respect to
the defaults.

In 2014 and 2013, the Company entered into various loan
agreements totaling $0 and $268,500 respectively at interest rates ranging from
15%-25%. In addition in 2013 the Company issued 110,000 warrants attached to
these loans. These loans are all currently in default. The creditors have not
called these loans.

The Company recorded $5,455 and $32,888 of interest expense
related to amortization of the debt discounts during the years ended December
31, 2014 and 2013. During the years ended December 31, 2014 and 2013, total
interest expense related to loans payable was $174,102 and $152,307, respectively,
and the total interest paid was $40,266 and $75,173, respectively, and accrued
interest was $249,285 and $115,488, respectively. At December 31, 2014 and 2013,
the unamortized debt discount was $0 and $5,455, respectively.

---

NOTE 5  LOANS PAYABLE SHAREHOLDERS

During the years ended December 31, 2013, 2012 and 2011, the
Company entered into various loan agreements and arrangements for loans with
certain shareholders. The loans all have different maturity dates ranging from
2011 to 2015 and interest rates that range from 2% to 18%. The Company was in
default on loans totalling $943,019 as of December 31, 2014. The shareholders
have not called these loans.

During the year ended December 31, 2014, the Company received
$1,311,534 in shareholders advances and repaid $726,573. During the year ended
December 31, 2013, the Company received $708,846 in shareholder advances and
repaid $360,696. The Company had an outstanding balance of $1,950,504 and
$1,343,562, with related discounts of $0 and $21,980 for the years ended
December 31, 2014 and 2013, respectively.

The Company recorded $21,980 of interest expense related to the
amortization of the debt discount on loans payable to shareholders during the
year ended December 31, 2014. The corresponding debt discount during the year
ended December 31, 2013 was $21,980. During the years ended December 31, 2014
and 2013, total interest expense was $104,569 and $78,630, respectively, and the
total interest paid was $12,467 and $30,364, respectively.

NOTE 6  CONVERTIBLE DEBENTURES

On April 29, 2011, the Company issued convertible debentures
for proceeds of $1,201,000 (the April 29 debenture) and on February 21, 2012,
issued an additional $119,500 (the February 21 debenture and together the
Debentures) with a maturity of 36 months and a coupon rate of 10% per annum
payable in cash or capital stock at the Companys discretion. The debentures are
held by third parties and by non-controlling shareholders, and are convertible
as follows:

April 29, 2011 convertible debentures

-by dividing the conversion amount by a conversion factor of
1.4 yielding Units of the Company where each Unit (at a price of $1.40 per
Unit), is comprised of 1 share of common stock and one half of a warrant to
purchase a share of common stock of the Company with an exercise price of $2.00
per share and a maturity at April 29, 2014. Warrants are exercisable at the
option of the holder at any time prior to maturity.

February 21, 2012 convertible debentures:

-by dividing the conversion amount by a conversion factor of
1.45 yielding Units of the Company where each Unit (at a price of $1.45 per
Unit), is comprised of 1 share of common stock and one half of a warrant to
purchase a share of common stock of the Company with an exercise price of $2.10
per share and a maturity at February 21, 2015. Warrants are exercisable at the
option of the holder at any time prior to maturity.

Both debentures carry an anti-dilution provision. The
conversion price applicable to the debentures is subject to reset in the event
of a Dilutive Issuance (as defined in the debenture agreement) by the Company. A
Dilutive Issuance excludes shares or options issued to employees, officers,
directors or consultants pursuant to stock option plans approved by the Board of
Directors.

The Company recorded a corresponding discount of $46,721 and
$558,248 against the carrying value of the convertible debentures during the
years ended December 31, 2012 and 2011, respectively. The discounts are
amortized using the effective interest method over the term of the debt.

On November 20, 2013, the Company entered into an amendment
agreement modifying its terms with both the April 29 and February 21 debenture
holders as follows:

1) The maturity date of the Debentures, was extended by a
period of 24 (twenty-four) months, to April 29, 2016 and February 21, 2017,
respectively,

2) Each Unit into which the Debentures are convertible shall be
comprised of 2 stock purchase warrants at an exercise price per share equal to
the conversion price. The warrants shall expire 36 (thirty-six months) from the
date of issuance.

As consideration for the amendments, the Company issued a total
of 400,152 shares to the debenture holders at a price of $0.33 per share.

The amendment resulted in an extinguishment of both the April
29 and February 21 Debentures as the present value of the new convertible
debentures exceeded the present value of the old debentures by greater than
10%.

The Company measured the fair value of the embedded derivatives
in the April 29 Debentures, which was $76,322 on the date of the amendments and
recorded a gain of $61,238 for the change in fair value of the derivative
liabilities.

---

NOTE 6  CONVERTIBLE DEBENTURES (contd)

The Company recorded a loss on extinguishment of debt on the
April 29 debenture of $530,541 and the new debt was recorded at its fair value
of $1,268,453 with a corresponding derivative liability of $357,790.

Face amount of April 29 debenture on date of extinguishment
    $
    1,201,000Debt discount
    
    (104,099
    )Accrued interest
    
    67,453Fair value of embedded derivative liability
    
    76,322Total debt extinguished
    
    1,240,676Fair value of new debt
    
    1,268,453Fair value of embedded derivative liability
    
    382,663Fair value of shares issued
    
    120,101Total fair value of consideration given
    
    1,771,217Loss on extinguishment of debt
    $
    530,541


The Company measured the fair value of the embedded derivatives
in the Feb 21 debentures, which was $23,090 on the date of the amendments and
recorded a gain of $6,071 for the change in fair value of the derivative
liabilities.

The Company recorded a loss on extinguishment of debt on the
Feb 21 debenture of $113,195 and the new debt was recorded at its fair value of
$128,405 with a corresponding derivative liability of $102,150.

Face amount of February 21 debenture on date of
    extinguishment
    $
    119,500Debt discount
    
    (22,186
    )Accrued interest
    
    8,905Fair value of embedded derivative liability
    
    23,090Total debt extinguished
    
    129,309Fair value of new debt
    
    128,405Fair value of embedded derivative liability
    
    102,150Fair value of shares issued
    
    11,949Total fair value of consideration given
    
    242,504Loss on extinguishment of debt
    $
    113,195


During the year ended December 31, 2014, the Company issued
432,454 shares of common stock for a value of $132,050 to pay for accrued interest. At December
31, 2014 approximately $95,000 (2013-15,000) in interest has been accrued.

On November 12, 2014 the Company issued convertible debentures
for $25,000, a maturity of 24 months and a coupon rate of 10% per annum payable
in cash or capital stock at the Companys discretion. The debentures are held by
third parties and by non-controlling shareholders.

-The conversion price is calculated as 45% of the average
trading price for the five days prior to the conversion however the conversion
price can never be lower than $0.08 per share nor can it exceed $0.30 per share

NOTE 7  SENIOR SECURED CONVERTIBLE DEBENTURES

On August 16, 2010, the Company entered into a securities
purchase agreement with a third party for the subscription of senior secured
convertible debentures (SSCD) for an amount of $400,000. The debentures have a
maturity date of August 16, 2012 with a coupon of 10% and convert into shares of
common stock of the Company at a price of $0.75 per share. The notes are secured
by all assets of the Company. The subscriber also received 533,336 Series A
warrants with a maturity of 1 year and an exercise price of $1.25 per share and
133,360 Series B warrants with a maturity of 3 years and an exercise price of
$1.50 per share. The debentures and Series A warrants carry registration rights
whereby upon the consummation of the reverse merger with Nanotech, the shares
underlying the debentures and Series A warrants will be registered as soon as is
practicable. All prices and warrants issued have been adjusted for the
post-acquisition of Nanotech by HCT.

Interest of $20,000 was accrued during the year ended December
31, 2014 ($2013-$20,000), for an outstanding balance of $48,159 (2013-$28,159)
that has been accrued.

---

NOTE 7  SENIOR SECURED CONVERTIBLE DEBENTURES (contd)

During the year ended December 31, 2011, $200,000 of the debt
was repaid through the issuance of a Convertible Debenture due April 29, 2014.
The balance due at December 31, 2014 and 2013 remained at $200,000. The Company
is in default of payment of the debentures which matured on August 16, 2012. No
notices have been issued by the debenture holder.

The obligations of the Company under the SSCD will rank senior
to all outstanding and future indebtedness of the Company and shall be secured
by a first priority, perfected security interest in all the assets of the
Company.

NOTE 8 CONVERTIBLE NOTES

On July 23, 2014, the Company entered into an agreement with an
investor whereby the investor could lend a principal sum up to $250,000
including an original issue discount (OID) of $25,000. Upon signing, the
investor was required to pay $111,111 with the OID prorated based on the actual
consideration paid. The investor may pay additional amounts at its own
discretion. The OID on the $111,111 investment was $11,111 and was recorded as
debt discount. If the Company pays the investor within 90 days then there is 0%
interest, and if the Company pays after 90 days then there is a one-time
interest charge of 12% applied to the outstanding balance. The maturity date is
2 years from the date of each borrowing and the outstanding balance and any
interest is due and payable. The note is convertible into common shares of the
Company. The conversion price is 60% of the lowest trade price of the 25 trading
days prior to the conversion.

In the case that conversion shares are not deliverable, an
additional l 0% discount will apply; and if the shares are ineligible for
deposit into the Depository Trust Company system and only eligible for Xclearing
deposit, an additional 5% discount shall apply; and in the case of both, an additional
cumulative 15%discount shall apply.

The Company determined that the conversion option was a
derivative. Accordingly, the Company recorded a derivative liability of
$153,702, a debt discount of $100,000 and recognized the difference as
additional interest. During the year ended December 31, 2014, amortization
expense of $24,505 was recorded for the debt discount.

The Company repaid the note subsequent to year end, in January
2015.

On October 3, 2014, the Company entered into an agreement with
an investor whereby the investor lent a principal sum of $115,000. Upon signing,
the Company received $108,000 in cash and paid fees of $7,000 recorded as debt
discount. The maturity date is April 3, 2015 and the interest rate from the date
of borrowing is 12% per annum. The note and any accrued unpaid interest is
convertible into common shares of the Company. The conversion price is 60% of
the lowest trade price of the 20 trading days prior to the conversion.

The Note has redemption premiums if the Note is repaid prior to
maturity130% up until the 160th day and 150% thereafter up until
maturity. The Company does not intend to repay the Note prior to maturity.

The Company determined that the conversion option was a
derivative, accordingly, the Company recorded a derivative liability of $73,357
recorded as a corresponding adjustment to debt discount was recorded with a fair
value adjustment of $115. The derivative liability at December 31, 2014 was
$76,222. During the year ended December 31, 2014 amortization expense of $48,214
was recorded for the debt discount.

On November 13, 2014, the Company entered into an agreement
with an investor whereby the investor lent a principal sum of $54,000. Upon
signing, the Company received $50,000 in cash and paid fees of $4,000, recorded
as a debt discount. The maturity date is August 17, 2015 and the interest rate
from the date of borrowing is 8% per annum. If the Note is unpaid by maturity
the interest rate becomes 22% per annum thereafter. The note and any accrued
unpaid interest is convertible into common shares of the Company 180 days after
the issuance of this Note. The conversion price is 61% of the lowest trade price
of the 10 trading days prior to the conversion.

The Company determined that the conversion option was a
derivative, accordingly, the Company recorded a derivative liability of $65,717
was recorded with $50,000 being recorded as debt discount, and $15,717 being
immediately expensed. During the year ended December 31, 2014 amortization
expense of $12,000 was recorded for the debt discount.

The Company accrued interest of $15,400 for the year ended
December 31, 2014 on these notes.

---

NOTE 9  DERIVATIVE LIABILITIES

The embedded conversion features in the convertible debentures
and attached warrants are accounted for as a derivative liability. The warrants
contain full ratchet reset features (subject to adjustment for dilutive share
issuances) and should be valued as a derivative liability.

The valuation of the derivative liability attached to the
Debentures arrived at through the use of multinomial lattice models based on a
probability weighted discounted cash flow model. These models are based on
future projections of the various potential outcomes. The features in the note
that were analyzed and incorporated into the model included the conversion
feature with the reset provisions and the call/redemption options. Based on
these features, there are six primary events that can occur: payments are made
in cash; payments are made with stock; the holder converts upon receiving a
change notice; the holder converts the note; the Issuer redeems the note; or the
company defaults on the note.

The model included an analysis of the underlying economic factors that
influenced which of these events would occur, when they were likely to occur,
and the specific terms that would be in effect at the time (i.e. interest rates,
stock price, conversion price, etc.). Projections were then made on these
underlying factors which led to a set of potential scenarios. Probabilities were
assigned to each of these scenarios over the remaining term of the note based on
management projections. This led to a cash flow projection over the life of the
note and a probability associated with that cash flow. A discounted weighted
average cash flow over the various scenarios was completed, and it was compared
to the discounted cash flow of the note without the embedded features, thus
determining a value for the derivative liability of $558,248 as of April 29,
2011 and of $46,721 at February 21, 2012, which was recorded to additional
paid-in capital for each issuance. On November 30, 2013 the Company renegotiated
the terms (see Note 6) extinguishing the old debt and recording a new debt at
its fair value with corresponding derivative liabilities of $357,790 and
$102,150. On July 23 ,2014 and October 10, 2014 the Company issued new
Convertible Notes (see Note 8) which resulted in derivative liabilities recorded
as a corresponding discount of $100,000 against the Convertibles Notes and
interest expense of $53,702 for the July 23 Note and a corresponding discount of
$73,357 for the October 10 Note . The Company also issued a $25,000 Convertible
Debenture on November 12, 2014, which resulted in a derivative liability and
corresponding discount of $2,804. The Company also issued a convertible note on
November 13, 2014, which resulted in a derivative liability recorded as a
corresponding discount of $50,000 against the convertible note and interest
expense of $15,717. The Company recorded an unrealized gain (loss) of $930,345
and ($264,355) to reflect the value of the derivative liability as $181,723 and
$816,488 as of December 31, 2014 and 2013, respectively.

The following table summarizes the derivative values, and
changes as at December 31, 2013and 2014:

|                   |   | Derivative Values       | 
|------------------ | - | ----------------------- | 
|                   |   | Pre-Amendment           | 
|Valuation Date:    |   | November
      20, 2013 | 
|                   |   |                         | 
|April 29 debenture | $ | 76,322                  | 
|Feb 21 debenture   |   | 23,090                  | 
|Total              | $ | 99,412                  | 

---

NOTE 9  DERIVATIVE LIABILITIES (contd)

|                   |   | Derivative Values | 
|------------------ | - | ----------------- | 
|                   |   |                   | 
|Valuation Date:    |   | December 31, 2013 | 
|April 29 debenture | $ | 741,433           | 
|Feb 21 debenture   |   | 75,055            | 
|July 23 note       |   | -                 | 
|Oct 10 note        |   | -                 | 
|Nov 12 debenture   |   | -                 | 
|Nov 13 debenture   |   | -                 | 
|Total              | $ | 816,488           | 

NOTE 10  STOCKHOLDERS DEFICIT

2014

During the year ended December 31, 2014, the Company issued the
following shares for fair value based on the market price at the date of the
grant:

- 3,507,804 shares to shareholder creditors and consultants as payment for
  services with a fair value of $494,137 based on market prices on the dates of
  grant.
- 432,454 shares to convertible debenture holders as payment of interest for
  the year of $132,050, based on market prices on the dates of grant.
- 100,000 to the Senior Secured Debenture Holder for payment of interest of
  $29,800, based on market prices on the dates of grant.
- 340,312 shares to shareholder- creditors for accrued interest of $51,595
  and recognized a loss on settlement in the amount of $4,263, based on market
  prices on the dates of grant.
- 154,315 shares as payment for payroll liabilities included in accounts
  payable of $50,924 and recognized a loss on settlement in the amount of
  $41,666, based on market prices on the dates of grant.
- 418,604 shares to landlord as payment of accounts payable and prepaid rent
  of $45,000 and recognized a loss on settlement in the amount of $1,046, based
  on market prices on the dates of grant.
- 8,113,116 shares for payment of note payable related party of $872,160 and
  recognized a loss on settlement in the amount of $20,283, based on market
  prices on the dates of grant.
- 18,695,000 shares to a shareholder-creditor and a related party for
  payment against accounts payable and accrued liabilities related parties of
  $1,047,500 and recognized a loss on settlement in the amount of $2,107,150,
  based on market prices on the dates of grant.

In addition, during the year ended December 31, 2014, warrant
holders exercised 880,000 warrants for 872,711 shares on a cashless basis with a
reduction in additional paid in capital of $873. Also, 325,000 warrants with an
exercise price of $0.001, were
exercised for $300 cash and $25 as settlement of accounts payable related party
debt.

---

NOTE 10  STOCKHOLDERS DEFICIT (contd)

During the year ended December 31, 2014, the Company issued
3,039,664 warrants to shareholders and consultants for consulting services at a
fair value of $691,863 recorded as stock-based compensation all with a corresponding increase
in additional paid-in capital using the Black-Scholes method according to the
following assumptions. The warrants have an exercise price of $0.001 and a life
of 1 to 5 years:

|Expected volatility     |   | 166%-300%   | 
|----------------------- | - | ----------- | 
|Exercise price          | $ | 0.001       | 
|Stock price             | $ | 0.08-$0.70  | 
|Expected life           |   | 1 -5 years  | 
|Risk-free interest rate |   | 0.09%-1.80% | 
|Dividend yield          | $ | Nil         | 

During the year ended December 31, 2014, the Company recorded
$491,656 (2013-$55,293) for amortization expense.

On December 29, 2014, the Company increased the authorized
common shares to 150 million and authorized 1,000,000 each Series A and Series B
preferred shares par value $500 per shares with the following features:

Series A preferred stock: non-voting, no liquidation or dividend rights,
redeemable and retractable at a price equal to its par value, convertible into a
number of shares of common stock as is equal to the par value of the Series A
Preferred Stock divided by the average closing price per share of common stock
of the last 5 trading days immediately prior to conversion;

Series B preferred stock: voting with 500 votes per share, no liquidation or
dividend rights, non  redeemable, no conversion privileges

2013

During the year ended December 31, 2013, the Company issued
349,303 shares to shareholder creditors and consultants as payment for services
with a fair value of $138,485 based on the market price on the date of grant,
420,567 shares to convertible debenture holders as payment of interest for the
year of $140,877 based on the market price on the date of grant, 400,152 shares
to convertible debenture holders in exchange for amended terms for fair value of
$132,050 based on the market price on the date of grant, 100,000 to the Senior
Secured Debenture Holder for payment of interest of $38,000 based on the market
price on the date of grant, 43,863 shares to a shareholder- creditor for accrued
interest of $13,084 based on the market price on the date of grant, and
2,287,000 shares to a shareholder-creditor and a related party for payment,
based on the market price on the date of grant, against accounts payable and
accrued liabilities related parties of $629,900 and recognized a loss on
settlement in the amount of $263,712.

In addition, during the year ended December 31, 2013, warrant
holders exercised 689,875 warrants with an exercise price of $0.001 and a life
of three to five years for 688,060 shares on a cashless basis with a
reduction in additional paid in capital of $688. Also, 375,000 warrants were
issued for settlement of related party debt in the amount of $375.

During the year ended December 31 2013, the Company issued
4,630,000 warrants with an exercise price of $0.001 - $0.75 and a life of 1 to 5
years, to shareholders and consultants for consulting services at a
fair value of $1,877,035 (recorded as stock-based compensation), and 457,875
warrants, with an exercise price of $0.001 and a life of 5 years, to a related party landlord as payment for rent with a fair value of
$202,095 (recorded as an adjustment to accounts payable of $116,250 and stock
based compensation of $85,845), 933,000 warrants, with an exercise price of
$0.001 and a life of 5 years, to a shareholder to pay a
shareholder loan with a fair value of $307,144 (recorded as an adjustment to
loans payable-shareholders of $125,022 and loss on extinguishment of debt of
$182,122), 755,000 warrants, with an exercise price of $0.001 and a life of 5
years, to a shareholder to repay accounts payable-related
party with a fair value of $316,521(recorded as an adjustment to accounts
payable-related party of $151,000 and loss on extinguishment of debt of
$165,521), 110,000 warrants, with an exercise price of $1.00 and a life of 5
years, in connection with a loan from a third party with a
relative fair value of $23,705 (recorded as debt discount), 142,000 warrants,
with an exercise price of $0.001 - $1.48 and a life of 2 to 5 years, to
shareholder loan holders for interest of 68,131, 75,000 warrants with an
exercise price of $0.001 and a life of 5 years in connection
with a loan from a shareholder with a fair value of $22,440 (recorded as debt
discount), and 25,000 warrants, with an exercise price of $0.01 and a life of 2
years, in connection with a loan from a shareholder with
a relative fair value of $9,148 (recorded as debt discount), all with a
corresponding increase in additional paid-in capital using the Black-Scholes
method according to the following assumptions:

---

NOTE 10  STOCKHOLDERS DEFICIT (contd)

Expected volatility
    
    111.56%-399.77%Exercise price
    $
    0.001 - $1.48Stock price
    $
    0.27-$0.64Expected life
    
    1 -5 yearsRisk-free interest rate
    
    0.13%-1.54%Dividend yield
    $
    Nil


On June 28, 2013, the Company extended the expiration date of
common stock purchase warrants described below to February 28, 2018. This
extension of the expiration date will apply to the following warrants: (i) the
533,336 Series A warrants issued to a third party pursuant to a securities
purchase agreement entered into on August 16, 2010; (ii) the 687,500 stock
purchase issued to a consultant on July 14, 2010; and (iii) the 50,000 stock
purchase warrants issued pursuant to a loan agreement on November 29, 2012. The
Company also agreed to reduce the exercise price of the 533,336 Series A
warrants from $1.25 per share to $0.39 per share.

The modification of the maturity and exercise price of the
above warrants resulted in a fair value of $241,697 which was recorded as a loss
on modification with a corresponding increase in additional paid-in capital
using the Black-Scholes method according to the following assumptions:

Expected volatility
    
    128.26% - 152.79%Exercise price
    $
    0.39-$0.50Stock price
    $
    0.39Expected life
    
    0.67 - 4.67 yearsRisk-free interest rate
    
    0.15% - 0.41%Dividend yield
    $
    Nil


Warrants

A summary of the activity in the Company's warrants during the
years ended December 31, 2014 and 2013 is presented below:

|                                                        |  |                    |   |   |                  |  |  | Weighted Average        | 
|------------------------------------------------------- |  | ------------------ | - | - | ---------------- |  |  | ----------------------- | 
|                                                        |  |                    |   |   | Weighted Average |  |  | Remaining Contract      | 
|                                                        |  | Number of Warrants |   |   | Exercise Price   |  |  | Term
      (# of years) | 
|                                                        |  |                    |   |   |                  |  |  |                         | 
|Outstanding and exercisable, at December
      31, 2012 |  | 2,248,928          |   | $ | 0.29             |  |  | 3.21                    | 
|Granted                                                 |  | 7,127,875          |   | $ | 0.07             |  |  |                         | 
|Exercised                                               |  | (1,064,875         | ) | $ | 0.001            |  |  |                         | 
|Expired                                                 |  | (115,000           | ) | $ | 1.50             |  |  |                         | 
|Outstanding and exercisable, at December
      31, 2013 |  | 8,266,928          |   | $ | 0.09             |  |  | 3.31                    | 
|Granted                                                 |  | 3,039,664          |   | $ | 0.001            |  |  |                         | 
|Exercised                                               |  | (1,205,000         | ) | $ | 0.001            |  |  |                         | 
|Expired                                                 |  | (600,000           | ) | $ | 0.043            |  |  |                         | 
|Outstanding and exercisable, at December
      31, 2014 |  | 9,501,592          |   | $ | 0.10             |  |  | 3.13                    | 

In addition to the regular warrants detailed in the table
above, there are issued and outstanding 533,336 Series A warrants with an
exercise price of $0.39 per share and a maturity date of February 28, 2018. The
133,336 Series B warrants with an exercise price of $1.50 per share and a
maturity date of August 16, 2013 are now expired.

The intrinsic value of warrants outstanding at December 31,
2014 was $580,289.

---

NOTE 10  STOCKHOLDERS DEFICIT (contd)

Contingent Warrant Issuance

On July 20, 2012, the Companys board of directors approved the
issuance of 300,000 stock purchase warrants, with an exercise price of $0.001
per share and a five-year life, from date of issuance, to the Companys
President, Joseph Kristul, contingent on his successful negotiation of a major
sales contract. The major sales contract agreement has not yet been reached by
the Company.

NOTE 11  RELATED PARTY TRANSACTIONS

Fees charged by ShareholderDuring the years ended
December 31, 2014 and 2013, the Company was charged $832,340 and $723,000 by an
outside consultant, who is also a shareholder, for professional fees, expenses
and commissions. The amounts are included in accounts payable and accrued
liabilities - related parties. The Company paid $1,047,500 and $780,900 to the consultant
(through the issuance of shares) during the years ended December 31,
2014 and 2013, respectively. The Company has an outstanding balance payable as of
December 31, 2014 and 2013 of $212,682 and $427,842, respectively.

Principal Debt Payments During the year ended
December 31, 2014:- the Company made principal payments of $310,291 in cash
and an additional $372,160 through the issuance of shares on its note payable to
NTI related to the 2011 acquisition of the license rights for Coatings in
Europe. The balance of the note was $0 and $682,451 at December 31, 2014 and
2013, respectively.-the Company created a note payable to NTI related to the
acquisition of its Spray Foam Insulation license of $500,000 and paid it in full
through the issuance of 8,113,116  shares of common stock.-the Company created a
$2,000,000 note payable to NTI for the acquisition of the Added Applications
license and paid $110,509. The note matures on March 31, 2017, does not bear
interest, and no payments are required prior to maturity. The balance of the
note was $1,889,491 and $0 at December 31, 2014 and 2013, respectively.

Shared Administrative Costs The Company shares
office space and certain personnel with NTI. Costs are allocated among the
parties based on usage. During 2014 and 2013, the allocation of such shared
costs between the Company and NTI was 80% and 20%, respectively. Rent expense
for the years ended December 31, 2014 and 2013 was $45,000 each year.

NOTE 12  INCOME TAXES

Deferred income taxes reflect the net effect of:

(a) temporary difference between
carrying amounts of assets and liabilities for financial purposes and the
amounts used for income taxes reporting purposes, and

(b) net operating loss carryforwards.

No net provision for refundable U.S. Federal income tax has
been made in the accompanying statement of operations because no recoverable
taxes were paid previously. Similarly, no deferred tax asset attributable to the
net operating loss carryforward has been recognized, as it is not deemed more
likely than not to be realized.

The effective tax rate of the Company is reconciled to
statutory tax rates as follows for the years ended December 31, 2014 and
2013:

|                                 |  | 2014 |   |  | 2013 |  
|-------------------------------- |  | ---- | - |  | ---- | -
|US federal statutory tax rate    |  | 34%  |   |  | 34%  |  
|Change in US valuation allowance |  | (34% | ) |  | (34% | )
|Effective tax rate               |  | -    |   |  | -    |  

---

NOTE 12  INCOME TAXES (contd)

Deferred tax assets consist of the following as of December
31:

|                                |   | 2014       |   |   | 2013       |  
|------------------------------- | - | ---------- | - | - | ---------- | -
|Net operating loss carryforward | $ | 6,827,735  |   | $ | 5,809,000  |  
|Valuation allowance             |   | (6,827,735 | ) |   | (5,809,000 | )
|Deferred tax asset              | $ | -          |   | $ | -          |  

The Company has non-capital losses carried forward of
approximately 15,952,000 which expire beginning in 2031. They may be utilized to
offset future taxable income. Future tax benefits, which may arise as a result
of these losses and resource expenditures, have not been recognized in these
financial statements.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

The Company has an option (expiring July 12, 2016) to issue a
controlling stake in the Company amounting to 52.5% to a related party for a
perpetual exclusive license to manufacture and sell Nanotech Products for all
North America, South America and Europe. If this option is exercised, the
Company will have a similar option for the territory of Asia to issue an
additional 10% ownership stake in the Company.

The Company is delinquent on its state and federal payroll tax
remittances. The State of California has issued a Notice of State Tax Lien
against the property and rights owned by the Company covering interest and
penalties for non-payment of payroll remittances of $3,897.

NOTE 14  SUBSEQUENT EVENTS

Subsequent to December 31, 2014, the Company issued the
following shares and warrants:

- 501,499 shares of common stock valued on the dates of issuances at
  $40,120, based on the market price, for consulting services.
- 5,100,000 shares of common stock valued on the dates of issuances in the
  amount of $300,000, based on the market price. $112,500 as payment for
  accounts payable and accrued liabilities to a related party and the remaining
  $187,500 was recorded as loss on settlement of debt.
- 300,000 shares of common stock on a cashless exercise of 300,000 warrants
- 6,252,324 shares of common stock for the conversion of a $100,000
  convertible note.
- 8,600,000 warrants with a five-year term, an exercise price of $0.001 per share having a fair value of $614,000 per Black-Scholes method, $245,000 as
  payment for accounts payable and accrued liabilities to a related party and
  the remaining $369,000 was recorded as loss on settlement of debt.
- 300,000 warrants with a five-year term, an exercise price of $0.001 per share
  having a fair value of $15,600 per Black-Scholes method, for interest expense.
- 510,000 warrants with a five-year term, an exercise price of $0.001 per share
  having a fair value of $26,520 per Black-Scholes method, for consulting
  services.

Subsequent to year end, the Company entered into a number of
Convertible Notes agreements with various investors, for loans totalling
$300,850, yielding proceeds of $268,000 after fees and discounts of $32,850. The
terms of the loan vary from 9 months to 2 years and the interest rates vary from
8%-18%. These loans are convertible into shares of the Company with some having
prepayment privileges. The conversion price on these notes are 60%-61% of the
market price of the Companys common stock. The Company determined that the
conversion option is a derivative.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTINGAND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

Reference is made to the disclosures below under Item 9A(T)
Controls and Procedures.

Item 9A(T). Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) which are designed to
ensure that information required to be disclosed in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms, and that such
information is accumulated and communicated to our management, including our
President and Chief Executive Officer, who also acts as our principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.

Under the supervision and with the participation of our
management, including our President and Chief Executive Officer, who also acts
as our principal financial officer, an evaluation was performed on the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this annual report. Based on
that evaluation, our President and Chief Executive Officer, concluded that our
disclosure controls and procedures were not effective and are not designed at a
reasonable level to provide assurance that information we are required to
disclose in reports that we file or submit under the Exchange Act as of the end
of the period covered by this annual report for the purpose of gathering,
analyzing and disclosing of information within the time periods specified in the
SECs rules and forms, and that such information is accumulated and communicated
to our management, including our chief executive officer, as appropriate to
allow timely decisions regarding required disclosure. The Company has undertaken
steps to remedy this and improve the effectiveness of its disclosure controls
and procedures.

(b) Managements Report on Internal Controls

Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal
control over financial reporting is a process designed under the supervision of
our Principal Executive Officer and Principal Financial Officer to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles (GAAP) and includes those policies and
procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately
  and fairly reflect the transactions and dispositions of the assets of the
  issuer;
- Provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with generally
  accepted accounting principles, and that receipts and expenditures of the
  issuer are being made only in accordance with authorizations of management
  anddirectors of the issuer; and
- Provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of the issuer's assets that could
  have a material effect on the financial statements.

- 26 -

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Due to inherent limitations, internal control over financial
reporting may not prevent or detect misstatements and, even when determined to
be effective, can only provide reasonable, not absolute, assurance with respect
to financial statement preparation and presentation. Projections of any
evaluation of effectiveness to future periods are subject to risk that controls
may become inadequate as a result of changes in conditions or deterioration in
the degree of compliance.

Under the supervision and with the participation of our
management, including our President and Chief Executive Officer, who also acts
as our principal financial officer, an evaluation was performed on the
effectiveness of the design and operation of our internal controls and
procedures over financial reporting as of December 31, 2013, covered by this
annual report, based on the criteria framework established in Internal
Control  Integrated Frameworkissued be the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that evaluation, our
President and Chief Executive Officer, concluded that our internal controls and
procedures were not effective as of the December 31, 2013, covered by this
annual report.

As of December 31, 2013, we identified material weaknesses in
certain controls related to the financial statement close and reporting process
that were not functioning effectively to properly accrue certain expenses and
classify some expenses in the financial statements. We also did not adequately
segregate, or mitigate the risks associated with, incompatible functions among
personnel to reduce the risk that a potential material misstatement of the
financial statements would occur without being detected or prevented. Management
concluded that these control deficiencies constituted a material weakness at
December 31, 2013. We are currently early stage company, and although we
have hired qualified resources to carry out our day-to-day accounting and
financial reporting obligations, we have not yet reached the point at which we
have adequate resources to address all accounting procedures, especially the
process to close our financial records at each reporting period in a timely
manner. These control weaknesses were, in part, due to lack of adequate funding
during the period in which the financial statements were being prepared.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to the attestation by our
independent registered public accounting firm because smaller reporting
companies are exempt from this requirement.

(c) Changes in Internal Controls

There were no changes in our internal control over financial
reporting that occurred during the period covered by this Annual Report on Form
10-K that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

- 27 -

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
CONTROL PERSONS ANDCORPORATE GOVERNANCE; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGEACT

The address of all Directors and Executive Officers listed
above is c/o Hybrid Coating Technologies Inc., 950 John Daly Blvd. Suite 260,
Daly City, CA 94015.

Directors and Executive Officers.

The current directors and executive officers of the Registrant
are as follows:

|Name           | Age | **Position(s)**                                                 
|-------------- | --- | ----------------------------------------------------------------
|Joseph Kristul | 66  | Director, President, Treasurer
      and Chief Executive Officer
|Darin Nellis   | 45  | Secretary , Director of Sales & Marketing                       
|Alex Trossman  | 65  | Director                                                        

All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
There are no agreements with respect to the election of directors. There is no
family relationship between any of our directors or executive officers. As of
April 16, 2013, there was no known litigation pending or active against any of
our directors or executive officers. None of our directors or executive officers
has served as a general partner or executive officer of any company that has
filed, or has had filed against it, any petition for bankruptcy, either at the
time such filing was made or during the preceding two years.

Set forth below is certain biographical information for our
current directors and executive officers and certain persons whom we have
identified as key personnel, including a summary description of the principal
occupation and business experience of each of our directors and executive
officers for at least the last five years.

-28-

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Directors and Executive Officers

Joseph Kristul,President, CEO, Treasurer and
Director

Mr. Kristul is one of the founders and principal financial
backers of Nanotech Industries. He has years of experience in international
financing with an emphasis on marketing and sales. He is the former Chairman,
CEO and co-founder of Transnational Financial Network. At Transnational Mr.
Kristul was responsible for overall company management directly overseeing
secondary marketing, finance, corporate marketing, investor relations and
strategic corporate planning. In 1995 Mr. Kristul created Transnationals
wholesale division, where he developed the company's base of loan brokers and
implemented systems and controls to manage the quality of loan products
delivered to brokers. In 1999 he took the company public and by 2005 had over
400 employees and $800 million in mortgage loan originations. Mr. Kristul
graduated with a Master of Science in Applied Mathematics and Mechanics from the
Odessa Physics and Technology University, in Odessa, Russia.

Darin Nellis,SecretaryDirector of
Sales & Marketing

Mr. Nellis, MBA,has twenty years of experience working
in business management and community relations for private, public and
non-profit organizations in Africa and the US. His expertise includes strategic
planning, marketing, cross-cultural education, youth mentorship and nonviolent
conflict resolution. Private sector positions include Director of Corporate
Planning and consultant in the area of finance, strategic planning and marketing
for several environmental high tech firms including the Eurasian power quality
equipment distribution company, Power Quality Holdings and the nanotechnology
commercialization company, Nanotech Industries. Non-profit and public positions
have included Community Development Officer at The United Way of Greater LA,
Loyola Marymount Peace Corps Fellow, and Community Development Agent for the
U.S. Peace Corps in Mauritania West Africa and Volunteer & Outreach
Coordinator for the American Oceans Campaign. Mr. Nellis received his BA from
UCLA in International Relations and his MBA in International Business from
Loyola Marymount University.

Alex Trossman,Director, VP of Israeli &
European Operations

Mr. Trossman is directly responsible for the daily running of
Nanotechs operations in Israel including managing the production process,
client orders & communication, product documentation and customs issues. Mr.
Trossman has nearly 30 years of experience in management and mechanical
engineering in Israel working in such positions as Assistant Chief Engineer for
Automotive Industries, Ltd.; Chief of the Engineering Department of
Rotem-Amfert-Negev, Ltd., a large fertilizer producer; Technical Manager of
Galam, Ltd., a Starch, Glucose & Fructose producer; General Manager of
Eurotech Israel, Ltd. and as a founding partner and general manager of the
Polymate Research Center.

-29-

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Executive Employment Agreements

The Company currently has no employment agreements in place
with any of its named executive officers.

Long-Term Incentive Plans

The Company currently has no long-term incentive plans.

Compensation of Directors

The Company has not compensated our directors for service on
the board of directors.

Stock Option Plans

On June 15, 2011, the Companys Board of Directors established
the 2011 Stock Incentive Plan expiring on June 15, 2016 (the 2011 Plan).

The Companys Board of Directors has determined that it would
be in the best interests of the Company to adopt and approve a new long-term
stock incentive plan which will facilitate the continued use of long-term
equity-based incentives and rewards for the foreseeable future. The Company
expects equity-based incentives to comprise an important part of the
compensation packages needed to attract qualified executives, key employees,
directors and consultants to the Company and in providing long-term incentives
and rewards to those individuals responsible for the Companys success.
Accordingly, the Companys Board of Directors approved the 2011 Plan. Pursuant
to Section 78.320(2) of the Nevada Revised Statutes and the Companys Bylaws,
the written consent of stockholders holding at least a majority of the voting
power may adopt a corporate action by written consent in lieu of holding a
special meeting of stockholders.

-30-

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The 2011 Plan is expected to ensure that the Company will have
a sufficient number of long-term equity-based incentives and rewards to issue to
its future employees as well as to help ensure, to the extent possible, the tax
deductibility by the Company of awards under the 2011 Plan for purposes of
Section 162(m) of the Internal Revenue Code of 1986 (the Code). The Code,
among other things, provides certain tax advantages to persons granted stock
options under a qualifying incentive stock option plan. The adoption of the
2011 Plan will allow option holders to take advantage of the favorable tax
attributes associated with such options that may be granted under the 2011 Plan.

The material terms of the 2011 Plan are summarized below. The
summary is qualified in its entirety by reference to the specific provisions of
the 2011 Plan, the full text of which is set forth as Exhibit C to this
Information Statement.

Purpose

The purpose of the 2011 Plan is to enhance the long-term
stockholder value of the Company by offering opportunities to its directors,
officers, employees and eligible consultants and any entity that directly or
indirectly is in control of or is controlled by the Company (a Related
Company) to acquire and maintain stock ownership in the Company in order to
give these persons the opportunity to participate in the Companys growth and
success, and to encourage them to remain in the Company or a Related Company.

2011 Plan

Under the Plan, the Company may grant certain employees both
incentive and non-qualified options to purchase shares of common stock. The Plan
is authorized to grant options covering up to seven hundred thousand (700,000)
shares.

Involvement in Certain Legal Proceedings

There are no legal proceedings that have occurred during the
past five years concerning our directors or control persons which involved a
criminal conviction, a criminal proceeding, an administrative or civil
proceeding limiting one's participation in the securities or banking industries,
or a finding of securities or commodities law violations.

Code of Ethics

Due to the limited scope of our current operations, the Company
has not yet adopted a Code of Business Conduct and Ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar function. Following
completion of the Acquisition described in Item 1, we may adopt a Code of
Ethics.

-31-

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Committees

Since our Board of Directors has not established an audit or
compensation committee comprised of independent directors, the functions that
would have been performed by such committees are performed by our Board of
Directors as a whole, nor has the Board established a corporate governance
committee or nominating committee.

We do not have a policy regarding the consideration of any
director candidates which may be recommended by our stockholders, including the
minimum qualifications for director candidates, nor has our Board of Directors
established a process for identifying and evaluating director nominees. We have
not adopted a policy regarding the handling of any potential recommendation of
director candidates by our stockholders, including the procedures to be
followed. Our Board has not considered or adopted any of these policies, as we
have never received a recommendation from any stockholder for any candidate to
serve on our Board of Directors. While there have been no nominations of
additional directors proposed, in the event such a proposal is made, all members
of our Board of Directors will participate in the consideration of director
nominees.

The Board is of the opinion that such committees and procedures
are currently not necessary, as the Company is an early exploration stage
company, has only one director and, to date, such director has been performing
the functions of such committees. When we are able to expand our Board of
Directors to include one or more independent directors, our Board of Directors
plans to form an audit committee and a corporate governance committee.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires or directors and
officers, and the persons who beneficially own more than ten percent (10%) of
our common stock, to file reports of ownership and changes in ownership with the
SEC. Copies of all filed reports are required to be furnished to us pursuant to
Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports
received by us and on the representations of the reporting persons, we believe
that these persons have complied with all applicable Section 16(a) filing
requirements during the fiscal year ended December 31, 2013.

-32-

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ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The table below sets forth all compensation awarded to, paid to
or earned by the Registrants President, Chief Executive Officer and Chief
Financial Officer and the Companys Secretary and Director of Sales and
Marketing for the fiscal year of the Company indicated.

|                                                                                                    |  |      |  |  |        |  |  |       |  |  |         |  |  |        |  |  | Nonequity |  |  | Nonqualifie d |  |  |          |  |  |         | 
|--------------------------------------------------------------------------------------------------- |  | ---- |  |  | ------ |  |  | ----- |  |  | ------- |  |  | ------ |  |  | --------- |  |  | ------------- |  |  | -------- |  |  | ------- | 
|Name and                                                                                            |  |      |  |  |        |  |  |       |  |  |         |  |  |        |  |  | Incentive |  |  | Deferred      |  |  | All      |  |  |         | 
|Principal                                                                                           |  |      |  |  |        |  |  |       |  |  | Stock   |  |  | Option |  |  | Plan      |  |  | Compensation  |  |  | Other    |  |  |         | 
|                                                                                                    |  |      |  |  |        |  |  |       |  |  |         |  |  | Awa    |  |  | Compensa  |  |  |               |  |  | Compe    |  |  |         | 
|Position                                                                                            |  | Year |  |  | Salary |  |  | Bonus |  |  | Awards  |  |  | rds    |  |  | tion      |  |  | Earnings      |  |  | n sation |  |  | Total   | 
|                                                                                                    |  |      |  |  | ($)    |  |  | ($)   |  |  | ($)     |  |  | ($)    |  |  | ($)       |  |  | ($)           |  |  | ($)      |  |  | ($)     | 
|Joseph Kristul Director,
      President, Chief Executive Officer and Chief Financial
      Officer |  | 2014 |  |  | 0      |  |  | 0     |  |  | 247,451 |  |  | 0      |  |  | 0         |  |  | 0             |  |  | 0        |  |  | 247,451 | 
|Darrin Nellis Secretary, Director of
      Sales and Marketing                                      |  | 2014 |  |  | 0      |  |  | 0     |  |  | 57,206  |  |  | 0      |  |  | 0         |  |  | 0             |  |  | 0        |  |  | 57,206  | 

Compensation of Executive Officers

Mr. Kristul received 2,340,465 shares for a fair value of
$257,451 in 2014and Mr. Nellis received 520,050 shares for fair value of $57,206
included in stock based compensation.

Employment Agreements

The Company has not entered into any employment agreements with
our executive officers or other employees to date.

Grants of Plan-Based Awards

No plan-based awards were granted to any of our named executive
officers during the fiscal year ended December 31, 2014.

-33-

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Outstanding Equity Awards at Fiscal Year End

Joseph Kristul holds 300,000 warrants expiring July 8.2015 and
480,000 warrants expiring March 14, 2018 at December 31, 2014.

Option Exercises and Stock Vested

No options to purchase our capital stock were exercised by any
of our named executive officers, nor was any restricted stock held by such
executive officers vested during the fiscal year ended December 31, 2014.

Pension Benefits

No named executive officers received or held pension benefits
during the fiscal year ended December 31, 2014.

Nonqualified Deferred Compensation

No nonqualified deferred compensation was offered or issued to
any named executive officer during the fiscal year ended December 31, 2014.

Potential Payments upon Termination or Change in
Control

Our executive officers are not entitled to severance payments
upon the termination of their employment agreements or following a change in
control.

-34-

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ANDMANAGEMENT

The table below provides information about the beneficial
ownership of the Common Stock as of December 31, 2014, by each of the current
directors and executive officers, by all directors and executive officers as a
group and by each person known to the Registrant who is the beneficial owner of
more than 5% of any class of the Registrants securities. Unless otherwise
noted, the persons listed below have sole voting and investment power with
respect to the shares reported.

|                                                                                    |  | Beneficial   |     |  |             | 
|----------------------------------------------------------------------------------- |  | ------------ | --- |  | ----------- | 
|                                                                                    |  | Ownership    |     |  |             | 
|                                                                                    |  |              |     |  |             | 
|Name of Beneficial Owner                                                            |  | Total Shares |     |  | Percent of  | 
|                                                                                    |  | *(2)*        |     |  | *Class (4)* | 
|                                                                                    |  |              |     |  |             | 
|Joseph Kristul (1) Director, President,
      Treasurer and Chief Executive Officer |  | 2,840,465    | (3) |  | 6.44%       | 
|Darin Nellis (1), Secretary                                                         |  | 565,355      |     |  | 1.28%       | 
|Alex Trossman (1), Director                                                         |  | 62,500       |     |  | 0.14%       | 
|                                                                                    |  |              |     |  |             | 
|All Directors and Executive Officers as a
      Group (4 Persons)                   |  | 3,468,320    |     |  | 7.86%       | 

|(1) | Executive officer and/or director of the
  Company.                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                       
|(2) | Represents the total number of shares of Common Stock
      owned as of December 31, 2014.                                            
|    |                                                                                                                                       
|(3) | Represents 2,740,465 shares of common stock issued to Mr.
      Kristul and 100,000 shares issued to his wife, Maria Kristul.         
|    |                                                                                                                                       
|(4) | The percentages listed in the percent of class column are
      based upon 44,126,829 issued and outstanding shares of Common
  Stock.

-35-

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS

Transactions with Related Persons

None of the following parties has had, since the beginning of
the Companys fiscal year, any material interest, direct or indirect, in any
transaction with us or in any presently proposed transaction that has or will
materially affect the Registrant:

- Any directors or executive officers;
- Any person who beneficially owns, directly or indirectly, shares carrying
  more than 5% of the voting rights attached to the outstanding shares of Common
  Stock;
- Any promoters; and
- Any member of the immediate family (including spouse, parents, children,
  siblings and in-laws) of any of the foregoing persons.

Director Independence

Because the Common Stock is traded on the OTC Bulletin Board,
the Company is not subject to the independence requirements of any securities
exchange or the NASD regarding members of the Companys Board of Directors. The
Company intends, in the future, to use the definition of independence of a
national securities exchange or of an inter-dealer quotation system which
requires that a majority of the Board of Directors be independent. The Company
has not determined whether any of its directors are independent.

-36-

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES

Audit Fees

GBH CPAs PC (GBH) served as our independent registered public
accounting firm for our fiscal year ended December 31, 2014 and 2013. Our
previous auditor, LBB & Associates Ltd., LLP served as our independent
registered public accounting firm for our fiscal year ended December 31, 2011
and up to the third quarter ended September 30, 2012 resigning on March 12,
2013. The following table shows the fees that were billed for the audit and
other services provided by the firm for the fiscal year indicated.

Fiscal Year Ended Dec. 31, 2014
    Fiscal Year Ended Dec. 31, 2013Audit Fees
    $ 83,200
    $ 76,500Audit-Related Fees
    -
    -Tax Fees
    -
    -All Other Fees
    -
    -Total
    $ 83,200
    $ 76,500


Audit Fees  This category includes the audit of our annual
financial statements, review of financial statements included in our Quarterly
Reports on Form 10-Q and services that are normally provided by the independent
auditors in connection with engagements for those fiscal years. This category
also includes advice on audit and accounting matters that arose during, or as a
result of, the audit or the review of interim financial statements.

Audit-Related Fees  This category consists of assurance and
related services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under Audit Fees. The services for the fees disclosed under
this category include consultation regarding our correspondence with the SEC and
other accounting consulting.

Tax Fees  This category consists of professional services
rendered by our independent auditors for tax compliance and tax advice. The
services for the fees disclosed under this category include tax return
preparation and technical tax advice.

All Other Fees  This category consists of fees for other
miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval
of all fees charged by our independent auditors. Under the procedure, the Board
approves the engagement letter with respect to audit, tax and review services.
Other fees are subject to pre-approval by the Board of Directors, or, in the
period between meetings, by a designated member of Board of Directors. Any such
approval by the designated member is disclosed to the entire Board of Directors
at the next meeting. The audit and tax fees paid to the auditors with respect to
our fiscal year ended December 31, 2014 were pre-approved by the Board of
Directors.

-37-

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ITEM 15. EXHIBITS

|Exhibit Number |  | Description of Exhibits                                                                                                                            
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                    
|3.1            |  | Amended Articles of Incorporation. (1)                                                                                                             
|3.2            |  | Bylaws, as amended. (1)                                                                                                                            
|3.3            |  | Certificate of Amendment to Articles of Incorporation
      (2)                                                                                    
|4.1            |  | Convertible Debenture Agreement dated April 29,2011
      Pursuant to Regulation D (6)                                                             
|4.2            |  | Convertible Debenture Agreement dated April 29,2011
      Pursuant to Regulation S (6)                                                             
|10.1           |  | Stock Purchase Agreement, dated August 18, 2010, by and
    among Nanotech Industries International Inc. and EPOD Solar Inc. (3)                   
|10.2           |  | Licensing Agreement between Nanotech Industries
      International Inc. and Nanotech Industries Inc. dated July 12, 2010 (4)                      
|10.3           |  | Amendment to the Licensing Agreement previously entered
      into on the 12thday of July, 2010 (5)                                                
|10.4           |  | Securities Purchase Agreement dated April 29,2011
      Pursuant to Regulation D (6)                                                               
|10.5           |  | Securities Purchase Agreement dated April 29,2011
      Pursuant to Regulation S (6)                                                               
|10.6           |  | Warrant Agreement dated April 29,2011 Pursuant to
      regulation D (6)                                                                           
|10.7           |  | Warrant Agreement dated April 29,2011 Pursuant to
      regulation S (6)                                                                           
|10.8           |  | Amendment to articles of incorporation to change the name
      of the company to Hybrid Coating Technologies Inc. (7)                           
|10.9           |  | Approval and adoption of the 2011 Stock Incentive Plan
      (7)                                                                                   
|10.10          |  | Second Amendment to the Licensing Agreement previously
    entered into on the 12thday of July, 2010 (8)                                           
|10.11          |  | Licensing Agreement between Nanotech Industries
      International Inc. and Nanotech Industries Inc. dated October 18, 2011
      (9)             
|10.12          |  | Convertible Debenture Agreement Dated February 21, 2012
      (10)                                                                                 
|10.13          |  | Third Amendment of Licensing Agreement entered into the
      12th day of July 2010 (11)                                                           
|10.14          |  | Amendment Agreements to Convertible Debenture Agreements
      dated April 29,2011 and February 21,2012 (12)                                       
|10.15          |  | Fourth Amendment of Licensing Agreement entered into the
      12th day of July 2010 (13)                                                          
|10.16          |  | Fifth Amendment of Licensing Agreement entered into the
      12th day of July 2010 (14)                                                           
|10.17          |  | Sixth Amendment of Licensing Agreement entered into the
      12th day of July 2010 (15)                                                           
|10.18          |  | Seventh Amendment of Licensing Agreement entered into the
      12th day of July 2010 (16)                                                         
|10.19          |  | Eight Amendment of Licensing Agreement entered into the
      12th day of July 2010 (17)                                                           
|10.20          |  | Ninth Amendment of Licensing Agreement entered into the
      12th day of July 2010 (18)                                                           
|10.21          |  | Form of 10% Convertible Debenture (Pursuant to Regulation
      D)(19)                                                                             
|10.22          |  | Form of 10% Convertible Debenture (Pursuant to Regulation
      S)(19)                                                                             
|10.23          |  | Form of Securities Purchase Agreement (Pursuant to
      Regulation D)(19)                                                                         
|10.24          |  | Form of Securities Purchase Agreement (Pursuant to
      Regulation S)(19)                                                                         
|31.1           |  | Certification of Principal Executive Officer pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.                                          
|31.2           |  | Certification of Principal Executive Officer and
      Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.

|(1) Incorporated by reference to the Registration Statement
      on Form S-1 (File No. 333-153675), filed with the SEC on September 26,
      2008.
|----------------------------------------------------------------------------------------------------------------------------------------------------
|(2) Incorporated by reference to the Current Report on Form
      8-K filed with the SEC on July 22, 2009.                                          
|(3 Incorporated by reference to the Current Report on Form
      8-K filed with the SEC on August 30, 2010.                                         
|(4) Incorporated as reference to the Current Report on Form
      8-K filed with the SEC on August 30,2010                                          
|(5) Incorporated as reference to the Current Report on Form
      8-K filed with the SEC on March 14,2011                                           
|(6) Incorporated as reference to the Current Report on Form
      8-K filed with the SEC on May 3,2011                                              
|(7) Incorporated as reference to the Schedule 14C filed
      with the SEC on July 6,2011                                                           
|(8) Incorporated as reference to the Current Report on Form
      8-K filed with the SEC on July 7,2011                                             
|(9) Incorporated as reference to the Current Report on Form
      8-K filed with the SEC on October 18,2011                                         
|(10) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on February 21,2012                                       
|(11) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on June 28,2013                                           
|(12) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on November 20,2013                                       
|(13) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on December 13,2013                                       
|(14) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on March 31,2014                                          
|(15) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on April 9,2014                                           
|(16) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on May 8, 2014                                            
|(17) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on August 19, 2014                                        
|(18) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on September 10, 2014                                     
|(19) Incorporated as reference to the Current Report on
      Form 8-K filed with the SEC on November 28, 2014                                      

-38-

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Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|Date: April 15, 2015 | HYBRID COATING TECHNOLOGIES INC
|-------------------- | -------------------------------
|                     | (Registrant)                   
|                     |                                
|                     | By:                            
|                     |                                
|                     |                                
|                     |                                
|                     |                                

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|Signature          |  | Title                         | Date          
|------------------ |  | ----------------------------- | --------------
|                   |  |                               |               
|/s/ Joseph Kristul |  |                               | April 15, 2015
|Joseph Kristul     |  | President and Chief Executive |               
|                   |  | Officer,                      |               
|                   |  | (Principal executive officer  |               
|                   |  | principal financial and       |               
|                   |  | accounting officer)           |               
|                   |  |                               |               
|                   |  |                               |               
|                   |  |                               |               
|/s/ Alex Trossman  |  |                               | April 15, 2015
|Alex Trossman      |  | Director                      |               

-39-

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