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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, 2013

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 260Daly 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. [   ]

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 $3,041,146based on
the closing price of $0.39for the common stock on June 29, 2013, 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 30, 2014was 14,356,528.

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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                                                          | 25  
|Item 8.  | Financial Statements and
      Supplementary Data                                                                          | 26  
|Item 9.  | Changes in and
      Disagreements with Accountants on Accounting and Financial Disclosure                                 | 27  
|Item 9A. | Controls And Procedures                                                                                                    | 27  
|         |                                                                                                                            |     
|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. | The Company shall issue to NTI a one-time licensing fee,
      an aggregate number of shares (Sealant Shares) of the Companys
      restricted common stock which shall give NTI, immediately upon issuance of
      such shares, an incremental 15% (fifteen percent) ownership stake in the
      Company.                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                         
|2. | The Company shall pay to NTI a royalty of 7.5% of gross
      revenue from the Sale of the Sealant Products for the duration of this
      Agreement. The royalty shall be paid on a quarterly basis 65 calendar days
      after the end of each quarter and shall be based on the gross revenue as
      stated in the Companys quarterly statements.

(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.

-6-

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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 a development-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.

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.

-7-

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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).

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.

-8-

---

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.

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

-9-

---

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.

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.

-10-

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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


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.

-11-

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Facilities and Employees

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

As of December 31, 2013, Hybrid Coating Technologies Inc. had 3
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.                                         
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 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).                                                                                                                                                                                                                                                                                                                                                              

-12-

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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.

2013 Progress and 2014 Outlook

On July 17, 2013, the Company entered into an agreement with a
major coatings manufacturer ("Licensee"), who will sell its products through
more than two thousand big box retail locations across the United States, for
the development and licensing of an isocyanate free polyurethane coating. Under
the terms of the agreement, the Company would make certain minor modifications
to its existing polyurethane formulation to address certain specific
requirements of the Licensee.

Once the modifications to the Companys formulation are
successfully completed and accepted, the Company will become a supplier and sell
its Coating Products to the Licensee in the territory of the United States. As
part of the confidentiality clause in the agreement, the Company is not at
liberty to divulge the identity of the Licensee at this time.

In addition, the Company has expanded its technology with a new
UV curing formulation which is the only non-isocyanate UV curing polyurethane
formulation in the world. The new formulation allows the Companys floor coating
products to fully cure within an hour instead of 7 days, which is currently the
normal industry standard.

On June 25, 2013 the Occupational Safety and Health
Administration (OSHA), a division of the US Department of Labor, initiated a
National Emphasis Program to protect workers from the serious health effects
from occupational exposure to isocyanates. According to the OSHA workers exposed
to isocyanates can suffer debilitating health problems for months or even years
after exposure which could result in death.

The EPA mentioned the Company's technology as an alternative to
toxic polyurethane coatings in its previously issued Action Plan. On page 4 of
its Action Plan, the scientists Figovsky and Shapovalov who are the founders of
Green PolyurethaneTM and who are presently continuing to develop
enhanced and new formulations for the Company, are mentioned as an alternative
to toxic polyurethane.

The Company is presently in discussions with several large
industry players and expects to enter into commercialization agreements with
some potential partners during 2014 and is targeting to generate revenues and
profit for its fiscal year of 2014.

-13-

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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.

-14-

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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.

-15-

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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.

-16-

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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.

-17-

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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.

-18-

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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 endedDecember 31, 2013
    December 31, 2012High
    Low
    High
    LowFirst Quarter
    $0.48
    $0.20
    $1.55
    $0.26Second Quarter
    $0.51
    $0.22
    $1.50
    $0.18Third Quarter
    $0.56
    $0.20
    $1.01
    $0.20Fourth Quarter
    $0.80
    $0.17
    $0.83
    $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, 2013 was 162.

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.

-19-

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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, 2012 as well as its financial position at
December 31, 2012, should be read in conjunction with the consolidated financial
statements and accompanying notes contained in this report.

-20-

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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 Nanortech 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 $16,788,776 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.

-21-

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Operating Results for the Fiscal Year Ended December 31,
2013 and 2012

Results of Operations

We have had no significant operating revenues for the period
from our inception on July 8, 2010 through December 31, 2013, save for samples
sales of $108,793. Our activities to date have been financed from the proceeds
of share subscriptions, proceeds from convertible debentures issued and from
loans from related and other parties and trade payables. During the year ended
December 31, 2013, revenues from our operations were $37,281 compared to $66,642
for the year ended December 31, 2012.

For the period from inception on July 8, 2010 through our
fiscal year ended December 31, 2013, we incurred total net loss of $16,788,776
including non-cash charges of $6,155,010 from stock-based compensation, warrant
modification expense of $241,697,intangible asset amortization of $673,143,
amortization of debt discounts of $1,012,309, interest expenses of $1,636,242,
loss on extinguishment of debt of $1,385,303 loss on impairment of intangible
assets of $631,917, loss on impairment of samples and supplies of $10,136, and a
gain in the fair value of the derivative liability of $173,882. Also incurred
were other general and administrative expenses of $3,266,018, cost of sales of
$69,350 and other interest expense of $2,012,330.

General and administrative expenses totaled $2,921,059 for the
year ended December 31, 2013, as compared to $1,608,055 for the year ended
December 31, 2012, representing an 82% increase from the prior corresponding
period. Included in general administrative expenses for the year ended December
31 are the following:

Year Ended December 312013
    
    
    2012
    
    
    %
      changeProfessional Fees
    $
    873,143
    
    $
    452,559
    
    
    93%Payroll
    
    170,088
    
    
    414,939
    
    
    (59%
    )Stock-based comp. (non-cash)
    
    1,609,709
    
    
    390,580
    
    
    312%Rent and general office costs
    
    97,678
    
    
    113,790
    
    
    (14%
    )Lab fees and supplies
    
    25,179
    
    
    87,809
    
    
    (71%
    )Travel and trade shows
    
    145,262
    
    
    148,378
    
    
    (2%
    )Total
    $
    2,921,059
    
    $
    1,608,055
    
    
    82%


General and Admistration expenses analysis

Professional fees were $873,143 for the year ended December 31,
2013 compared to $452,559 for the year ended December 31, 2012.Professional fees
increased due to greater use of consultants for financing, sales and marketing
purposes. Payroll was $170,088 for the year ended December 31, 2013 compared to
$414,939 for the year ended December 31, 2012.  Payroll decreased due to a
reduction in employees from five to two , specifically senior management who
were remunerated through stock based compensation. Stock based compensation was
$1,609,709 for the year ended December 31, 2013 compared to $390,580 for the
year ended December 31, 2012.Stock based compensation increased due to payments
to management and other consultants for services through the issuance of shares.
Lab fees and supplies was $25,179 for the year ended December 31, 2013 compared
to $87,809 for the year ended December 31, 2012. Lab fees and supplies decreased
because of more extensive lab use and testing in 2012 and more material use for
sample sales in 2013

-22-

---

Amortization and depreciation was $182,023 for the year ended
December 31, 2013 compared to $218,580 in the year ended December 31, 2012.
Certain patents and licenses of the Company have been fully amortized which
resulted in lower amortization in the year ended December 31, 2013 compared to
December 31, 2012.

During the year ended December 31, 2013, we recorded a loss of
$264,366 on the change in fair value of derivative liabilities related to our
convertible notes payable, compared to a gain of $360,461 during the year ended
December 31, 2012. The change in derivative liability has no impact on our cash
flows for operations and was primarily a result of the increase in our stock
price during the year ended December 31, 2013.

During the year ended December 31, 2013, we recorded $921,096
in interest expense compared to $799,374 during the year ended December 31,
2012. Interest expense increased in the year ended December 31, 2013 due to the
Company extending the maturity dates of several of its notes payable. In order
to obtain these extensions the Company issued additional shares of its common
stock which resulted in the recording of additional interest expense.

During the year ended December 31, 2013, we recorded a loss on
the extinguishment of debt in the amount of $1,282,836 compared to $22,750
during the year ended December 31, 2012. The loss was a result from amending the
convertible debentures as well as other loans.

-During the year ended December 31, 2013, we recorded a loss on
warrant modifications of $241,697 compared to $0 in December 31, 2012. 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, 2013 and
2012. The Company had a working capital deficit of $4,296,231 as of December 31,
2013. We do not have enough cash on hand to commence operations. We believe that
we will need approximately $1,500,000 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.

From our inception, we raised $25,000 through an exercise of
warrants at $0.40 per share for 62,500 shares. We issued 100,000 shares for fair
value services rendered with respect to media relations of $135,000 in the
fourth quarter of 2010. We issued Senior Secured Convertible Debentures for
$400,000 on August 16, 2010. We raised an additional $75,000 and $72,600 from
short-term loans in the 4th quarter of 2010.

In April 2011, the Company raised $1,201,000 in convertible
debentures, with an individual face value of $5,000, a maturity of 36 months and
a coupon rate of 10% per annum payable in cash or capital stock at the Companys
discretion. Each debenture shall be convertible (using a conversion factor of
1.4) into 3,571 Units of the Company where each Unit (at a price of $1.40 per
Unit) , comprises of 1 share of common stock at and one half a stock purchase
warrant of the Company with an exercise price of $2.00 per full unit and a
maturity of 36 months. Warrants are exercisable at the option of the holder at
any time prior to maturity. The Debentures shall carry an anti-dilution
provision if the total outstanding shares exceed 9,250,000 shares.

On February 21, 2012, the Company raised an additional $119,500
in similar conditions as the ones above except for a conversion price of $1.45
per unit and a warrant exercise price of $2.10.

23-

---

In 2011, the Company received $894,000 in short term loans from
shareholders and repaid $315,200.

In 2012, the Company received approximately $1,566,000
(approximately $765,000 from related parties) in short term loans and repaid
approximately $449,000.

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

Principal Cash Flows for the Fiscal Year Ended December
31, 2013

Operating activities used cash flows of $502,095. Net
change in operating assets and liabilities generated cash flows of $1,175,660
This increase in use of cash relates primarily to the net loss incurred during
2013 after adjusting for non-cash expenses.

Financing activities provided cash flows of $502,095,
primarily as a result of receipt of funds such as $708,846 in shareholder loans
and $260,000 in loan payable-related party. In addition, the Company repaid
$106,430 of the note payable - related party, and repaid $360,696 on loans
payable  shareholders.

-24-

---

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.

-25-

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Hybrid Coating Technology Inc.(A Development Stage Company)

Consolidated Financial StatementsDecember 31,
2013

-26-

---

Hybrid Coating Technology Inc.(A Development Stage Company)

Consolidated Financial Statements

Contents

|Report of Independent Registered Public
      Accounting Firms | F-1 
|-------------------------------------------------------------- | ----
|                                                               |     
|Consolidated Balance Sheets                                    | F-2 
|                                                               |     
|Consolidated Statements of Operations                          | F-3 
|                                                               |     
|Consolidated Statement of Stockholder's
      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.(A Development Stage Company) Daly City, CA

We have audited the accompanying consolidated balance sheets of
Hybrid Coating Technologies, Inc. as of December 31, 2013 and 2012, and the
related consolidated statements of operations, stockholders deficit and cash
flows for the years then ended and the period from July 8, 2010 (inception) to
December 31, 2013. 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. The consolidated financial
statements for the period from July 8, 2010 (inception) through December 31,
2011 were audited by other auditors whose report expressed an unqualified
opinion on those financial statements. The consolidated financial statements for
the period from July 8, 2010 (inception) through December 31, 2011 include total
revenues of $4,870 and a net loss of $8,728,044. Our opinion on the consolidated
financial statements for the period from July 8, 2010 (inception) through
December 31, 2013, insofar as it relates to amounts from July 8, 2010
(inception) through December 31, 2011, is based solely on the report of other
auditors.

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, 2013 and 2012, and the
results of its operations and its cash flows for the period described above 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 net capital deficiency that raises 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. comHouston, TexasApril 30, 2014

F-1

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)ConsolidatedBalanceSheetsAs ofDecember31, 2013
and 2012

|                                                                                                                                                       |   | December 31 |   |   | December 31 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|ASSETS                                                                                                                                                 |   | 2013        |   |   | 2012        |  
|                                                                                                                                                       |   |             |   |   |             |  
|Intangible asset, net of accumulated
      amortization                                                                                                | $ | 444,940     |   | $ | 626,963     |  
|                                                                                                                                                       |   |             |   |   |             |  
|TOTAL ASSETS                                                                                                                                           | $ | 444,940     |   | $ | 626,963     |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                  |   |             |   |   |             |  
|Current liabilities                                                                                                                                    |   |             |   |   |             |  
|Bank indebtedness                                                                                                                                      | $ | 7,706       |   | $ | 22,104      |  
|Accounts payable and accrued liabilities                                                                                                               |   | 564,289     |   |   | 435,245     |  
|Accounts payable and accrued liabilities-related parties                                                                                               |   | 491,178     |   |   | 554,633     |  
|Deferred revenue                                                                                                                                       |   | 20,000      |   |   | -           |  
|Stock payable                                                                                                                                          |   | 15,000      |   |   | 15,000      |  
|Senior secured convertible
    debentures                                                                                                              |   | 200,000     |   |   | 200,000     |  
|Loans payable, net of unamortized discount of $5,455 and
      $14,638, respectively                                                                   |   | 972,045     |   |   | 694,362     |  
|Loans payable -shareholders net of
      unamortized discounts and premiums of $21,980 and $25,194, respectively                                       |   | 1,343,562   |   |   | 1,062,521   |  
|Note payable  related party                                                                                                                           |   | 682,451     |   |   | 800,481     |  
|Total current
      liabilities                                                                                                                        |   | 4,296,231   |   |   | 3,784,346   |  
|Convertible debentures, net of unamortized discount of $ 0
      and $325,136, respectively                                                            |   | 1,396,858   |   |   | 995,364     |  
|Derivative liability                                                                                                                                   |   | 816,488     |   |   | 166,721     |  
|Total liabilities                                                                                                                                      |   | 6,509,577   |   |   | 4,946,431   |  
|Commitments and contingencies                                                                                                                          |   |             |   |   |             |  
|STOCKHOLDERS DEFICIT                                                                                                                                  |   |             |   |   |             |  
|Common stock, $0.001 par value, 75,000,000
      shares authorized, 11,167,513 shares and 6,503,568 shares issued and
      outstanding , respectively |   | 11,168      |   |   | 6,504       |  
|Additional paid in capital                                                                                                                             |   | 10,712,971  |   |   | 6,651,428   |  
|                                                                                                                                                       |   |             |   |   |             |  
|Deficit accumulated during development stage                                                                                                           |   | (16,788,776 | ) |   | (10,977,400 | )
|Total stockholders deficit                                                                                                                            |   | (6,064,637  | ) |   | (4,319,468  | )
|                                                                                                                                                       |   |             |   |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                            | $ | 444,940     |   | $ | 626,963     |  

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

F-2

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)ConsolidatedStatementsofOperationsFor the Years EndedDecember31,
2013 and 2012and the Period from July 8, 2010(Inception)throughDecember31,
2013

|                                                                 |   | Year ended        |   |   | Year ended        |   |   | July 8, 2010 (inception)  |  
|---------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | - | - | ------------------------- | -
|                                                                 |   | December 31, 2013 |   |   | December 31, 2012 |   |   | through December 31, 2013 |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Revenues                                                         | $ | 37,281            |   | $ | 66,642            |   | $ | 108,793                   |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Cost of sales                                                    |   | 37,650            |   |   | 27,700            |   |   | 69,350                    |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Gross-profit                                                     |   | (369              | ) |   | 38,942            |   |   | 39,443                    |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Operating expenses                                               |   |                   |   |   |                   |   |   |                           |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|General and
      administrative                                 |   | 2,921,059         |   |   | 1,608,055         |   |   | 10,423,539                |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Impairment of
      intangible asset                             |   | -                 |   |   | -                 |   |   | 631,917                   |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Amortization of
      intangible asset                           |   | 182,023           |   |   | 218,580           |   |   | 673,143                   |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Total operating expenses                                         |   | 3,103,082         |   |   | 1,826,635         |   |   | 11,728,599                |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Loss from operations                                             |   | (3,103,451        | ) |   | (1,787,693        | ) |   | (11,689,156               | )
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Warrant modification expense                                     |   | (241,697          | ) |   | -                 |   |   | (241,697                  | )
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Loss on extinguishment of
      debt                             |   | (1,282,836        | ) |   | (22,750           | ) |   | (1,385,303                | )
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Change in fair value of
      derivative liability               |   | (264,366          | ) |   | 360,461           |   |   | 173,882                   |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Gain on foreign currency
      transaction                       |   | 2,070             |   |   | -                 |   |   | 2,070                     |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Interest expense                                                 |   | (921,096          | ) |   | (799,374          | ) |   | (3,648,572                | )
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Net loss                                                         | $ | (5,811,376        | ) | $ | (2,249,356        | ) | $ | (16,788,776               | )
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Basic and diluted net loss
      per common share                | $ | (0.70             | ) | $ | (0.36             | ) |   |                           |  
|                                                                 |   |                   |   |   |                   |   |   |                           |  
|Basic and diluted weighted
      average number of common shares |   | 8,257,277         |   |   | 6,316,699         |   |   |                           |  

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

F-3

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)StatementofStockholdersDeficitFor the Period July 8, 2010(Inception)throughDecember31, 2013

DeficitAccumulatedNumber of
    
    
    
    
    
    
    
    
    During theShares
    
    
    
    
    
    Additional
    
    
    DevelopmentIssued
    
    
    Amount
    
    
    paid-in capital
    
    
    Stage
    
    
    TotalBalance , July 8, 2010
    
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -Issuance of Founders' shares for services
      rendered
    
    3,381,003
    
    
    3,381
    
    
    334,719
    
    
    
    
    
    338,100Fair value of warrants granted on July 8 -
      re-valued on August 30
    
    -
    
    
    -
    
    
    2,047,471
    
    
    -
    
    
    2,047,471Fair value of warrants granted on July 14 -
      re-valued on August 30
    
    -
    
    
    -
    
    
    849,063
    
    
    -
    
    
    849,063Exchange of shares for 33,810,035 shares of
      Nanotech Industries Int'l Inc.
    
    1,821,000
    
    
    1,821
    
    
    (1,821
    )
    
    -
    
    
    -Issuance of shares for services rendered
    
    100,000
    
    
    100
    
    
    134,900
    
    
    -
    
    
    135,000Beneficial conversion feature on Senior
      Secured ConvertibleDebenture
    
    -
    
    
    -
    
    
    126,607
    
    
    -
    
    
    126,607Valuation of warrants issued
    
    -
    
    
    -
    
    
    273,393
    
    
    -
    
    
    273,393Exercise of warrants for cash on July 30,
      2010 - 62,500 shares at $0.40 per share
    
    -
    
    
    -
    
    
    25,000
    
    
    -
    
    
    25,000Net loss
    
    -
    
    
    -
    
    
    -
    
    
    (4,062,486
    )
    
    (4,062,486
    )Balance, December 31, 2010
    
    5,302,003
    
    $
    5,302
    
    $
    3,789,332
    
    $
    (4,062,486
    )
    $
    (267,852
    )


(Continued on next page)

F-4

---

Issuance of shares as payment for
      consulting fees on February 9, 2011
    
    30,000
    
    
    30
    
    
    50,970
    
    
    -
    
    
    51,000Valuation of warrants issued with Loans
      payable shareholders
    
    -
    
    
    -
    
    
    48,710
    
    
    -
    
    
    48,710Re-measurement of warrants July 14, 2010
      and Series A warrants
    
    -
    
    
    -
    
    
    1,179,887
    
    
    -
    
    
    1,179,887Issuance of shares as payment for
      consulting fees on May 16, 2011
    
    112,928
    
    
    113
    
    
    175,925
    
    
    -
    
    
    176,038Fair value of 25,000 warrants issued with
      loans payable shareholders - May 24, 2011
    
    -
    
    
    -
    
    
    15,450
    
    
    -
    
    
    15,450Issuance of shares as payment for
      consulting fees on June 2, 2011
    
    58,000
    
    
    58
    
    
    89,842
    
    
    -
    
    
    89,900Issuance of shares for services rendered on
      June 15, 2011
    
    20,000
    
    
    20
    
    
    30,980
    
    
    -
    
    
    31,000Fair value of 25,000 warrants issued with
      loans payable shareholders - July 15, 2011
    
    -
    
    
    -
    
    
    27,915
    
    
    -
    
    
    27,915Issuance of shares for services rendered on
      September 6, 2011
    
    40,000
    
    
    40
    
    
    59,560
    
    
    -
    
    
    59,600Replacement of outstanding pre-merger
      shares on September 7, 2011
    
    30,500
    
    
    31
    
    
    (31
    )
    
    -
    
    
    -Issuance of shares for services rendered on
      September 7, 2011
    
    10,000
    
    
    10
    
    
    14,390
    
    
    -
    
    
    14,400Issuance of shares for services rendered on
      September 9, 2011
    
    2,000
    
    
    2
    
    
    2,878
    
    
    -
    
    
    2,880To record shares to be issued with loans
      payable shareholders
    
    -
    
    
    -
    
    
    36,000
    
    
    -
    
    
    36,000Issuance of shares for services rendered on
      October 31, 2011
    
    27,302
    
    
    27
    
    
    42,291
    
    
    -
    
    
    42,318Issuance of shares for services rendered on
      November 9, 2011
    
    184,000
    
    
    184
    
    
    285,016
    
    
    -
    
    
    285,200Net loss
    
    -
    
    
    -
    
    
    -
    
    
    (4,665,558
    )
    
    (4,665,558
    )Balance, December 31, 2011
    
    5,816,733
    
    $
    5,817
    
    $
    5,849,115
    
    $
    (8,728,044
    )
    $
    (2,873,112
    )


(Continued on next page)

F-5

---

Issuance of shares for services rendered on
      January 31, 2012
    
    18,000
    
    
    18
    
    
    26,982
    
    
    -
    
    
    27,000Fair value of 30,000 warrants issued for
      services rendered - February 16, 2012
    
    -
    
    
    -
    
    
    29,136
    
    
    -
    
    
    29,136Fair value of 230,000 warrants issued for
      services rendered - February 23, 2012
    
    -
    
    
    -
    
    
    239,269
    
    
    -
    
    
    239,269Issuance of shares for services rendered -
      March 5, 2012
    
    51,000
    
    
    51
    
    
    66,249
    
    
    -
    
    
    66,300Issuance of shares with loans payable to
      shareholders - March 5, 2012
    
    10,000
    
    
    10
    
    
    12,990
    
    
    
    
    
    13,000Issuance of shares for interest and premium
      on loan - March 5, 2012
    
    90,000
    
    
    90
    
    
    92,910
    
    
    -
    
    
    93,000Issuance of shares for cashless exercise of
      220,000 warrants on loan - March 23, 2012
    
    205,135
    
    
    205
    
    
    (205
    )
    
    -
    
    
    -Issuance of shares for interest on
      convertible debentures - May 21, 2012
    
    240,200
    
    
    240
    
    
    119,860
    
    
    -
    
    
    120,100Issuance of shares for services rendered -
      May 21, 2012
    
    50,000
    
    
    50
    
    
    16,450
    
    
    -
    
    
    16,500Issuance of shares for services rendered -
      August 15, 2012
    
    22,500
    
    
    23
    
    
    12,352
    
    
    -
    
    
    12,375Imputed interest on note payable  related
      party
    
    -
    
    
    -
    
    
    169,452
    
    
    -
    
    
    169,452Fair value of warrants issued with loans
      payable - shareholders
    
    -
    
    
    -
    
    
    16,868
    
    
    -
    
    
    16,868Net loss
    
    -
    
    
    -
    
    
    -
    
    
    (2,249,356
    )
    
    (2,249,356
    )Balance, December 31, 2012
    
    6,503,568
    
    $
    6,504
    
    $
    6,651,428
    
    $
    (10,977,400
    )
    $
    (4,319,468
    )


Continued on next page)

F-6

---

Issuance of shares for services rendered
    
    349,303
    
    
    349
    
    
    138,136
    
    
    -
    
    
    138,485Issuance of shares for interest payments on
      Convertible Debentures
    
    420,567
    
    
    421
    
    
    140,456
    
    
    -
    
    
    140,877Issuance of warrants for services
    
    -
    
    
    -
    
    
    1,385,379
    
    
    -
    
    
    1,385,379Imputed interest on note payable-related
      party
    
    -
    
    
    -
    
    
    133,464
    
    
    -
    
    
    133,464Issuance of warrants to landlord for
      payment of accounts payable and prepaid rent
    
    -
    
    
    -
    
    
    202,095
    
    
    -
    
    
    202,095Exercise of warrants
    
    375,000
    
    
    375
    
    
    -
    
    
    -
    
    
    375Issuance 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
    
    
    -
    
    
    38,000Issuance of shares for interest payment on
      loans payable - shareholders
    
    43,863
    
    
    44
    
    
    13,040
    
    
    -
    
    
    13,084Issuance of warrants for interest payment
      on loans payable - shareholders
    
    -
    
    
    -
    
    
    68,131
    
    
    -
    
    
    68,131Issuance of shares for payment on accounts
      payable and accrued liabilities-related parties
    
    2,287,000
    
    
    2,287
    
    
    891,325
    
    
    -
    
    
    893,612Issuance of warrants for payment on loans
      payable - shareholders
    
    -
    
    
    -
    
    
    623,665
    
    
    -
    
    
    623,665Fair value of 110,000 warrants issued with
      loans payable
    
    -
    
    
    -
    
    
    23,705
    
    
    -
    
    
    23,705Fair value of 100,000 warrants issued with
      loans payable shareholders
    
    -
    
    
    -
    
    
    31,588
    
    
    -
    
    
    31,588Modification of Series A warrants
    
    -
    
    
    -
    
    
    241,697
    
    
    -
    
    
    241,697Issuance of shares for amended Convertible
      Debentures
    
    400,152
    
    
    400
    
    
    131,650
    
    
    -
    
    
    132,050Net 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
    )


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

F-7

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)ConsolidatedStatementsof Cash FlowsFor the Years EndedDecember31, 2013 and
2012 and the Period from July 8, 2010(Inception)throughDecember31, 2013

|                                                                                  |   | Year ended       |   |   | Year ended       |   |   | July 8, 2010 (inception) |  
|--------------------------------------------------------------------------------- | - | ---------------- | - | - | ---------------- | - | - | ------------------------ | -
|                                                                                  |   | December 31,2013 |   |   | December 31,2012 |   |   | through December 31,2013 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |                  |   |   |                  |   |   |                          |  
|Net loss                                                                          | $ | (5,811,376       | ) | $ | (2,249,356       | ) | $ | (16,788,776              | )
|Adjustments to reconcile net loss to net cash
      used in operating activities: |   |                  |   |   |                  |   |   |                          |  
|Stock-based
      compensation                                                    |   | 1,643,459        |   |   | 390,580          |   |   | 6,155,010                |  
|Warrant modification expense                                                      |   | 241,697          |   |   | -                |   |   | 241,697                  |  
|Impairment of samples
      and supplies                                          |   | -                |   |   | 10,136           |   |   | 10,136                   |  
|Interest paid through issuance of
      shares                                    |   | 90,043           |   |   | 213,100          |   |   | 303,143                  |  
|Amortization of
      intangible asset                                            |   | 182,023          |   |   | 218,580          |   |   | 673,143                  |  
|Loss on extinguishment
      of debt                                              |   | 1,282,836        |   |   | 22,750           |   |   | 1,385,303                |  
|Impairment of intangible assets                                                   |   | -                |   |   | -                |   |   | 631,917                  |  
|Interest expense from revaluation of
      SSCD warrants                          |   | -                |   |   | -                |   |   | 1,180,886                |  
|Change in fair value of
      derivative liability                                |   | 264,366          |   |   | (360,461         | ) |   | (173,882                 | )
|Interest expense on
      beneficial conversion feature related to SSCD warrants  |   | -                |   |   | -                |   |   | 126,607                  |  
|Interest imputed from notes payable
      -related party                          |   | 133,464          |   |   | 169,452          |   |   | 302,916                  |  
|Incentive and interest paid on
      prepayment of debt                           |   | -                |   |   | -                |   |   | 25,833                   |  
|Amortization of debt
      discounts                                              |   | 297,803          |   |   | 260,505          |   |   | 1,012,309                |  
|Gain on foreign currency
    transaction                                          |   | (2,070           | ) |   | -                |   |   | (2,070                   | )
|Change in operating assets
      and liabilities                                  |   |                  |   |   |                  |   |   |                          |  
|Samples and supplies                                                              |   | -                |   |   | 27,700           |   |   | (10,136                  | )
|Accounts payable and
      accrued liabilities                                    |   | 362,330          |   |   | 142,031          |   |   | 811,742                  |  
|Accounts payable and accrued
      liabilities related parties                    |   | 799,945          |   |   | 381,938          |   |   | 1,354,578                |  
|Bank indebtedness                                                                 |   | (6,615           | ) |   | (17,909          | ) |   | 15,489                   |  
|Deferred revenue                                                                  |   | 20,000           |   |   | -                |   |   | 20,000                   |  
|Net cash used in operating
      activities                                       |   | (502,095         | ) |   | (790,954         | ) |   | (2,724,155               | )

CONTINUED ON NEXT PAGE)

F-8

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)ConsolidatedStatementsof Cash FlowsFor the Years EndedDecember31, 2013 and
2012 and the Period from July 8, 2010(Inception)throughDecember31, 2013

|                                                          |   | Year ended       |   |   | Year ended       |   |   | July 8, 2010  (inception) |  
|--------------------------------------------------------- | - | ---------------- | - | - | ---------------- | - | - | ------------------------- | -
|                                                          |   | December 31,2013 |   |   | December 31,2012 |   |   | through December 31,2013  |  
|CASH FLOWS FROM INVESTING ACTIVITIES                      |   |                  |   |   |                  |   |   |                           |  
|                                                          |   |                  |   |   |                  |   |   |                           |  
|Proceeds from sale of intangible asset                    |   | -                |   |   | -                |   |   | 150,000                   |  
|Net cash provided by investing activities                 |   | -                |   |   | -                |   |   | 150,000                   |  
|                                                          |   |                  |   |   |                  |   |   |                           |  
|CASH FLOWS FROM FINANCING ACTIVITIES                      |   |                  |   |   |                  |   |   |                           |  
|                                                          |   |                  |   |   |                  |   |   |                           |  
|Proceeds from issuance of Convertible Debentures          |   | -                |   |   | 119,500          |   |   | 970,500                   |  
|Proceeds from Senior Secured Convertible
      Debentures |   | -                |   |   | -                |   |   | 400,000                   |  
|Proceeds from exercise of warrants                        |   | 375              |   |   | -                |   |   | 25,375                    |  
|Proceeds from loans payable-shareholders                  |   | 708,846          |   |   | 765,296          |   |   | 2,440,742                 |  
|Repayments from loans payable-shareholders                |   | (360,696         | ) |   | (448,992         | ) |   | (1,124,888                | )
|Proceeds from loans payable                               |   | 260,000          |   |   | 681,500          |   |   | 1,018,375                 |  
|Repayments of note payable - related party                |   | (106,430         | ) |   | (326,350         | ) |   | (1,155,949                | )
|Net cash provided by financing activities                 |   | 502,095          |   |   | 790,954          |   |   | 2,574,155                 |  
|                                                          |   |                  |   |   |                  |   |   |                           |  
|INCREASE (DECREASE) IN CASH                               |   | -                |   |   | -                |   |   | -                         |  
|                                                          |   |                  |   |   |                  |   |   |                           |  
|CASH, BEGINNING OF PERIOD                                 |   | -                |   |   | -                |   |   | -                         |  
|CASH, ENDING OF PERIOD                                    | $ | -                |   | $ | -                |   | $ | -                         |  

(CONTINUED ON NEXT PAGE)

F-9

---

Hybrid Coating Technology Inc.(ADevelopmentStageCompany)ConsolidatedStatementsof Cash FlowsFor the Years EndedDecember31, 2013 and
2012 and the Period from July 8, 2010(Inception)throughDecember31, 2013

|                                                                                    |   | Year ended       |  |   | Year ended       |  |   | July 8, 2010 
    (inception) | 
|----------------------------------------------------------------------------------- | - | ---------------- |  | - | ---------------- |  | - | ----------------------------- | 
|                                                                                    |   | December 31,2013 |  |   | December 31,2012 |  |   | through December 31,2013      | 
|Supplemental disclosure of cash flow
      information                              |   |                  |  |   |                  |  |   |                               | 
|Cash paid during the period
      for:                                              |   |                  |  |   |                  |  |   |                               | 
|Interest paid                                                                       | $ | 122,140          |  | $ | 83,440           |  | $ | 133,980                       | 
|Income taxes                                                                        | $ | -                |  | $ | -                |  | $ | -                             | 
|                                                                                    |   |                  |  |   |                  |  |   |                               | 
|Non cash financing
      transactions:                                              |   |                  |  |   |                  |  |   |                               | 
|Reclassification of Bank
    indebtedness to
      payables                         | $ | 8,500            |  | $ | -                |  | $ | 8,500                         | 
|Acquisition of intangible
      asset through issuance of note payable              | $ | -                |  | $ | -                |  | $ | 1,900,000                     | 
|Discount arising from warrants attached to
      issuance of Convertible Debentures | $ | -                |  | $ | -                |  | $ | 273,393                       | 
|Discount arising from loans payable
      -shareholders                             | $ | 31,588           |  | $ | 16,868           |  | $ | 140,531                       | 
|Reclassification of accrued
    interest to Convertible Debentures                  | $ | 76,358           |  | $ | -                |  | $ | 76,358                        | 
|Discount arising from loans
    payable                                             | $ | 23,705           |  | $ | -                |  | $ | 23,705                        | 
|Transfer of loans and SSCD
    to Convertible Debentures                            | $ | -                |  | $ | -                |  | $ | 310,000                       | 
|Reclassification of accrued interest to SSCD                                        | $ | -                |  | $ | -                |  | $ | 14,167                        | 
|Fair value of derivative convertible
      debenture                                | $ | -                |  | $ | 46,721           |  | $ | 604,969                       | 
|Reclassification of note
      payable to accounts payable                          | $ | 11,600           |  | $ | -                |  | $ | 11,600                        | 
|Shares issued for premium on
      shareholder loans                                | $ | -                |  | $ | 28,000           |  | $ | 64,000                        | 
|Common stock issued and payable for interest
      accrual                          | $ | 170,049          |  | $ | -                |  | $ | 170,049                       | 
|Common stock issued for
      settlement of accounts payable -related party         | $ | 780,900          |  | $ | -                |  | $ | 780,900                       | 
|Cashless exercise of warrants                                                       | $ | 688              |  | $ | 205              |  | $ | 893                           | 
|Warrants issued in payment of shareholder
      loan                                | $ | 125,022          |  | $ | -                |  | $ | 125,022                       | 
|Warrants issued for
      settlement of rent liability and prepaid rent             | $ | 116,250          |  | $ | -                |  | $ | 116,250                       | 

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

F-10

---

Hybrid Coating Technology Inc.Notes to Consolidated Financial StatementsDecember
31, 2013 and 2012

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.

On July 27, 2011, the Company, by majority vote of shareholders,
amended its articles of incorporation to change its name to Hybrid Coating
Technologies Inc. from EPOD Solar Inc. (EPOD). Further, the name change was
approved by the Nevada Secretary of State on September 7, 2011, and the
Companys OTC Bulletin Board trading symbol has been changed to HCTI.

On August 30, 2010, the Company acquired from Nanotech
Industries International Inc. ("Nanotech"), a corporation formed pursuant to the
laws of Nevada on July 8, 2010, all of the issued and outstanding shares of
capital stock of Nanotech ("Nanotech Shares") held by the holders of the
Nanotech Shares ("Nanotech Shareholders") (the "Acquisition"). The purchase
price for the Acquisition consisted of 3,381,003 shares of common stock, $0.001
par value per share (the " EPOD Common Stock") of the Registrant, issued to
Nanotech Shareholders. Nanotech is the surviving and continuing entity and the
historical financials following the reverse merger transaction were those of
Nanotech. As a result of such acquisition, 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 $16,789,000 since inception, and has a working capital
deficit of approximately $4,296,000 as of December 31, 2013. 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.

Development StageThe Company complies
with Financial Accounting Standards Board Accounting Standards Codification
(FASB ASC) 915 Development Stage Entities in its characterization of the
Company as a development stage enterprise.

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.

F-11

---

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Cash and Cash Equivalents–The Company maintains various cash balances in one financial institution 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.

Inventories-Inventories are valued at the lower of cost or market. The cost is determined by using the average cost method.

Intangible Assets-Intangible assets are comprised of intellectual property which is amortized on a straight-line basis over the assets’ respective lives, 36 months, 60 months and 120 months. Intellectual property with a
perpetual life is not amortized.

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.

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, 2013 and 2012, 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, 2013 and 2012, the significant inputs to the Company’s derivative liability calculation were Level 3 inputs.

F-12

---

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,  |  
|                                                                                                                                        |   | 2013                     |  
|Beginning balance                                                                                                                       | $ | 166,721                  |  
|Total (gains) losses                                                                                                                    |   | 264,366                  |  
|Settlements                                                                                                                             |   | (99,412                  | )
|Additions                                                                                                                               |   | 484,813                  |  
|Ending balance                                                                                                                          | $ | 816,488                  |  
|                                                                                                                                        |   |                          |  
|Change in unrealized gains(losses) included
      in earnings relating to derivatives still held as of December 31, 2013 and
      2012 | $ | 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, 2013 and 2012, the following
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, | 
|---------------- |  | ----------------------------- | 
|                 |  | 2013                          | 
|Convertible debt |  | 2,002,769                     | 
|Stock warrants   |  | 7,701,928                     | 
|                 |  | 9,704,697                     | 

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 the year ended December 31, 2013,
and 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

F-13

---

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, 2012 and 2011, 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,
2013 and 2012 was $36,463 and $73,080, 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, 2013 and
2012 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, 2012 and December 31, 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, 2012 and December
31, 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 and
$140,700 of amortization expense for the years ended December 31, 2013 and 2012,
respectively.

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

| | 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
      for the duration of the 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.

F-14

---

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
(thirty-six) 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.

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.

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

Carrying ValueLicense Rights
    
    Date of
    Original
    at December 31,Overview
    Licensed Region
    License/Term
    cost
    2013A     Coating Products
    North America
    June 12, 2010 6 years
    $500,000
    nilB     Coating Products
    Russian Territory
    March 17, 2011 10 years
    $150,000
    $34,400C     Coating Products
    European Continent
    July 7, 2011 5 years
    $1,250,000
    $410,540


The balance of intangible assets is as follows as of December
31, 2013 and 2012:

2013
    
    
    2012Intangible assets
    $
    1,118,083
    
    $
    1,118,083Less: accumulated amortization
    
    (673,143
    )
    
    (491,120
    )Intangible assets, net
    $
    444,940
    
    $
    626,963


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, 2013 and 2012 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 2012 the Company entered into various loan agreements
totaling $681,500 at interest rates ranging from 15%-25%. These loans are all
currently in default. The creditors have not called these loans.

During the year ended December 31, 2013, the Company issued a
$100,000 loan with a three-month maturity, maturing on August 23, 2013, bearing
interest at 16% per annum, payable monthly, with an additional $5,000 premium
payable at maturity, a $110,000 loan with a one-year maturity, maturing on March
25, 2014, bearing interest at 16% per annum, payable monthly with an additional
110,000 warrants attached to the loan, a loan for $8,500 maturing in July 2013
bearing interest of 15% per annum and a $50,000 loan, maturing in April 2014,
bearing interest at 15% per annum.

The fair value of these 110,000 warrants issued in conjunction
with the $110,000 loan mentioned above amounted to $30,217 using the assumptions
discussed in the table below. This resulted in a relative fair value of $23,705
which was recorded as a debt discount and a corresponding increase in paid-in
capital. The discount is amortized over the life of the associated loan payable.
The assumptions used in determining the fair value were:

|Expected volatility     | 120%   
|----------------------- | -------
|Exercise price          | $1.00  
|Stock price             | $0.38  
|Expected life           | 5 years
|Risk-free interest rate | 0.8%   
|Dividend yield          | $ Nil  

F-15

---

NOTE 4LOANS PAYABLE(contd)

During the year ended December 31, 2012, the Company issued
50,000 warrants related to a loan payable. The fair value of the 50,000 warrants
issued in conjunction with the debt issued in 2012 amounted to $19,005 using the
assumptions discussed in the table below. This resulted in a relative fair value
of $16,868 which was recorded as a debt discount. The discount is amortized over
the life of the associated loan payable.

|Expected volatility     | 166.04%
|----------------------- | -------
|Exercise price          | $0.50  
|Stock price             | $0.50  
|Expected life           | 2 years
|Risk-free interest rate | 0.25%  
|Dividend yield          | $ Nil  

The Company recorded $32,888 and $2,230 of interest expense
related to amortization of the debt discounts during the years ended December
31, 2013 and 2012. During the year ended December 31, 2013 and 2012 total
interest expense related to loans payable was $152,307 and $47,527 respectively,
the total interest paid was $75,173 and $31,086 respectively and accrued
interest was $115,448 and $17,345, respectively. Cash payments on interest due
from loans payable of $20,969 paid in the year ended December 31, 2012, were
reclassed from bank overdraft to accrued interest during the year ended December
31, 2013. At December 31, 2013 and 2012 the unamortized debt discount was $5,455
and $14,638, respectively.

NOTE 5  LOANS PAYABLE SHAREHOLDERS

During the years ended December 31, 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
2013 and interest rates that range from 2% to 18%. The Company was in default on
loans totalling $1,046,313 as of December 31, 2013. The shareholders have not
called these loans.

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 $1,343,562 and $1,062,521, with related discounts of
$21,980 and $25,194 for the years ended December 31, 2013 and 2012, respectively
..

In addition the Company repaid an additional $125,022 through
the issuance of 933,000 warrants. The fair value of the warrants was $307,144.
The Company recorded a loss on settlement of debt in the amount of $182,122 and
an increase in paid-in capital of $ 307,144. The fair-value of these 933,000
warrants was determined using the assumptions in the table below:

|Expected volatility     | 128.26%
|----------------------- | -------
|Exercise price          | $0.001 
|Stock price             | $0.33  
|Expected life           | 5 years
|Risk-free interest rate | 1.01%  
|Dividend yield          | $ Nil  

On January 1, 2013, the Company entered into a new loan
agreement with a shareholder with a maturity of December 31, 2013. The new loan
agreement for $130,000 cancelled the previous loan agreement for $100,000 that
had expired. The Company recorded a loss on extinguishment of debt of $10,169
and a debt discount of $19,831 which has been fully amortized to interest
expense at December 31, 2013. In addition 25,000 warrants were issued.

F-16

---

NOTE 5  LOANS PAYABLE SHAREHOLDERS (contd)

The fair value of these 25,000 warrants issued in conjunction
with this debt amounted to $9,840 using the assumptions discussed in the table
below. This resulted in a relative fair value of $9,148 which was recorded as an
additional debt discount and a corresponding increase in paid up capital. The
discount has been fully amortized and charged to interest expense. The
assumptions used in determining the fair value were:

|Expected volatility     | 399.77%
|----------------------- | -------
|Exercise price          | $0.01  
|Stock price             | $0.40  
|Expected life           | 2 years
|Risk-free interest rate | 0.27%  
|Dividend yield          | $ Nil  

On January 21, 2013, the Company entered into a loan agreement
for $78,400 CDN with a shareholder. At December 31, 2013, the value was $73,296
US. The loan matured on July 20, 2013 (but was extended through an amendment on
that date to January 20, 2014) and bears interest at 2% per month, payable
monthly, unpaid amounts bear interest at 2.5% per month. The loan is secured by
the Companys current and future assets for approximately $94,000. In exchange
for that above mentioned amendment extension 43,863 shares of common stock were
issued for $13,084 charged to interest expense. The loan is in default and no
notice has been given to the Company.

On October 4, 2013, the Company revised its loan agreement with
one of its shareholders amending the maturity date from April 30, 2011 to June
30, 2014. In exchange the Company agreed to pay a renewal fee of $10,000, which
was added to the principal, and accrue interest at 10% per annum retroactively,
from June 30, 2012 through October 4, 2013, which resulted in $12,667 in
additional interest which was added to the principal and issue 75,000 warrants
to purchase the Companys common stock.

The fair value of these 75,000 warrants issued in conjunction
with this debt was $22,440 using the assumptions discussed in the table
below.

|Expected volatility     | 111.56%
|----------------------- | -------
|Exercise price          | $0.001 
|Stock price             | $0.30  
|Expected life           | 5 years
|Risk-free interest rate | 1.41%  
|Dividend yield          | $ Nil  

The Company also issued 142,000 warrants to shareholders whose
loans were in default. The fair value of these 142,000 warrants issued in
conjunction with this debt was $68,131 using the assumptions discussed in the
table below.

|Expected volatility     | 111.56%-359.19%
|----------------------- | ---------------
|Exercise price          | $0.001-$1.48   
|Stock price             | $0.40-$0.64    
|Expected life           | 2-5 years      
|Risk-free interest rate | 0.33%-1.41%    
|Dividend yield          | $ Nil          

The Company recorded $66,061 of interest expense related to the
amortization of the debt discount on loans payable to shareholders during the
year ended December 31, 2013. The corresponding debt discount during the year
ended December 31, 2012 was $76,649. During the years ended December 31, 2013
and 2012 total interest expense was $78,630 and $73,854 respectively, and the
total interest paid was $30,364 and $52,354 respectively. At December 31, 2013
the unamortized debt discount was $15.420 compared to $31,533 as of December 31,
2012.

F-17

---

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 in 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.

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. See table below for
calculation of loss on extinguishment of April 29th Debentures.

F-18

---

NOTE 6  CONVERTIBLE DEBENTURES (contd)

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

The Company measured the fair value of the embedded derivatives
in the February 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
February 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.
See table below for calculation of loss on extinguishment of February 21 debentures.

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

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.

There was a debt discount as a result of the relative fair
value of the Series A and B warrants attached to the SSCD. Amortization of the
debt discount was $nil and $ $21,566 for years ended December 31, 2013 and 2012,
respectively. The discount was amortized using the effective interest method over
the two year term of the debt. There was no unamortized discount as of December
31, 2013 and 2012. Interest of $20,000 was accrued during the year ended
December 31, 2013 ($2012-$20,075), for an outstanding balance of $28,159
(2012-$46,159) that has been accrued. During the year $38,000 has been repaid
through the issuance of $100,000 shares.

F-19

---

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

During the year ended December 31, 2011, $200,000 of the debt
was repaid along with $14,167 of accrued interest and $25,833 as an incentive
payment for pre-payment. This $240,000 was repaid through the issuance of a
Convertible Debenture due April 29, 2014. A loss on extinguishment of debt of
$79,717 was recorded. The balance due at December 31, 2013 and 2012,
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  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 analyzed 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. The Company recorded an unrealized gain
(loss) of ($264,366) and $360,461 to reflect the value of the derivative
liability as $816,488 and $166,721 as of December 31, 2013 and 2012,
respectively.

As described in Note 6, on November 20, 2013 the company
entered in an amendment agreement modifying its terms with both the April 29 and
February 21 debenture holder.

The following table summarizes the derivative values, pre
amendment, post amendment and at December 31, 2013.

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

NOTE 9  STOCKHOLDERS DEFICIT

Common Stock

The Company is authorized to issue 75,000,000 shares of its
common stock.

2012

During 2012, the Company issued 141,500 shares to employees and
consultants for services with a fair value of $122,175. The shares were valued
using the stock price on the date of grant.

F-20

---

NOTE 9  STOCKHOLDERS DEFICIT (contd)

During 2012, the Company issued 240,200 shares to the
Convertible Debenture holders as payment for one years interest totaling
$120,100. The shares were valued using the stock price on the date of grant.

During 2012, the Company issued 100,000 shares to a shareholder
as interest compensation for loans. 20,000 of the shares were issued for 2011
premiums previously valued and recorded in additional paid-in capital, 70,000
shares were issued as interest compensation and were valued at $93,000 and were
charged to interest expense and the remaining 10,000 shares valued at $13,000
were recorded as debt discount for new loan premiums.

During 2012, the Company issued 260,000 warrants to purchase
common stock of the Company to consultants for services and 50,000 warrants in
conjunction with the issuance of shareholder loans. The warrants were valued
using the Black-Scholes option pricing model using the following
assumptions:

|Expected volatility     | 104.75% - 166.04%
|----------------------- | -----------------
|Exercise price          | $0.10 - $0.50    
|Stock price             | $0.50 - $1.12    
|Expected life           | 2 - 3 years      
|Risk-free interest rate | 0.24% - 0.43%    
|Dividend yield          | $ Nil            

The value of the warrants (see above) issued to consultants was
determined to be $268,405 and was recognized as an increase in additional
paidin capital and expensed as consulting fees. The fair value of the warrants
issued for the shareholder loan was $19,005 and the relative fair value of the
warrants was $16,868. The relative fair value was recorded as a debt discount
against the carrying value of the loan and an increase in additional paid-in
capital.

On February 22, 2012, the Company entered an agreement with a
shareholder whereby a loan premium of 10,000 shares would be issued to the
shareholder. Although the shares had not been issued the Company has recorded a
reduction of the loan and an increase in stock payable of $15,000. The fair
value of the stock was determined using the stock price on the date of grant.

On March 23, 2012, a warrant holder exercised 220,000 warrants
through a cashless option for 205,135 shares. The Company recorded an increase
in par value for the shares and a corresponding reduction in additional paid in
capital of $205.

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 for 688,060 shares on a cashless basis with a
reduction in additional paid in capital of $688. Also, 375,000 warrants were
exercised for 375,000 shares and $375 was paid.

During the year ended December 31 2013, the Company issued
4,630,000 warrants to shareholders and consultants for consulting services at a
fair value of $1,877,035 (recorded as stock-based compensation), and 457,875
warrants 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 to 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 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 in connection with a loan from a third party with a
relative fair value of $23,705 (recorded as debt discount), 142,000 warrants to
shareholder loan holders for interest of 68,131, 75,000 warrants in connection
with a loan from a shareholder with a fair value of $22,440 (recorded as debt
discount), and 25,000 warrants 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:

F-21

---

NOTE 9  STOCKHOLDERS DEFICIT (contd)

|Expected volatility     | 111.56%-399.77%
|----------------------- | ---------------
|Exercise price          | $0.001 - $1.48 
|Stock price             | $0.27-$0.64    
|Expected life           | 1 -5 years     
|Risk-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-$0.50      
|Stock price             | $0.39            
|Expected life           | 0.67 - 4.67 years
|Risk-free interest rate | 0.15% - 0.41%    
|Dividend yield          | $ Nil            

F-22

---

Warrants

A summary of the activity in the Company's warrants during the
years ended December 31, 2013 and 2012 is presented below:

|                                                        |  |                    |   |   | Weighted Average | 
|------------------------------------------------------- |  | ------------------ | - | - | ---------------- | 
|                                                        |  | Number of Warrants |   |   | Exercise Price   | 
|                                                        |  |                    |   |   |                  | 
|Outstanding at December 31,
      2011                  |  | 2,158,928          |   | $ | 0.28             | 
|Issued February 16, 2012                                |  | 30,000             |   | $ | 0.10             | 
|Issued February 23, 2012                                |  | 230,000            |   | $ | 0.10             | 
|Issued November 29, 2012                                |  | 50,000             |   | $ | 0.50             | 
|Exercised March 23, 2011                                |  | (220,000           | ) | $ | 0.10             | 
|Outstanding and exercisable, at December 31,
      2012 |  | 2,248,928          |   | $ | 0.29             | 
|Issued January 1, 2013                                  |  | 25,000             |   | $ | 0.01             | 
|Issued March 1, 2013                                    |  | 457,875            |   | $ | 0.001            | 
|Issued March 14, 2013                                   |  | 420,000            |   | $ | 0.001            | 
|Issued March 25, 2013                                   |  | 110,000            |   | $ | 1.00             | 
|Issued April 5, 2013                                    |  | 480,000            |   | $ | 0.001            | 
|Issued May 30, 2013                                     |  | 1,683,000          |   | $ | 0.001            | 
|Issued July 1 ,2013                                     |  | 200,000            |   | $ | 0.20             | 
|Issued July 10 ,2013                                    |  | 230,000            |   | $ | 0.65             | 
|Issued August 15,2013                                   |  | 400,000            |   | $ | 0.001            | 
|Issued October 1,2013                                   |  | 80,000             |   | $ | 1.48             | 
|Issued October 4,2013                                   |  | 75,000             |   | $ | 0.001            | 
|Issued November 25,2013                                 |  | 700,000            |   | $ | 0.001            | 
|Issued November 28,2013                                 |  | 380,000            |   | $ | 0.001            | 
|Issued December 2,2013                                  |  | 375,000            |   | $ | 0.001            | 
|Issued December 3,2013                                  |  | 100,000            |   | $ | 0.001            | 
|Issued December 9,2013                                  |  | 1,200,000          |   | $ | 0.001            | 
|Issued December 9,2013                                  |  | 12,000             |   | $ | 0.001            | 
|Issued December 18,2013                                 |  | 150,000            |   | $ | 0.001            | 
|Issued December 31,2013                                 |  | 50,000             |   | $ | 1,48             | 
|Exercised                                               |  | (1,064,875         | ) | $ | 0.001            | 
|Expired                                                 |  | (115,000           | ) | $ | 1.50             | 
|Outstanding and exercisable, at December 31,
      2013 |  | 8,196,928          |   | $ | 0.12             | 

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,
2013 was $4,480,098.

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.

F-23

---

NOTE 10  RELATED PARTY TRANSACTIONS

Fees charged by Shareholder

During the years ended December 31, 2013 and 2012, the Company
was charged $723,000 and $317,000 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 $780,900 (through the issuance of shares) and $44,000 to the
consultant during the years ended December 31, 2013 and 2012, respectively. The
Company has an outstanding balance as of December 31, 2013 and 2012 of $427,842
and $485,468, respectively.

Principal Debt Payments

During the year ended December 31, 2013, the Company made
principal payments of $118,030 on its note payable to NTI related to the 2011
acquisition of the license rights for Coatings in Europe. The note matures on
May 29, 2015, does not bear interest, and no payments are required prior to
maturity. The balance of the note was $682,451 and $800,481at December 31, 2013
and 2012, respectively.

Shared Administrative Costs

The Company shares office space and certain personnel with NTI.
Costs are allocated among the parties based on usage. During 2013 and 2012, the
allocation of such shared costs between the Company and NTI was 80% and 20%,
respectively. Rent expense for the years ended December 31, 2013 and 2012 was
$45,000 and $45,000, respectively.

NOTE 11  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, 2013 and
2012:

|                                       |  | 2013 |   |  | 2012 |  
|-------------------------------------- |  | ---- | - |  | ---- | -
|                                       |  |      |   |  |      |  
|US federal statutory tax rate          |  | 34%  |   |  | 34%  |  
|                                       |  |      |   |  |      |  
|Change in US valuation
      allowance |  | (34% | ) |  | (34% | )
|                                       |  |      |   |  |      |  
|Effective tax rate                     |  | -    |   |  | -    |  

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

|                                      |   | 2013       |   |   | 2012       |  
|------------------------------------- | - | ---------- | - | - | ---------- | -
|                                      |   |            |   |   |            |  
|Net operating loss
      carryforward | $ | 5,809,000  |   | $ | 3,672,000  |  
|                                      |   |            |   |   |            |  
|Valuation allowance                   |   | (5,809,000 | ) |   | (3,672,000 | )
|                                      |   |            |   |   |            |  
|Deferred tax asset                    | $ | -          |   | $ | -          |  

The Company has non-capital losses carried forward of
approximately $12,939,000 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.

F-24

---

NOTE 12 - 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 and
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.

NOTE 13  SUBSEQUENT EVENTS

Subsequent to December 31, 2013, the Company issued the
following shares:

- 540,000 shares of common stock valued on the dates of issuances in the
  amount of $270,000 for consulting services.
- 2,330,000 shares of common stock valued on the dates of issuances in the
  amount of $1,206,000. $233,000 as payment for accounts payable and accrued
  liabilities to a related party and the remaining $973,000 were recorded as
  loss on settlement of debt.
- 154,315 shares of common stock valued on the dates of issuances in the
  amount of $ 93,000. $51,000 applied against payroll liabilities and the
  remaining $42,000 recognized as a loss on settlement of debt ,
- 14,700 shares of common stock valued on the dates of issuances in the
  amount of $7,000. $2,900 to pay interest expenses and the remaining $4,300
  recognized as a loss on settlement of debt ,
- 150,000 shares of common stock on a cashless exercise of 150,000 warrants.

F-25

---

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.

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.

- 27 -

---

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 ro 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 in the development stage, 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.

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 | 65  | Director,
      President, Treasurer and Chief Executive Officer
|Darin Nellis   | 44  | Secretary , Director of Sales
      & Marketing                 
|Alex Trossman  | 64  | 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-

---

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-

---

Significant Employees

Elena Shenkar,Director of Operations

Ms. Shenkar:has seventeen years of experience as a
business owner and upper level executive in the hospitality and finance
industries. Her expertise includes negotiations and management of contractual
relationships with bankers, private equity investors, landlords, trademark and
transactions attorneys, architects, interior designers, operations managers,
entitlement consultants, neighborhood community leaders, publicists, marketing
and promotions firms, major publications, graphic and brand designers, corporate
America executives and high profile charity organizations. She was one of the
founding partners of O Sushi Café in Brea, California and helped structure,
develop and finance several key concepts in the hospitality industry including
the construction, operations and ownership of Blowfish Sushi in the highly
publicized, billion-dollar, Santana Row Development. She has raised close to
five million dollars for various business ventures and has a wealth of
experience with investor relations. She attended the University of Southern
California where she received a bachelor of science in Business Finance. She
also attended Whittier Law School and has passed the California Bar Exam. Ms.
Shenkar was born in Odessa, Ukraine and immigrated to the United States in 1978.
She is fluent in English and Russian.

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-

---

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-

---

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-

---

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 for the fiscal year of the Company indicated.

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

|Name and Principal
      Position                                                             | Year | Salary ($) | Bonus ($) | Stock Awards
      ($) | Option Awards
      ($) | NonequityIncentive
      Plan Compensation ($) | **Nonqualified**
      Deferred Compensation Earnings
      ($) | All Other Compensation ($) | Total ($)
|--------------------------------------------------------------------------------------------- | ---- | ---------- | --------- | ---------------------- | ----------------------- | ---------------------------------------------- | --------------------------------------------------------------- | -------------------------- | ---------
|                                                                                              |      |            |           |                        |                         |                                                |                                                                 |                            |          
|Joseph Kristul Director,
      President, Chief Executive Officer and Chief Financial Officer | 2013 | $0         | 0         | 0                      | $244,368                | 0                                              | 0                                                               | 0                          | 0        

Compensation of Executive Officers

Mr. Kristul received $480,000 warrants for a fair value of
$244,368 in 2013 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, 2013.

-33-

---

Outstanding Equity Awards at Fiscal Year End

No unexercised options or warrants were held by any of our
named executive officers at December 31, 2013. No equity awards were made during
the fiscal year ended December 31, 2013.

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, 2013.

Pension Benefits

No named executive officers received or held pension benefits
during the fiscal year ended December 31, 2013.

Nonqualified Deferred Compensation

No nonqualified deferred compensation was offered or issued to
any named executive officer during the fiscal year ended December 31, 2013.

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-

---

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, 2013, 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 (2)       |    
|                                                                                    |  |                        |    
|Joseph Kristul (1) Director, President,
      Treasurer and Chief Executive Officer |  | 500,000                | (3)
|Darin Nellis (1), Secretary                                                         |  | 189,473                |    
|Alex Trossman (1), Director                                                         |  | 62,500                 |    
|Eugene Shenkar                                                                      |  | 412,000                |    
|All Directors and Executive Officers as a
      Group (3 Persons)                   |  | 751,973                |    

|(1) | Executive officer and/or director of the Company.                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(2) | Represents the total number of shares of Common Stock
      owned as of December 31, 2013.                                          
|(3) | Represents 400,000 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 11,167,513 issued and outstanding shares of Common Stock.

-35-

---

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-

---

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, 2013 and 2012. 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 |  |   | Fiscal
      Year Ended | 
|------------------ | - | ----------------------- |  | - | ----------------------- | 
|                   |   | Dec.
      31, 2013     |  |   | Dec.
      31, 2012     | 
|                   |   |                         |  |   |                         | 
|Audit Fees         | $ | 76,500                  |  | $ | 73,383                  | 
|Audit-Related Fees |   | -                       |  |   | -                       | 
|Tax Fees           |   | -                       |  |   | -                       | 
|All Other Fees     |   | -                       |  |   | -                       | 
|Total              | $ | 76,500                  |  | $ | 73,383                  | 

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, 2013 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)                                                           
|31.1           |  | Certification of Principal Executive Officer pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.                                          
|32.1           |  | 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

-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: May 2, 2014 | HYBRID COATING TECHNOLOGIES INC
|----------------- | -------------------------------
|                  | (Registrant)                   

| | By: | /s/ Joseph Kristul                                  
| | --- | ----------------------------------------------------
| |     | Name: Joseph Kristul                                
| |     | Title: President
      and Chief Executive Officer  
| |     | (Principal Executive, Financial
      and Accounting
| |     | Officer)                                            

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 |                               | May 2, 2014
|Joseph Kristul     | President and Chief Executive |            
|                   | Officer,                      |            
|                   | (Principal executive officer  |            
|                   | principal financial and       |            
|                   | accounting officer)           |            
|                   |                               |            
|                   |                               |            
|                   |                               |            
|/s/ Alex Trossman  |                               | May 2, 2014
|Alex Trossman      | Director                      |            

-39

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