BEACON EQUITY RESEARCH

Analyst: Victor Sula, Ph.D.

Initial Report
October 3rd, 2007

HYBT daily 10/04/07

3.75

3.50

3.25

3.00

2.75

2.50

2.25

Hybrid Technologies, Inc. 2.00

1.75
5001 East Bonanza Road
Suite 138-145 volume
Las Vegas, NV 89110 USA 1.0

Millions
Tel: 888-HYBTECH
0.5
Fax: (702) 926-9508

www.hybridtechnologies.com 0.0
Aug Sep Oct

Market Data Company Background

Symbol / Exchange OTC BB: HYBT Hybrid Technologies, Inc. (HYBT), founded in 2000, is developing and mar-
Coverage Initiated 02-Oct-2007 keting electric-powered vehicles and products based on advanced lithium
Current Price $1.97 battery technology. The Company has developed a proprietary advanced
Rating Speculative Buy lithium management and battery-balancing system and is converting vehicles
Price Target $5.12
from conventional gasoline and diesel fuel systems to electric power. HYBT
Outstanding Shares 39.27 Mn
Market Cap. $77.36 Mn
has converted several test vehicles to electric power, including Chrysler PT
Average 3M Volume 113,254 Cruisers, Mini Coopers, Chrysler Crossfires and Mercedes’ Smart cars, and
is commencing production of its Mini Cooper lithium hybrid. The Company
is also converting two-wheeled and three-wheeled vehicles such as bicycles,
motorcycles, small ATV’s and vehicles for the handicapped into lithium-pow-
ered products.

In addition to its lithium-powered products business, HYBT provides Voice-

over-Internet Protocol (VoIP) telecommunications services to business and resi-
dential customers through its Zingo, Inc. majority-owned subsidiary.
 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Investment Highlights

Business model based on technology advances

The Company is using its advanced lithium battery technology to develop and eventually produce and market
lithium-powered vehicles and products for the US market. HYBT is developing a portable battery power pack
technology and converting popular vehicles from conventional fuel systems to electric power systems. To date,
the Company has successfully converted cars as well as scooters, bicycles, mopeds, motorcycles and even homes
to zero-emission, lithium battery power.
HYBT’s business is not limited to hybrid fuel technologies: the Company also offers VoIP telecommunications
services to businesses and residential customers and plans to extend the operations of this business segment into
Canada, Europe and the developed countries of Asia.

HYBT’s battery technology offers one of the industry’s fastest charger systems

HYBT hybrid vehicles draw power from electricity stored in batteries instead of from the combustion of liquid
fuels. The Company uses high energy density and lightweight rechargeable lithium ion batteries that can be
charged simply by plugging into household electrical outlets.
In August 2007, HYBT announced the development of a highly advanced rapid charger system. A battery pack
equivalent to 35-40 kWh systems can be charged in less than 4 hours from 0% state of charge to 100% state of
charge. Compared to other chargers, HYBT’s rapid system reduces charge time by 65%.

Technology applications tap an expanding market

HYBT’s battery packs can be produced in a variety of sizes, capacities and voltages to suit a broad range of
product applications. In trials of its technology, the Company has successfully converted several models of cars,
including Chrysler PT Cruisers, Mini Coopers, Chrysler Crossfires and Mercedes’ Smart cars to lithium power.
It has also converted numerous two-wheeled and three-wheeled vehicles such as bicycles, motorcycles, small
ATV’s and vehicles for the handicapped. HYBT hybrid vehicles offer numerous advantages compared to conven-
tional fuel vehicles, including zero-emissions, high-speed capacity, rapid charge time and overall functionality.
Its hybrid vehicles are able to reach speeds of 80 miles per hour, accelerate from 0 to 60 miles per hour in six
seconds and travel more than 120 miles on a single charge.

Portfolio of contracts

The Company has signed contracts for the development and deployment of its technology with NASA, the Ca-
nadian Ministry of Transportation, the City of New York, the US Navy, and Paratransit, a New York transporta-
tion company, among others.
HYBT’s hybrid ATV-LX vehicle was used by NASA during a training mission and has been chosen by the US
Navy for military missions. Initially developed for military applications, the ATV-LX will be made available to
consumers by year-end 2007. In addition, the Company has contracts with Arcasis, a contractor to the US EPA,
for the use of hybrid vehicles in advanced roadside air quality monitoring. Increasing government support and

Hybrid Technologies, Inc. (OTCBB: HYBT) 2

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

sponsorship of environmentally friendly technologies will likely create future government contracting opportu-
nities for HYBT.
In early October, Sam’s Club announced that one of its Once-in-a-Lifetime Holiday packages would consist of
a 2007 HYBT Lithium powered Smart Car. The Lithium powered Smart Car is a zero-emissions vehicle that in-
corporates cutting edge technology developed for NASA while being cool enough for A-list celebrities such as
George Clooney, who drives a similar model.

Media coverage enhances HYBT’s visibility

Media coverage is helping the Company solidify its position as an emerging leader in hybrid automotive tech-
nologies. The Company’s products and technologies have been featured on TV and in the print media on CNN,
CBS the Early Show, FOX - the Big Story, ABC, NBC, CTV, CBC, WCNC, WBTV, TV Tokyo, CFCN Money TV,
Space Channel, Car and Driver, Global News, Business Week, Living Well magazine and MSNBC. Newspaper
stories about the Company and its technology have appeared in NC Business Journal, Statesville, Calgary Sun,
Calgary Herald, Toronto Star, Chrysler Freedom Magazine, Easy Rider, DuPont Registry, Kyodo News, Char-
lotte Weekly, Mooresville Tribune, New York Post, Los Angeles Business Journal and other papers.
The Discovery Channel recently completed filming a special series on Hybrid Technologies and their latest pro-
duction vehicle, the lithium-powered Mini Cooper. Discovery Channel reaches 431 million homes in 170 coun-
tries.

HYBT is already generating revenues

The growing market acceptance of HYBT’s products is evidenced by the Company’s sizable revenue growth in
the first nine months of FY 2007. HYBT generated nearly $1 million in revenues during the first nine months
and is on track to reach $1.5 million by fiscal 2007 year-end. Going forward, we anticipate that the creation of a
nationwide distribution network for its hybrid vehicles will allow HYBT to generate consistent double and triple
digit revenue growth over the near and medium-term.

Environmental concerns drive product demand

Currently, hybrid vehicles have a limited presence throughout the world, but over time this technology has the
potential to become mainstream. High prices have been a limiting factor for hybrid cars but this could change as
demand builds and manufacturing economies of scale allow prices to fall. An estimated 187,000 hybrid vehicles
were sold in the US through the first half of 2007, accounting for 2.3% of total US new light-vehicle market, and
this market remains on track to sell 345,000 hybrids in 2007—a 35% increase over 2006.
Environmental concerns and the need to reduce dependence on foreign oil are encouraging governments to
promote the purchase of hybrid vehicles. In the US, hybrid electric cars qualify for a federal income tax credit of
up to $3,400. In addition, many states provide additional tax credits for hybrid car purchasers. European buyers
also benefit from government incentives; in the Netherlands, for instance, a EUR 6000 discount is offered for new
hybrid vehicles while the Republic of Ireland offers a 50% discount on registration taxes for hybrid vehicles.

Hybrid Technologies, Inc. (OTCBB: HYBT) 3

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Business Model

The Company’s business model focuses on developing, producing and marketing lithium-powered vehicles and
products for the US market. Using its proprietary technology, the Company has successfully converted cars,
scooters, bicycles, mopeds, motorcycles, and even homes to zero-emission, lithium power.

Electric battery pack and vehicle technology

HYBT is developing a portable battery power pack technology that can convert gasoline-powered vehicles into
lithium-powered vehicles. The Company has converted and will soon begin producing an All Lithium Mini
Cooper, has produced and delivered hybrid Chrysler PT Cruisers and is testing hybrid Chrysler Crossfires and
Mercedes’ Smart cars. HYBT is also converting bicycles, motorcycles, small ATV’s and vehicles for the handi-
capped into lithium powered vehicles. HYBT replaces the car’s gasoline power system with an all electric power
system; some installations include installed solar cells and battery management systems. HYBT can produce its
battery packs in a variety of sizes, capacities and voltages to fit specific product applications. Its battery packs
feature installed controls to prevent over heating and the charging/discharging of packs above/below a maxi-
mum/minimum voltage. The Company works with third party developers and independent engineers to ensure
the high quality of its battery management systems.
HYBT converts vehicles in its own facility in Mooresville, North Carolina. This 40,000 square foot facility allows
the Company’s engineers to work on many projects and vehicles simultaneously and has room for additional
conversions and storage, with the potential for future growth.

Technology characteristics

HYBT’s conversions combine proprietary battery technology components and electricity to create the vehicles
propulsion system. The hybrid vehicles draw its power from electricity stored in batteries. The power system
consists of an integrated network of high performance components that are adaptable to multiple energy sources
and are capable of powering a wide variety of products.

Lithium Power Advanced Drive System Technology

Battery 1 Wheel
Solar

Battery 2 Motor

Charger
Fuel Cell Battery 3 Controller

Generator

Source: http://www.hybridtechnologies.com/lithium

Hybrid Technologies, Inc. (OTCBB: HYBT) 4

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

The Company uses high energy density and lightweight rechargeable lithium ion batteries that can be charged
simply by plugging into household electrical outlets. The electric vehicles’ battery pack performs the same func-
tion as the gas tank in a conventional vehicle: it stores the energy needed to operate the vehicle.
The Company uses individual lithium polymer cells that have 4.2 volts DC and 100AH each and are connected
in such a way as to provide up to 336 volts DC and 30 KW (thus a battery pack can contain up to 160 individual
cells), depending on the performance required. The battery pack may contain many “packs” of the cells, each in
an ABS protective shell for protection against abrasion and moisture, and will have a separate thermal cut-off
circuit to prevent overheating. Control circuits that monitor the voltage during discharge and charging ensure
that the pack does not go below a minimum voltage or above a maximum.
In August 2007, HYBT announced the development of a new, highly advanced rapid charger system that re-
duces charge time by 65%. This lithium supercharger was developed for NASA, and Federal Government fleet
vehicles. A battery pack equivalent to 35-40 kWh systems can be charged within 2.75 to 4 hours from 0% state of
charge to 100% state of charge.
This novel charger system is based on kinetics, thermodynamics and transportation phenomenon related to lith-
ium ion polymer systems. The charger works in combination with HYBT’s battery management system, which
is designed to protect all individual lithium ion polymer cells within the system from overcharge and overheat-
ing and also performs charge balancing within a 10 mV range. Tests using the battery management system have
indicated that 100% of rated capacity can be obtained using the advanced rapid charger without affecting cycle
life and battery safety.

Telecommunication business

HYBT provides telecommunication services through its majority-owned subsidiary, Zingo, Inc., a worldwide
VoIP communications service provider. Zingo serves residential and small business users across the US, Canada,
Latin America, and other locations. Zingo operates its own SIP (Session Initiation Protocol) network to connect
voice, data and messaging content between end points for consumers and businesses. It utilizes both broadband
Internet access and the Public Switch Telephone Network to enable any customer with a touchtone phone and
a broadband connection to call anywhere in the world. Zingo also provides Internet protocol phones and offers
VoIP plans that include caller ID, call waiting, call transfer, repeat dial, return call, and three-way calling. HYBT
owns 69% of the outstanding common shares of Zingo Inc.

Hybrid Technologies, Inc. (OTCBB: HYBT) 5

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Corporate strategy

HYBT’s corporate strategy focuses on commercializing its lithium power technology by:
- Establishing a dealer/distributor network for its hybrid products across North America;
- Licensing its’ technology to automotive manufacturers;
- Working closely with the US Army, US Navy and NASA to develop electric vehicles for special tasks;

Strategic partnerships and agreements

HYBT is leveraging its technology across a broad number of applications. For example, the Company has initi-
ated the development of military vehicles powered by high performance lithium systems and is working with
the US military to develop lithium powered vehicles for specific military applications.
The Company’s ability to attract strategic partners and customers is enhanced by the visibility it has gained
through large-scale media coverage of its products and technology. Stories about the Company have appeared
on CNN, CBS the Early Show, FOX the Big Story, ABC, NBC, CTV, CBC, WCNC, WBTV, TV Tokyo, CFCN Mon-
ey TV, Space Channel, Car and Driver, Global News and MSNBC; and in newspapers and magazines such as
NC Business Journal, Statesville, Calgary Sun, Calgary Herald, Toronto Star, Chrysler Freedom Magazine, Easy
Rider, DuPont Registry, Living Well Magazine, Kyodo News, Business Week, Charlotte Weekly, Mooresville Tri-
bune, New York Post and Los Angeles Business Journal.
A special series about HYBT and its production vehicle, the lithium-powered Mini Cooper, will appear on Dis-
covery Channel, a network that reaches 431 million homes and 170 countries.

Contracts with Arcadis

In September 2007, the Company was awarded a contract to provide advanced lithium powered PT Cruisers to
Arcadis, a contractor to the US EPA. The vehicle, equipped with the Company’s onboard rapid charger system,
was selected due to its zero-emissions, high-speed capacity, low charge time, and overall functionality, for an
EPA Near-Road Air Quality Monitoring Study.
The EPA’s Office of Research & Development will use the hybrid PT Cruisers to track air pollutant concentrations
alongside major roadways, which may pose a high risk to nearby residents.

US government contractor chooses HYBT products

In September 2007, HYBT announced a new contract with a US government contractor to provide this contractor
with lithium powered PT Cruiser vehicles. The all lithium PT Cruiser has a charge time, using an onboard rapid
charge system, of 2.6 hours.

Products for NASA’s John F. Kennedy Space Center

The Company signed an agreement a year ago with NASA’s John F. Kennedy Space Center to determine the util-
ity of a fleet of lithium powered vehicles. NASA is studying alternative fuel vehicles to potentially replace the
space center’s fleet of 1,200 vehicles. The selected vehicles for the study were the hybrid PT Cruiser, the Lithium
Smart Car, and the Yamaha Rhino ATV, a high performance lithium powered, all-terrain vehicle.

Hybrid Technologies, Inc. (OTCBB: HYBT) 6

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Lithium PT Cruiser for the City of New York

HYBT recently delivered a L-(lithium) PT Cruiser for use in taxi fleets in the City of New York. The Li-Ion taxi
delivered to New York City represents the world’s first all lithium taxi. This event marks the Company’s transi-
tion from development-stage to commercial manufacturing. The City of New York taxi fleet and Paratransit PT
Cruisers (developed for Paratransit, a provider of community transportation services), both represent major
market opportunities for Hybrid Technologies.

Collaboration with Canadian Ministry of Transportation

HYBT signed a contract with Canada’s Ministry of Transportation and on June 15, 2007, delivered Smart Car
and PT Cruiser vehicles to Canadian authorities for field trials measuring fuel efficiency, emissions, and safety
performance. This evaluation will help identify barriers to the implementation of advanced lithium technologies
and also define new potential markets for HYBT’s hybrid vehicles.

HYBT Lithium powered Smart Car part of Sam’s Club’s 2007 Once in a Lifetime Holiday Package
In early October, Sam’s Club announced that one of the Once in a Lifetime Holiday Packages it was offering for
2007 would consist of a 2007 HYBT Lithium powered Smart Car. The Smart Car features advanced technology
developed for NASA and is similar to a model currently being driven by the well-known actor George Cloo-
ney. Other holiday packages offered by Sam’s Club included a VIP tour of NASA’s Kennedy Space Center, the
ultimate NASCAR Sprint Cup Series Race experience, a trip to the 2008 Beijing Olympic Games and a visit with
celebrity chef Paula Deen.

Products

The primary application for HYBT’s technology is electric cars, which are very reliable and maintenance-free.
Electric vehicles don’t require oil changes, filter change and tune-ups and have less than 1/10th of the parts of
a gasoline powered vehicle. There’s no engine, transmission, spark plugs, valves, fuel tank, tailpipe, distributor,
starter, clutch, muffler or catalytic converter.
Electric cars also have no harmful emissions. The advantages of battery powered electric vehicles, the technology
promoted by HYBT, versus fuel cell powered vehicles include the following:
- Fuel cells consume 4 times as much electricity per mile as similarly-sized battery-powered vehicles;
- Fuel cells require electricity to compress hydrogen;
- Fuel cell hydrogen units emit 12.5 kg of carbon dioxide per kg of hydrogen produced;
- The driving range of battery powered vehicles is twice that of fuel cell vehicles of similar vehicle weight;
- The fuel cell vehicle fueling system is complicated compared to the battery powered vehicle plug-in system;
- Fuel cell hydrogen tanks are a major safety concern.

Hybrid Technologies, Inc. (OTCBB: HYBT) 7

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Technology applications

Smart Car: Innovative Intelligence. A globally popular coupe, now changed by emis-
sions’ freedom. It’s the perfect, around-town auto that’s rechargeable. Lithium-powered
performance responds instantly to driver demand.

R-Car Chrysler Crossfire: Sleek Style. The R-Car Chrysler Crossfire conversion makes
medium- to long-range trips and neighborhood excursions. Travel in excess of 90 mph
for over 100 miles with zero emissions.

L1X-75 Carbon Fiber Supercar: It scores 600 horsepower and 0-60 in-just-seconds ac-
celeration. The L1X-75 all lithium super car was selected for invitation to the Super Car
Show in Monaco this year.

PT Cruiser: Reaches speeds in excess of 80 mph and traveling up to 120 miles, the
Company`s PT Cruiser conversion offers the green car connoisseur an eco-friendly al-
ternative with comfort and style. (It was chosen as first lithium NY City taxi).

Mini Cooper: Distinctive personality meets advanced drive technology with the lithi-
um version of this British invader. No fuel required to quietly maneuver city streets, and
reliable, instantaneous performance punches up to highway speeds.

Cal Sol Berkeley Sponsorship: Solar Driven. Top engineering students, working with
HYBT support, competed in US/Canadian cross-country solar car race.

British Embassy Mini Cooper: Chosen by the British Embassy in Mexico City for its
alternative vehicle program. The L-Mini Cooper is pollution-free and a viable contender
for environmentally friendly government vehicle fleets.

E-Cobra: s Commanding Cycle. Motorcycle road freedom goes further with freedom
from fuel. Striking appearance and durability combined with advanced pioneering
technology so you can power-up in just a few hours. Hit city streets or vacation venues;
be seen, but not heard.

CHP Chopper: Designed to honor the fallen officers of the California Highway Patrol,
this one-of-a-kind, lithium motorcycle boasts sharp lines and a chiseled style. Its ad-
vanced science is dedicated to the memory of those who served the CHP.

Hybrid Technologies, Inc. (OTCBB: HYBT) 8

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Stealth Bike Motorcycles: Silent Silver. The name says bike. The sculpted look says seri-
ous motorcycle. And the handling and performance say it’s time to spontaneously ride
out at 6 am without waking a neighbor or sending out an emission.

R-Bike: Efficient Excitement. The Company has reinvented everything from vehicles to
mopeds. And this progressive product allows the customer to pedal or accelerate with
lithium.

ATV: Four-wheel Workaholic. (A work or recreational vehicle for farm, ranch, lodge, or
country road. Charge it up, then go where there’s no gas around. Room for two, plus
cargo, and 4-wheel drive for when the going gets rough.

Mini ATV: Fun Starter. Compact, yet designed for safety and dependability. An ATV
with a little less speed and weight than larger all-terrain vehicles; it’s a rechargeable,
pollution-free mini that comes with charisma built in.

Hybrid Living Home: Ultimate Add-ons. All the comforts of home - plus plenty of ex-
tras - in an outstanding, off-the-grid lifestyle! It’s a completely clean home that sets the
standard for your alternative energy house of the future.
Source: http://www.hybridtechnologies.com/products

Hybrid Technologies, Inc. (OTCBB: HYBT) 9

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Industry Outlook

Hybrid Electric Vehicles

Hybrid vehicles are receiving lots of attention because of their low emissions and fuel economy benefits. Oil pric-
es around $80 a barrel also help to spark consumer interest in electric vehicles. At present, hybrid vehicles have a
limited market, but the technology has the potential to become mainstream. High prices for hybrids are a limit-
ing factor - currently a buyer pays $2,000-4,000 more compared to a conventional light vehicle. However, cost
disparities between hybrids and conventional light vehicles should decline as production volumes increase.
The US is the world’s largest hybrid car market, accounting for nearly 70% of global hybrid sales in 2005. Accord-
ing to an IDTechEx 1 report, the hybrid electric vehicle (HEV) market is large and prosperous, with worldwide
2005 sales approaching $31.1 billion. This report forecasts 730% growth in the HEV market by 2015.
According to Freedonia Group, Inc,2 worldwide demand for hybrid electric vehicles will advance to 3.9 million
units in 2015 and then double again by 2020 3 . HEVs are expected to quickly gain meaningful share in the world-
wide light vehicle market due to rising energy costs and increased emissions regulations worldwide.

US hybrid electric vehicle sales 2000-2006

400
345
350
300
246.6
250 209.7
200
150
100 83.2
47.5
50 9.4 20.3 36.0
0
2000 2001 2002 2003 2004 2005 2006 2007e

Source: Electric Drive Transportation Association. www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0

Significant growth in the market between 2004 and 2007 reflects rising oil prices and lower price premiums
on hybrid models by automakers.. An estimated 187,000 hybrid vehicles were sold in the US market through
the first half of 2007, accounting for 2.3% of total US new light-vehicle sales. While sales of hybrid vehicles are
projected to decline slightly in the second half, the market is still on track to sell 345,000 hybrids in 2007—a 35%
increase from 256,000 hybrids sold in 2006.

1 http://www.idtechex.com/products/en/view.asp?productcategoryid=41
2 http://www.marketresearch.com/product/display.asp?productid=1362399&g=1
3 http://www.marketwire.com/mw/release_html_b1?release_id=191172&tsource=3

Hybrid Technologies, Inc. (OTCBB: HYBT) 10

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Monthly US hybrid sales,# of units

50,000
2004
45,000
2005
40,000 2006
35,000 2007
30,000
25,000
20,000
15,000
10,000
5,000
0 Source: www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0

Toyota Prius is the most popular hybrid model. Approximately 94,000 Prius units were sold through June of 2007,
representing 50.6% of all new hybrid vehicles sold in the US market this year. Prius sales were strengthened ear-
lier this year when Toyota began offering incentives of up to $2,000. Despite the entry of nine new hybrid vehicle
models in the market in 2007—seven of which are expected to go on sale between July and December, Prius will
likely remain the sales leader among hybrid vehicles for the foreseeable future.

Hybrid Electric Passenger Vehicle Sales, 000’s

120

100 2005 2006

80

60

40

20

0
Honda
Accord

Honda
Civic

Honda
Insight

Ford
Escape

Mercury
Mariner

Toyota
Camry

Toyota
Prius

Toyota

Lexus GS
Highlander

Lexus RX
400h

450

Source: www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0

Hybrid Technologies, Inc. (OTCBB: HYBT) 11

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Competition in the hybrid segment is likely to intensify further. According to an industry report, there will be
as many as 65 hybrid models—28 cars and 37 light trucks—in the market by 2010, with sales expected to reach
nearly 775,000 units, or 4.6% of the total US new light-vehicle market.
The primary markets for HEVs are the US, Western Europe and Japan. However, demand for hybrids in Europe
is expected to lag that of the US due to Europe’s high percentage of light diesels (currently 50% of the total mar-
ket). Demand in Japan will continue to grow, spurred by government incentives and regulations. Sales in the
rapidly growing Chinese market will likely rise because of that government’s interest in reducing emissions and
the construction of manufacturing facilities by major HEV automakers in China.
Toyota and Honda are the leading players in the global hybrid market. The US HEV market share broke down as
follows in 2006 4: Toyota – 67%; Honda – 15%; Ford – 8%; Lexus – 8%. In the global hybrid car market, strategies
differ from player to player: Toyota, for example, aims to offer a full lineup of models by calling attention to the
output power of its hybrid system while Honda concentrates on the development of small cars.
Other important players in the HEV market include Azure Dynamics, BAE Systems, Daimler Chrysler, UQM
Technologies, Torvec, Enova Systems and Eaton.
According to Freedonia Group’s report, “mild” hybrids, which include technologies such as “stop/start” systems
and belt-driven hybrid assist systems, are expected to experience rapid growth. Mild hybrid-electric systems are
much easier to integrate in current vehicle lines and are priced lower than fully integrated hybrids. The latest
HEV technology includes so-called “plug-in” HEVs, which can provide even greater fuel economy but face some
commercialization challenges.

VoIP market

Voice over Internet Protocol is a leading communications sector and is gaining market share from traditional
wireline circuit switched communications. Cable companies, Internet providers and even traditional telecom
companies are becoming more aggressive in deploying VoIP, adding voice-over-Internet to their bundled ser-
vices.
In 2005, there were 5.2 million residential VoIP subscribers in the US, and the broadband penetration rate was
12.3%. By 2010, it is estimated there will be 32.6 million VoIP subscribers and a 28.5% broadband penetration
rate.
According to TeleGeography’s 2005 US VoIP Subscribers and Revenues Update, voice over broadband (VoBB)
subscribers grew from 1.3 million in 2004 to 4.5 million by year-end 2005 and 9.6 million by year-end 2006. More
impressively, the US is adding nearly a million new VoBB subscribers every three months 5.
TeleGeography’s general findings confirm statistics released by TIA during 2006. According to TIA, the number
of residential VoIP customers more than tripled to 4.2 million users in 2005, and is expected to hit 18 million by
2008. Another researcher, Infonetics Research, estimates that North American VoIP service revenues will rise
from $1.3 billion in 2004 to $19.9 billion in 2009.
An important market for VoIP services is international calls, due to the high prices charged by Public Switched

4 http://www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0
5 Source: http://www.vonmag.com/webexclusives/2006/02/28_Cable_is_Big.asp

Hybrid Technologies, Inc. (OTCBB: HYBT) 12

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Telephone Network (PSTN) companies. Based on TeleGeography’s latest forecasts, international VoIP traffic
exceeded 42 billion minutes in 2005, over 16% of the global market, compared to 31 billion minutes and 13.7%
of the market in 2004. TeleGeography’s forecast shows the international call portion of the VoIP market basically
doubling each year over the next few years.

International traffic and mainline growth trends and projections

5,500 550

International Voice Traffic (billions of minutes)

5,000 500
Fixed main lines
Worldwide Subscribers (millions)

4,500 Cellular Subscribers 450

International call minutes 372.8
4,000 400
329.9
3,500 350
3,000 300
2,500 291.9 250
258.4
2,000 228.6 200
201.0
1,500 177.6 150
156.2
1,000 138.8 100
93.5 110.5
500 71.7 82.5 50
54.6 61.6
0 43.2 48.3 0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Notes: Data includes both switched and VoIP traffic. Projections assume 13% traffic growth, 5% main line growth, and 20% mobile
subscriber growth annually.
Source: TeleGeography research

Source http://www.itu.int/osg/spu/statistics/DOI/linkeddocs/TG2006_ExecSumm.pdf.

Acording to TeleGeography, total VoIP traffic will continue to increase 12% to 15% annually over the next few
years. At this pace, international traffic will exceed 370 billion minutes by 2008. Over the longer term, the growth
of IP-to-IP voice communications promises to reshape the market.

Hybrid Technologies, Inc. (OTCBB: HYBT) 13

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Financial Analysis

Income statement

HYBT has recorded sizable year-over-year revenue growth in the past three quarters and generated nearly $1
million in revenues during the first nine months of FY 2007. The Company is poised to commence commercial
production of its lithium powered Mini Coopers, which should support a significant ramp-up in revenues next
year.
Revenue, $ thousands

400
384
350
325
300
276
250
200 176
150
102 99
100
50 13
0
Q1FY06 Q2FY06 Q3FY06 Q4FY06 Q1FY07 Q2FY07 Q3FY07

Source: SEC filings, fiscal year ended July 31

In the first nine months of FY 2007, HYBT incurred net losses of $12.8 million, up 23% from net losses of $10.4
million for the same period in FY 2006. Higher net losses are attributable to an increase in general and adminis-
trative expense from $8.6 million in the nine-month FY 2006 period to $11.6 million in the comparable FY 2007
period, and a decline in research and development expenses from $1.4 million to $0.8 million.
Income statement, $ thousands

9 months 9 months
FY05 FY06 % Chg % Chg
FY06 FY07
Sales 0 390 n/m 215 985 359%
Cost of sales 0 843 n/m 450 1,015 125%
Gross profit 0 (452) n/m (236) (29) n/m

General and administrative 2,247 11,440 409% 8,606 11,563 34%

Research and development 375 1,984 429% 1,409 793 -44%
n/m
Operating profit (2,621) (13,876) n/m (10,250) (12,386) n/m
Other income (297) 750 n/m (176) (375) n/m

Net loss (2,919) (13,127) n/m (10,427) (12,761) n/m

Diluted EPS (0.43) (1.22) n/m (1.17) (0.47) n/m

Gross margin n/m -116% n/m -110% -3% n/m

Operating margin n/m -3554% n/m -4774% -1257% n/m

Source: SEC Filings, year ended July 31

Hybrid Technologies, Inc. (OTCBB: HYBT) 14

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Balance Sheet

Since its inception, HYBT has financed its operations almost exclusively through equity sales and debt financing.
We expect the Company will continue to raise funds through these channels until product sales reach a level
where HYBT becomes cash flow positive.

Balance Sheet, $ thousands

31-Oct-06 31-Jan-07 30-Apr-07

Total Assets, including 4,075 4,369 2,675

Current Assets 374 681 446
Net working capital (1,477) (1,332) (960)

Total Liabilities, including 2,836 2,892 2,271

Debt 1,214 879 1,102

Total Stockholder Equity, including 1,239 1,477 404

Retained Earnings (36,385) (42,813) (47,553)

Source:SEC Filings, year ended July 31

During the first nine months of FY 2007, the Company received proceeds of $2.3 million from the exercise of
stock options and $0.5 million from net advances from related parties. The Company’s current operating funds
are insufficient to support the implementation of its business plan and HYBT anticipates that up to $2 million of
additional working capital will be required over the next 12 months to support the market launch of its hybrid
vehicles.

Valuation

Currently, HEV penetration is around 1% of global new light-vehicles market; however, oil prices reaching $80 a
barrel and global supply concerns are persuading an increasing number of new car purchasers to “go electric”.
Consumer hybrid vehicles are receiving media attention because of their fuel economy benefits and reduced
CO2 emissions.
Auto industry analysts agree that HEV industry have the potential to garner market share from petroleum-
powered vehicles and record double and triple digit sales gains over the next few years. Moreover, rising sales
volumes should help HEV players attract significant financing to improve their technologies and manufacturing
processes, resulting in greater efficiencies and economies of scale and lower manufacturing costs.
Several prominent automakers have established HEV product lines. However, small players such as HYBT have
favorable odds of success because of their technology leadership and differentiation strategy.
Reflecting the immense growth potential of this market, manufacturers of HEV and related products currently
trade at comparatively high Price/Earnings and Price/Sales multiples. Given HYBT’s rapid growth and progress
towards commercializing its hybrid vehicles, we believe HYBT shares warrant a premium valuation relative to
peer group average multiples.

Hybrid Technologies, Inc. (OTCBB: HYBT) 15

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Peer comparison

Company Ticker Price per Mrkt.Cap. P/S Sales estimate

Symbol Share, $ $ Mn ttm
2007 2008 %Chg

Tanfield Group TAN £659 117.2 102%

177.87 р. 8.43 237.2

ZAP ZAAP $1.00 $48 7.89 n/a n/a n/m

Ballard Power Systems Inc. BLDP $4.98 $571 10.22 59.1 74.1 25%

Ener1 Inc. ENEI $0.44 $214 829.81 2.4 25.9 988%

Median 9.33 102%

Source: Reuters, Analyst estimates

We believe that, with the establishment of a North American dealer/distributor network, HYBT will be able to
achieve growth rates comparable to Tanfield, which has recorded compound annual growth of 153% since 2003.
Analysts following Tanfield expect triple digit growth to continue in 2008.

HYBT and TAN revenue track

250 Tanfield, £ Mn 237 50

Hybrid, $ Mn 45
200 40
34.3
35
150 30
117
25
100 17.3 20
15
40.9 7.5
50 10
22.4
10.7 2.5 5
2.85 0.9
0.1
0 0
2003 2004 2005 2006 2007 2008 2009 2010

Source: Yahoo Finance, Analyst estimates

Applying these growth rates and the peer group 9.3 P/S multiple, we derive a fair value for HYBT equity ap-
proaching $317 million by year-end 2010. Applying a 15% discount rate to the 2010 estimate, we derive a current
price target for HYBT of $5.12 per share.

Hybrid Technologies, Inc. (OTCBB: HYBT) 16

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Analyst Summary

HYBT is developing and plans to produce and market lithium-powered vehicles and products which leverage its
advanced lithium battery technology. The Company is converting vehicles from conventional power systems to
electric power systems with the goal of marketing its own brand of portable battery power pack systems. HYBT
uses high-energy density and lightweight rechargeable lithium ion batteries that can be charged by plugging
into household outlets. In August 2007, HYBT announced the development of an advanced charger system that
reduces charge time by 65%.
To date, the Company has converted Chrysler PT Cruisers, Mini Coopers, Chrysler Crossfires and Mercedes’
Smart cars into lithium powered models. In addition, HYBT is converting two-wheeled and three-wheeled ve-
hicles. HYBT vehicles, equipped with hybrid technologies, offer advantages such as zero-emissions, high-speed
capacity, reduced charge time and improved overall functionality.
The Company has delivered hybrid test vehicles to NASA, the US military and the US EPA. HYBT’s lithium pow-
ered all-terrain vehicle was utilized by NASA and placed into service during a NASA training mission. The US
Navy has also chosen the ATV-LX for military applications. Recently, the Company entered into an agreement
with Arcadis, a contractor to the US EPA, for the use of HYBT vehicles in roadside air quality monitoring.
HYBT recorded revenues of nearly $1 million in the first nine months of 2007 and is on track to reach $1.5 million
by fiscal year-end. We expect HYBT’s future growth to match or exceed the growth rates of other HEV manu-
facturers who are already producing double and triple digit growth. In view of the industry’s favorable growth
outlook, and the strong progress HBBT has made in gaining visibility and market acceptance for its hybrid prod-
ucts, we are initiating coverage of HYBT with a Speculative Buy rating and a $5.12 price target.

Risk Factors

Development-stage business

HYBT has modest revenues, and has not yet signed any joint venture agreements to support large-scale com-
mercialization of its products. Since its inception, the Company has accumulated a $47.5 million deficit. Despite
management’s optimistic outlook and the progress made to-date, there is no assurance that the Company will be
able to successfully commercialize its products and establish a viable long-term business.

Additional financing needed to continue as going concern

HYNT must obtain additional financing to implement its business plan. If the Company fails to obtain sufficient
funds on favorable terms or in a timely manner, it may be unable to implement its business plan.

Hybrid Technologies, Inc. (OTCBB: HYBT) 17

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Management

Holly Roseberry
President, CEO and Director
Ms. Roseberry was appointed as Secretary, Treasurer and CFO of Hybrid Technologies
in February 2002. In November 2002, she resigned from these positions to become Presi-
dent, CEO and a director of the Company. From 2001 to 2003, she served as Manager of
the Azra Shopping Center. She obtained a Bachelor of Arts degree from Sacred Heart
University in Bridgeport, Connecticut in 1973. Ms. Roseberry previously served as Hu-
man Resources Manager and Business Office Manager, of the Las Vegas Wards Depart-
ment Store. Ms. Roseberry has held the positions of President, CEO and director of
Zingo, Inc. since August 2005.

Mehboob Charania
CFO, Treasurer, Secretary
and Director
Mehboob Charania has served as Secretary, Treasurer and CFO of Hybrid Technologies
since November of 2002. Since June 2001, Mr. Charania has owned and operated Infu-
sion Bistro, a restaurant in Calgary, Alberta. From 1998 to 2001, he served as a manager
at IBM’s Calgary office. Mr. Charania has been Secretary and a director of Zingo, Inc.
since August 2005.

Brian Newman Mr. Newman holds a Bachelor of Commerce degree from the University of Calgary and
Director has been a Chartered Accountant since 1982. He has served as a director and President
of Brian Newman Professional Corporation, a public accounting firm located in Cal-
gary, Alberta for the past 25 years. Since September 2004 to the present time, Mr. New-
man has served as a director of Olympia Financial Group, and Albury Resources Ltd.
Both of these companies are publicly traded in Canada.

Greg Navone Mr. Navone graduated from St. Mary’s College in Morgan, California in 1968 with a
Director Bachelor of Arts degree. For the past two years, Mr. Navone has been the owner and
President of First Interstate Mortgage, a mortgage banking firm. Since 1987, Mr. Navone
has been the owner and President of First Capital Financial. Both of these firms are lo-
cated in Las Vegas, Nevada. Mr. Navone was appointed a director of the Company in
April 2000.

Shaffiq Kotadia Mr. Kotadia is a computer infrastructure specialist and has been a director and Presi-
Director dent of The Dolphin Project Inc., an information technology-consulting firm located in
Calgary, Alberta since 1990. Mr. Kotadia graduated from the University of British Co-
lumbia in 1979 with a Bachelor of Science degree in physics/geophysics.

Hybrid Technologies, Inc. (OTCBB: HYBT) 18

 Analyst: Victor Sula, Ph.D.
Initial Report
October 3rd, 2007

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclu-
sions in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides
investors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all
investors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties,
as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expe-
ctations expressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate
due-diligence prior to making any investment. Beacon Equity Research and its affiliates have been directly compensated a total of seven
thousand five hundred dollars directly from InvestSource Inc. for enrollment of HYBT in its research program.Ratings and price targets
in this report should not be construed as recommendations or stock price predictors. Readers of this report are urged to use due-diligence
in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as our initial report on the firm to bet-
ter understand the inherent risks associated with this security. There may be many uncontrollable or unknown factors which may cause
actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements.
Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, PhD, the author of this report, certify that the material and views presented herein represent my personal opinion regar-
ding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my com-
pensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will
own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004,
Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistan-
ce and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D.
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

Hybrid Technologies, Inc. (OTCBB: HYBT) 19