UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2014

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 000-53459

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

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

(650) 491-3449
(Registrant's telephone number, including area code)

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

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $ 0.001 par value

Indicate by check mark 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 whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

21,529,594 shares of the issuer’s common shares, par value $0.001 per share, were issued and outstanding as of August 15, 2014.

TABLE OF CONTENTS

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PART I

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited consolidated balance sheet of Hybrid Coating Technologies Inc. as of June 30, 2014 and the related unaudited consolidated statements of operations, and cash flows for the six months ended June 30, 2014 have been prepared by management in conformity with accounting principles generally accepted in the United States. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the period ended June 30, 2014, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2014 or any other subsequent period.

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Hybrid Coating Technologies Inc.
Consolidated Balance Sheets
(Unaudited)

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

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Hybrid Coating Technologies Inc.
Consolidated Statements of Operations
For the Three Months and Six Months ended June 30, 2014 and 2013
(Unaudited)

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

4

Hybrid Coating Technologies Inc.
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2014 and 2013
(Unaudited)

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

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Hybrid Coating Technologies Inc.
Consolidated Statements of Cash Flows (continued)
For the Six Months ended June 30, 2014 and 2013
(Unaudited)

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

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Hybrid Coating Technologies Inc.
Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Hybrid Coating Technologies Inc. (the “Company”, “HCT”) formerly EPOD Solar Inc., was incorporated in the State of Nevada on July 8, 2010.

The Company manufactures and sells under license, alternative non-toxic (isocyanate-free) polyurethane, Green Polyurethane™, including coatings and raw binder ingredients (Green Polyurethane® Monolithic Floor Coating and Green Polyurethane™ Binder).

The accompanying consolidated financial statements, which should be read in conjunction with the financial statements and footnotes of Hybrid Coating Technologies Inc., included in Form 10-K filed on May 2, 2014 with the Securities and Exchange Commission, are unaudited, but have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014.

Going Concern

The Company also 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 $19,002,000 since inception, and has a working capital deficit of approximately $4,650,000 as of June 30, 2014. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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.

Intangible Assets - Intangible assets are comprised of intellectual property which is amortized on a straight-line basis over the assets’ respective life, 36 months, 60 months and 120 months. Intellectual property with a perpetual life in 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.

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 June 30, 2014 and 2013, the significant inputs to the Company’s derivative liability calculation were Level 3 inputs. 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) Per Share - 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 six months ended June 30, 2014 and 2013, 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:

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Recently Issued Accounting Pronouncements – In June 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-10 “Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. ASU 2014-10 eliminates all incremental financial reporting requirements for development stage entities by removing ASC Topic 915 “Development Stage Entities”, from the FASB Accounting Standards Codification. The ASU 2014-10 clarified that the guidance in Topic 275 “Risks and Uncertainties” is applicable to entities that have not yet commenced operations. Accordingly, upon adopting the ASU 2014-10 and eliminating development stage information, entities should re-evaluate their disclosures under Topic 275. The Company decided to early adopt this pronouncement as of the second quarter of 2014. As a result, cumulative information in the Company’s statements of operations, its statements of cash flows and the notes to its unaudited consolidated financial statements was removed.

Subsequent Events – The Company has evaluated all transactions occurring between the period ended June 30, 2014, and through the date of issuance of the consolidated financial statements for disclosure consideration.

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NOTE 3 – INTANGIBLE ASSETS

During 2010 and 2011 the Company acquired licensing rights from 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 part of the original licensing agreement signed on July 12, 2010 (see table below) the Company 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.

Following is a summary of the licenses acquired to date from NTI:

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

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. 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. To date the company has not paid any consideration pertaining to the Added Applications.

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

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

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Intangibles activity is as follows for the six months ended June 30, 2014 and 2013:

The balance of intangible assets, net is as follows:

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 June 30, 2014 and December 31, 2013 was $27,500, and the loan is currently in default. The Company has not received any notices from the loan holder with respect to the defaults.

In 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.

In 2013, the Company entered into various loan agreements totaling $268,500, at interest rates ranging from 15%-16%. These loans are all currently in default. The creditors have not called these loans.

The Company recorded $5,455 and $22,654 of interest expense related to the debt discount during the six months ended June 30, 2014 and 2013, respectively. During the six months ended June 30, 2014 and 2013, total interest expense was $81,552 and $69,979, respectively, and the total interest paid was $18,792 and $35,204, respectively. At June 30, 2014 the unamortized debt discount was $0 compared to $5,455 as of December 31, 2013.

NOTE 5 – LOANS PAYABLE – SHAREHOLDERS

During the year ended December 31, 2013, the Company received $708,846 in shareholders' advances and repaid a total of $360,696. Except for demand loans totaling $653,040 and a shareholder loan totaling $72,457 originally maturing July 20,2014 that was extended to January 20, 2015 subsequent to year end, the remaining loans totaling $973,020 are all due and in default. The creditors have not called these loans.

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During the six months ended June 30, 2014, the Company received $669,311 in shareholder loans and repaid $335,498. During the six months ended June 30, 2014 and 2013, the Company recorded interest expense related to the amortization of debt discounts of $21,981 and $16,121, respectively, related to all loans from shareholders. As of June 30, 2014 and 2013, the total interest expense was $33,950 and $44,230, respectively, and the total interest paid on loans from shareholders was $7,671 and $24,367. The Company had an outstanding balance of $1,698,517 and $1,343,562, with related discounts of $0 and $21,980 for the six months ended June 30, 2014 and year ended December 31, 2013, respectively.

NOTE 6 –CONVERTIBLE DEBENTURES

On April 29, 2011, the Company issued convertible debentures for proceeds of $1,201,000 (the “April 29” debenture) and on February 21, 2012, issued an additional $119,500 (the “Feb 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 Feb 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%.

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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.

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.

Interest of $65,482 has been accrued for the six months ended June 30, 2014 and June 30, 2013. Interest of $ 55,692 and principal of $ $76,358 was paid through the issuance of 432,454 shares at a fair value of $132,050 during the second quarter ended June 30, 2014. During the six months ended June 30, 2013, $140,877 in interest was paid through the issuance of 420,567 shares of common stock. The balance of the debentures both at June 30, 2014 and December 31, 2013, was $1,320,500 and $1,396,858.

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 at the option of the holder 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 and 133,360 Series B warrants with a term of 3 years and an exercise price of $1.50. 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.

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.

During the period ended June 30, 2014, the Company issued 100,000 shares to pay accrued interest of $29,800,

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

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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. To reflect the change in fair value for the six months ended June 30, 2014, the Company recorded a gain of $762,908.

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:

NOTE 9– STOCKHOLDERS’ DEFICIT

During the six months ended June 30, 2014, the Company issued the following shares:

- 4,095,000 shares of common stock 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 to related parties of $322,000 and recognized a loss on settlement in the amount of $1,294,150,

- 432,454 shares at a fair value of $132,050 paying accrued interest of $ 55,692 and principal of $76,358,

- 154,315 shares of common stock to an officer as payment, based on the market price on the date of grant, against payroll liabilities (included in accounts payable and accrued liabilities) of $50,924 and recognized a loss on settlement in the amount of $41,666,

- 540,334 shares to consultants as payment for services with a fair value of $167,750, based on the market price on the date of grant,

- 100,000 shares to the Senior Secured Convertible Debenture holder for fair value of $29,800 as payment for accrued interest,

- 50,000 shares to a creditor at fair value of $14,900 as payment for accrued interest on loans payable,

- 44,192 shares of common stock to a shareholder- creditor; $9,143 for interest expense, $2,940 for accrued interest and $4,263 for a recognized loss on settlement based on the market price on the date of grant.

In addition, during the six months ended June 30, 2014, warrant holders exercised 150,000 warrants for 149,666 shares on a cashless basis with a reduction in additional paid in capital of $150. Also, 300,000 warrants were issued for cash proceeds of $300.

Warrants

A summary of the activity in the Company's warrants during the three months ended June 30, 2014 is presented below:

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In addition to these regular warrants there are 533,336 Series A warrants with an exercise price of $0.39 per share and a maturity date of February 28, 2018.

During the six months ended June 30, 2014, the Company recorded $491,656 for amortization expense.

The intrinsic value of warrants outstanding at June 30, 2014 was $508,932.

Contingent Warrant Issuance

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

NOTE 10– RELATED PARTY TRANSACTIONS

Fees Charged by Shareholder
During the six months ended June 30, 2014 and 2013, the Company was charged $522,000 and $262,000 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 to related parties. The Company has an outstanding balance as of June 30, 2014 and December 31, 2013 of $629,697 and $427,842, respectively.

Principal Debt Payments
During the six months ended June 30, 2014, the Company made principal payments of $179,000 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 $503,451 and $682,451 at June 30, 2014 and December 31, 2013, respectively.

Shared Administrative Costs
The Company shares office space and certain personnel with NTI. Costs are allocated among the parties based on usage. Rent expense for the six months ended June 30, 2014 and 2013 was $22,500.

NOTE 11– SUBSEQUENT EVENTS

Subsequent to the six months ended June 30, 2014 the Company has issued the following shares:

-3,900,000 shares of common stock to a shareholder/creditor valued on the dates of issuances for $389,500. $132,000 as payment for accounts payable and accrued liabilities to a related party and the remaining $257,500 was recorded as loss on settlement of debt.

-350,000 shares on cash-less exercise of warrants

-105,000 shares to a shareholder creditor to extend the terms of the loan, and another 141,120 shares as payment for interest at fair value of $24,620.

All shares issued were valued using the market price on the date of grant.

On July 20, 2014 a shareholder creditor amended the terms of it’s note. An extension was granting revising the maturity date from July 20, 2014 to January 20, 2015. For consideration of this amendment, 105,000 shares were issued , and another 141,120 shares as payment for interest at total fair value of $24,620.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The 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 report 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, and the factors described under “Risk Factors” contained in the Company’s Form 10-K Report filed May 2, 2014. 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.

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.

The following information should be read in conjunction with the unaudited financial statements for the period ended June 30, 2014 and notes thereto. Unless otherwise indicated or the context otherwise requires, the "Company," “HCT,” “we," "us," and "our" refer to Hybrid Coating Technologies Inc.

Compliance with Generally Accepted Accounting Principles

Unless otherwise indicated, the financial information presented below, including tabular amounts, is expressed in US dollars and prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Critical items of the financial statements that require the use of estimates include the determination of the allowance for doubtful accounts, the determination of the allowance for inventory obsolescence, the determination of the useful life of fixed and intangible assets for amortization calculation purposes, the assumptions for fixed asset impairment tests, the determination of the allowance for guarantees, the determination of the allowance for income taxes, the assumptions used for the purposes of calculating the stock-based compensation expense, the determination of the fair value of financial instruments, the determination of the fair value of the assets and liabilities acquired on business acquisitions and the implicit fair value of goodwill.

The financial statements include estimates based on currently available information and management’s judgment as to the outcome of future conditions and circumstances.

Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial statements and actual results could differ from the estimates and assumptions.

Changes in Accounting Principles

No accounting changes were adopted during the period ended June 30, 2014.

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Overview

Company Background

HCTs principal office is located in Daly City, California, U.S.A. As of June 30, 2014, HCT had 2 employees.

HCT offers an alternative to toxic formulations of polyurethane (PU) worldwide through its exclusive distribution rights which provide for a cost-effective alternative non-toxic (isocyanate-free) polyurethane, Green Polyurethane™. Its focus is within the C.A.S.E. segment specifically for large industrial and commercial coatings applications where Green Polyurethane™ has a natural competitive advantage over other PU and epoxy coatings due to its superior chemical resistance and environmentally safe properties with reduced health risks.

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 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 markets 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

• Protective coatings inside industrial and commercial pipes

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

In addition, 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

• Sub-license technology in certain geographic areas.

HCT 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.

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HCT’s strategy is to avoid large capital investments in manufacturing and to outsource the manufacturing of the EPOD Products to third-party manufacturers. At current capacity, the Company can outsource the manufacture of up to 20,000 tons per year.

HCT is currently at the commencement of the commercialization phase of its business model. HCT plans on significantly expanding its sales and client base by promoting the NTI Products at trade unions, press and trade shows and by capitalizing on existing distribution hubs to increase its distribution channels and build new strategic relationships. The Company expects to have significant sales by the end of 2014. In June 2014 the Company announced that it had entered into a distribution agreement with a California based coatings distribution group that sells upwards of $100M a year in raw materials for coatings through its network.

Results of Operation

HCT is still developing its products and as such does not yet have meaningful revenues. Management is in ongoing discussions with prospective clients. However, subject to the availability of funds, the Company expects to significantly increase operating expenses including selling general and administrative expenses as the Company commences its efforts to commercialize its products.

For the three and six month period ended June 30, 2014, the Company had sample sales of $0 and $29,370, respectively, and associated cost of sales of $0 and $1,994, respectively. General and administrative expenses totaled $698,450 and $1,304,397 for the three and six months ended June 30, 2014, respectively, as compared to $807,613 and $1,312,001 for the three and six months ended June 30, 2013, representing a 13% and1% decrease for the three and six months, respectively.

For the six months ended June 30, 2013 : the Company had gross-profit of $27,376 , general and administration expenses totaling $1,304,397, after removing stock – based compensation of $659,406 amounted to $644,991, with only non-cash charges related to the amortization of intangible assets of $72,780, amortization of debt discounts of $27,436, imputed interest on notes payable –related party of $64,000, (all included in interest expense of $284,778) loss on extinguishment of debt $1,340,079, a loss on foreign currency translation of $1,528, and a gain in the fair value of the derivative liability of $762,908 all leading to a net loss of $2,213,277.

General and administrative expenses totaled $1,304,397 for the six months ended June 30, 2014, as compared to $1,312,001 for the six months ended June 30, 2013, representing a 1% decrease from the prior corresponding period. Included in general administrative expenses for the six months ended June 30 are the following:

Professional fees were $492,808 for the six months ended June 30, 2014 compared to $363,051 for the six months ended June 30, 2013. Professional fees increased due to greater use of consultants for financing, sales and marketing purposes.

Payroll was $58,067 for the six months ended June 30, 2014 compared to $77,995 for the corresponding prior year’s period. Payroll decreased due to a reduction in employees from three to two.

Stock based compensation was $659,406 for the six months ended June 30, 2014 compared to $740,677 for the six months ended June 30, 2013. Stock based compensation decreased by 10% from the prior year’s period due to the decline in stock price and thus the fair value of shares issued to consultants in 2014.

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Rent, supplies and general office costs were $59,446 for the six months ended June 30, 2014 a decrease of 8 % from the $64,777 for the corresponding prior year’s period due to lower shipping and delivery charges in 2014.

For the six months ended June 30, 2014, travel and tradeshows were $34,670 decreasing from $65,801 for the corresponding prior year’s period as 2013 included trade show expenses of which there were none in 2014.

Comparison of the Three Months Ended June 30, 2014 with the Three Months Ended June 30, 2013

General and administrative expenses totaled $698,450 for the three months ended June 30, 2014, as compared to $807,613 for the three months ended June 30, 2013, representing a 14% decrease from the prior corresponding period. Included in general administrative expenses for the three months ended June 30 are the following:

Professional fees were $305,673 for the three months ended June 30, 2014 compared to $198,856 for the three months ended June 30, 2013.Professional fees increased due to greater use of consultants for financing, sales and marketing purposes.

Payroll was $26,674 for the three months ended June 30, 2014 compared to $25,787 for the corresponding prior year’s period. There was no significant change.

Stock based compensation was $321,155 for the three months ended June 30, 2014 compared to $512,168 for the three months ended June 30, 2013.Stock based compensation decreased by 37% due to additional warrants issued to consultants and employees for services in 2013.

Rent, supplies and general office costs were $23,973 for the three months ended June 30, 2014 a decrease of 19 % from the $29,717 for the corresponding prior year’s period due to lower shipping an delivery charges in 2014.

For the six months ended June 30, 2014, Travel and tradeshows were $21,006 decreasing from $43,085 for the corresponding prior year’s period as 2013 included trade show expenses of which there were none in 2014.

Liquidity and Capital Resources

The Company had no cash and equivalents as of June 30, 2014. For the six-month period ended June 30, 2014, the Company received $669,311 proceeds from shareholder loans and repaid $335,498. The Company repaid $179,000 to related party note. The Company intends to raise additional capital to fund ongoing operations, but has no assurances of being able to do so.

The Company expects to raise funding through issuances of convertible debt and interest bearing loans to shareholders and third party investors.

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.

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Principal Cash Flows for the six months ended June 30, 2014

Operating activities for the six months ended June 30, 2014, used cash flows of $155,113 compared to $312,032 for the six months ended June 30, 2013. The Company’s net loss for the six months ended June 30, 2014 was offset by $1,340,079 in loss on settlement of debt, $659,405 for stock-based compensation, changes in operating liabilities of $649,068 and by $762,908 for unrealized gain on change in derivative.

Financing activities for the six months ended June 30, 2014, provided cash flows of $155,113 compared to $312,032 for the six months ended June 30, 2013. The decrease in cash provided by financing activities was primarily as a result of less funds received and higher repayments of loans during the six months ended June 30, 2014 compared to the six months ended June 30, 2013.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

ITEM 4. CONTROLS AND PROCEDURES

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 quarterly report. Based on that evaluation, our President and Chief Executive Officer, concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report for the purpose of gathering, analyzing and disclosing of information that the Company is required to disclose in the reports it files under the Exchange Act within the time periods specified in the SEC’s rules and forms. The Company has undertaken steps to remedy this and improve the effectiveness of its disclosure controls and procedures.

Changes in internal control over financial reporting

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

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

We are a “smaller reporting company” (as defined by Rule 12b-2 of the Exchange Act) and are not required to provide the information required under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

This Item is not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

This Item is not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

This Item is not applicable.

ITEM 5. OTHER INFORMATION

This Item is not applicable.

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ITEM 6. EXHIBITS

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

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SIGNATURES

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

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