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Filings show a different Hybrid firm

June 15, 2007|E. Scott Reckard | Times Staff Writer

"Green" can be gold these days, but investment experts say prospectors for investment riches should wield their pickaxes carefully.

A recent newspaper advertisement for Hybrid Technologies Inc., a Las Vegas-based electric vehicle company, said the company "anticipates exciting growth" and "could be this year's home run for astute investors."

But the company's filings with the Securities and Exchange Commission tell a less cheery story: "minimal revenue," $42 million in losses since 2000, scrutiny from regulators and insufficient funds for "commercialization of our planned products."

What's more, the company's auditor expressed doubt about Hybrid's odds of survival, the filings show.

The contrasting images that can be presented in promotional materials and regulatory filings show why investors should take care to research before they invest, said John Gannon, senior vice president for financial education at brokerage regulator NASD.

"If people just spent a half-hour doing some homework, they could save themselves a lot of pain," said Gannon, adding that he couldn't speak specifically about Hybrid or any other firm.

Gannon said the need for research was especially crucial for companies such as Hybrid whose shares trade "over the counter" on the OTC Bulletin Board.

OTC companies must keep their SEC filings current. But they don't have to meet the stricter rules on revenue and other standards of companies listed on Nasdaq and the New York Stock Exchange, he noted.

In its short history, Hybrid has invested in or considered investing in a mineral property in Canada, a shopping center in Las Vegas and a medical software company, the company has said in its annual reports, the last of which was filed Nov. 8.

"None of these business opportunities produced meaningful revenue," the company said in its latest annual report.

Repeated efforts to reach Hybrid were unsuccessful.

A full-page ad promoting the company ran in The Times last week. The ad was written and placed by NovaNet Media Inc., a Torrance-based marketing company, said Kenneth S. Owen, NovaNet's chairman and chief executive. He said NovaNet was hired to promote the stock not by Hybrid but by a third party, which he wouldn't identify.

A disclaimer at the bottom of the ad says, "There is no representation, warranty or guarantee as to the accuracy of the info."

Owen said the third party that hired him received $250,000 of Hybrid Technologies stock to promote the company. He wouldn't say who had hired the third party, but said some of the shares were to be passed on to NovaNet.

The ad's disclaimer notes that NovaNet may buy or sell the stock at any time, which may affect the share price. "You may lose all or part of your investment by investing in" the company, the disclaimer adds.

Owen said the auditor's warning that Hybrid might not survive was common among early-stage companies.

"They have to say that," he said. As for Hybrid's losses and lack of revenue, he said, "The company has had tremendous development costs."

Hybrid has been featured in various print, online and broadcast stories. Tiny Smart Cars refurbished as electric vehicles by the company were featured on CNN, Fox News, CBS' "The Early Show" and ABC's "Live With Regis & Kelly." The resulting segments did not examine the company's financial performance or business prospects.

In April, Hybrid gave a battery-powered Mini Cooper to singer James Blunt, describing the performer as a "great example of artists who are working to raise awareness about the importance of our environment."

In its filings, Hybrid Technologies said that the SEC had requested documents from the company in July 2004 and February 2006, and that it had cooperated fully with those requests.

It said the federal agency was conducting an informal inquiry into its stock sales, major corporate transactions and agreements with consultants, business partners and customers.

It added that in April 2006, the SEC initiated a full-fledged investigation. SEC officials declined to comment.

The company's president and CEO is Holly Roseberry. From 2001 through 2003, she managed the 24/7 Drycleaning Laundromat in Las Vegas, Hybrid's filings show.

She previously worked as business office manager for a Wards Department Store in Las Vegas, filings show.

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