UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                   __________________________________________

                                   FORM 10-QSB

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

     For the quarterly period ended March 31, 2004

                                       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 000-26165


                            IQ POWER TECHNOLOGY INC.
        (Exact name of small business issuer as specified in its charter)


             CANADA                                   NOT APPLICABLE
   (Jurisdiction of incorporation)          (I.R.S. Employer Identification No.)


                                  Erlenhof Park
                              Inselkammer Strasse 4
                          D-82008 Unterhaching, Germany
                    (Address of principal executive offices)

                               + 49 89 614 483 10
                           (Issuer's telephone number)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)


     Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 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 [  ]

         The number of outstanding common shares, without par value, of the
registrant at May 13, 2004 was 31,510,457.

     Transitional Small Business Disclosure Format (check one): Yes [ ]; No [X]

<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

iQ POWER TECHNOLOGY INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars;
all amounts in thousands, except per share data)
(Unaudited)


<TABLE>
---------------------------------------------------------------------------------------------------------
                                                                              March 31,   December 31,
                                                                                 2004           2003
-----------------------------------------------------------------------------------------------------
<S>                                                                               <C>          <C>
ASSETS

  Current Assets
    Cash and cash equivalents                                                     555          1,135
    Accounts receivable                                                             -             37
    Receivable from related parties                                                 -             15
    Other receivables                                                              49             45
    Prepaids and deposits                                                          94             41
    Current deposits                                                              410            410
    Inventory                                                                     239            245
  ---------------------------------------------------------------------------------------------------
  Total current assets                                                          1,347          1,928

  Non-current Assets
    Equipment, net                                                                422            445
  ---------------------------------------------------------------------------------------------------
  Total non-current assets                                                        422            445

TOTAL ASSETS                                                                    1,769          2,373
-----------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

  LIABILITIES
    Current liabilities
      Bank overdraft                                                                -            182
      Short-term debt                                                               -            155
      Accounts payable                                                            517            818
      Accrued payroll and employees benefits                                      168            226
      Advances                                                                     54            292
      Other/Accrued liabilities                                                   167            193
    -------------------------------------------------------------------------------------------------
    Total current liabilities                                                     906          1,866

  ---------------------------------------------------------------------------------------------------
  TOTAL LIABILITIES                                                               906          1,866

  SHAREHOLDERS' EQUITY
    Authorized:
      An unlimited number of common shares of no par value
    Issued and outstanding:
           27,563,071 common shares at December 31, 2003
           29,619,207 common shares at March 31, 2004                          14,268         13,315
    Capital surplus/Additional paid-in                                          2,017          2,108
    Accumulated other comprehensive (loss) income                              (1,034)        (1,221)
    Accumulated deficit, during development stage
      (after loss allocation to silent partners of k$1,024)                   (14,388)       (13,695)
  ---------------------------------------------------------------------------------------------------
  TOTAL SHAREHOLDERS' EQUITY                                                      863            507

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      1,769          2,373
-----------------------------------------------------------------------------------------------------
</TABLE>



          See accompanying notes to consolidated financial statements.



                                       1
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)
(Expressed in United States Dollars;
all amounts in thousands, except per share data)
(Unaudited)


<TABLE>
------------------------------------------------------------------------------------------------------------------

                                                              Cumulative from
                                                            date of inception            Three months ended
                                                                 to March 31,      to March 31,      to March 31,
                                                                         2004              2004              2003
-----------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                 <C>               <C>
SALES AND OTHER REVENUE                                                   224                 -                 -

   Costs of goods sold                                                     29                 -                 -
-----------------------------------------------------------------------------------------------------------------
GROSS MARGIN                                                              195                 0                 0

EXPENSES
   Research and development expenses
     Personnel (incl. stock based compensation)                         4,745               184               180
     Laboratory                                                         1,923                71                70
     Office & Travel                                                      651                12                 6
     Consulting services                                                  637                 -                 8
     Professional fees                                                    912                13                 8
-----------------------------------------------------------------------------------------------------------------
   Total Research & Development expenses                                8,868               280               272

   Marketing and general & administrative expenses
     Personnel (incl. stock based compensation)                         1,955                (1)               48
     Financing                                                            588                 2                 7
     Office & Travel                                                      860                38                32
     Consulting services                                                  735                29                50
     Professional fees                                                  1,334                39                92
     Management fees                                                      351                23                18
     Marketing activities                                                 436                13                25
     Investor relations                                                   997                69                31
     Research memberships                                                 100                 -                 -
     Provision for investment                                             225                 -                 -
     Other                                                                229                 3                 3
-----------------------------------------------------------------------------------------------------------------
   Total Marketing and G&A expenses                                     7,810               215               306
-----------------------------------------------------------------------------------------------------------------
   TOTAL OPERATING EXPENSES                                            16,678               495               578

   Interest expense                                                       193                 3                 2
-----------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                         16,871               498               580

   Interest and other income                                             (154)               (0)               (0)
   (Gain)/loss on foreign exchange                                     (1,110)              195               (90)

INCOME/(LOSS) BEFORE INCOME TAX                                       (15,412)             (693)             (490)

NET INCOME/(LOSS)                                                     (15,412)             (693)             (490)
-----------------------------------------------------------------------------------------------------------------
   Other comprehensive income (loss)                                   (1,035)              187               (98)

COMPREHENSIVE INCOME/(LOSS)                                           (16,447)             (506)             (588)
-----------------------------------------------------------------------------------------------------------------
Basic and diluted loss per share, on net loss                           (1.52)            (0.02)            (0.02)

Basic and diluted weighted average
   number of shares outstanding                                    10,170,423        28,978,212        20,620,396
-----------------------------------------------------------------------------------------------------------------
</TABLE>


                   See accompanying notes to consolidated financial statements.



                                       2
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars; all amounts in thousands)
(Unaudited)


<TABLE>
--------------------------------------------------------------------------------------------------------------------
                                                                    Cumulative from      Three months  Three months
                                                                  date of inception            ended         ended
                                                                       to March 31,        March 31,      March 31,
                                                                               2004             2004          2003
--------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                 <C>          <C>
OPERATING ACTIVITIES
Net loss                                                                    (15,413)            (693)        (490)
Items not affecting cash
  Depreciation and amortization                                                 494               20           25
  Stock based compensation                                                    2,226              (26)          38
Changes in non-cash working capital
  (Increase) decrease in receivables                                             55               55           (1)
  (Increase) decrease in prepaids and deposits                                  (85)             (53)         (75)
  Increase (decrease) in accounts payable                                       530             (287)          31
  Increase (decrease) in accrued liabilities                                    392              (74)         139
  (Increase) decrease in inventory                                             (196)               0           (1)
--------------------------------------------------------------------------------------------------------------------
                                                                            (11,997)          (1,058)        (334)

INVESTING ACTIVITIES
  (Additions) of current deposits                                              (410)              (0)           -
  (Additions) to property, plant and equipment                                 (848)              (4)          (4)
--------------------------------------------------------------------------------------------------------------------
                                                                             (1,258)              (4)          (4)

FINANCING ACTIVITIES
  Increase (decrease) in bank overdraft                                         (20)            (181)          16
  Increase (decrease) in due to shareholder                                     138                -            -
  Proceeds received from issuance of short term debt                            167                -            -
  Repayment of short term debt                                                 (187)               -            -
  Advances received from external parties                                       646               54          (32)
  Cash acquired on business combination                                       4,718                -            -
  Other advances received                                                       581                -            -
  Issue of capital stock                                                      7,890              441          288
  Issuance of atypical shares                                                 1,025                -            -
--------------------------------------------------------------------------------------------------------------------
                                                                             14,958              314          272
(DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                                            1,703             (748)         (66)

EFFECT OF FOREIGN EXCHANGE MOVEMENT                                          (1,148)             168          (91)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                                             -            1,135          331
--------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                                                 555              555          174
--------------------------------------------------------------------------------------------------------------------
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       3
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(Expressed in United States Dollars;
all amounts in thousands, except per share data)
(Unaudited)


<TABLE>
---------------------------------------------------------------------------------------------------------------
                                                                       Accumulated                      Total
                                     Common shares        Additional          Other               Shareholders'
                                ------------------------    Paid-In    Comprehensive  Accumulated     Equity
                                     Shares       Amount    Capital     Income (Loss)    Deficit    (Deficit)
                                ------------  ----------- ---------- ---------------- ----------- -------------
<S>                              <C>             <C>         <C>          <C>         <C>           <C>
Balance at December 31, 1999      9,731,620        5,904        396              82       (3,733)      2,649
Net loss                                  -            -          -               -       (2,359)     (2,359)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -            -          -             (98)           -         (98)
Exercise of options                  15,000           37          -               -            -          37
Stock based compensation                  -            -         10               -            -          10
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000      9,746,620        5,941        406             (16)      (6,092)        239
Net loss                                  -            -          -               -       (3,754)     (3,754)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -            -          -              42            -          42
Issue of shares                   5,203,004        2,132          -               -            -       2,132
Stock based compensation                  -            -      1,444               -            -       1,444
Exercise of options               1,002,500          501          -               -            -         501
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001     15,952,124      $ 8,574    $ 1,850            $ 26     $ (9,846)      $ 604
Net loss                                  -            -          -               -       (1,555)     (1,555)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -            -          -            (472)           -        (472)
Issue of shares                   4,376,103        1,992          -               -            -       1,992
Stock based compensation                  -            -       (279)              -            -        (279)
Exercise of options                  20,000           10          -               -            -          10
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002     20,348,227     $ 10,576    $ 1,571          $ (446)   $ (11,401)      $ 300
Net loss                                  -            -          -               -       (2,294)     (2,294)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -            -          -            (775)           -        (775)
Issue of shares                   4,683,145        1,670          -               -            -       1,670
Stock based compensation            138,198                    6370               -            -         431
Exercise of warrants              1,622,853          700          -               -            -         700
Exercise of options                 770,648          308        167               -            -         475
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003     27,563,071     $ 13,315    $ 2,108        $ (1,221)   $ (13,695)      $ 507
Net loss                                  -            -          -               -         (693)       (693)
Other comprehensive (loss) -
  foreign currency translation
adjustments                               -            -          -             187            -         187
Issue of shares                   1,206,634          523          -               -            -         523
Conversion of debt                  259,452          158          -               -            -         158
Stock based compensation            108,800                    (129)              -            -         (63)
Exercise of warrants                281,250          118          -               -            -         118
Exercise of options                 200,000           88         38               -            -         126
---------------------------------------------------------------------------------------------------------------
Balance at March 31, 2004        29,619,207     $ 14,268    $ 2,017        $ (1,034)   $ (14,388)      $ 863
---------------------------------------------------------------------------------------------------------------
</TABLE>



          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


1.   NATURE OF OPERATIONS

     iQ Power  Technology  Inc. ("iQ Power") was  incorporated  under the Canada
     Business  Corporations Act on September 20, 1994.  Effective June 17, 1999,
     iQ Power  completed  a  business  combination  with iQ  Battery  Research &
     Development  GmbH  ("iQ  Battery").   The  business  combination  has  been
     accounted for as a reverse  acquisition with iQ Battery being identified as
     the acquirer. Although iQ Battery is deemed to be the acquiring corporation
     for financial  accounting  and reporting  purposes,  the legal status of iQ
     Power as the surviving  corporation does not change.  Herein after iQ Power
     and its subsidiary are referred to as "the Company".

     iQ  Battery,  established  in 1991,  is  conducting  research  and  product
     development  in  the  area  of  intelligent   performance-improved  battery
     systems.  The Company's  first product is an  intelligent  car battery,  in
     which  electronics,   microprocessors   and  software  manage  the  energy.
     Additional  products,  related to energy management in automotive vehicles,
     have been developed.

     Patents have been granted for Germany,  thirteen other European  countries,
     and for the United States of America.  International  patents  applications
     have been filed in nine additional  countries.  iQ Battery's legal domicile
     is  Chemnitz,  Germany,  and it  maintains  a  branch  near  Munich,  where
     management has its offices. BarbiQ was established in 2003 as an investment
     holding company and is domiciled in Barbados.  Since its inception,  BarbiQ
     has had no significant holdings or operations.


2.   CONTINUING OPERATIONS

     These  financial  statements  have been prepared on a going concern  basis,
     which  contemplates  the  realization  of assets  and the  satisfaction  of
     liabilities  in the normal  course of  business.  The Company has  incurred
     cumulative losses since inception.  As of March 31, 2004, the Company has a
     positive working capital  position.  The Company's ability to continue as a
     going concern is dependent upon the ability of the Company to attain future
     profitable  operations and/or to obtain the necessary financing to meet its
     obligations  and  repay  its  liabilities   arising  from  normal  business
     operations  when they become due. The  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 this
     uncertainty.

     In 1999, the Company raised  approximately  $4,875,000,  net of commissions
     and costs of issue,  through  the  issuance of  2,200,000  shares of common
     stock pursuant to a  Registration  Statement on Form SB-1. In May 2001, the
     Company  completed a private  placement of 3,000,000 common shares at $0.25
     per share for proceeds of $750,000.  In September 2001, a private placement
     of 333,333  common  shares at $0.75 per share for  proceeds of $250,000 was
     also  completed.  In  the  fourth  quarter  of  2001,  the  Company  raised
     additional  funds through the private  placement of 1,019,344  units of the
     Company  at  $0.70  per unit for  proceeds  of  $713,541,  with  each  unit
     consisting  of one common  share of the  Company  and one  non-transferable
     warrant  exercisable  for a period  of six  months  following  closing  and
     entitling the holder to purchase one additional common share of the Company
     for $1.00 (see note 5(e) for more details on the warrants).

     In January  2002,  the  Company  raised an  additional  $617,500  in equity
     capital  through the private  placement of 950,000  units of the Company at
     $0.65  per  unit,  each such unit  consisting  of one  common  share of the
     Company and one non-transferable warrant exercisable for a period of twelve
     months  following   closing  and  entitling  the  holder  to  purchase  one
     additional common share of the Company for $0.85. In June 2002, the Company
     raised  an  additional  $750,000  in equity  capital  through  the  private
     placement  of 1,500,000  units of the Company at $0.50 per unit,  each such
     unit consisting of one common share of the Company and one non-transferable
     warrant  exercisable  for a period of twelve months  following  closing and
     entitling the holder to purchase one additional Common share



                                       5
<PAGE>


iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


2.   CONTINUING OPERATIONS (Continued)

     of the Company for $0.65. In November and December 2002, the Company raised
     an additional  $550,500 in equity capital through the private  placement of
     1,572,853 units of the Company at $0.35 per unit, each such unit consisting
     of one  common  share  of the  Company  and  one  non-transferable  warrant
     exercisable for a period of twelve months  following  closing and entitling
     the holder to  purchase  one  additional  common  share of the  Company for
     $0.45.

     In February 2003, the Company raised $52,500 in equity capital  through the
     private  placement of 150,000 units of the Company at $0.35 per unit,  each
     such  unit   consisting  of  one  common  share  of  the  Company  and  one
     non-transferable   warrant  exercisable  for  a  period  of  twelve  months
     following  closing  and  entitling  the holder to purchase  one  additional
     common share of the Company for $0.45.

     From February  through June 2003,  the Company  raised  $820,300 in capital
     through the private  placement of  2,563,437  units of the Company at $0.32
     per unit,  each such unit consisting of one common share of the Company and
     one  non-transferable  warrant  exercisable  for a period of twelve  months
     following  closing  and  entitling  the holder to purchase  one  additional
     common share of the Company for $0.42.

     In October 2003, the Company's subsidiary iQ Battery Research & Development
     GmbH issued a convertible  loan  instrument at 12% interest per annum,  due
     September  2004.  The loan terms provide that the holders have the right to
     convert their respective loans, together with interest thereon, into common
     shares of iQ Power at a conversion  price of $0.61 (EUR 0.48).  The Company
     had the right to repay the loan  including  interest at any time,  prior to
     the due  date.  Under  this  agreement,  $153.000  (EUR  120,000)  had been
     subscribed  and the  lender  opted to  convert  the loan  plus  accumulated
     interest of $5,766 (EUR 4,537) on January 7, 2004 into 259,452 shares.

     In November 2003, we announced another private placement of 2,222,222 units
     at $0.45 per unit,  each such unit  consisting  of one common share and one
     non-transferable   warrant  exercisable  for  a  period  of  twelve  months
     following  closing  and  entitling  the holder to purchase  one  additional
     common share for $0.50. In December 2003, our Board of Directors  increased
     the private placement allotment to 2,850,000 units. As of December 31, 2003
     1,686,666  units for $759,000 were  subscribed.  In the quarter ended March
     31, 2004,  the  remaining  1,163,334  shares for proceeds of $523,000  were
     issued.

     In the  quarter  ended  March 31,  2004,  281,250  shares for  proceeds  of
     $118,000 were issued on the exercise of warrants.  As of March 31, 2004, we
     received additional  advances of $54,000,  which were placed into trust for
     the exercise of 110,000 warrants. [see F/S notes.]

     The subscribers to all private placements were non-U.S. persons outside the
     United  States  of  America.  The  Company  has used the  proceeds  to fund
     research  and  development  of iQ  Battery's  technology,  expansion of the
     Company's  marketing  and sales  activities  and general  working  capital.
     Additional funds are necessary to allow the Company to complete its product
     development and marketing plan. In order to increase outsourced  production
     and to build in-house production capabilities, additional financing will be
     required.  There is no  assurance  that the Company  will be able to secure
     additional  financing or that such financing will be on terms beneficial to
     the existing shareholders.

     The Company has used the proceeds to fund  research and  development  of iQ
     Battery's  technology,  expansion  of the  Company's  marketing  and  sales
     activities and general working  capital.  Additional funds are necessary to
     allow the Company to complete its product  development  and marketing plan.
     Additional  financing  will be required and there is no assurance  that the
     Company will be able to secure additional  financing or that such financing
     will be on terms beneficial to the existing shareholders.



                                       6
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


2.   CONTINUING OPERATIONS (Continued)

     The  Company  has  signed  agreements  to  jointly  develop  and market its
     applications   with  large   corporations.   Such  alliances   involve  the
     utilization  of certain  aspects of the Company's  technology and know how.
     The ability of the Company to succeed in these  alliances is dependent upon
     the Company's ability to obtain additional financing.  The Company has been
     active in its  search  for such  financing.  Management  believes  that the
     Company will be able to obtain the necessary financing.

     As of March 31, 2004, the Company's  current financial  condition  requires
     additional  capital in order to continue or expand its current  operations.
     If the Company is unable to obtain additional capital,  the Company will be
     unable to meet all of its financial obligations. There is no assurance that
     the  Company  will be able to  secure  additional  financing  or that  such
     financing will be on terms beneficial to the existing shareholders.


3.   BASIS OF PRESENTATION

     The  unaudited  financial  statements  included  herein have been  prepared
     pursuant  to the rules  and  regulations  of the  Securities  and  Exchange
     Commission for reporting on Form 10-QSB.  Certain  information and footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States of America have been condensed or omitted pursuant to such rules and
     regulations.  The  statements  should  be  read  in  conjunction  with  the
     accounting policies and notes to consolidated financial statements included
     in the Company's 2003 Annual Report on Form 10-KSB.

     In  the  opinion  of  management,  the  financial  statements  reflect  all
     adjustments  necessary  for a fair  statement  of the  operations  for  the
     interim periods presented.


4.   SHARE CAPITAL

     Authorized
          An unlimited number of common shares
     Issued and outstanding

<TABLE>
                                                                         Number of
                                                                     Common shares        Amount ($ 000)
      <S>                                                               <C>                    <C>
       Balance, January 1, 1998 (iQ Power)                                787,896                   493
       Private placement, issued cash                                   1,483,874                   927
       -------------------------------------------------------------------------------------------------
       Balance, December 31, 1998                                       2,271,770                 1,420

       Shares issued for cash                                           2,200,000                 5,500
       Issue costs                                                              -                  (653)
       -------------------------------------------------------------------------------------------------
       Balance, June 17, 1999                                           4,471,770                 6,267
       Adjustment for
       reverse acquisition on June 17, 1999                                     -                (6,207)
       -------------------------------------------------------------------------------------------------
                                                                        4,471,770                    60

       Issued to effect the reverse acquisition                         5,120,000                 5,495
       Warrants exercised during the year                                 139,850                   349
       Balance, December 31, 1999                                       9,731,620                 5,904

       Options exercised during the year                                   15,000                    37
       -------------------------------------------------------------------------------------------------
</TABLE>



                                       7
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


4.   SHARE CAPITAL (Continued)

<TABLE>
      <S>                                                              <C>                       <C>
       Balance, December 31, 2000                                        9,746,620                 5,941

       Private placements, issued for cash (incl. Finder's Fees)         4,597,944                 1,714
       Shares issued for conversion of debt                                400,000                   200
       Shares issued for external stock based compensation                 205,060                   218
       Options exercised during the year                                 1,002,500                   501
       -------------------------------------------------------------------------------------------------
       Balance, December 31, 2001                                       15,952,124                 8,574

       Private placements, issued for cash (incl. Finder's Fees)         4,225,853                 1,881
       Shares issued for external stock based compensation                 150,250                   111
       Options exercised during the year                                    20,000                    10
       -------------------------------------------------------------------------------------------------
       Balance, December 31, 2002                                       20,348,227                10,576

       Private placements, issued for cash (incl. Finder's Fees)         7,076,646                  2,678
       Shares issued for stock based compensation                          138,198                    61
       -------------------------------------------------------------------------------------------------
       Balance, December 31, 2003                                       27,563,071                13,315

       Private placements, issued for cash (incl. Finder's Fees)         1,947,336                   888
       Shares issued for stock based compensation                          108,800                    65
       -------------------------------------------------------------------------------------------------
       Balance, March 31, 2004                                          29,619,207                14,268
</TABLE>


     On April 10, 2000,  the  company's  board of directors  declared a 2.5 to 1
     reverse  stock  split of the  company's  common  stock.  In  addition,  the
     authorized  shares of common stock issued and  outstanding  were  decreased
     from  24,366,550 to 9,746,620  shares.  All references in the  consolidated
     financial statements to shares and related prices,  weighted average number
     of shares,  per share  amounts,  and stock plan data have been  adjusted to
     reflect the reverse split.

     (a)  Stock options

          The  Company  has  established  a Stock  Option  Plan  for  employees,
          officers,  directors,  consultants,  and  advisors.  The  Company  has
          reserved  4,714,000  common shares for issuance under the Stock Option
          Plan.  Thereof  30,000  options were granted in the first quarter 2002
          with an exercise price of $1.00. In the second quarter of 2002, 20,000
          shares were issued on the exercise of stock options  granted under the
          stock option plan.  During the first  quarter of 2003,  no shares have
          been issued on the exercise of stock  options  granted under the stock
          option plan.  Options granted for issuance under the Stock Option Plan
          generally  are not  transferable,  and the  exercise  price  of  stock
          options must be at least equal to 100% of the fair market value of the
          common shares on the date of the grant.

          The Stock Option Plan may be administered by the Board of Directors or
          a committee of the Board (the "Committee").  The Board of Directors or
          the  Committee,  as the case may be,  has the power to  determine  the
          terms of any options  granted  there  under,  including  the  exercise
          price,   the  number  of  shares  subject  to  the  option,   and  the
          exercisability  thereof.  The term of an option granted under the Plan
          may not exceed ten years.  The  specific  terms of each  option  grant
          shall be approved by the Board of Directors or the Committee.

          SFAS No. 123,  issued in October  1995,  requires  the use of the fair
          value based method of accounting for stock options. Under this method,
          compensation  cost is  measured at the grant date as the fair value of
          the options granted and is recognized over the exercise period. During
          the years ended December 31, 2002 and 2001, the Company issued options
          to individuals  other than  employees and directors,  which under SFAS
          No. 123 are recognised as share-based  compensation  rateably over the
          vesting period. SFAS No. 123, however,  allows the Company to continue
          to measure the  compensation  cost of employee  and  director  related
          stock options in  accordance  with APB 25. The Company has adopted the
          disclosure-only provision of SFAS No. 123 and SFAS



                                       8
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


4.   SHARE CAPITAL (Continued)

          No. 148,  Accounting  for  Stock-Based  Compensation  - Transition and
          Disclosure - an Amendment of FASB Statement No. 123.

          On June 12, 2000, the Board of Directors  decreased the exercise price
          for the Stock Option Plan; from $2.50 to $1.50 for all options granted
          under and  outside of the plan.  On  January  16,  2001,  the Board of
          Directors  decreased  again the  exercise  price for the Stock  Option
          Plans from $1.50 to $0.50 for all options granted under and outside of
          the plan.  On January 18, 2002,  the Board of Directors  decreased the
          exercise price of the 1,415,000 options granted under the Plan on June
          28, 2001, from $1.37 to $1.00. On June 6, 2003 all outstanding options
          were reprised to $0.40.  Due to the changes,  all the options  granted
          under the plan will be accounted for using  variable  plan  accounting
          under APB 25. On March 31, 2004, the fair value of the Company's stock
          was below the fair  values  accounted  for as of  December  31,  2003.
          Therefore, stock-based compensation expense of $91,000 was reversed.

          The following table  illustrates the effect on net earnings (loss) and
          net  earnings  (loss) per share if the  Company  had  applied the fair
          value recognition  provisions of SFAS No. 123 to stock-based  employee
          compensation. All amounts below are in $000's except per share data.

<TABLE>
                                                                   Three months ended          Three months ended
                                                                            March 31,                   March 31,
                                                                                 2004                        2003
                                                                   ------------------          ------------------
            <S>                                                     <C>                          <C>
             Net loss, as reported                                     $        (693)                $      (491)
             Add: reversal of stock based compensation                 $         (91)                $        (0)
               Expense (reversal of expense), included in
                reported net loss, net of related tax effects
             Deduct: Total stock-based employee
               compensation expense determined
               under fair value based method for all
               awards, net of related tax effects                      $          (5)                $         -
             ----------------------------------------------------------------------------------------------------
             Pro forma net loss                                        $        (789)                $      (491)

             Loss per share (basic and diluted)
               As reported                                             $       (0.02)                $     (0.02)
               SFAS No. 123 pro forma                                  $       (0.01)                $         -
             ----------------------------------------------------------------------------------------------------
             Pro forma net loss                                        $       (0.03)                $     (0.02)
</TABLE>


          The weighted average fair value,  calculated  using the  Black-Scholes
          option  pricing model value of options  granted under the stock option
          plan  during the year ended  March 31,  2004 was $0.37 per share.  The
          fair value of these options was estimated at the date of grant using a
          weighted average  volatility factor of 142%, a dividend yield of 0%, a
          weighted  average expected life of the stock options of 4 years, and a
          risk free  interest  rate of 1.375%.  For the three months ended March
          31, 2004, no stock options were granted to employees,  however the non
          vested options of 100,000, issued in December 2003, were accounted for
          on a pro-rata basis.

     (b)  Incentive Share Plan

          The  Company  has a  long-term  incentive  plan  although  no  cash or
          non-cash   compensation   intended  to  serve  as  an  incentive   for
          performance (whereby performance is measured by reference to financial
          performance  or the  price of the  Company's  securities)  was paid or
          distributed  to the  executive  officer  listed or any  other  person,
          company,  or entity during the most recently completed  financial year
          under that plan. The Incentive Plan was



                                       9
<PAGE>


iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


4.   SHARE CAPITAL (Continued)

          adopted by  shareholders  in 2001 and amended in 2002 and provides for
          the issue of up to 2,500,000  common shares to valued  directors,  key
          employees,  and consultants of the Company and similar such persons to
          encourage those persons to acquire a greater  proprietary  interest in
          the  Company,  thereby  strengthening  their  incentive to achieve the
          objectives of the shareholders of the Company,  and to serve as an aid
          and inducement in the hiring of new employees and to provide an equity
          incentive to consultants and other persons. The shares issued pursuant
          to the Incentive  Plan will be issued at a discount to market price on
          the  basis  of  resale  restrictions  prohibiting  their  being  sold,
          assigned,   pledged   or   otherwise   transferred,   voluntarily   or
          involuntarily,  by a plan participant  until the Company meets certain
          performance requirements.  Such restrictions on transfer shall, to the
          extent  that such  shares of Common  Stock  have not  previously  been
          forfeited to the Company,  lapse on the last day of the fiscal  period
          in which the Company shall have generated  cumulative net revenue from
          inception of $2,500,000 or more,  calculated in accordance with United
          States generally accepted accounting principles. The shares awarded or
          sold under the Plan shall be  forfeited  to the Company if the Company
          shall not have  generated  cumulative  net revenues from  inception of
          $2,500,000  or more,  calculated  in  accordance  with  United  States
          generally accepted accounting principles,  prior to December 31, 2006.
          Certificates for the shares shall be issued in the plan  participant's
          respective  names and shall be held in escrow by the Company until all
          restrictions  lapse or such shares are forfeited.  No incentive shares
          have been granted  under this plan as of December  31, 2003.  However,
          the board of Directors  decided on Dec 17, 2003 to grant  1,350,000 of
          these incentive shares in 2004. These incentive shares were granted on
          January 7, 2004 to the above mentioned escrow account.

     (c)  Loss per share

          Losses per share  calculations  give  effect to the  reverse  takeover
          described in Note 1.

     (d)  iQ share capital

          The  registered  capital of iQ Battery  is  EUR51,129,  which is fully
          paid. All equity  securities  were acquired by iQ Power as part of the
          business combination.

     (e)  Issuance of shares due to private placements

          In November 2003, we announced  another private placement of 2,222,222
          units at $0.45 per unit, each such unit consisting of one common share
          and one  non-transferable  warrant  exercisable for a period of twelve
          months  following  closing and  entitling  the holder to purchase  one
          additional  common  share for $0.50.  In December  2003,  our Board of
          Directors  increased  the private  placement  allotment  to  2,850,000
          units.  As of December  31, 2003  1,686,666  units for  $759,000  were
          subscribed.  In the  quarter  ended  March  31,  2004,  the  remaining
          1,163,334 shares for proceeds of $523,000 were issued.

          In the quarter  ended March 31, 2004,  281,250  shares for proceeds of
          $118,000  were  issued on the  exercise of  warrants.  As of March 31,
          2004, we received  additional  advances of $54,000,  which were placed
          into trust for the exercise of 110,000 warrants. [see F/S notes.]

          The combined fair value of the attached warrants issued in 2004, as of
          the date of the private  placement,  was approximately  $435,000.  The
          fair  value  was  calculated  using the  Black-Scholes  option-pricing
          model.



                                       10
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


4.   SHARE CAPITAL (Continued)

     (f)  Issuance of shares due to consulting agreements

          In August 2002, we entered into a Financial Public  Relations  Adviser
          Consulting Agreement with Joerg Schweizer,  a non-U.S.  person outside
          the United States.  We agreed to pay Joerg  Schweizer a consulting fee
          in the amount of  approximately  $6,250 (EUR 5,000) per month for such
          services.  Of the consulting fee,  approximately $2,500 (EUR 2,000) is
          due monthly,  while the remaining  approximately $3,750 (EUR 3,000) is
          payable  by issuing  Joerg  Schweizer  common  shares,  issuable  on a
          quarterly basis. The agreement has an initial term of 12 months. As of
          December 31, 2002,  we issued Joerg  Schweizer  16,900  common  shares
          under the  agreement.  During the fiscal  year 2003,  we issued  Joerg
          Schweizer 50,700 common shares under the agreement, as well as another
          22,500  common  shares  on  account  of   reimbursement  of  expenses.
          Effective August 2003, we entered into a restated Agreement with Joerg
          Schweizer.  In  the  first  quarter  of  2004,  we  also  concluded  a
          Supplemental Agreement with Joerg Schweizer, under which we issued Mr.
          Schweizer 75,000 common shares in  consideration  for his provision of
          services beyond those contracted for in his Financial Public Relations
          Adviser  Consulting  Agreements  and in respect  of which two  further
          installments  of 25,000 common  shares each are due.  During the first
          Quarter 2004, we issued Joerg Schweizer 108,800 common shares. Through
          March 31,  2004,  we have  issued a total of  204,500  shares to Joerg
          Schweizer in connection with these agreements.


5.   RELATED PARTY TRANSACTIONS

     Related  party  transactions  not  disclosed  elsewhere  in  the  financial
     statements comprised:

     (a)  Management  fees for the three  months ended March 31, 2004 of $21,600
          (2003 - $18,000) were paid to a company with a common director.

     The Company has entered into the following contractual arrangements:

     (b)  employment  agreement  with two directors of the Company to occupy the
          position of President and Chief Executive  Officer and Chief Technical
          Officer.  Under the terms of these agreements the Company is obligated
          to pay these employees $9,300 and $8,750 per month, respectively. This
          agreement is subject for renewal at the 2004 Annual General Assembly.

     (c)  iQ Battery acquired patents and know-how  improving the current output
          of a chargeable battery at low outside temperatures and the registered
          design  "iQ"  based  on a  contract  dated  March  15,  1995  from two
          shareholders,  one  of  which  is  a  director  of  the  Company.  The
          intangibles  purchased  relate to a German  patent,  an  international
          patent  application as well as the registered design "iQ". The Company
          and the  shareholders  agreed  that  the  shareholders  would  receive
          approximately  $250,000 (DM 400,000;  approximately  EUR 205,000) from
          future income.  No amounts are due as the Company has not realized any
          applicable revenues or royalties.


6.   SEGMENT DISCLOSURES

     The  Company  is  currently   marketing  and  developing  its   proprietary
     technology.  In  accordance  with SFAS No. 131 the  Company  considers  its
     business to consist of one reportable  operating  segment.  The majority of
     the Company's significant physical assets are located in Germany.



                                       11
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Quarter Ended March 31, 2004
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
================================================================================


7.   SUBSEQUENT EVENTS

     In 2003 we began  participating  in  another  joint  filing  of a  research
     project under the European 6th Framework  program,  again under the lead of
     DaimlerChrysler.  The project is called Secure  Propulsion  using  Advanced
     Redundant Control (SPARC).  This project aims at scalable  architecture and
     solutions to be used both in passenger cars and heavy trucks.  Again, it is
     iQ's role to  provide  the  system  architecture  and  components  for safe
     electrical energy supply. The project agreement became effective in January
     2004.  From this project,  the Company  received funds amounting to approx.
     $135,000 (EUR 112,000).

     In April 2004, we concluded  arrangements  with SBI for the recovery of our
     Gel  Project  advances.  We assigned  our  interest in the Gel notes and GE
     Industries' notes aggregating $525,000 to SBI against promissory notes from
     SBI in similar amounts.  We took this step as SBI was already in possession
     of the Gel assets and had  notified us that it intended to proceed with the
     Hong Kong/China  project  despite our withdrawal.  SBI also issued us notes
     for the $96,000 we advanced  directly to it.  Management  believes that the
     amounts will be recovered  during the fiscal year ending December 31, 2004,
     and that no allowance  pertaining to the deposits made to GE Industries and
     SBI is necessary as of March 31, 2004.




                                       12
<PAGE>

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

Certain   statements  in  this  Quarterly  Report  on  Form  10-QSB   constitute
forward-looking  statements  within the meaning of Section 21E of the Securities
Exchange Act of 1934. Such forward-looking  statements involve known and unknown
risks,  uncertainties  and other  factors  that may cause  the  actual  results,
performance or achievements of iQ Power  Technology Inc. and its subsidiary,  iQ
Battery  Research  and  Development  GmbH   (hereinafter  "iQ  Germany"  or  "iQ
Battery"),  (hereinafter  collectively,  referred  to as  "iQ  Power"  and  "the
Company"),  or developments in the Company's industry, to differ materially from
the anticipated  results,  performance or  achievements  expressed or implied by
such forward-looking  statements.  Such factors include, but are not limited to:
the Company's limited operating history;  risks related to delays in developing,
marketing and commercializing the Company's  batteries;  lengthy development and
sales  cycles  related to the  commercialization  of battery  technologies;  the
Company's  dependence  upon  a  relative   concentration  of  customers  in  the
automotive  and battery  manufacturing  industries;  competition  in the battery
industry and competing battery technologies;  risk related to the development of
the Company's battery  technologies and acceptance by the automotive and battery
manufacturing industries; risks of technological change that may be inconsistent
with the Company's  technologies  or the may render its  technologies  obsolete;
dependence  on  selected  vertical  markets  within the  automotive  and battery
manufacturing industries;  general economic risks that may affect the demand for
automotive   batteries;   the  Company's   reliance  on  third-party   marketing
relationships  and suppliers;  the Company's ability to protect its intellectual
property rights;  risks related to the Company's  proposed  acquisitions and the
other risks and uncertainties  described under "Business - Risk Factors" in Part
I of the  Company's  Annual  Report on Form 10-KSB filed with the United  States
Securities and Exchange Commission on April 14, 2004.

Overview

The Company was  organized in 1991 to develop and  commercialize  batteries  and
electric  power  technology for the  automotive  industry and other  industries.
Since  that  date,  it has  been  engaged  primarily  in  research  and  product
development  efforts.  Its  primary  product  is a  "smart"  automotive  starter
battery,  which  combines  several  proprietary  features  designed  to optimize
automotive starter battery efficiency.

While our iQ Battery  technology  platform can be applied  across a  diversified
spectrum of industries  and  applications,  ranging from  automotive  (including
electric,  hybrid and fuel cell powered vehicles) to stationary  applications in
telecommunications and standby power sources, we have chosen in light of our own
expertise and financial  limitations to initially focus on the automotive market
and specifically cars and trucks.

We have only recently begun the process of  commercially  marketing our products
on a limited basis. We have targeted two products for initial  commercialization
in  2004:  we began  shipping  our  PowerLyzer(R)  in 2003  and  expect  to ship
additional  orders in 2004,  and we also  expect to begin to  commercialize  our
Generation 1 MagiQTM Battery in 2004,  assuming adequate financing is available.
Our  commercialization  efforts  resulted from years of research and development
work and we expended  substantial  management time and resources over the past 2
years  finalizing  our  supply  chain,  sourcing  contract  manufacturers,   and
marketing  our  Generation  1 MagiQTM  Battery to potential  Original  Equipment
Manufacturer (OEM) users.

The greatest  challenge we have faced and continue to face is raising sufficient
capital on a timely basis to implement  commercial  production while maintaining
our existing  research and  development  operations and the overhead  associated
with  those  operations.  Further  details  of our  current  financial  plan for
implementing production can be found below.

In addition to any production we may undertake  directly,  we anticipate that we
will  eventually  license the iQ technology to automobile  suppliers and battery
manufacturers  or that we will  enter into one or more  strategic  relationships
with established battery manufacturers to produce and distribute our battery and
energy management  products.  We currently have no arrangements or agreements to
do so.

The Company  believes that its historic  spending  levels are not  indicative of
future   spending   levels   because   in  order  to   implement   our   planned
commercialization and development strategies,  the Company will need to increase
spending on product  research  and  development,  marketing,  staffing and other
general operating expenses. For these reasons, the Company believes its



                                       13
<PAGE>

expenses,  losses,  and deficit  accumulated  during the development  stage will
increase significantly before it generates any material revenues.

Critical Accounting Policies

Financial   Reporting  Release  (FRR)  No.  60,   "Cautionary  Advice  Regarding
Disclosure  About  Critical  Accounting  Policies,"  requires  all  companies to
include a  discussion  of critical  accounting  policies or methods  used in the
preparation  of  financial  statements.  The  discussion  and  analysis  of  the
Company's  financial  condition  and  results of  operations  are based upon its
consolidated  financial statements,  which have been prepared in accordance with
accounting  principles  generally accepted in the United States. The preparation
of these  financial  statements  requires  the  Company  to make  estimates  and
judgments that affect the reported  amount of assets and  liabilities,  revenues
and expenses, and related disclosure of contingent assets and liabilities at the
date of its financial statements. Actual results may differ from these estimates
under different assumptions or conditions.

Critical  accounting  policies  are  defined  as those  that are  reflective  of
significant  judgments and  uncertainties,  and potentially result in materially
different  results under different  assumptions  and conditions.  The accounting
policy  which  the  Company  believes  are the  most  critical  to aid in  fully
understanding  and  evaluating  its  reported   financial  results  include  the
following:

In accordance with the provisions of the Financial  Accounting Standards Board's
("FASB")  Statement of  Accounting  Standard  ("SFAS") No. 123,  Accounting  for
Stock-Based  Compensation,  as amended by SFAS 148  "Accounting  for Stock-Based
Compensation-Transition  and Disclosure",  the Company has elected to follow the
Accounting  Principles  Board's  Opinion No. 25,  Accounting for Stock Issued to
Employees  and the  related  interpretations  ("APB 25") in  accounting  for its
employee stock based  compensation  plans.  Due to changes in the exercise price
for certain  Stock Options  granted  under the Stock Option Plan,  those options
will be  accounted  for using  variable  plan  accounting  under  APB 25.  Under
variable plan accounting total  compensation  cost is measured by the difference
between the quoted market price of the stock and the amount,  if any, to be paid
by an employee  and is  recognized  as an expense  over the period the  employee
performs  related   services.   (see  Note  5(a)).   Stock  options  granted  to
non-employees result in the recognition of expenses based upon the fair value of
such stock options.

The Company's accounting for stock options is significant because the effect the
compensation  expense has on the  Company's  results.  As the Company  begins to
produce  their  product in the future and begins to earn revenue on sales of the
product,  the compensation  expense  associated with the Company's stock options
will have a significant effect on its ability to incur positive net results.

The Company is in the development stage and will require  additional  capital to
implement it business  strategy.  Given the Company's  history of losses and its
working  capital  position,  the  Company  could fail  before  implementing  its
business  strategy.  The Company expects to continue to incur net losses for the
foreseeable future. The Company prepared the accompanying  financial  statements
assuming that we will  continue as a going  concern.  The Company's  auditors in
their audit  report on the  Company's  financial  statements  for the year ended
December 31, 2003 expressed  uncertainty as to the Company's ability to continue
as a going concern.

The  Company's  current  activities  result in  transactions  denominated  in US
dollars, Euros, and Canadian dollars. The Company has determined that the United
States  dollar is the  appropriate  currency for  reporting  purposes and is the
functional  currency for iQ Power.  Transaction  amounts  denominated in foreign
currencies  are translated  into US dollars at exchange rates  prevailing at the
transaction  dates.  Carrying values of non-US dollar assets and liabilities are
adjusted at each balance sheet date to reflect the exchange  rate  prevailing at
that date.  Gains and  losses  arising  from  adjustment  of foreign  assets and
liabilities are included in the consolidated statement of loss and comprehensive
loss.  The  functional  currency  of iQ  Battery  is the Euro.  iQ  Battery  had
previously reported its internal financial  statements in German Deutsche Marks,
but as of January 1, 2002 the entity  successfully  transitioned  its systems to
the Euro.  Assets and  liabilities  of iQ Battery are  translated  into their US
dollar  equivalents at the rate of exchange in effect at the balance sheet date.
Revenues  and  expenses  are  translated  at the average  exchange  rate for the
reporting period. The US dollar effect arising from translation of the financial
statements   at  changing   rates  is  recorded  as  a  separate   component  of
comprehensive income (loss).



                                       14
<PAGE>

In April 2004,  we concluded  arrangements  with SBI for the recovery of our Gel
Project  advances.  We assigned our interest in the Gel notes and GE Industries'
notes aggregating  $525,000 to SBI against  promissory notes from SBI in similar
amounts.  We took this step as SBI was already in  possession  of the Gel assets
and had notified us that it intended to proceed with the Hong Kong/China project
despite  our  withdrawal.  SBI also  issued us notes for the $96,000 we advanced
directly to it.  Management  believes that the amounts will be recovered  during
the fiscal year end December 31, 2004,  and that no allowance  pertaining to the
deposits made to GE Industries and SBI is necessary as of March 31, 2004.


Related Party Transactions

Financial  Reporting Release (FRR) No. 61, "Effects of transactions with related
and certain  other  parties,"  requires all companies to include a discussion of
all material transactions with related and certain other parties to the Company,
as discussed in Note 5 of the financial statements.

The Company's  Results of  Operations  for the Three Months Ended March 31, 2004
Compared to the Three Months Ended March 31, 2003

Revenues. No revenues were recorded in either the three month period ended March
31, 2004 or the three month period ended March 31, 2003. The Company delivered a
limited number of its MagiQTM batteries for a pilot program as its first step in
the plan to commercialize  MagiQTM  batteries.  No revenues were recorded in for
these  deliveries.  The Company does not  anticipate  that it will  generate any
significant  revenues from the sale of MagiQTM  batteries  until it successfully
introduces  MagiQTM  batteries  to a  broad  commercial  market  or one or  more
manufacturers  install MagiQTM batteries as original  manufacturer  equipment in
their  vehicles,   assuming  the  Company  can  raise  sufficient  financing  to
commercialize its MagiQTM batteries.

Total Operating  Expenses.  The Company had total operating expenses of $496,000
for the three month period  ended March 31,  2004,  compared to $578,000 for the
same period in 2003.  Total operating  expenses for the three month period ended
March 31, 2004 included research and development  expenses of $280,000 ($272,000
- 2003) and  marketing  and  general  and  administrative  expenses  of $215,000
($306,000 - 2003).  Total operating expenses decreased by $82,000 or 14% for the
three month period  ended March 31,  2004,  compared to the same period in 2003.
The primary factors contributing to decreased operating expenses were a reversal
of $91,000 in  non-cash  stock-based  compensation  expenses  in the three month
period ended March 31, 2004, compared to nil during the same period in 2003.

Research and Development  Expenses.  Research and development  expenses in total
were $280,000 for the three months ended March 31, 2004 compared to $272,000 for
the same period in 2003, an increase of $8,000 or 3%.  Research and  development
personnel  costs increased by $4,000 from $180,000 for the first quarter in 2003
to $184,000 for the first quarter in 2004.  Research and  development  personnel
costs  included the reversal of stock-based  compensation  expenses in the three
month  period  ended March 31, 2004 of $41,000,  which was offset by  additional
personnel  expense of  $37,000.  Laboratory  expenses  related to  research  and
development  were  approximately  the same at $71,000 for the three months ended
March 31, 2004 and  $70,000  for the  comparable  period in 2003.  Research  and
development  office & travel expenses  increased from $6,000 for the three month
period ending March 31, 2003 to $12,000 for the same period in 2004.  Consulting
services decreased from $8,000 for the first quarter in 2003 to $0 for the first
three months in 2004. The Company's  professional  fees associated with research
and development  increased to $13,000 in the first quarter of 2004,  compared to
$8,000 in 2003.

The Company anticipates that research and development  expenses will be slightly
higher in 2004 as it continues  development of our BEM-Battery Energy Manager(R)
and  SEM-Smart  Energy  Manager(R)   technologies  and  continues  research  and
development efforts to improve its MagiQTM batteries and PowerLyzer(R)  product.
See "Plan of Operation."

Marketing  and General and  Administration  Expenses.  The  expenses  related to
marketing  and general and  administration  decreased  to $215,000 for the three
month period  ended March 31, 2004 from  $306,000 for the same period in 2003, a
decrease of $91,000 or 30%.  Personnel  related  expenses  decreased  $49,000 to
$(1,000)  for the three month  period  ended March 31, 2004 from $48,000 for the
same period in 2003. The reversal of stock-based



                                       15
<PAGE>

compensation  expenses in the three month period ended March 31, 2004  accounted
for $50,000 of the total  decrease in  personnel  related  expenses (no expenses
related to stock-based  compensation  were incurred in 2003).  Professional fees
decreased  significantly  to $39,000 for the first quarter in 2004,  compared to
$92,000 for the first quarter in 2003.  Investor relations expenses increased to
$69,000 for the three  months  ended March 31,  2004,  from $31,000 for the same
period  in 2003,  a  decrease  of  $38,000,  due to  increase  fees  paid to the
Company's investors relations firm. Consulting fees decreased $21,000 to $29,000
for the three  months  ended March 31,  2004,  from $50,000 for the three months
ended  March 31,  2003.  Other  expenses  related to  marketing  and general and
administration for the quarter ended March 31, 2004 included: increased office &
travel expenses at $38,000 ($32,000 - first quarter 2003);  decreased  marketing
activities at $13,000 ($25,000 - first quarter 2003);  increased management fees
at $23,000  ($18,000 - first quarter 2003);  and decreased all other expenses at
$5,000 ($10,000 - first quarter 2003).

The Company anticipates that the level of expenditures  related to its marketing
and general and administration expenses will increase during 2004 as it plans to
increase  marketing  efforts to introduce and  commercialize the MagiQTM battery
and  PowerLyzer(R).  The Company  also  expects to increase its efforts to enter
into service and licensing arrangements to commercialize its MagiQTM battery and
its related energy management technologies.

Net Loss. The Company incurred a net loss of $693,000 or $0.02 per share for the
first  quarter of 2004,  compared  to a net loss of  $490,000 or $0.02 per share
during the same period in 2003. The Company  incurred a loss on foreign exchange
of $195,000 for the three months period ended March 31, 2004, compared to a gain
on foreign exchange of $90,000 for the same period in 2003.

The Company  anticipates that it will continue to incur losses in future periods
until the Company is able to successfully  commercialize its MagiQTM battery and
energy management technologies.  There can be no assurance that the Company will
have  sufficient  capital  to  commercialize  its  MagiQTM  battery  and  energy
management  technologies or that such products will be commercially  successful.
The MagiQTM  battery is being  manufactured  by a third-party  manufacturer  for
limited  sales in Europe,  assuming that  adequate  financing is available.  The
Company did not ship any products during the first quarter of 2004. There can be
no assurance that the Company's  efforts to commercialize the MagiQTM battery or
any other products will be successful or that we will not  experience  delays in
introducing our battery or any other products to the market.

Liquidity and Capital Resources

Since inception, the Company has financed its operations primarily through sales
of its equity  securities.  From  inception to March 31,  2004,  the Company had
raised  approximately  $14,000,000 (net of issuance costs) from the sale of such
securities.  As of March 31, 2004, the Company had cash and cash  equivalents of
$555,000,  compared to $1,135,000, at December 31, 2003. The Company had working
capital of $441,000 at March 31, 2004, compared to working capital of $62,000 at
December  31,  2003.  In light of the  Company's  working  capital  position and
prospects at December 31, 2003,  the Company's  auditors  expressed  substantial
doubt  about the ability of the  Company to  continue  as a going  concern.  The
circumstances  giving rise to these  concerns  continue to exist as of March 31,
2004.  The  Company's  financial  statements  are prepared  using United  States
generally accepted accounting principles,  applicable to a going concern, and do
not reflect  adjustments  to the carrying value of assets and  liabilities,  the
reported expenses and balance sheet  classifications  that would be necessary if
the  appropriateness of the going concern assumption were not appropriate.  Such
adjustments could be material.

In November 2003, the Company  announced a private  placement of 2,222,222 units
of the Company at $0.45 per unit,  each such unit consisting of one common share
of the  Company and one  non-transferable  warrant  exercisable  for a period of
twelve  months  following  closing  and  entitling  the holder to  purchase  one
additional  common share of the Company for $0.50. In December 2003 the Board of
Directors  decided to increase  the private  placement  allotment  to  2,850,000
units. Until December 31, 2003 1,686,666 units for $759,000 were subscribed.  In
the quarter  ended March 31,  2004, a further  1,163,334  shares for proceeds of
$523,000 were issued.

In the quarter  ended March 31,  2004,  281,250  shares for proceeds of $118,000
were issued on the  exercise of warrants  out of private  placements.  As of the
balance  sheet  date,  additional  advances  of  $54,000  were  placed  into the
Company's trust account for the exercise of 110,000 warrants.



                                       16
<PAGE>

The  subscribers to all private  placements and warrant  exercises were non-U.S.
persons outside the United States of America.  The Company has used the proceeds
to fund research and  development of iQ Battery's  technology,  expansion of the
Company's marketing and sales activities and general working capital. Additional
funds are necessary to allow the Company to complete its product development and
marketing plan. In order to increase outsourced production and to build in-house
production  capabilities,  additional  financing  will be required.  There is no
assurance that the Company will be able to secure  additional  financing or that
such financing will be on terms beneficial to the existing shareholders.

The Company currently has no further  commitments for equity  financing,  credit
facilities,  revolving  credit  agreements or lines of credit that could provide
additional working capital.

The  Company  anticipates  that it will  require  an  additional  $2,300,000  to
$2,600,000  in  financing  to  meet  its  on-going  short  term  and  long  term
obligations  during  2004  and to fund  its  plan of  operation.  See  "Plan  of
Operation." The Company plans to finance its capital needs  principally from the
net  proceeds of its  securities  offerings,  if any. In  addition,  the Company
expects to generate revenues from the sales of its products.

The Company advanced $225,000 to Gel Electric  Technologies,  Inc. in connection
with  our  proposed  acquisition  of its  assets.  The  Company  made a bad debt
provision of $75,000 related to these advances, and the letter of intent related
to the  acquisition of these assets has expired.  In 2003, the Company  withdrew
from the Gel Battery  Project to focus on our  automotive  related  products and
wrote off a total of $225,000 related to these advances,  including  $150,000 in
2002. In addition,  the Company  recorded  $410,000 in 2003 related to a balance
originating   from  deposit   payments  made  in  connection  with  the  planned
acquisition of assets from a battery manufacturing  facility.  These assets will
be used by a former  prospective  venture partner,  who will eventually  acquire
these  assets and  reimburse  these  advances  to the  Company.  The  management
believes that the amounts are recoverable in the foreseeable  future and that no
allowance was necessary as of March 31, 2004.

The Company  currently  has no  external  sources of capital and there can be no
assurance  that the Company will be able to raise  sufficient  financing to meet
its capital requirements on acceptable terms or in a timely manner, if at all.

The Company  anticipates that the level of spending will increase  significantly
in future  periods as the  Company  undertakes  marketing  and sales  activities
related  to  the  commercialization  of  the  iQ  technology.  In  addition,  we
anticipate that our general and administrative  expenses will also significantly
increase  as  a  result  of  the  growth  in  our  commercialization,  research,
development,  testing and business development programs. The Company expects its
expenditures on research and  development to continue on the current level.  The
actual  levels of research and  development,  administrative  and  general,  and
marketing  corporate  expenditures are dependent on the cash resources available
to the Company, if any.

Currently  the  Company  is  exploring  investment   opportunities  such  as  an
investment  in a  production  site in Germany.  Should the  Company  pursue such
investments, it anticipates that it will require substantially more capital. The
Company  currently  has  commitments  in the  form  of  letters  of  intent  for
government  subsidies and credit  financing for the building of a  manufacturing
plant in Germany.  Both are dependent on the  availability of equity  financing,
which the Company has not secured.


Obligations and Commitments

iQ Battery  acquired  patents and  know-how  improving  the current  output of a
chargeable  battery at low outside  temperatures and the registered  design "iQ"
based on a contract dated March 15, 1995 from two shareholders,  one of which is
a director of the Company. The intangibles  purchased relate to a German patent,
an international  patent  application as well as the registered design "iQ". The
Company  and  the  shareholders  agreed  that  the  shareholders  would  receive
approximately  $250,000 (DM  400,000;  approximately  EUR  205,000)  from future
income.  No amounts  are due as the  Company  has not  realized  any  applicable
revenues or royalties.

In August 2002, the Company entered into a Financial  Public  Relations  Adviser
Consulting Agreement with Joerg Schweizer, a non-U.S.  person outside the United
States. The Company agreed to pay Joerg Schweizer a consulting fee in the amount
of  approximately  $6,250  (EUR  5,000)  per  month  for such  services.  Of the
consulting  fee,  approximately  $2,500  (EUR 2,000) is due  monthly,  while the
remaining approximately $3,750 (EUR 3,000) is payable by issuing Joerg Schweizer
common shares,  issuable on a quarterly basis. The agreement has an initial term
of 12 months.  As of December 31, 2002,  the Company had issued Joerg  Schweizer
16,900  common  shares  under the  agreement.  During the fiscal year 2003,  the
Company had issued Joerg Schweizer 50,700 common shares under the agreement,  as
well as another 22,500 common shares for the  reimbursement of expenses.  During
the first Quarter  2004,  the company had issued Joerg  Schweizer  65,280 common
shares.  As of March 31,  2004 the Company  had issued  155,380  shares to Joerg
Schweizer in connection with this agreement.  Effective August 2003, the Company
entered into a restated Agreement with Joerg Schweizer.  In the first quarter of
2004, the Company also concluded a Supplemental  Agreement with Joerg Schweizer,
under  which  the  Company  issued  Mr.   Schweizer   75,000  common  shares  in
consideration  for his provision of services beyond those  contracted for in his
Financial Public Relations Adviser Consulting Agreements and in respect of which
two further  installments of 25,000 common shares each are due. During the first
quarter 2004,  the Company had issued Joerg  Schweizer  108,800  common  shares.
Through March 31, 2004,  the Company  issued a total of 204,500  shares to Joerg
Schweizer in connection with these agreements.



                                       17
<PAGE>

Our capital  requirements  depend on several factors,  including the success and
progress  of our  product  development  programs,  the  resources  we  devote to
developing  our  products,  the  extent to which  our  products  achieve  market
acceptance, and other factors. We expect to devote substantial cash for research
and  development.  We cannot  adequately  predict  the  amount and timing of our
future  cash  requirements.   We  will  consider   collaborative   research  and
development  arrangements  with  strategic  partners  and  additional  public or
private financing  (including the issuance of additional  equity  securities) to
fund  all or a part of a  particular  program  in the  future.  There  can be no
assurance that  additional  funding will be available or, if available,  that it
will be available on terms acceptable to the Company.  If adequate funds are not
available,  we may have to reduce  substantially  or eliminate  expenditures for
research and  development,  testing,  production  and  marketing of its proposed
products,  or obtain funds through  arrangements  with  strategic  partners that
require it to relinquish  rights to some of its technologies or products.  There
can be no assurance  that we will be able to raise  additional  cash if our cash
resources  are  exhausted.  Our ability to arrange such  financing in the future
will depend in part upon the prevailing capital market conditions as well as our
business performance.


Plan of Operation

As part of our strategic plan for fiscal 2004,  assuming  sufficient funding, we
intend to undertake the following activities:

Research and Development

We  anticipate  that  we will  spend  approximately  $900,000  on  research  and
development for the fiscal year ending December 31, 2004. We expect this will be
partially  compensated  by $200,000 in subsidies  from  European  programs.  Our
research and development initiatives for fiscal 2004 are expected to include:

     o    intensifying  our research and  development  operations on the SEM and
          BEM product family designs;
     o    complete  and   continuously   improve   refining  and   supplementing
          ourMagiQTM product family designs;
     o    finalizing our third party testing and validation program;
     o    continuing and expanding our joint research activities with car makers
          in various x-by-wire programs;
     o    continuing  our  state of  charge  (SOC)  and  state of  health  (SOH)
          software  and  implementation   development;
     o    expediting  our  activities  in the field of power line  communication
          with the DC-BUS technology; and
     o    expanding  our  activities  in the field of powernet  measurement  and
          diagnosis tools (similar to the PowerLyzer(R))

Production

We anticipate that we will spend  approximately  $500,000 on production  related
costs and planning  activities in fiscal 2004.  These activities are expected to
include:

     o    commencing production of our MagiQTM battery;
     o    continuing and expanding production of the PowerLyzer(R)device
     o    continuing  the  assessment  and  the   qualification   of  additional
          manufacturing sites for the production of the MagiQTM battery designs;
     o    seeking  and  concluding  joint  ventures,   partnership   agreements,
          cooperation    agreements   or   similar   agreements   with   battery
          manufacturers and component suppliers;
     o    assessing options to operate own manufacturing sites;
     o    enforcing quality  management and assurance programs of supplier's and
          internal workflows;
     o    continuously   improving   production   processes,   optimizing   cost
          structure, and increasing product quality; and



                                       18
<PAGE>

     o    implementing  adequate  software  tools for  production  planning  and
          scheduling (PPS) and enterprise resource planning (ERP)


Hof Project:

We have entered into a letter of intent with the City of Hof, Germany, to pursue
the  opportunity  to build a pilot  production  plant  as part of an  automotive
cluster that the Bavarian  State plans to locate  there.  In that  context,  the
Company had filed an  application  for  government  funds in April 2002, and has
been negotiating  financings with numerous banks and investment firms, resulting
in the  issuance  of a letter  of  intent  by a major  German  bank for the loan
financing  portion of the  investment.  In 2003 we  received a second  letter of
intent by another  German bank institute to participate in the loan financing of
the plant.  The Hof plant is contingent upon the Company raising and designating
to the  project  an  additional  $6,000,000  to  $8,000,000  in equity  capital,
resulting in over  $25,000,000 for investment and working capital being provided
by bank loans and government  subsidies.  Though  negotiations  with independent
financiers  are  ongoing,  there  is no  assurance  that  the  Company  will  be
successful in this endeavor.


Sales and Marketing

We anticipate that we will spend  approximately  $400,000 on marketing and sales
for the fiscal year ending  December  31,  2004.  These funds are expected to be
expended on:

     o    expanding our marketing activities of our MagiQTM battery system;
     o    starting  sales of our MagiQTM  battery system to OEM customers and AM
          distributors;
     o    marketing the iQ technology and our software as part of our technology
          for solutions  regarding SOC and SOH status  indications for batteries
          to  car  manufacturers  and  their  Tier  1  suppliers  under  license
          agreements or similar agreements;
     o    entering into customization  programs with customers of the automotive
          industry  and other  industries  to apply our  technology  for  energy
          storage (MagiQTM) to their individual demand; and
     o    entering into  development  contracts with customers of the automotive
          industry  and other  industries  to apply our  technology  for  energy
          management  solutions (BEM, SEM) to their  individual  demand with the
          goal of producing and supplying the products to those customers.


Financing activities

Our ability to continue as a going concern is entirely  dependent on our ability
to  raise  additional  capital  in  2004.  We  anticipate  that  we  will  spend
approximately  $150,000 for capital  raising  efforts  during fiscal 2004 with a
view to

     o    seeking  additional  financing to expand our operations and to acquire
          an  interest  in  or  form  a  strategic   alliance   with  a  battery
          manufacturer  so  that  time-to-market  of  our  first  generation  of
          products can be reduced;

     o    generating sales of our products; and

     o    research and development.


Administrative and General Operating

We  estimate  that our  general  administrative  and  operating  budget  will be
approximately  $1,200,000  during our fiscal year ending  December 31, 2004.  In
addition to existing general administrative functions, we anticipate

     o    intensifying our business development  activities towards corporations
          and alliances;
     o    implementing  additional corporate  governance  structures in order to
          respond to  increased  internal  and external  needs;



                                       19
<PAGE>

     o    continuously  improving public  awareness  through investor and public
          relations activities in accordance with the Company's development;
     o    adjusting  the  structure of the Company  organization  and work flows
          along company growth and expansion; and
     o    Selecting  IT-support  tools  for  smoother  and  more  efficient  and
          transparent processes.

We anticipate  that our total  operating  budget for fiscal year ending December
31, 2004,  will be  approximately  $2,950,000,  and that we will require minimum
additional  financing of  approximately  $2,000,000 to $2,600,000 to satisfy our
working capital requirements through December 31, 2004.

In the event that we acquire or  commence  plans to develop  our own  production
facilities,  our total  budget for the fiscal  year  ended 2004 is  expected  to
increase significantly.

In the first quarter of 2004, we received  funds out of a private  placement but
we will  need  to  undertake  additional  financings  in the  near  future.  See
"Liquidity  and  Capital  Resources"  above.  We may need more  financing  if we
experience delays, cost overruns, additional funding needs for joint ventures or
other unanticipated  events. We cannot assure you that we will be able to obtain
more  financing or that, if we do, it will be on favorable  terms or on a timely
basis.

If we are unable to raise  additional  financing on acceptable  terms, we may be
required to take some or all of the following:

     o    reduce expenditures on research and development;
     o    reduce sales and marketing expenditures;
     o    reduce  general  and  administrative  expenses  through  lay  offs  or
          consolidation of our operations;
     o    suspend our  participation in pilot programs that are not economically
          profitable;
     o    sell assets, including licenses to our technologies;
     o    suspend our operations until sufficient financing is available; or
     o    sell or wind up and liquidate our business.

Any of these  actions  may affect our ability to offer  competitive  products or
compete  in the  market.  Our  inability  to offer a  competitive  product or to
effectively compete will affect our ability to continue as a going concern.


Personnel

The Company does not expect any  significant  changes in its personnel  strategy
over the next twelve months. The Company's personnel strategy is to maintain its
research  and  development  capabilities  and the Company may hire  personnel in
marketing and sales once the  commercial  production  of the MagiQTM  battery is
commenced.



                                       20
<PAGE>

Other Trends and Uncertainties

Foreign Currency  Translation Risk US dollars forwarded to our German subsidiary
are translated  into Euros for German  accounting  purposes as soon as the funds
are used for their  operations.  In the  consolidation  process  these loans are
translated back into US dollars resulting in foreign exchange gains or losses at
the  Company's  German  subsidiary.  In the first  quarter  of 2004,  due to the
strengthening  of the Euro versus the US dollar,  the Company  incurred  foreign
exchange losses of $195,000.  The Company  believes its risk of foreign currency
translation is limited to these inter-company transactions. The Company does not
currently  engage in hedging or other  activities to control the risk of foreign
currency translation, but may do so in the future, if conditions warrant.


Going Concern

We are still in the  development  stage and could fail before  implementing  our
business  strategy.  We may  continue  to incur net losses  for the  foreseeable
future and our auditors  have  prepared the  accompanying  financial  statements
assuming that we will continue as a going  concern.  Our auditors have expressed
continued  uncertainty  as to our ability to continue  as a going  concern.  See
"Item 7. Financial Statements -- Note 2 to our Financial Statements."


Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.


ITEM 3.  CONTROLS AND PROCEDURES

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that  information  required to be disclosed in the  Company's  Securities
Exchange  Act of 1934 reports 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  the  Company's  management,
including  its  Chief  Executive  Officer  and  Chief  Financial   Officer,   as
appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period  covered by this report,  the  Company's  management
carried out an evaluation,  under the supervision and with the  participation of
the Company's  management,  including the Company's Chief Executive  Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls  and  procedures  pursuant to Exchange  Act Rule
13a-14.  Based upon the foregoing,  the Company's  Chief  Executive  Officer and
Chief Financial  Officer  concluded that the Company's  disclosure  controls and
procedures were effective in connection with the filing of the quarterly  report
on Form 10-QSB for the quarter ended March 31, 2004.

During the most recent fiscal  quarter  ended March 31, 2004,  there has been no
change in our internal  control  over  financial  reporting  (as defined in Rule
13a-15(f) or 15d-15(f) under the Exchange Act) that has materially affected,  or
is reasonably likely to materially  affect,  our internal control over financial
reporting.



                                       21
<PAGE>

Part II -  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of March 31,  2004,  there was no  material  litigation  pending  against the
Company.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities.

In the quarter  ended March 31,  2004,  the Company  issued Joerg  Schweizer,  a
non-U.S. person outside the United States, 108,800 common shares under the terms
of a Financial Public Relations Adviser Consulting  Agreements.  The shares were
issued in reliance upon an exception  from the  registration  requirement of the
Securities Act under Regulation S.

In November 2003, the Company  announced a private  placement of 2,222,222 units
of the Company at $0.45 per unit,  each such unit consisting of one common share
of the  Company and one  non-transferable  warrant  exercisable  for a period of
twelve  months  following  closing  and  entitling  the holder to  purchase  one
additional  common share of the Company for $0.50. In December 2003 the Board of
Directors  increased the private placement  allotment to 2,850,000 units.  Until
December 31, 2003 1,686,666 units for $759,000 were subscribed.  As of March 31,
2004, a further 1,163,334 shares for proceeds of $523,000 were issued. The Units
were issued  outside the United States to non-U.S.  Persons in reliance upon the
exception from  registration  available under Regulation S of the Securities Act
of 1933, as amended.

As of March 31, 2004, 281,250 shares for proceeds of $118,000 were issued on the
exercise of warrants out of private  placements.  As of the balance  sheet date,
additional  advances  of $54,000  were  placed  into trust for the  exercise  of
110,000 warrants. The Warrants were exercised and the shares were issued outside
the United  States to  non-U.S.  Persons in  reliance  upon the  exception  from
registration  available  under  Regulation S of the  Securities  Act of 1933, as
amended.

Additional   information   regarding  the  Company's  issuance  of  unregistered
securities  during the past three fiscal  years is  contained  in the  Company's
annual  reports on Form 10-KSB for the years ended  December 31, 2003,  2002 and
2001 under "Item 5. Market for Common Equity and Related  Shareholder  Matters -
Recent Sale of Unregistered  Securities" filed with the United States Securities
and Exchange  Commission.  The  information  contained under Item 5. "Market for
Common Equity and Related Shareholder Matters


Purchases of Equity Securities by the Company or  Affiliated Purchasers

There were no purchases of equity  securities by the Company or any  "affiliated
purchaser" (as defined in Rule  10b-18(a)(3)  of the Securities  Exchange Act of
1934, as amended) during the quarter ended March 31, 2004.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Shareholders during the quarter ended
March 31, 2004.


ITEM 5. OTHER INFORMATION

None.



                                       22
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following Exhibits are filed as part of this report:


EXHIBIT INDEX

   EXHIBIT NO.      DESCRIPTION
   -----------      -----------
     2.1(1)         Certificate  of  Incorporation  dated December 20, 1994, for
                    3099458 Canada Inc.

     2.2(1)         Articles of  Incorporation  dated  December  21,  1994,  for
                    3099458 Canada Inc.


     2.3(1)         Certificate  of Amendment  dated May 9, 1997,  together with
                    Form 4, Articles of Amendment for iQ Power Technology Inc.

     2.4(1)         Certificate of Amendment  dated March 31, 1998, for iQ Power
                    Technology Inc.

     2.5(1)         By-law Number One General By-Law of iQ Power Technology Inc.
                    dated December 31, 1997, as confirmed on June 30, 1998

     2.6(9)         Certificate  of  Amendment  dated July 23, 2002 for iQ Power
                    Technology Inc.

     2.7(9)         Amendment  to By-law  Number One General  By-Law of iQ Power
                    Technology Inc. dated June 28, 2002

    10.1(1)         Management  Agreement dated January 1, 1997, between 3099458
                    Canada Inc. and Mayon Management Corp.  (previously filed as
                    Exhibit 6.5)

    10.2(1)         Consulting Agreement dated August 25, 1998, between iQ Power
                    Technology Inc. and Mayon Management Corp. (previously filed
                    as Exhibit 6.6)

    10.3(1)         Employment  Agreement dated August 31, 1998 with Dr. Gunther
                    C. Bauer (previously filed as Exhibit 6.7)

    10.4(1)         Employment  Agreement  dated  August 31,  1998 with Peter E.
                    Braun (previously filed as Exhibit 6.8)

    10.5(1)         Form  of   Confidentiality   Agreement   between   iQ  Power
                    Technology   Inc.  and  certain   Officers  of  the  Company
                    (previously filed as Exhibit 6.10)

    10.6(1)         Form of iQ Germany Confidentiality  Agreement (Translated to
                    English)(previously filed as Exhibit 6.13)

    10.7(1)         Form   of   iQ   Germany   Employee    Confidentiality   and
                    Nondisclosure  Agreement (Translated to  English)(previously
                    filed as Exhibit 6.14)

    10.8(1)         Cooperation Agreement by and between iQ Battery Research and
                    Development GmbH and BASF Aktiengesellschaft  (Translated to
                    English)(previously filed as Exhibit 6.15)

    10.9(1)         Confidentiality Agreement by and between iQ Battery Research
                    and Development GmbH and Bayerische Motoren Werke dated July
                    29, 1997 (Translated to English)(previously filed as Exhibit
                    6.16)

    10.10(1)        Mutual  Confidentiality  Agreement among iQ Battery Research
                    and Development  GmbH,  Akkumulatorenfabrik  Moll GmbH & Co.
                    KG,   and  Audi   dated   May  26,   1998   (Translated   to
                    English)(previously filed as Exhibit 6.17)



                                       23
<PAGE>

   EXHIBIT NO.      DESCRIPTION
   -----------      -----------
    10.11(1)        Confidentiality  Agreement  between iQ Battery  Research and
                    Development GmbH and Mercedes Benz Aktiengessellschaft dated
                    March 21, 1997 (Translated to  English)(previously  filed as
                    Exhibit 6.18)

    10.12(1)        Contract Concerning  Industrial Property Rights and Know How
                    by and  between  Dieter  Braun  and  Peter E.  Braun  and iQ
                    Battery  Research and Development  GmbH dated March 15, 1995
                    (Translated to English)(previously filed as Exhibit 6.22)

    10.13(1)        Supplementary Contract to the Contract concerning Industrial
                    Property  Rights and Know How by and between H. Dieter Braun
                    and Peter E. Braun and iQ Battery  Research and  Development
                    GmbH    dated    August    16,    1996     (Translated    to
                    English)(previously filed as Exhibit 6.23)

    10.14(1)        Extension of Contract regarding  Industrial  Property Rights
                    and Know How by and between Dieter Braun and Peter Braun and
                    iQ Battery Research and Development GmbH dated September 20,
                    1996  (Translated  to  English)(previously  filed as Exhibit
                    6.24)

    10.15(1)        Agreement (Debt Deferral) by and between iQ Battery Research
                    and Development  GmbH and Dieter Braun and Peter Braun dated
                    December 27, 1996 (Translated to  English)(previously  filed
                    as Exhibit 6.27)

    10.16(1)        Agreement  (Debt  Deferral)  by and between iQ Research  and
                    Development  GmbH and Gunther Bauer dated  December 27, 1996
                    (Translated to English)(previously filed as Exhibit 6.28)

    10.17(1)        Waiver among H. Dieter Braun, Peter E. Braun, Gunther Bauer,
                    Karin  Wittkewitz  and iQ Battery  Research and  Development
                    GmbH   dated    December    19,    1997    (Translated    to
                    English)(previously filed as Exhibit 6.29)

    10.18(1)        Agreement by and between iQ Battery Research and Development
                    GmbH and Dieter Braun and Peter Braun dated  October 9, 1998
                    (Translated to English)(previously filed as Exhibit 6.30)

    10.19(1)        1998 Stock Option Plan (previously filed as Exhibit 6.31)

    10.20(1)        Form of Stock Option Agreement  (previously filed as Exhibit
                    6.32)

    10.21(1)        Agreement Re Rights and Interests  dated December 9, 1998 by
                    and among the  Company,  H. Dieter  Braun and Peter E. Braun
                    (previously filed as Exhibit 6.34)

    10.22(1)        Trademark  Assignment  dated December 9, 1998 by and between
                    the Company and H. Dieter Braun (previously filed as Exhibit
                    6.35)

    10.23(1)        Patent  Assignment dated December 9, 1998 by and between the
                    Company and H. Dieter  Braun and Peter E. Braun  (previously
                    filed as Exhibit 6.36)

    10.24(3)        Cooperation  Agreement  dated October 19, 1999 between Yamar
                    Electronics Ltd. and iQ Battery R&D GmbH(previously filed as
                    Exhibit 6.40)

    10.25(4)        Agreement of Subordination in Priority in Association with a
                    Conditional   Waiver  of  Claim  by  and  between  IQ  Power
                    Technology Inc. and iQ Battery Research and Development GmbH
                    dated May 2, 2001 (previously filed as Exhibit 6.49)

    10.26(5)        Amendment  No. 3 to iQ Power  Technology  1998 Stock  Option
                    Plan (previously filed as Exhibit 6.50)



                                       24
<PAGE>

   EXHIBIT NO.      DESCRIPTION
   -----------      -----------
    10.27(5)        iQ Power Technology 2001 Incentive Plan (previously filed as
                    Exhibit 6.51)

    10.28(8)        European    Investor    Relations    Consulting    Agreement
                    Supplemental  Agreement  # 1 by and  between the Company and
                    Magdalena Finance Corp. dated September 1, 2001. (previously
                    filed as Exhibit 6.57)

    10.29(10)       Amendment  No. 4 to iQ Power  Technology  1998 Stock  Option
                    Plan (previously filed as Exhibit 6.61)

    10.30(10)       Amendment No. 1 to iQ Power  Technology  2001 Incentive Plan
                    (previously filed as Exhibit 6.62)

    10.31(11)       Media Relations Consulting Agreement by and between iQ Power
                    Technology  Inc. and Andreas  Gloetzl  (previously  filed as
                    Exhibit 6.63)

    10.32(11)       Financial Public Relations Adviser  Consulting  Agreement by
                    and  between iQ Power  Technology  Inc.  and Jorg  Schweizer
                    (previously filed as Exhibit 6.64)

    10.33(11)       Letter of Intent by and between iQ Power Technology Inc. and
                    Gel Electric Technologies, Inc. (previously filed as Exhibit
                    6.65)

    10.34(12)       Consulting Agreement by and between iQ Power Technology Inc.
                    and Marco Graf v. Matuschka

    10.35(13)       Financial Public Relations Adviser Consulting Agreement 2003
                    by and between iQ Power Technology Inc. and Jorg Schweizer

    10.36           Amendment to Financial Public Relations  Adviser  Consulting
                    Agreement 2003 by and between iQ Power  Technology  Inc. and
                    Jorg Schweizer

    31.1            Section 302  Certification  of Chief  Executive  Officer and
                    Acting Principal Financial Officer

    32.1            Section 904  Certification  of Chief  Executive  Officer and
                    Acting Principal Financial Officer

---------------------
(1)  Previously filed as an exhibit to the registrant's  registration  statement
     on Form SB-1 on December 10, 1998 (File No. 333-68649).
(2)  Previously filed as an exhibit to the registrant's  registration  statement
     on Form SB-1/A (Amendment No. 1) on March 18, 1998 (File No. 333-68649).
(3)  Previously  filed as an exhibit to the  registrant's  annual report on Form
     10-KSB for the year ended December 1, 1999.
(4)  Previously  filed as an exhibit to the  registrant's  annual report on Form
     10-KSB for the year ended December 31, 2000.
(5)  Previously filed as an exhibit to the registrant's  registration  statement
     on Form S-8 filed on July 25, 2001.
(6)  Previously filed as an exhibit to the registrant's quarterly report on Form
     10-QSB for the quarter ended June 30, 2001.
(7)  Previously filed as an exhibit to the registrant's quarterly report on Form
     10-QSB for the quarter ended September 30, 2001.
(8)  Previously  filed as an exhibit to the  registrant's  annual report on Form
     10-KSB for the year ended December 31, 2001.
(9)  Previously filed as an exhibit to the registrant's quarterly report on Form
     10-QSB for the quarter ended June 30, 2002.



                                       25
<PAGE>

(10) Previously filed as an exhibit to the registrant's  registration  statement
     on Form S-8 filed on November 8, 2002.
(11) Previously filed as an exhibit to the registrant's quarterly report on Form
     10-QSB for the quarter ended September 30, 2002.
(12) Previously  filed as an exhibit to the  registrant's  annual report on Form
     10-KSB for the year ended December 31, 2002.
(13) Previously  filed as an exhibit to the  registrant's  annual report on Form
     10-KSB for the year ended December 31, 2003.


(b)  Reports on Form 8-K.

     None.



<PAGE>


                                   SIGNATURES

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

May 13, 2004.


                                          iQ POWER TECHNOLOGY INC.


                                 By:      /s/ Peter E. Braun
                                     -------------------------------------------
                                          Peter E. Braun,
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)







                                       26