================================================================================
                       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, 2000

                                       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 0-28968

                            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.)


                     Suite 708-A, 1111 West Hastings Street
                       Vancouver, British Columbia V6E 2J3
                                 (604) 669-3132
                          (Address and telephone number
                         of principal executive offices)

                                  Erlenhof Park
                              Inselkammer Strasse 4
                          D-82008 Unterhaching, Germany
(Address of principal place of business or intended principal place of business)

                                 (604) 669-3132
                           (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 March 31, 2000 was 9,746,620.



<PAGE>



                               IQ POWER TECHNOLOGY

                            INDEX TO THE FORM 10-QSB
                  For the quarterly period ended March 31, 2000

                                                                           Page

Part I -  Financial Information

 ITEM 1.  Financial Statements

          Balance Sheet ......................................................3

          Statement of Loss and Deficit ......................................4

          Statement of Cash Flow .............................................5

          Notes to the Financial Statements ..................................6

 Item 2.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations ................................15

Part II - Other Information ..................................................17

 Item 1.  Legal Proceedings ..................................................17

 Item 2.  Changes in Securities and Use of Proceeds ..........................17

 Item 3.  Defaults Upon Senior Securities ....................................17

 Item 4.  Submission of Matters to a Vote of Security Holders ................18

 Item 5.  Other Information ..................................................18

 Item 6.  Exhibits and Reports on Form 8-K ...................................18


Signatures ...................................................................19


<PAGE>

Part I -  Financial Information

     Item 1. Financial Statements


IQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Balance Sheet
March 31, 2000
(Expressed in United States dollars; all amounts in thousands
except per share data)
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
                                                                         March 31,        December 31,
                                                                              2000                1999
                                                                      ------------        -------------
<S>                                                                        <C>                 <C>
ASSETS

CURRENT
   Cash and cash equivalents                                               $ 1,940             $ 2,283
   Receivable from shareholders                                                 46                  62
   Accounts receivable                                                          90                 180
   Prepaids and deposits                                                        19                  15
--------------------------------------------------------------------------------------------------------
Total current assets                                                         2,095               2,540
EQUIPMENT, net                                                                 285                 297
--------------------------------------------------------------------------------------------------------
Total assets                                                               $ 2,380             $ 2,837
========================================================================================================

LIABILITIES

CURRENT
   Bank indebtedness                                                       $     1             $     1
   Accounts payable                                                            108                 130
   Accrued liabilities                                                          36                  55
--------------------------------------------------------------------------------------------------------
Total current liabilities                                                      145                 186
BANK DEBT - non-current                                                          2                   2
--------------------------------------------------------------------------------------------------------
Total liabilities                                                              147                 188
========================================================================================================

SHAREHOLDERS' EQUITY (Note 4)

Authorized:
  An unlimited number of common shares of no par value.
Issued and outstanding:
        9,776,620  common shares at March 31, 2000
        9,731,620  common shares at December 31, 1999                        5,941               5,904
Additional paid-in capital                                                     401                 396
Accumulated other comprehensive income (loss)                                   (1)                 82
Accumulated deficit, during development stage                               (4,108)             (3,733)
--------------------------------------------------------------------------------------------------------
Total shareholders' equity (deficit)                                         2,233               2,649
--------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                 $ 2,380             $ 2,837
========================================================================================================
</TABLE>

CONTINUING OPERATIONS


         See accompanying notes to consolidated financial statements



                                       3
<PAGE>


IQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Statement of Loss and Comprehensive Loss
Three Months Ended March 31, 2000
(Expressed in United States dollars; all amounts in thousands
except per share data)
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
                                                               Cumulative from             Three              Three
                                                             date of inception      months ended       months ended
                                                                  to March 31,         March 31,          March 31,
                                                                          2000              2000               1999
                                                             -----------------      ------------       -------------
<S>                                                                <C>               <C>                <C>
Sales and other revenues                                           $    176          $        -         $        -
--------------------------------------------------------------------------------------------------------------------
EXPENSES
  Research and development expenses:
      Personnel                                                       1,412                 117                122
      Laboratory                                                        785                  81                 42
      Office                                                            349                  70                  5
      Consulting services                                               547                  15                 15
      Professional fees                                                 676                  10                 17
--------------------------------------------------------------------------------------------------------------------
                                                                      3,768                 292                201

  General and administrative expenses:
      Personnel                                                         220                  49                 14
      Financing                                                         151                   -                  1
      Office                                                             67                   8                  5
      Consulting services                                               110                   8                  5
      Professional fees                                                 176                  33                  5
      Management fees                                                    54                  18                  -
      Investor relations                                                100                  20                  -
      Research memberships                                               50                   -                  -
      Travel                                                            119                  16                  -
      Other                                                             141                  16                  -
--------------------------------------------------------------------------------------------------------------------
                                                                      1,187                 167                 30

  Interest                                                              133                   -                  -
  Stock based compensation                                              368                   -                  -
--------------------------------------------------------------------------------------------------------------------

TOTAL EXPENSES                                                        5,456                 459                231
--------------------------------------------------------------------------------------------------------------------
INTEREST INCOME                                                        (147)                (84)                 -
--------------------------------------------------------------------------------------------------------------------
NET LOSS                                                             (5,133)               (375)              (231)
--------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income:
  Accumulated other comprehensive
    income (loss)                                                        (1)                (46)               (78)
--------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE LOSS                                                 $ (5,134)         $     (458)        $     (309)
--------------------------------------------------------------------------------------------------------------------
Basic and diluted loss per share                                                     $    (0.04)        $    (0.04)
--------------------------------------------------------------------------------------------------------------------
Basic and diluted weighted average
  number of shares outstanding                                                        9,730,820          5,120,000
--------------------------------------------------------------------------------------------------------------------
</TABLE>


         See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

IQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Statement of Cash Flows
Three Months Ended March 31, 2000
(Expressed in United States dollars; all amounts in thousands
except per share data)
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
                                                                     Cumulative
                                                                   from date of              Three              Three
                                                                   Inception to       months ended       months ended
                                                                      March 31,          March 31,          March 31,
                                                                           2000               2000               1999
                                                               -----------------      ------------       -------------
<S>                                                                   <C>                  <C>              <C>
OPERATING ACTIVITIES
   Net loss                                                           $ (5,123)            $ (375)          $   (231)
   Items not affecting cash
      Depreciation and amortization                                        123                  8                  -
      Stock based compensation                                             373                  5                  -
   Changes in non-cash working capital
      Decrease (increase) in accounts receivable                           (90)                90                 35
      Decrease (increase) in prepaid and deposits                          (19)                (4)                 -
      Increase (decrease) in accounts payable                              108                (22)               (64)
      Increase (decrease) in accrued liabilities                            36                (19)                 1
----------------------------------------------------------------------------------------------------------------------
                                                                        (4,592)              (317)              (259)
----------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITY
   Additions to property, plant and equipment                             (420)                (8)               (89)
----------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
   Increase in short-term debt                                               1                  -                177
   Increase in due to shareholder                                          (46)                16                224
   Advances received from external parties                                 296                  -                  -
   Increase in other long-term debt                                          2                  -                  -
   Cash acquired on business combination                                 4,718                  -                  -
   Advances from subsidiary                                                581                  -                 69
   Issuance of shares                                                      409                  -                  -
   Issuance of atypical shares                                           1,025                  -                  -
----------------------------------------------------------------------------------------------------------------------
                                                                         6,986                 16                470
----------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND
  CASH EQUIVALENTS                                                       1,963               (310)               122

FOREIGN EXCHANGE MOVEMENT                                                  (23)               (33)               (92)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                                        -              2,283                 13
----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                                        $ 1,940            $ 1,940               $ 43
----------------------------------------------------------------------------------------------------------------------
</TABLE>


         See accompanying notes to consolidated financial statements.




                                       5
<PAGE>

IQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Statement 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, 1994              40       $   60    $     -       $       -      $    (173)      $    (113)
Issue of shares
Net loss                                                                                       (341)           (341)
Allocation of loss to
  atypical shares                                                                               379             379
---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995              40           60          -               -           (135)            (75)
Issue of shares
Net loss                                                                                       (496)           (496)
Allocation of loss to
  atypical shares                                                                               139             139
---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996              40           60          -               -          (492)            (432)
Issue of shares
Net loss                                                                                      (597)            (597)
Allocation of loss to
  atypical shares                                                                              312              312
---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997              40           60          -               -          (777)            (717)
Issue of shares
Net loss                                                                                    (1,027)          (1,027)
Allocation of loss to
  atypical shares                                                                              228              228
Other comprehensive (loss) -
  foreign currency translation
  adjustments                                                                    (94)                           (94)
---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998              40           60          -             (94)       (1,576)          (1,610)
Reorganization of capital on
  reverse acquisition              5,119,960
Deemed issuance of shares on
  acquisition of iQ Power
  Technology Inc.                  4,471,770        5,495                                                     5,495
Stock based compensation                                         396                                            396
Exercise of warrants                 139,850          349                                                       349
Net loss                                                                                    (2,157)          (2,157)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                                                                    176                            176
---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999       9,731,620     $  5,904      $ 396            $ 82      $ (3,733)        $  2,649
Net loss                                   -            -          -               -          (375)            (375)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                              -            -          -             (83)            -              (83)
Exercise of Options                   15,000           37          -               -             -               37
Stock based compensation                   -            -          5               -             -                5
---------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000          9,746,620     $  5,941      $ 401            $ (1)     $ (4,108)        $  2,233
</TABLE>



    See accompanying notes to consolidated financial statements.



                                       6
<PAGE>



iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


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
     as reverse  acquisition  with iQ Battery being  identified as the acquiror.
     The comparative financial statements are those of iQ Battery.

     iQ Battery  established  in 1991 is  developing a chargeable  battery which
     allows an improved current output at low outside temperatures.  The process
     engineering  for this  chargeable  battery  and the  know-how is based on a
     patent acquired from the founding shareholders of iQ Battery.

     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 Floha,  Germany, and it maintains a branch near Munich, where management
     has its offices.  The Company intends to grant licenses for this process to
     the automotive and related industries in the future.

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'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 come 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.

     The Company has 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. The Company  intends to
     use  the  proceeds  to  fund  research  and  development  of  iQ  Germany's
     technology,  expansion of the Company's  marketing and sales activities and
     general  working  capital.  It is unlikely  that current funds on hand will
     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 financings
     will be on terms beneficial to the existing shareholders.



                                       7
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These  consolidated  financial  statements have been prepared in accordance
     with  accounting  principles  generally  accepted in the United  States and
     reflect the following significant accounting policies:

     (a)  Consolidation

          These  consolidated  financial  statements  include  accounts  of  the
          Company and its wholly owned  subsidiary IQ Battery.  All intercompany
          transactions and balances have been eliminated.

     (b)  Use of estimates

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States requires management
          to make estimates and assumptions  that affect the reported amounts of
          assets  and  liabilities  and  disclosure  of  contingent  assets  and
          liabilities  at the date of the financial  statements and the reported
          amounts of revenues and expenses during the reporting  period.  Actual
          results could differ from those estimates.

     (c)  Foreign currency translation

          The Company's current activities result in transactions denominated in
          German   Deutschemarks  and  US  and  Canadian   dollars.   Management
          considered the following in the process of  determining  the Company's
          functional currency.

          (i)       All  significant  equity  financing  to this  date have been
                    denominated in US funds.

          (ii)      In excess of 50% of the Company's operating expenditures are
                    paid or denominated in US funds.

          (iii)     In  excess  of  50%  of  the  total  assets  throughout  are
                    denominated in US funds.  Further, the Company maintains its
                    cash in US dollars,  only converting to Canadian  dollars or
                    German  Deutsche  Marks  to  the  extent  necessary  to  pay
                    Canadian or German denominated liabilities.

          Based on these  factors  the Company  has  determined  that the United
          States dollars is the appropriate  functional currency for measurement
          and reporting purposes.



                                       8
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (c)  Foreign currency translation (continued)

          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 earnings.  Assets and liabilities of
          subsidiaries  not reporting in US dollars 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.  Gains and losses arising from
          translation  of  financial  statements  are deferred and recorded as a
          separate component of comprehensive income (loss).

     (d)  Cash and cash equivalents

          Cash and cash equivalents  consist of cash on hand,  deposits in banks
          and highly liquid money market  instruments with an original  maturity
          of 90 days or less.

     (e)  Equipment

          Equipment  is recorded  at cost.  Depreciation  is recorded  using the
          straight-line  method  based  upon the  useful  lives  of the  assets,
          generally estimated at 3-5 years. When assets are sold or retired, the
          cost and  accumulated  depreciation  are removed from the accounts and
          any gain or loss is included in income.

     (f)  Long-term liabilities to original shareholders

          Liabilities  due to shareholders  including  interest only in case the
          Company has generated  sufficient net assets or  liquidation  proceeds
          are shown under non-current liabilities.

     (g)  Research and development

          Research  and  development  costs are  expensed as  incurred  unless a
          project meets the specified criteria for  capitalization.  Transfer of
          intangible  assets in the amount of DM400,000  (patent and  registered
          design)  by  founding  shareholders  of the  Company  and the  related
          liability are not reflected in the accompanying financial statements.



                                       9
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (h)  Impairment of long-lived assets

          The carrying value of long-lived  assets,  principally  equipment,  is
          reviewed  for   potential   impairment   when  events  or  changes  in
          circumstances indicate that the carrying amount of such assets may not
          be recoverable. The determination of recoverability is made based upon
          the  estimated  undiscounted  future  net cash  flows  of the  related
          assets.

     (i)  Stock based compensation

          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,  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.  Under APB 25, if the exercise  price of employee
          stock options equals or exceeds the fair value of the underlying stock
          on the date of grant, no compensation expense is recognized.

     (j)  Financial instruments and risk concentration

          The Company  estimates  that the carrying  values of its cash and cash
          equivalents, current receivables and, payables, approximate fair value
          at March 31, 2000 and December 31, 1999 due to the short-term maturity
          of the balances.  Financial  instruments which potentially subject the
          Company to  concentration  of credit risk are primarily  cash and cash
          equivalents.  It is the Company's  practice to place its cash and cash
          equivalents  in time  deposits  at  commercial  banks with high credit
          ratings.  In  foreign  locations,  local  financial  institutions  are
          generally  utilized for local currency  needs.  The Company limits the
          amount of exposure to any one  institution  and does not believe it is
          exposed to any significant credit risk.

     (k)  Recent pronouncements

          In  June  1998,  the  Financial   Accounting  Standards  Board  issued
          Statement No. 133 (SFAS 133),  Accounting for  Derivative  Instruments
          and  Hedging   Activities,   which  standardizes  the  accounting  for
          derivative instruments.

          SFAS 133,  as amended,  is  effective  for all fiscal  quarters of all
          fiscal  years  beginning  after  June  15,  2000.  The  impact  on the
          Company's financial statements has not been determined but the Company
          currently  does not use  derivatives to manage its exposure to foreign
          exchange and interest rate risk. The Company will adopt SFAS 133 as of
          January 1, 2001.



                                       10
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


4.   SHARE CAPITAL

     Authorized
          An unlimited number of common shares
     Issued and outstanding

<TABLE>
                                                                                   Number of
                                                                               Common shares              Amount
                                                                               ---------------       ------------
        <S>                                                                    <C>                     <C>
        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 period                                           15,000                  37
        ---------------------------------------------------------------------------------------------------------
        Balance, March 31, 2000                                                    9,746,620             $ 5,941
        ---------------------------------------------------------------------------------------------------------
</TABLE>


     Subsequent to March 31, 2000, the Company  completed a share  consolidation
     whereby  all  of  the  Company's   issued  and   outstanding   shares  were
     consolidated  on a 2.5  shares  to 1  basis.  This  consolidation  has been
     retroactively applied in these financial statements.

     (a)  Agent's Warrants

          As a part of the issuance of 2,200,000  common shares the agent to the
          offering was granted  220,000  Agent  Warrants  entitling the agent to
          purchase  220,000  common shares for $2.50 per share in the first year
          of the  warrant  and for  $3.75 per  share in the  second  year of the
          warrant. During the period to December 31, 1999, 139,850 warrants were
          exercised for proceeds of $350,000.




                                       11
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


4.   SHARE CAPITAL (Continued)

     (b)  Service warrants

          The US Investor  Relations  Service  Agreement dated June 28, 1999 has
          been terminated in November 12, 1999 and the 200,000 warrants provided
          for under the IR Agreement were cancelled.

          In December 1999, the Company issued 40,000 one year Service Warrants,
          each  warrant  entitling  the  holder to  purchase  one  common  share
          exercisable as follows:

          (i)       20,000 warrants  vesting on execution of Investor  Relations
                    Agreement, exercisable at a price of $5.00 per share;

          (ii)      20,000 warrants vesting June 1, 2000, exercisable at a price
                    of $7.50 per share.

     (c)  Stock options

          The  Company  has  established  a Stock  Option  Plan  for  employees,
          officers, directors,  consultants, and advisors. Options granted under
          the  Stock  Option  Plan  may be  either  incentive  stock  option  or
          non-qualified stock options. The Company has reserved 1,918,000 common
          shares for issuance under the Stock Option Plan.  Options  granted for
          issuance under the Stock Option Plan  generally are not  transferable,
          and the  exercise  price of incentive  stock  options must be at lease
          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 thereunder, 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.

          The Company  grants stock options both under the Stock Option Plan and
          by way of individual grants outside of the Stock Option Plan.



                                       12
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


4.   SHARE CAPITAL (Continued)

     (c)  Stock options (continued)

          The  following  options  have been granted and remain  outstanding  at
          March 31, 2000 under the Stock Option Plan:

             Number of                 Exercise
              options                    price                   Expiry date
           -------------              -----------             ----------------

            1,115,000                   $ 2.50                December 1, 2008
               58,000                   $ 2.50                June 28, 2009
               80,000                   $ 2.50                June 28, 2009
              160,000                   $ 3.75                July 7, 2009
              140,000                   $ 4.375               October 15, 2009
               20,000                   $ 5.00                April 30, 2000
        ---------------
            1,573,000


          The  following  options  have been granted and remain  outstanding  at
          March 31, 2000 outside of the Stock Option Plan:

             Number of                 Exercise
              options                    price                   Expiry date
           -------------              -----------             ----------------

              60,000                    $ 2.50                June 28, 2001
              40,000                    $ 5.00                June 30, 2000
           -------------
             100,000


          In addition,  15,000 shares were issued in the quarter ended March 31,
          2000, on the exercise of stock options  granted under the Stock Option
          Plan.

     (d)  iQ Battery share capital

          The registered capital of iQ Battery is DM 100, which is fully paid.

          In  addition,  the Company has also  received a total of DM  1,842,000
          ($1,025,000)  of  capital  from the  issue  of  atypical  shares.  The
          atypical  shareholders have certain  information rights, but no voting
          powers.  Losses and profits are allocated to the atypical shareholders
          capital account as stipulated in the individual  atypical  shareholder
          agreements.  The atypical  shareholders  are entitled to terminate the
          agreements at the end of 2002  depending on their entrance  dates:  iQ
          Battery had the rights to terminate  the  agreement in 2001,  2002 and
          2003.   Generally  the   compensation  to  be  paid  to  the  atypical
          shareholders  upon their  termination is based on the applicable  fair
          value of the Company.

          All  equity  securities  were  acquired  by iQ  Power  as  part of the
          business combination.



                                       13
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2000
(Expressed in United States dollars;
tabular amounts in thousands except per share data)
(Unaudited)
--------------------------------------------------------------------------------


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,  2000 of $Nil
          (three  months  ended March 31, 1999 - $Nil) paid to a company  with a
          common director.

          The Company has entered into the following contractual arrangements:

          (a)  a  consulting  agreement  dated  August  25,  1998 with a company
               having a common  director.  Under the terms of the  agreement the
               Company is obligated to pay the consultant $6,000 per month for a
               term of three years commencing August 25, 1998;

          (b)  employment  agreement with two directors of the Company to occupy
               the  position  of  President  and  Chief  Executive  Officer  and
               Vice-President,  Research and Development and Technical  Advisor.
               Under the terms of these  agreements  the Company is obligated to
               pay these  employees  $9,000 and $8,000 per month,  respectively,
               for a term of five years commencing August 31, 1998;

          (c)  an  employment  agreement  with the  Vice-President,  Finance and
               Chief Financial  Officer.  Under the terms of the agreement,  the
               Company is obligated to pay this employee  $7,000 per month for a
               term of three years commencing September 1, 1998.

     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  and
     directors  of iQ  Battery.  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
     DM  400,000  from  future  income.  Any  amounts  paid will be  charged  to
     operations  as a current  expense.  No other 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.  All of the
     Company's physical assets are located in Germany.



                                       14
<PAGE>

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

     Certain  statements  and  information  contained in this Report  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  achievement of 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
and history of losses,  the Company's relative  concentration of customers,  the
risks related to the Company's  ability to commercialize  its technology,  risks
associated  with changes in market  demand for the Company's  technology,  risks
involving the management of growth and integration of acquisitions, competition,
product  development  risks and risks of  technological  change,  dependence  on
third-party  marketing  relationships  and suppliers,  the Company's  ability to
protect its intellectual  property rights and the other risks and  uncertainties
detailed in the Company's Securities and Exchange Commission filings.

Overview

     The Company was  organized in 1991 to develop and  commercialize  batteries
and electric power technology for the automotive industry.  Since that date, the
Company 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.

     The Company is an early stage  company and its  principal  activity to date
has been  research and  development.  The Company has not derived  revenues from
operations,  and does not anticipate  having  material  revenues from operations
until late 2000, if at all. The Company has incurred substantial losses to date,
and there can be no assurance that the Company will attain any particular  level
of revenues or that the Company will achieve profitability.

     The Company  believes that its historic  spending levels are not indicative
of future  spending  levels  because  it is  entering  a period in which it will
increase spending on product research and development,  marketing,  staffing and
other general operating  expenses.  For these reasons,  the Company believes its
expenses,  losses,  and deficit  accumulated  during the development  stage will
increase significantly before it generates material revenues.  Prior to June 18,
1999,  the  financial  statements  of the  Company  and iQ  Battery  Research  &
Development  GmbH ("iQ  Germany") were presented as separate and distinct as the
former shareholders of iQ Germany had a put option to enable them to reverse the
August 25,  1998  transaction  in which the Company  acquired  iQ Germany.  That
option  terminated  on June 18, 1999,  when the Company  raised in excess of US$
3,000,000 through equity financing. See "Liquidity and Capital Resources."

     After  June  17,  1999,   all  financial   information  is  reported  on  a
consolidated   basis.  Any  financial   information  of  the  Company  used  for
comparative  purposes  prior to June 18, 1999,  is financial  information  of iQ
Germany only.

     On March 30, 2000, the Company's  shareholders  approved a reverse-split of
the Company's issued and outstanding common shares on a two and one-half (2 1/2)
share for one (1) share basis.  On April 10, 2000, the Company filed Articles of
Amendment to effect the reverse  split,  and each 2 1/2 common shares issued and
outstanding on April 10, 2000 were automatically  converted into 1 common share.
The information  contained in the Company's  financial  statements,  which are a
part of this report, and this report give effect to the reverse split.

     The Company's  Results of  Operations  for the Three Months Ended March 31,
2000 Compared to the Three Months Ended March 31, 1999.

     No revenues  were recorded in either the three month period ended March 31,
2000 or the three month period ended March 31, 1999.

     As  of  March  31,  2000,  the  Company  had  an  accumulated   deficit  of
US$5,133,000.  The Company incurred a net loss of US$375,000 for the three month
period  ended  March 31,  2000,  compared  to a net loss of  US$231,000  for the
comparable period of the prior year primarily as result of the cost of increased
management and professional fees



                                       15
<PAGE>

and increased  employment expenses related to the hiring of additional employees
during 1999. The increase in research and development expenses reflects the cost
of  supporting  a  higher  level  of  activity,  principally  research,  product
development, building prototypes and product testing.

     For the three month  period  ended  March 31,  2000,  the Company  incurred
research and development expenses of US$292,000 compared with US$201,000 for the
comparable  period of the prior year.  The increase in research and  development
expenses reflects the cost of supporting a higher level of activity, principally
research, product development, building prototypes and product testing.

     The Company incurred general and administrative  expenses of US$167,000 for
the three month  period ended March 31, 2000  compared  with  US$30,000  for the
comparable period of the prior year. The increase in administrative  and general
corporate expenses was due primarily to increased personnel costs.

     The  Company's  expenditures  are  expected  to  materially  increase as it
pursues  research,  development,  testing  and  commercialization  programs  and
expands finance and administrative staff and financial and management system.

Liquidity and Capital Resources

     Since inception,  the Company has financed its operations primarily through
sales of its equity  securities.  As of March 31, 2000, the Company had cash and
cash equivalents of US$1,940,000.  From inception to March 31, 2000, the Company
had raised  approximately  US$7.35 million (net of issuance costs) from the sale
of such securities, excluding the issuance of 4,000,000 common shares for deemed
proceeds of US$2,500,000 on the business  combination  with iQ Germany.  On June
18, 1999, the Company completed its initial public offering in the United States
pursuant to which it received  net proceeds of US  $4,690,000.  As a part of the
issuance  of  2,200,000  common  shares the agent to the  offering  was  granted
220,000 Agent Warrants entitling the agent to purchase 220,000 common shares for
$2.50 per share in the first year of the  warrant and for $3.75 per share in the
second  year of the  warrant.  During  the  period  to March 31,  2000,  139,850
warrants were exercised for proceeds of $350,000 to the Company.

     iQ  Germany is  obligated  to pay to Horst  Dieter  Braun,  that  company's
founding President and Peter Braun, our President, DM 400,000 in connection with
iQ Germany's  acquisition of the iQ technology and other  intellectual  property
rights.  The amount is  payable  only out of and only to the extent of the gross
profits of iQ Germany.

     The Company  plans to finance its capital  needs  principally  from the net
proceeds of its past  securities  offerings  and  interest  thereon  and, to the
extent available,  lines of credit. The Company currently has no commitments for
any credit  facilities  such as revolving  credit  agreements or lines of credit
that could provide  additional  working  capital.  The Company believes that its
existing capital  resources,  will be sufficient to fund its operations  through
2000. The Company's capital  requirements  depend on several factors,  including
the success and progress of its product development programs,  the resources the
Company  devotes to developing  its  products,  the extent to which its products
achieve  market  acceptance,  and other factors.  The Company  expects to devote
substantial  cash for research and  development.  The Company cannot  adequately
predict the amount and timing of our future cash requirements.  The Company 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,   the  Company  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 the Company
will be able to raise  additional cash if its cash resources are exhausted.  The
Company's  ability to arrange  such  financing in the future will depend in part
upon  the  prevailing   capital  market  conditions  as  well  as  its  business
performance.

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



                                       16
<PAGE>

Foreign Currency Translation Risk

     To date,  exposure to foreign currency  fluctuations has not had a material
effect on our  operations.  The Company  believes  its risk of foreign  currency
translation  is limited,  as its  operations are based in Germany with resulting
transactions  primarily  denominated in United States dollars.  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.

Recent Accounting Pronouncements

Accounting for Derivative Instruments and Hedging Activities.

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities."  The Statement  establishes  accounting  and reporting
standards  requiring that every derivative  instrument  (including some types of
derivative  instruments  embedded in other contracts) be recorded in the balance
sheet as either an asset or liability  measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized  currently in
earnings unless specific hedge accounting  criteria are met. Special  accounting
for qualifying  hedges allows a derivative's  gains and losses to offset related
results on the hedged item in the income statement,  and requires that a company
must formally document,  designate, and assess the effectiveness of transactions
that receive hedge accounting.  SFAS 133 is effective for fiscal years beginning
after June 15,  1999 and must be applied to  instruments  issued,  acquired,  or
substantively  modified after December 31, 1997. The Company does not expect the
adoption  of the  accounting  pronouncement  to have a  material  effect  on our
financial position or results of operations.

PART II -  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     As of the date hereof,  there is no material litigation pending against the
Company. On January 3, 1994, a civil lawsuit was filed by Hans Engelhorn against
Peter E. Braun and Horst Dieter Braun in the District  Court of Berlin (Case No.
3 O 40/94).  Mr.  Engelhorn seeks to compel  transfer of  intellectual  property
rights  related  to  the iQ  technology  or,  alternatively,  money  damages  of
approximately  DM500,000  ($310,000).  The intellectual property rights at issue
are now  held by iQ  Battery.  Mr.  Engelhorn  alleges  that  the  Brains  had a
contractual  obligation to transfer the  intellectual  property to a partnership
which has since been  dissolved.  Although  the  lawsuit is still  pending,  the
Company has been advised by the Brauns that the  prosecution of this lawsuit has
not been  pursued.  The Company  believes  that the lawsuit is without merit and
will not materially affect its rights in the intellectual property at issue.

     From time to time,  the  Company  may be a party to  litigation  and claims
incident to the ordinary course of business. While the results of litigation and
claims cannot be predicted with certainty,  the Company  believes that the final
outcome of such matters will not have a material adverse effect on its business,
financial condition and operating results.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     a)   Sales of Unregistered Securities

     During the three month  period  ended March 31,  2000,  the Company  issued
15,000 common  shares  pursuant to the exercise of Stock Options for proceeds of
$37,500.  The common shares were issued to non-U.S.  persons  outside the United
States in reliance upon an exemption from registration  pursuant to Regulation S
promulgated under the Securities Act.



                                       17
<PAGE>

     b)   Use of Proceeds from Sales of Registered Securities

     On June 18, 1999, the Company  completed an initial public  offering of its
common  shares.  The selling  agent in the offering was IPO Capital  Corp.  (the
"Agent").  The common  shares sold in the  offering  were  registered  under the
Securities  Act of 1933, as amended,  on a  Registration  Statement on Form SB-1
(the "Registration  Statement") (Reg. No. 333-68649) that was declared effective
by the SEC on May 10, 1999.  The offering  commenced on May 10, 1999 after which
time, all 2,200,000 common shares  registered  under the Registration  Statement
were sold at a price to the  public of $2.50 per  common  share.  The  aggregate
offering amount registered was $5,500,000.  In connection with the offering, the
Company paid an aggregate of $105,000 in  commissions  and fees to the Agent and
also issued to the Agent warrants to purchase  220,000 common shares.  The Agent
may  exercise  the warrants for $2.50 per common share during the first year and
for $3.75 per common share during the second year after issuance.

     In  addition,  the  following  table sets forth an estimate of all expenses
incurred in connection  with the offering,  other than Agent's fees. All amounts
shown are estimated except for the registration fees of the SEC.

         SEC Registration Fee                        $            1,390
         NASD Filing Fee                             $            1,000
         Accounting Fees and Expenses                $           50,000
         Legal Fees and Expenses                     $           75,000
         Blue Sky Qualification Fees and Expenses    $           15,000
         Transfer and Custody Agent Fees             $           10,000
         Printing Expenses                           $            4,000
         Miscellaneous                               $          103,610
                                                                -------
         Total                                       $          260,000


     After  deducting the estimated  expenses set forth above,  the net offering
proceeds to the Company was $5,240,000. Since May 10, 1999, the Company has used
a portion of the net offering  proceeds for the purposes  described  below.  The
Company  believes that the amounts set forth represent a reasonable  estimate of
the amounts actually applied.

         Transfer to iQ Battery                      $        3,500,000
         Payment of payables                         $          312,527
         Current expenses   (working capital)        $          224,470


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     At its March 30, 2000 Special  Shareholders'  Meeting, the Company received
approval from its shareholders to pass a Special Resolution that the Articles of
the  Corporation be amended to change the issued and  outstanding  common shares
without par value of the Corporation through the consolidation of every 2.5 such
shares  into 1 share.  Subsequently  the Company  effected  its 2.5 to 1 reverse
split on April 10, 2000.  As a  consequence  of the reverse  split,  the trading
symbol and CUSIP number for the Company have changed to "IQPR" and "44985N 20 5"
respectively

ITEM 5.  OTHER INFORMATION

     None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits.

        Exhibit
        Number             Description
        ------             -----------

         2.6               Articles of Amendment dated April 10, 2000.


     (b)  Reports on Form 8-K

        None.


                                       18
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                       IQ POWER TECHNOLOGY INC

Date:  May 12, 2000                By: /s/ Peter E. Braun
                                       ----------------------------------------
                                       Name:   Peter E. Braun
                                       Title:  President


Date:  May 12, 2000                By: /s/ Gerhard K. Trenz
                                       ----------------------------------------
                                       Name:   Gerhard K. Trenz
                                       Title:  Vice President Finance and Chief
                                               Financial Officer (Principal
                                               Financial and Accounting Officer)








                                       19



<PAGE>

                                 EXHIBIT INDEX
                                 -------------

        Exhibit
        Number             Description
        ------             -----------

         2.6               Articles of Amendment dated April 10, 2000.