================================================================================
                                  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, 2001

                                       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.)

                     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, 2001 was -------.

     Transitional  Small Business  Disclosure Format (check one): Yes ; No_ X_



<PAGE>




                               IQ POWER TECHNOLOGY

                            INDEX TO THE FORM 10-QSB
                  For the quarterly period ended March 31, 2001


<TABLE>
                                                                                     Page
                                                                                     ----
<S>      <C>                                                                         <C>
PART I - FINANCIAL INFORMATION .......................................................1

         ITEM 1.    FINANCIAL STATEMENTS .............................................1

               UNAUDITED CONSOLIDATED BALANCE SHEET ..................................1

               UNAUDITED CONSOLIDATED STATEMENT OF LOSS AND COMPREHENSIVE LOSS .......2

               UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS'EQUITY (DEFICIT) .....3

               UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW .........................4

               NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ..............5


         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS .................................11

PART II - OTHER INFORMATION ..........................................................16

         ITEM 1.    LEGAL PROCEEDINGS ................................................16

         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 ..............17

         ITEM 5.    OTHER INFORMATION ................................................17

         ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K .................................17


SIGNATURES ...........................................................................21
</TABLE>




<PAGE>




Part I - Financial Information

         Item 1.  Financial Statements

iQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Balance Sheets
(Expressed in United States Dollars; all amounts in thousands,
exept per share data)
(Unaudited)
================================================================================


<TABLE>
                                                                               March 31,         December 31,
                                                                                    2001                 2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>
 ASSETS

  Current Assets
    Cash and cash equivalents                                                         38                  183
    Receivable from original shareholders                                             52                   54
    Prepaids and deposits                                                             89                   76
    Other receivables                                                                104                  138
    Other current assets                                                               -                    -
  ------------------------------------------------------------------------------------------------------------
  Total current assets                                                               283                  451

  Non-current Assets
    Loans to iQ Germany                                                                0                    0
    Investments                                                                        -                    -
    Equipment, net                                                                   333                  374
  ------------------------------------------------------------------------------------------------------------
  Total non-current assets                                                           333                  374

 TOTAL ASSETS                                                                        616                  825
 -------------------------------------------------------------------------------------------------------------
 LIABILITIES AND SHAREHOLDERS' EQUITY

  LIABILITIES
    Current liabilities
       Short-term bank debt                                                            -                    -
       Accounts payable                                                              378                  191
       Advances by iQ Germany                                                          -                    -
       Loans payable due to shareholder                                              200                   66
       Accrued payroll and employees benefits                                         84                   66
       Due to parent company                                                           -                    -
       Advances                                                                        0                    -
       Accrued liabilities                                                           240                  263
    ----------------------------------------------------------------------------------------------------------
    Total current liabilities                                                        902                  586

    Non-current liabilities
       Long-term bank debt                                                             -                    -
       Due to shareholders                                                             -                    -
    ----------------------------------------------------------------------------------------------------------
    Total non-current liabilities                                                      0                    -
  ------------------------------------------------------------------------------------------------------------
  TOTAL LIABILITIES                                                                  902                  586

  SHAREHOLDERS' EQUITY

    Authorized:
       An unlimited number of common shares of no par value
    Issued and outstanding:
          9,746,620 common shares at March 31, 2001 and December 31, 2001          5,941                5,941
    Capital surplus/Additional paid-in                                               406                  406
    Accumulated other comprehensive (loss) income                                     21                  (16)
    Accumulated deficit, during development stage (after loss
      allocation to silent partner                                                (6,654)              (6,092)
  ------------------------------------------------------------------------------------------------------------
  TOTAL SHAREHOLDERS' EQUITY                                                        (286)                 239

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                          616                  825
--------------------------------------------------------------------------------------------------------------
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       1
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars; all amounts in thousands,
exept per share data)
(Unaudited)
================================================================================



<TABLE>
                                              Cumulative from
                                             date of inception     Three months ended  Three months ended
                                                 to March 31,          to March 31,          to March 31,
                                                         2001                  2001                  2000
----------------------------------------------------------------------------------------------------------
<S>                                             <C>                        <C>                 <C>
Sales and other revenue                                   182                     0                     0
----------------------------------------------------------------------------------------------------------
EXPENSES
  Research and development expenses
    Personnel                                           2,071                   178                   117
    Laboratory                                          1,043                    80                    81
    Office                                                476                    11                    70
    Consulting services                                   600                     1                    15
    Professional fees                                     776                    13                    10
  --------------------------------------------------------------------------------------------------------
  Total R&D expenses                                    4,966                   283                   292

  Marketing and General & Administrative expenses
    Personnel                                             475                    42                    49
    Financing                                             274                     1                     0
    Office                                                158                    17                     8
    Consulting services                                   355                    30                     8
    Professional fees                                     374                    68                    33
    Management fees                                       126                    18                    18
    Marketing activities                                  125                    10                     0
    Investor relations                                    275                    41                    20
    Research memberships                                  100                     0                     0
    Travel                                                218                     8                    16
    Other                                                 166                     3                    16
  --------------------------------------------------------------------------------------------------------
  Total Marketing and General & Administrative expenses 2,646                   238                   167

  Total operating expenses                              7,612                   521                   459

  Interest expense                                        133                     0                     0
  Stock based compensation                                378                     0                     0
  --------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                          8,123                   521                   459

  Interest and other income                              (136)                   (0)                  (28)
  (Gain)/loss on foreign exchange                        (127)                   41                   (56)

LOSS BEFORE INCOME TAX                                 (7,679)                 (562)                 (375)

  Income tax                                                0                     0                     0

NET LOSS                                               (7,679)                 (562)                 (375)
----------------------------------------------------------------------------------------------------------
  Other comprehensive (loss) income:
    Accumulated other comprehensive
    income (loss)                                          21                    37                   (83)

COMPREHENSIVE LOSS                                     (7,658)                 (525)                 (458)
----------------------------------------------------------------------------------------------------------
Basic and diluted loss per share, on net loss           (1.25)                (0.06)                (0.04)

Basic and diluted weighted average
  number of shares outstanding                      6,132,538             9,746,620             9,730,820
----------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<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, 1991             40   $     60   $     -     $        -   $     (1)    $     59
Issue of shares                                                                                       -
Net loss                                                                                (9)          (9)
----------------------------------------------------------------------------------------------------------
Balance at December 31, 1992             40         60         -              -        (10)          50
Issue of shares                                                                                       -
Net loss                                                                                (7)          (7)
----------------------------------------------------------------------------------------------------------
Balance at December 31, 1993             40         60         -              -        (17)          43
Issue of shares                                                                                       -
Net loss                                                                              (193)        (193)
Allocation of loss to
  atypical shares                                                                       37           37
----------------------------------------------------------------------------------------------------------
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                                  -          -         -              -     (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                                  -          -         -              -       (562)        (562)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -          -         -             37          -           37
----------------------------------------------------------------------------------------------------------
Balance at March 31, 2001         9,746,620    $ 5,941    $  406     $       21   $ (6,654)    $   (286)
----------------------------------------------------------------------------------------------------------
</TABLE>

                See accompanying notes to consolidated financial statements.

                                       3
<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 date of       Three months        Three months
                                                   inception to              ended               ended
                                                      March 31,          March 31,           March 31,
                                                           2001               2001                2000
-------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                 <C>
OPERATING ACTIVITIES
Net loss                                                 (7,679)              (562)               (375)
Items not affecting cash
  Depreciation and amortization                             230                 24                   8
  Stock based compensation                                  378                  0                   5
Changes in non-cash working capital                           0
  (Increase) decrease in accounts receivable                (99)                30                  90
  (Increase) decrease in prepaids and deposits              (89)               (14)                 (4)
  Increase (decrease) in accounts payable                   389                199                 (22)
  Increase (decrease) in accrued liabilities                338                 10                 (19)
-------------------------------------------------------------------------------------------------------
                                                         (6,532)              (313)               (317)
INVESTING ACTIVITY
  Additions to property, plant and equipment               (581)                (1)                 (8)
-------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
  Increase (decrease) in short-term debt                     (0)                 0                   0
  Increase (decrease) in long-term debt                      (0)                 0                   0
  Increase (decrease) in due to shareholder                 138                133                  16
 Advances received from external parties                    296                 (0)                  0
 Cash acquired on business combination                    4,718                  0                   0
 Advances from subsidiary                                   581                  0                   0
 Issue of capital stock                                     446                  0                   0
 Issuance of atypical shares                              1,025                  0                   0
-------------------------------------------------------------------------------------------------------
                                                          7,204                133                  16
(DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                           90               (180)               (309)

EFFECT OF FOREIGN EXCHANGE MOVEMENT                         (52)                35                 (33)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                         0                183               2,283
-------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                              38                 38               1,941
-------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(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 acquiror.  The comparative financial statements for 1998 are those
       of iQ Battery.  Collectively  within these financial  statements the term
       Company applied to operations subsequent to the business combination.

       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,  for the first time,  electronics,  microprocessors  and  software
       manage the energy.  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  Chemnitz,  Germany,  and it  maintains  a branch near  Munich,  where
       management has its offices. The Company intends to grant licenses for its
       technologies 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 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. 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.



                                       5
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(Expressed in United States dollars; tabular amounts in thousands
except per share data)
--------------------------------------------------------------------------------


2.     CONTINUING OPERATIONS (Continued)

       In the year 2000,  the Company has signed  agreements to jointly  develop
       its applications with large  corporations such as  DaimlerChrysler.  Such
       alliances  involve the  utilisation  of certain  aspects of th  Company's
       technology.  The ability of the Company to succeed in these  alliances is
       also dependent upon the Company's ability to obtain additional financing.
       Management  believes  theat  the  Company  will  be able  to  obtain  the
       necessary financing.

       As of March 31, 2000, the Company's current financial  condition requires
       the infusion of such capital in order to continue its current operations.
       If the Company is unable to obtain the additional financing,  the Company
       will  be  unable  to meet  all 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 aud  regulations  of the  Securities  and  Exchange
       Commission for reporting on Form 10-Q.  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 2000 Annual Report on Form 10-K.

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




                                       6
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(Expressed in United States dollars; tabular amounts in thousands
except per share data)
--------------------------------------------------------------------------------


4.     SHARE CAPITAL

       Authorized
           An unlimited number of common shares
       Issued and outstanding
<TABLE>
<S>                                                                     <C>                  <C>

                                                                     Number of
                                                                   Common shares          Amount ($ 000)
                                                             -----------------------  ----------------------

       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 acqisition                         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
       -----------------------------------------------------------------------------------------------------
       Balance, December 31, 2000                                      9,746,620            5,941

       Balance, March 31, 2001                                         9,746,620            5,941
</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  outstanging  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) 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.  In 1999,  139,850  warrants were  exercised for proceeds of
           $350,000. No further warrants were exercised as of March 31, 2001.

       (b) 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  1,949,000
           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  least  equal to 100% of the fair  market  value of the  common
           shares on the date of the grant.



                                       7
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(Expressed in United States dollars; tabular amounts in thousands
except per share data)
--------------------------------------------------------------------------------


4.         SHARE CAPITAL (Continued)

           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.

           Under the Stock Option Plan the  following  options have been granted
           and remain outstanding at March 31, 2001.


                  Number of Options      Exercise price       Expiration date

                          1,035,000            $   0.50      December 1, 2008
                            138,000            $   0.50         June 28, 2009
                            160,000            $   0.50          July 7, 2009
                            115,000            $   0.50      October 15, 2009
                            259,500            $   0.50         June 12, 2010
                             30,000            $   0.50         July 28, 2010
                            175,500            $   0.50      January 16, 2011
                         ----------
                          1,913,000


           The following  options have been granted to non-employees  and remain
           outstanding at March 31, 2001 outside of the Stock Option Plan:

                  Number of Options      Exercise price       Expiration date

                             60,000         $   0.50            June 28, 2001
                             40,000         $   0.50            June 12, 2002
                         ----------
                            100,000

           During the year 2000,  15,000  shares were issued on the  exercise of
           stock  options  granted  under the Stock Option Plan. No options were
           exercised under the Stock Option Plan in 1999.

           As of March 31, 2001,  428,000 options were cancelled by the Board of
           Directors granted under and outside of the Stock Option Plan.

           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 year ended December 31, 2000 and 1999, the Company
           issued  options to  individuals  other than  employees  and directors
           which under SFAS No. 123 are recognized 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 therefore adopted the disclosure-only provision of SFAS No. 123.




                                       8
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(Expressed in United States dollars; tabular amounts in thousands
except per share data)
--------------------------------------------------------------------------------


4.        SHARE CAPITAL (Continued)

          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. Subsequent to that date, on January 16,
          2001,  the Board of Directors  decreased  abain the exercise price for
          the Stock  Option  Plans from $1.50 to $0.50 for all  options  granted
          under and outside of the plan. Due to the changes, all options granted
          under the plan will be accounted for using  variable  plan  accounting
          under APB 25. As of March 31, 2001,  December 31, 2000, August 1, 2000
          and June 12, 2000, no compensation  expense was recognized because the
          fair  value of the stock  was  either  equal to or below the  exercise
          price.

       (c) Loss per share

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

       (d) iQ share capital

          The  registered  capital of iQ Battery is DM  100,000,  which is fully
          paid.

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


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, 2001 of $18,000
           (three  months  ended  March 31,  2000 - $Nil) were paid to a company
           with a common director.

       (b) The Company issued convertible  debentures to John Lawson, a Director
           of the Company, in the aggregate principal amount of CDN$300,000,  at
           the annual rate of 24%,  payable monthly in arrears.  The convertible
           debentures  were issued  pursuant  to the terms of a credit  facility
           dated December 13, 2000, and are secured by the assets of the Company
           and its subsidiary under the terms of a General Security Agreement of
           equal date. The convertible  debentures are  convertible  into common
           shares  of  the  Company,  at  the  rate  of  $0.50  per  share.  The
           convertible  debenture  is  payable  one  month  after  demand by the
           holder, and the Company may prepay the convertible  debenture without
           penalty.   The  Company  received  net  proceeds  in  the  amount  of
           CDN$100,000  ($66,000) from the issuance of the convertible debenture
           in December 2000, and CDN$200,000 ($132,000) in January 2001. No fees
           were paid in connection with this transaction.



                                       9
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
Notes to the Consolidated Financial Statements
(Expressed in United States dollars; tabular amounts in thousands
except per share data)
--------------------------------------------------------------------------------


5.     RELATED PARTY TRANSACTIONS (Continued)

       (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  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 significant physical assets are located in Germany.

7.     SUBSEQUENT EVENT

       In May, 2001, the Company  completed a private  placement of 3,000,000
       common  shares  at $0.25  per  share  for  proceeds  of  approximately
       $750,000.  The  Company  paid a finder's  fee in  connection  with the
       offering  consisting  of 120,000  common  shares at a deemed  value of
       $0.25 per share The subscribers to the private placement were non-U.S.
       persons outside the United States of America.






                                       10
<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 (collectively,  referred to as "we," "us,"
"our," iQ  Power"  and/or  "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,  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 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 Securities and Exchange Commission. You are
cautioned against placing undue reliance on forward looking statements.

     Unless provided otherwise, all amounts are in United States dollars.

Overview

         The Company  was  incorporated  on  December  20, 1994 under the Canada
Business Corporations Act as 3099458 Canada Inc. The Company changed its name to
iQ Power  Technology  Inc. on May 9, 1997.  The  Company's  principal  executive
offices  are  located at Suite  708-A,  1111 West  Hastings  Street,  Vancouver,
British  Columbia,  Canada V6E 2J3, and the Company's  telephone  number at that
location is (604) 669-3132.

         iQ  Germany  was formed in 1991 to  research  and  evaluate  methods of
maximizing lead-acid battery  performance.  The Company was formed to acquire iQ
Germany and to license the  technology  developed  by iQ Germany to others or to
market products based on such  technology.  Throughout this quarterly report the
Company refers to the technology developed by iQ Germany as the "iQ technology."

         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.  The Company does not anticipate that it will generate revenues
until the second half of 2001, as it expects to begin  marketing and selling its
Generation  I iQ  Battery  product  beginning  in the second  half of 2001.  The
Company  anticipates it may generate additional revenues from service agreements
with battery  manufacturers  and licensing  agreements during the second half of
2001 or 2002,  although  the  Company  currently  has no  service  or  licensing
agreements  in place.  There can be no  assurance  that  that the  Company  will
generate any material revenues during 2001 or 2002 from the sale of batteries or
from  service or license  arrangements.  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 in a period in which it may
be required to increase spending on product research and development, marketing,
staffing  and  other  general  operating   expenses  in  order  to  successfully
commercialize  its  technology.  For these  reasons,  the Company  believes  its
expenses,  losses,  and deficit  accumulated  during the development  stage will
increase significantly before it begins to generate 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.  That option terminated
on June 18, 1999, when



                                       11
<PAGE>

the Company raised in excess of $3,000,000 by equity  financing.  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. All amounts are set forth
in U.S. dollars unless provided otherwise.

         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 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, 2001
compared to the Three Months Ended March 31, 2000

         Revenues:  No revenues  were  recorded in either the three month period
ended March 31, 2001 or three month period ended March 31, 2000.

         Expenses:  Total  expenses  increased  to $521,000  for the three month
period  ended March 31, 2001  compared  to $459,000  for the three month  period
ended March 31, 2000, a 13.5%  increase.  Research and  development  expenses in
total  decreased  slightly to $283,000 in the three month period ended March 31,
2001 from $292,000 in the  comparable  period in 2000, as the Company  continued
its  efforts  to  improve  the iQ Battery  technologies  and to  develop  energy
management systems  technologies.  R&D Personnel costs increased to $178,000 for
the three month  period  ended March 31,  2001 from  $117,000 in the  comparable
period  in  2000,  a  $61,000  (52.1%)   increase.   Laboratory   expenses  were
approximately  the same for the three  month  period  ended  March  31,  2001 at
$80,000  compared to $81,000 during the same period in 2000. R&D office expenses
declined to $11,000 for the three month period ended March 31, 2001  compared to
$70,000  during  the same  quarter in 2000.  R&D  Consulting  services  expenses
decreased to $1,000 for the three month period ended March 31, 2001  compared to
$15,000  for the same  quarter in 2000,  as the  Company's  employees  conducted
research and development  efforts.  The Company  anticipates  that  expenditures
related to research and development  will remain  consistent  with  expenditures
during the first quarter 2001 for the balance of 2001.

         In 2000,  the  Company  launched  a new web site  designed  to  provide
potential industry partners with information related to the Company's iQ Battery
and its energy  management  technologies.  The  Company  also hired a  marketing
specialist and additional  marketing personnel and consultants to coordinate and
manage the Company's  marketing  efforts;  to assist the Company in defining its
corporate and marketing  strategies and to assist in developing  action plans to
commercialize its iQ Battery and energy management systems. The expenses related
to marketing  and general and  administration  increased  by $71,000  (45.5%) to
$238,000 for the three month  period ended March 31, 2001,  compared to $167,000
for the  comparable  period  in 2000,  primarily  as a result  of the  Company's
increased  efforts to develop  relationships to commercialize the iQ Battery and
technologies. The Company anticipates that expenditures related to marketing and
general and  administration  will increase  during the year ending  December 31,
2001, as it begins marketing  efforts to introduce its Generation I - iQ Battery
and increases its efforts to enter into service and  licensing  arrangements  to
commercialize  its iQ Battery  and energy  management  technologies.  During the
three month period ended March 31, 2001,  office  expenses  increased to $17,000
due to Company  increased  business  activities,  compared to $8,000 in the same
period in 2000.  Professional  fees  increased to $68,000 during the three month
period ended March 31, 2001,  from $33,000  during the same period  during 2000,
due  primarily  to auditing  fees and legal  expenses  related to the  Company's
Securities  and Exchange  Commission  filings.  Other  changes in the  Company's
operating  expenses from the three month period ended March 31, 2001 compared to
the same period during March 31, 2000,  included increased  consulting  services
($30,000 in 2001, compared to $8,000 in 2000);  increased  marketing  activities
($10,000  in  2001,  compared  to nil in  2000);  increased  investor  relations
($41,000  in 2001,  compared  to  $20,000  in 2000)  due to  increased  investor
relations  activities in Europe; and decreased travel ($8,000 in 2001,  compared
to $16,000 in 2000).

         The Company's  expenditures are expected to continue on a similar level
in 2001 as it  pursues  research,  development,  testing  and  commercialization
programs  and  expands  finance  and  administrative  staff  and  financial  and
management system.



                                       12
<PAGE>

         Losses:   As  of  March  31,  2001,  the  Company  had  an  accumulated
comprehensive deficit of $7,678,000. The Company incurred a net loss of $562,000
for the three  month  period  ended  March 31,  2001,  compared to a net loss of
$375,000  for the  comparative  quarter in 2000.  The  increase  in net loss was
primarily a result of higher marketing and general and  administrative  expenses
and were slightly offset by a decline in research and development expenses.  The
Company  incurred a  comprehensive  loss of $525,000  for the three month period
ended March 31,  2001,  compared  to a  comprehensive  loss of $458,000  for the
comparative quarter in 2000.

     The  Company  anticipates  that  losses will  increase  marginally,  as the
Company  expects to begin  generating  revenues from the commercial  sale on its
Generation  I  iQ  Battery,  which  are  being  manufactured  by  a  third-party
manufacturer  for  limited  sales in  Europe,  in the last half of 2001 or 2002.
There can be no assurance  that the Company's  efforts to  commercialize  its iQ
Battery will be  successful  or that the Company will not  experience  delays in
introducing its battery to the market.

Liquidity and Capital Resources

         Since  inception,  the Company has  financed its  operations  primarily
through sales of its equity  securities.  As of March 31, 2001,  the Company had
cash and cash  equivalents of $38,000,  and working capital deficit of $619,000.
From  inception to March 31, 2001,  the Company had raised  approximately  $7.35
million  (net of issuance  costs)  from the sale of  securities,  excluding  the
issuance of 4,000,000  common  shares for deemed  proceeds of  $2,500,000 on the
business combination with iQ Germany.

         During  the  quarter  ended  March  31,  2001,  the  Company  issued  a
convertible  debenture  to  John  Lawson,  a  Director  of the  Company,  in the
aggregate  principal amount of CDN$300,000  (US$200,000),  at the annual rate of
24%, payable monthly in arrears.  The convertible  debenture was issued pursuant
to the terms of a credit facility dated December 13, 2000, and is secured by the
assets of the Company and its subsidiary  under the terms of a General  Security
Agreement of equal date. The  convertible  debenture is convertible  into common
shares of the Company, at the rate of $0.50 per share. The convertible debenture
is payable one month after demand by the holder, and the Company may pre-pay the
convertible  debenture without penalty. The Company received net proceeds in the
amount of CDN$100,000  ($66,000) in December 2000 and CDN$200,000  ($132,000) in
January  2001  under  the  terms of the  credit  facility.  No fees were paid in
connection with this transaction.

         Subsequent to March 31, 2001, the Company completed a private placement
of  3,000,000  common  shares at $0.25 per share for  proceeds of  approximately
$750,000. The Company paid a finder's fee of 120,000 common shares in connection
with the  offering.  The  subscribers  to the private  placement  were  non-U.S.
persons outside the United States.

         Obligations and Commitments

         iQ Germany is obligated to pay to Horst Dieter Braun, that iQ Germany'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.

         During the year ended  December  31, 2000,  the Company  entered into a
consulting  agreement  dated August 12, 2000 with Richard Singer under which the
parties agreed that Mr. Singer would serve as a strategic advisor to the Company
for an  initial  term of 24  months.  The  Company  agreed  to pay Mr.  Singer a
consulting  fee of $2,000 per full working day in which services are provided to
the  Company.  Mr.  Singer will work an average of one full working day per week
during the term of the  agreement.  The Company also agreed to grant Mr.  Singer
options exercisable to acquire 25,000 common shares at $1.50 per share,  vesting
50% immediately on the date of the agreement and 50% on the first anniversary of
such date.  The  Company  also agreed to pay Mr.  Singer a finder's  fee for any
financing  agreement  entered  into by the  Company as a result of Mr.  Singer's
efforts  equal to: 6% on  contracts  in excess of  $1,000,000;  4% on  contracts
between  $1,000,001  to  $4,000,000;  3%  on  contracts  between  $4,000,001  to
10,000,000 and 2% on contracts in excess of  $10,000,001.  In November 2000, the
Company and Mr. Singer agreed that the consulting  agreement  would be suspended
pending the  Company's  ability to obtain  additional  financing  and subject to
renegotiation of certain the terms of the agreement.



                                       13
<PAGE>

         During the quarter  ended March 31,  2001,  the Company  entered into a
corporate  consultant  agreement with Murdock Capital Partners Corp. under which
the parties agreed that Murdock Capital Partners Corp. would provide  consulting
services related to corporate  communications and support services for a term of
12 months commencing on February 15, 2001. Under the terms of the agreement, the
Company agreed to pay TRT Capital Projects a consulting fee of $7,500 per month.
The  agreement was mutually  terminated by the parties  during the quarter ended
March 31, 2001. The Company paid Murdock Capital $7,500 under the agreement.

     After  considering the $750,000  private  placement closed in May 2001, the
Company  anticipates that it will require an additional  $500,000 to $750,000 in
financing to meet its on-going short term and long term obligations  during 2001
and to fund its plan of  operation  through  December  31,  2001.  See  "Plan of
Operation." The Company plans to finance its capital needs principally from cash
flow from operations,  if any, the net proceeds of its securities  offerings and
interest thereon and, to the extent available, lines of credit.

         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  resources toward marketing  activities and research and development
activities  during 2001.  The Company cannot  adequately  predict the amount and
timing of its 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.

Plan of Operation

         The Company has undertaken and is pursuing the following initiatives:

         Since  November  2000,  the  Company  was  awarded   certification   in
         accordance  with the  international  standards  organization  (ISO) and
         Verein Deutscher  Automobilzulieferer  (VDA), the Association of German
         automotive suppliers. ISO and VDA certifications are generally required
         for battery  suppliers.  No  governmental  or regulatory  approvals are
         required for the development of battery technologies.

         The Company has been able to complete the development of the Generation
         I iQ  intelligent  battery  and is  currently  organizing  the  initial
         production  run. The Company  contracted  with  suppliers  necessary to
         provide the components  for the ramp-up of the production  according to
         quality requirements and at fixed negotiated costs.

         The Company developed the SEM smart energy  management(TM)  application
         together with DaimlerChrysler, which was displayed in the international
         Auto Show for Trucks in Frankfurt.  This  resulted in a joint  proposal
         submitted  to the  European  Union  for  funding  of  DaimlerChrysler's
         intelligent  Powertrain  X-by-wire concept. In this program, iQ will be
         responsible  for  development  and delivery of the complete  electrical
         energy storage and supply system.

         Since July 2000,  the Company has been  preparing the  foundation of an
         alliance in the automotive industry, the DC-BUS Alliance.  Supported by
         BMW,  the purpose of this  alliance  is to  standardize  the  powerline
         communication   technology  that  was  originally  developed  by  YAMAR
         Electronics  Israel, a strategic  partner of the Company.  In December,
         2000, the founding members accepted the proposed structure and publicly
         announced the formation of the alliance.  Peter E. Braun, the Company's
         Chief Executive Officer, was appointed to coordinate the management and
         administration of the Alliance.

         Since the first  quarter  of 2000,  the  Company  has been  invited  to
         present its  technology  in several  international  conferences  and to
         submit  several  technical   papers.   The  Company  has  entered  into
         negotiations  with battery  manufacturers,  suppliers to the automotive
         industry  and  automakers  regarding  the  use  and  licensing  of  the
         Company's products and/or its technology.

         The Company's  strategic  plan and plan of operation for the remainder
         of 2001 is as follows:



                                       14
<PAGE>

Research and Development

          o    expand research and development efforts with existing personnel,

          o    prepare for and start production of the Generation I iQ batteries
               that   incorporate   the  iQ   technology,   and  prepare  for  a
               pre-production   and  initial   production   of  batteries   that
               incorporate the iQ technology, and

          o    expand its third party testing program.

The Company  anticipates that it will spend  approximately  $850,000 on research
and development during the fiscal year ending December 31, 2001.

Marketing

          o    enter into development contracts with customers of the automotive
               industry and other  industries  to apply its  technology to their
               individual  demands  with the  goal of  producing  and  supplying
               components for commercial applications in their products,

          o    market the  commercial  launch of the  Generation I iQ Battery in
               the second half of 2001,

          o    market  the  iQ  technology  and  our  software  as  part  of its
               technology  for state of charger  (SOC) and state of health (SOH)
               status indications solutions for original equipment  manufacturer
               batteries and/or First Tier battery suppliers.

The Company anticipates that it will spend  approximately  $150,000 on marketing
and sales during the fiscal year ending December 31, 2001.

Financial

          o    seek additional  financing to expand the Company's operations and
               finance its development and marketing efforts.

The Company  anticipates that it will expend  approximately  $100,000 on capital
raising efforts during 2001.

Administrative and General Operating

     The Company estimates that its general  administrative and operating budget
will be approximately $400,000 during the year ending December 31, 2001.

     The Company  anticipates  that its total operating  budget for 2001 will be
approximately  $1,500,000.   The  Company  anticipates  that  it  will  required
additional  financing  of  approximately  $500,000  to  $750,000  to satisfy its
working  capital  requirements  through  December 31, 2001. The Company may need
more financing if it experiences delays, cost overruns, additional funding needs
for joint ventures or other unanticipated  events. The Company cannot assure you
that it will be able to obtain  additional  financing on favorable terms or on a
timely basis.

     If the Company is unable to raise additional financing on acceptable terms,
the Company 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 its operations;

          o    suspend  its   participation  in  pilot  programs  that  are  not
               economically profitable;

          o    sell assets, including licenses to its technologies;

          o    suspend its operations until  sufficient  financing is available;
               or

          o    sell or wind up and liquidate its business.



                                       15
<PAGE>

Any of these  action  may  affect the  Company's  ability  to offer  competitive
products  or  compete  in  the  market.  The  Company's  inability  to  offer  a
competitive  product  or to  effectively  compete  will  affect  its  ability to
continue as a going concern.


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.


Part II -  OTHER INFORMATION

           ITEM 1.      Legal Proceedings

          As of the date hereof, there is no material litigation pending against
          us or iQ Germany.

     On August 4, 2000, a civil  lawsuit was filed by Gerhard  Trenz  against iQ
Power and iQ Battery in the Labor Court of Munich (Case No. 3 Ca 10364/00).  Mr.
Trenz was  dismissed as Chief  Financial  Officer of IQ Power in July,  2000. He
filed a lawsuit claiming wrongful termination and seeks an order to continue his
employment  until August 2001.  On December 21, 2000,  the Labor Court of Munich
allowed  an action to be  brought  against  us. We made an appeal to a  superior
court.

         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  believe that the final
outcome of such matters will not have a material adverse effect on its business,
financial condition and operating results.





                                       16
<PAGE>


           ITEM  2.     Changes in Securities AND USE OF PROCEEDS

           a)           Sales of Unregistered Securities

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.  The  subscribers  to the
private  placement were non-U.S.  persons  outside the United States in reliance
upon an exemption from registration  under Regulation S of the Securities Act of
1933,  as  amended.  The  Company  paid a finder's  fee in  connection  with the
offering consisting of 120,000 common shares at the deemed value of $30,000.

           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 security  holders of the Company
during the three month period ended March 31, 2001.

           Item 5.      Other Information

           None.

           Item 6.      Exhibits and Reports on Form 8-K

           (a)          Exhibits

                                    EXHIBIT INDEX

Exh. 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

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

6.1(1)    Form of Atypical Share Exchange Agreement

6.2(1)    ShareExchange  Agreement  dated  August  25,  1998,  between  iQ Power
          Technology Inc., iQ Battery Research

6.3(1)    Pooling  Agreement  No.  1 dated  August  25, 1998, between  iQ  Power
          Technology Inc., Montreal Trust

6.4(1)    Pooling  Amendment  Agreement dated August 15, 1998,  between iQ Power
          Technology Inc., Montreal Trust

6.5(1)    Management Agreement dated January 1, 1997,between 3099458 Canada Inc.
          and Mayon Management Corp.



                                       17
<PAGE>

Exh. No.   Description
--------   -----------
6.6(1)    Consulting Agreement dated August 25, 1998,between iQ Power Technology
          Inc. and Mayon Management

6.7(1)    Employment Agreement dated August 31, 1998 with Dr. Gunther C. Bauer

6.8(1)    Employment Agreement dated August 31, 1998 with Peter E. Braun

6.9(1)    Employment Agreement dated September 1, 1998 with Gerhard K. Trenz

6.10(1)   Form of Confidentiality Agreement between iQ Power Technology Inc. and
          certain Officers of the Company

6.11(1)   Lease  Agreement by and between iQ Battery  Research  and  Development
          GmbH and Spima Spitzenmanufaktur

6.12(1)   Commercial  Lease  Agreement  by and between iQ Battery  Research  and
          Development GmbH and Josef

6.13(1)   Form of iQ Germany Confidentiality Agreement (Translated to English)

6.14(1)   Form  of iQ  Germany  Employee  Confidentiality  and  Nondisclosure
          Agreement (Translated to English)

6.15(1)   Cooperation   Agreement  by  and  between  iQ  Battery   Research  and
          Development GmbH and BASF

6.16(1)   Confidentiality  Agreement  by and  between  iQ  Battery Research  and
          Development GmbH and Bayerische

6.17(1)   Mutual Confidentiality Agreement among iQ Battery Research and
          Development   GmbH,    Akkumulatorenfabrik

6.18(1)   Confidentiality  Agreement between iQ Battery Research and Development
          GmbH and Mercedes Benz

6.19(1)   Letter  Agreement between iQ Battery Research and Development GmbH and
          Manufacturer of Batteries Moll

6.20(1)   Mutual  Confidentiality  Agreement between iQ Battery  Research  and
          Development GmbH and Manufacturer of

6.21(1)   Loan Contract by and between Karin Wittkewitz and iQ Battery Research
          and Development GmbH dated

6.22(1)   Contract  Concerning  Industrial  Property  Rights and Know How by and
          between  Dieter Braun and Peter E.

6.23(1)   Supplementary  Contract to the Contract concerning Industrial Property
          Rights and Know How by and

6.24(1)   Extension of Contract  regarding  Industrial  Property Rights and Know
          How by and between Dieter Braun

6.25(1)   Consulting Contract by and between iQ Battery Research and Development
          GmbH and Peter Braun dated



                                       18
<PAGE>

Exh. No.   Description
--------   -----------
6.26(1)   Consulting  Contract by and between iQ Battery Research
          and  Development  GmbH and Dr. Gunther Bauer

6.27(1)   Agreement  (Debt  Deferral)  by and  between  iQ Battery Research  and
          Development GmbH and Dieter Braun

6.28(1)   Agreement  (Debt  Deferral) by and between iQ Research and Development
          GmbH and Gunther Braun dated

6.29(1)   Waiver  among H. Dieter  Braun,  Peter E. Braun, Gunther  Bauer, Karin
          Wittkewitz and iQ Battery Research

6.30(1)   Agreement by and between iQ Battery
          Research and Development GmbH and Dieter Braun and Peter Braun

6.31(1)   1998 Stock Option Plan

6.32(1)   Form of Stock Option Agreement

6.33(1)   License Agreement dated September 1, 1998 between iQ Power Technology,
          Inc. and Mattalex Management

6.34(1)   Agreement Re Rights and Interests dated  December 9, 1998 by and among
          the Company, H. Dieter Braun

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

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

6.37(2)   Pooling  Agreement  No.  2 dated  December  1, 1998  between  iQ Power
          Technology, Inc., Montreal Trust

6.38(2)   Lease Agreement effective as of February 16,1999 between Dr. Arne Curt
          Berger and iQ Battery

6.39(2)   Rescission   Agreement   dated   January   13,  1999   between   Spima
          Spitzenmanufaktor GmbH and iQ Battery

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

6.41(3)   Investor Relations Consulting Agreement dated December 8, 1999 between
          Boyle International (Guernsey)

6.41(4)   Corporate  Consulting  Agreement  May 1,  2000,  between  TRT  Capital
          Projects Inc. and iQ Power  Technology

6.43(4)   Consulting   Agreement  dated  August  12,  2000,   between  iQ  Power
          Technology and Richard J. Singer

6.44(4)   Convertible   Debenture  dated  December  27,  2000,  among  iQ  Power
          Technology Inc., John Lawson, and iQ

6.45(4)   Grid  Promissory  Note  dated  December  27,  2000,  between  iQ Power
          Technology Inc. and John Lawson

6.46(4)   Commitment  Letter dated December 13, 2000,  among iQ Power Technology
          Inc., John Lawson, and iQ




                                       19
<PAGE>

Exh. No.   Description
--------   -----------
6.47(4)   Guarantee dated December 27, 2000,  between John Lawson and iQ Battery
          Research and Development GmbH

6.48(4)   General Security  Agreement dated December 27, 2000,  between iQ Power
          Technology Inc. and John Lawson

6.49(4)   Agreement  of   Subordination   in  Priority  in  Association  with  a
          Conditional  Waiver of Claim by and

7.1(1)    List of Material Foreign Patents

10.1(4)   Consent of Deloitte & Touche GmbH Wirtschaftsprufungsgesellschaft

13.1(1)   Form  F-X  Consent
---------------------

(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 31, 1999.
(4) Previously  filed as an exhibit to the  registrant's  annual report on Form
    10-KSB for the year ended December 31, 2000
(b) Report on Form 8-K

    None.





                                       20
<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 21, 2001                             By: /s/ Peter E. Braun
                                                    ---------------------------
                                                  Name: Peter E. Braun
                                                  Title:President and
                                                        Principal Financial and
                                                        Accounting Officer











                                       21