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 June 30, 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 June 30, 2001 was 13,506,620.

     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 June 30, 2001


                                                                            Page
                                                                            ----

PART I -  FINANCIAL INFORMATION ..............................................1

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

          Unaudited Consolidated Balance Sheet ...............................2

          Unaudited Consolidated Statement of Loss and .......................3
            Comprehensive Loss

         Unaudited Consolidated Statements of Shareholders' ..................4
            Equity (Deficit)

          Unaudited Consolidated Statement of Cash Flow ......................5

          Notes to the Unaudited Consolidated Financial Statements ...........6


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

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 ....................................18

  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................18

  ITEM 5. OTHER INFORMATION ..................................................20

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ...................................20

SIGNATURES ...................................................................25




                                       i

<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)
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
                                                                             June 30,       December 31,
                                                                                 2001               2000
---------------------------------------------------------------------------------------------------------
<S>                                                                            <C>           <C>
ASSETS
  Current Assets
    Cash and cash equivalents                                                     493                183
    Receivable from original shareholders                                          65                 54
    Other receivables                                                             144                138
    Prepaids and deposits                                                          87                 76
    Other current assets                                                           79                  -
  -------------------------------------------------------------------------------------------------------
  Total current assets                                                            868                451

  Non-current Assets
    Equipment, net                                                                298                374
  -------------------------------------------------------------------------------------------------------
  Total non-current assets                                                        298                374

TOTAL ASSETS                                                                    1,166                825
---------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
  LIABILITIES
    Current liabilities
      Bank overdraft                                                               22                  -
      Accounts payable                                                            264                191
      Loans payable due to shareholder                                            172                 66
      Accrued payroll and employees benefits                                       35                 66
      Accrued liabilities                                                         233                263
    -----------------------------------------------------------------------------------------------------
    Total current liabilities                                                     726                586
  -------------------------------------------------------------------------------------------------------
  TOTAL LIABILITIES                                                               726                586

  SHAREHOLDERS' EQUITY
    Authorized:
      An  unlimited number of common shares of no par value
        Issued and outstanding:
        9,746,620 common shares at December 31, 2000
       13,747,470 common shares at June 30, 2001                                7,163              5,941
    Capital surplus/Additional paid-in                                          2,735                406
    Accumulated other comprehensive (loss) income                                  74                (16)
    Accumulated deficit, during development stage
      (after loss allocation to silent partners)                               (9,532)            (6,092)
  -------------------------------------------------------------------------------------------------------
  TOTAL SHAREHOLDERS' EQUITY                                                      440                239

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      1,166                825
---------------------------------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

</TABLE>



                                       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       Six months ended
                                               to June 30,              June 30                  June 30
                                                      2001         2001         2000         2001        2000
-------------------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>          <C>          <C>         <C>
Sales and other revenue                                182            -            -            -           -
-------------------------------------------------------------------------------------------------------------
EXPENSES
  Research and development expenses
   Personnel                                         2,219          150          162          327         279
   Laboratory                                        1,099           56           87          135         169
   Office                                              497           21           46           32         115
   Consulting services                                 600            -            6            1          21
   Professional fees                                   789           12           36           26          47
-------------------------------------------------------------------------------------------------------------
  Total Research & Development expenses              5,204          239          337          521         631

  Marketing and general & administrative expenses
   Personnel                                           516           41           33           82          68
   Financing                                           275            1            9            2          13
   Office                                              176           18           16           36          24
   Consulting services                                 380           25           29           55          46
   Professional fees                                   428           53           43          122          76
   Management fees                                     144           18           18           36          36
   Marketing activities                                126            1           39           11          40
   Investor relations                                  351           76           47          117          68
   Research memberships                                100            -            -            -           -
   Travel                                              220            1            4            9          20
   Other                                               167            4           21            6          31
-------------------------------------------------------------------------------------------------------------
  Total Marketing and G&A expenses                   2,883          238          259          476         422

  Total operating expenses                           8,087          477          596          997       1,053

  Interest expense                                     158           24            -           24           -
  Stock based compensation                           2,707        2,329            5        2,329          10
-------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                      11,080        2,958          601        3,477       1,063

  Interest and other income                           (137)          (1)         (24)          (1)        (56)
  (Gain)/loss on foreign exchange                      (77)          49          (16)          91         (71)

LOSS BEFORE INCOME TAX                             (10,556)      (2,878)        (561)      (3,440)       (936)

  Income tax                                             0            0            -            0           -

NET LOSS                                           (10,556)      (2,878)        (561)      (3,440)       (936)
-------------------------------------------------------------------------------------------------------------
  Other comprehensive (loss) income:
   Accumulated other comprehensive
   income (loss)                                        74           53          (51)          90         (97)

COMPREHENSIVE LOSS                                 (10,483)      (2,825)        (612)      (3,350)     (1,033)
-------------------------------------------------------------------------------------------------------------
Basic and diluted loss per share, on net loss        (1.62)       (0.26)       (0.06)       (0.33)      (0.10)

Basic and diluted weighted average
  number of shares outstanding                   6,499,188   10,863,832    9,746,620   10,308,312   9,741,620
-------------------------------------------------------------------------------------------------------------
</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,
exept per share data)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
                                                              Additional             Other                      Shareholders'
                               Common shares                     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                                  -             -             -                 -          (3,440)            (3,440)
Other comprehensive (loss) -
  foreign currency translation
  adjustments                             -             -             -                90               -                 90
Issue of shares                   3,240,850           842             -                 -               -                842
Stock based compensation                                          2,329                                                2,329
Exercise of options                 760,000           380             -                 -               -                380
------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2001         13,747,470       $ 7,163       $ 2,735          $     74         $(9,532)         $     440
-------------------------------------------------------------------------------------------------------------------------------
</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         Six months        Six months
                                                      inception to              ended             ended
                                                       to June 30,           June 30,          June 30,
                                                              2001               2001              2000
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>                 <C>
 OPERATING ACTIVITIES
 Net loss                                                  (10,556)            (3,440)             (936)
 Items not affecting cash
   Depreciation and amortization                               253                 46                50
   Stock based compensation                                  2,707              2,329                10
 Changes in non-cash working capital
   (Increase) decrease in other receivable                    (159)               (29)               84
   (Increase) decrease in prepaids and deposits                (87)               (11)              (27)
   Increase (decrease) in accounts payable                     281                 91                27
   Increase (decrease) in accrued liabilities                  289                (40)               36
   (Increase) decrease in other assets                         (84)               (84)                -
 -------------------------------------------------------------------------------------------------------
                                                            (7,357)            (1,138)             (756)
 INVESTING ACTIVITY
   Additions to property, plant and equipment                 (581)                (1)             (101)
 -------------------------------------------------------------------------------------------------------
 FINANCING ACTIVITIES
   Increase (decrease) in bank overdraft                        23                 23                 -
   Increase (decrease) in long-term debt                        (0)                 -                (3)
   Increase (decrease) in due to shareholder                   109                105                 6
  Advances received from external parties                      296                 (0)                -
  Cash acquired on business combination                      4,718                  -                 -
  Advances from subsidiary                                     581                  -                 -
  Issue of capital stock                                     1,668              1,222                37
  Issuance of atypical shares                                1,025                  -                 -
 -------------------------------------------------------------------------------------------------------
                                                             8,420              1,350                40
 (DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS                                            482                211              (817)

 EFFECT OF FOREIGN EXCHANGE MOVEMENT                            11                 99              (103)

 CASH AND CASH EQUIVALENTS,
   BEGINNING OF PERIOD                                           -                183             2,283
--------------------------------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS,
   END OF PERIOD                                               493                493             1,363
--------------------------------------------------------------------------------------------------------
</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)
--------------------------------------------------------------------------------

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. 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 subscribers to the
     private  placement  were  non-U.S.  persons  outside  the United  States of
     America.

     The Company has used the proceeds to fund  research and  development  of iQ
     Battery's  technology,  expansion  of the  Company's  marketing  and  sales
     activities and general working  capital.  Additional funds are necessary to
     allow the Company to complete its product development and marketing plan.

     In 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 the  Company's
     technology. The


                                       5
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
--------------------------------------------------------------------------------

2.   CONTINUING OPERATIONS (Continued)

     ability of the Company to succeed in these alliances is also dependent upon
     the Company's ability to obtain additional  financing.  Management believes
     that the Company will be able to obtain the necessary financing.

     As of June 30, 2001, 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  and  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.


4.   SHARE CAPITAL

     Authorized
          An unlimited number of common shares

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

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

       Issued to effect the reverse 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

       Private placement, issued for cash                                     3,000,000                          750
       Other shares issued                                                      240,850                           92
       Options exercised during the year                                        760,000                          380
       -------------------------------------------------------------------------------------------------------------
       Balance, June 30, 2001                                                13,747,470                        7,163
</TABLE>



                                       6
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
--------------------------------------------------------------------------------


4.   SHARE CAPITAL (Continued)

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

     (a)  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
          approximately $350,000. In May 2001 the remaining 80,150 warrants were
          cancelled.

     (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  options or
          non-qualified stock options. The Company has reserved 3,448,000 common
          shares for issuance  under the Stock Option  Plan.  Thereof  1,415,000
          options were granted in June 2001.  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.

          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 June 30, 2001.

          Number of Options        Exercise price            Expiration date
          -----------------        --------------            ---------------
                    450,000              $   0.50           December 1, 2008
                     64,000              $   0.50              June 28, 2009
                    160,000              $   0.50               July 7, 2009
                    115,000              $   0.50           October 15, 2009
                    243,500              $   0.50              June 12, 2010
                     10,000              $   0.50              July 28, 2010
                    148,000              $   0.50           January 16, 2011
                  1,415,000              $   1.37              June 27, 2011
                  ---------
                  2,605,500



                                       7
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
--------------------------------------------------------------------------------

4.   SHARE CAPITAL (Continued)

          The following  options have been granted to  non-employees  and remain
          outstanding at June 30, 2001 outside of the Stock Option Plan:

         Number of Options            Exercise price            Expiration date
         -----------------            --------------            ---------------
                    40,000                  $   0.50              June 12, 2002

          As of June 30, 2001,  775,000  shares have been issued on the exercise
          of stock  options  granted  under and  outside  the Stock  Option Plan
          (thereof  60,000 shares outside the plan). Of the total shares issued,
          760,000  shares were issued during the current year (all in the second
          quarter)  and 15,000  shares  were  issued in 2000.  No  options  were
          exercised under the Stock Option Plan in 1999.

          As of June 30, 2001,  470,500  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 years 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.

          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  again the exercise price for
          the Stock  Option  Plans from $1.50 to $0.50 for all  options  granted
          under and outside of the Plan. Due to the changes, all options granted
          under the Plan will be accounted for using  variable  plan  accounting
          under APB 25.  Therefore,  as of June 30, 2001,  the fair value of the
          Company's stock exceeded the adjusted  exercise price,  thus resulting
          in the recognition of compensation  expense.  At the end of the second
          quarter,  $2,329,275  of  compensation  expense was  recognized in the
          financial statements.

     (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.

     (e)  Issuance of shares due to private placement

          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 to EH&P,  a non-U.S.  person  outside  the United
          States,  in connection with the offering  consisting of 120,000 common
          shares.  The cost of the finders fee was netted  against the  proceeds
          obtained from the  financing.  The shares were issued to EH&P pursuant
          to an exemption from registration  available under Regulation S of the
          Securities Act.


                                       8
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
--------------------------------------------------------------------------------


4.   SHARE CAPITAL (Continued)

     (f)  On May 7, 2001, the Company entered into a European Investor Relations
          Consulting  Agreement with  Magdalena,  a non-U.S.  person outside the
          United States. The Company agreed to pay Magdalena a consulting fee in
          the amount of $62,500 for such services,  payable by issuing Magdalena
          a total of  250,000  common  shares  with a deemed  value of $0.25 per
          share, issuable as follows: 20,850 common shares of the Company during
          the first eleven months and 20,650 common shares in the final month of
          the agreement.  As of June 30, 2001, the Company had issued  Magdalena
          20,850  common shares under the  agreement.  The shares were issued to
          Magdalena  pursuant to an exemption from registration  available under
          Regulation S of the Securities Act.

5.   RELATED PARTY TRANSACTIONS

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

     (a)  Management  fees for the three  months  ended June 30, 2001 of $18,000
          (three  months ended June 30, 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  US$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. On May 24, 2001, the lender opted to
          convert CDN$77,365 ($50,000) of the convertible debenture into 100,000
          common shares of the Company.

     (c)  iQBattery  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.



                                       9
<PAGE>

iQ POWER TECHNOLOGY INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
--------------------------------------------------------------------------------

7.   SUBSEQUENT EVENT

     Subsequent to June 30, 2001,  the Company has negotiated and has approved a
     term sheet for a private  placement  of common  shares of the  Company  for
     approximate  financing  proceeds  to the Company of  $1,000,000.  The final
     terms of the private  placement  are subject to  negotiations  and entering
     into a definitive  agreement among the parties.  The  negotiations  and the
     definitive  agreement are  anticipated to be finalized  during August 2001.
     The prospective investor is a non-U.S. person outside the United States and
     the private  placement is intended to comply with Regulation S. The Company
     has  agreed  to pay a 10%  finder's  fee in  connection  with  the  private
     placement, payable in common shares of the Company.

     In July 2001, the Company instituted an Incentive Plan reserving  1,500,000
     shares for issue to officers,  directors,  employees of our company and our
     subsidiaries and other persons, including consultants as an incentive.




                                       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 that 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 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 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.



                                       11
<PAGE>

     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 June 30, 2001
compared to the Three Months Ended June 30, 2000

     The Company  recorded no  revenues in either the three month  period  ended
June 30, 2001 or the three month period ended June 30, 2000.

     The Company  incurred a net loss of  $2,878,000  for the three month period
ended June 30,  2001,  compared  to a net loss of  $561,000  for the  comparable
period in 2000.  Total  expenses  rose from  $601,000 for the three month period
ended June 30, 2000 to $2,830,000  for the same period in 2001.  The main factor
contributing  to the expense  increase  was an increase in non-cash  stock based
compensation  expense  recorded  by the  Company,  which rose from $5,000 in the
second  quarter of 2000 to $2,329,000  for the same period in 2001. The non-cash
stock  based  compensation  for  the  quarter  ended  June  30,  2001,  included
$1,303,000 due to variable  accounting  treatment for fully vested options which
remained  outstanding and an increase in the price of the Company's common stock
in the  second  quarter of 2001.  The  Company's  common  stock is traded in the
United States on the Over The Counter Bulletin Board market.

     The operating  expenses for the three month period ended June 30, 2001 were
$477,000  compared to $596,000 for the comparable  period in 2001, a decrease of
$119,000 or 20.0%.

     Research and development  expenses decreased by $98,000 to $239,000 for the
three month period ended June 30, 2001 from $337,000 for the  comparable  period
in  2000.  This  decrease  reflects  the  Company's  completion  of the  initial
development  of the  Company's  battery  technology  in 2000,  and  research and
development efforts during the first half of 2001 to finalize the development of
the pre-series production of the Generation I battery technology.  R&D personnel
expenses  decreased  for the three month  period ended June 30, 2001 to $150,000
compared  to  $162,000  during  the same  period  in 2000;  laboratory  expenses
decreased for the three month period ended June 30, 2001 to $56,000 from $87,000
during the same period in 2000; R&D office expenses  declined to $21,000 for the
three  month  period  ended June 30, 2001  compared  to $46,000  during the same
quarter in 2000; no R&D Consulting services expenses were incurred in the second
quarter  of  2001  compared  to  $6,000  for  the  same  quarter  in  2000;  and
professional  fees were  reduced to $12,000  for the  second  quarter  2001 from
$36,000 for the comparable quarter in 2000. During the fiscal quarter ended June
30, 2001, the Company's research and development were conducted primarily by its
employees.

     During the three month  period  ended June 30,  2001,  expenses  related to
marketing  and  general  and  administrative  decreased  by $21,000 to  $238,000
compared  to $259,000 in the same  period in 2000.  Personnel  expenses  for the
three month period ended June 30, 2001 increased to $41,000 from $33,000 for the
three months ended June 30, 2000. Professional fees increased to $53,000 for the
second  quarter  2001 from  $43,000  for the same  quarter  of the  prior  year.
Expenses for investor relations increased to $76,000 from $47,000 for the second
quarters 2001 and 2000, respectively.  Expenses for marketing activities for the
three month period  ended June 30, 2001 were $1,000,  compared to $39,000 in the
same period in 2001,  which  included  costs  related to the launch of a new web
site in 2000. Other changes in the Company's general and administrative expenses
from the three  month  period  ended June 30,  2001  compared to the same period
ended June 30, 2000,  included  slightly  increased office expenses  ($18,000 in
2001,  compared to $16,000 in 2000);  decreased  consulting services ($25,000 in
2001,  compared to $29,000 in 2000);  and decreased  other  expenses  ($4,000 in
2001, compared to $21,000 in 2000).

     Loss per Share: The Company  experienced a basic and diluted loss per share
of $0.26 for the three month period ended June 30, 2001, compared to a basic and
diluted loss per share of $0.06 for the three month period ended June 30, 2000.

     The Company anticipates that expenditures  related to marketing and general
and administration will increase during the year ending December 31, 2001, as it
conducts marketing efforts to introduce our Generation I



                                       12
<PAGE>

iQ Battery,  including costs related to building product awareness and increased
efforts to enter into service and licensing  arrangements to  commercialize  our
Generation I iQ Battery and our related energy management technologies.


The  Company's  Results of  Operations  for the Six Months  Ended June 30,  2001
compared to the Six Months Ended June 30, 2000

     The Company  recorded no revenues in either the six month period ended June
30, 2001 or the six month period ended June 30, 2000.

     The  Company  incurred a net loss of  $3,440,000  for the six month  period
ended June 30,  2001,  compared  to a net loss of  $936,000  for the  comparable
period in 2000.  Total  expenses  increased to  $3,350,000  during the six month
period ended June 30, 2001 compared with $1,063,000 for the same period in 2000.
The main factor contributing to the expense increase was an increase in non-cash
stock  based  compensation  expense  recorded  by the  Company,  which rose from
$10,000 during the first six months of 2000 to $2,329,000 for the same period in
2001. The non-cash stock based  compensation for the six month period ended June
30, 2001,  included  $1,303,000 due to variable  accounting  treatment for fully
vested  options which remained  outstanding  and an increase in the price of our
common stock in the second quarter of 2001.

     Total  operating  expenses  decreased by $56,000 to $997,000 during the six
month period ended June 30, 2001 from $1,053,000 during the same period in 2000.
Research  and  development  expenses in total  decreased  to $521,000 in the six
month period ended June 30, 2001 from $631,000 in the comparable period in 2000,
as the Company  concentrated  on finalizing  the  development  of the pre-series
production  of the  Generation  I iQ Battery  technology.  R&D  Personnel  costs
increased to $327,000 for the six month period ended June, 2001 from $279,000 in
the comparable  period in 2000, a $48,000  (17.2%)  increase.  This increase was
primarily  due to newly hired  personnel  added to our payroll in April of 2000.
Laboratory  expenses  decreased  for the six month period ended June 30, 2001 to
$135,000  from  $169,000  during the same  period in 2000.  R&D office  expenses
declined to $32,000 for the six month period  ended June 30,  2001,  compared to
$115,000  during the same  quarter in 2000.  R&D  Consulting  services  expenses
decreased to $1,000 for the six month  period ended March 31, 2001,  compared to
$21,000 for the same quarter in 2000.  This decrease is primarily  attributed to
our focus on later stage research and  development  efforts.  We anticipate that
expenditures related to research and development will remain consistent with our
expenditures during the first two quarters of 2001 for the balance of 2001.

     The expenses related to marketing and general and administration  increased
$54,000 to  $476,000  for the six month  period  ended June,  2001,  compared to
$422,000 for the comparable period in 2000. For the comparable six month periods
ended June 30 for the years 2001 and 2000,  the personnel  expenses were $82,000
and  $68,000,  respectively,  a $14,000  (20.6%)  increase  due to the hiring of
additional  personnel.  During the six month period ended June 30, 2001,  office
expenses  increased to $36,000 due to newly  rented  office  space,  compared to
$24,000 in the same  period in 2000.  Professional  fees  increased  to $122,000
during the six month period ended June 30,  2001,  from $76,000  during the same
period during 2000, due primarily to auditing fees and legal expenses related to
the Company's Securities and Exchange Commission filings.  Expenses on increased
investor relations  increased to $117,000 in the first two quarters of 2001 from
$68,000  for the  comparable  period in 2000.  Other  changes  in our  operating
expenses  from the six month  period  ended June 30,  2001  compared to the same
period during June 30, 2000, included increased  consulting services ($55,000 in
2001, compared to $46,000 in 2000);  decreased marketing  activities ($11,000 in
2001,  compared to $40,000 in 2000);  decreased travel ($9,000 in 2001, compared
to $20,000 in 2000);  and decreased other expenses ($6,000 in 2001,  compared to
$31,000 in 2000). We anticipate that  expenditures  related to our marketing and
general  and  administration  expenses  will  increase  during  the year  ending
December  31,  2001.  We  anticipate  this  increase  will be on  account of our
increased  marketing  efforts to introduce our Generation I iQ Battery.  We also
expect to increase our efforts to enter into service and licensing  arrangements
to commercialize  our Generation I iQ Battery and our related energy  management
technologies.

     Loss per Share: The Company  experienced a basic and diluted loss per share
of $0.35 for the six month period  ended June 30, 2001,  compared to a basic and
diluted loss per share of $0.10 for the six month period ended June 30, 2000.



                                       13
<PAGE>

     We anticipate that losses will increase  marginally,  as we expect to begin
generating  revenues from the commercial  sale of our Generation I iQ Battery in
the last half of 2001 or the beginning of 2002.  Our  Generation I iQ Battery is
being  manufactured  by a third-party  manufacturer  for limited sales in Europe
during this period.  There can be no assurance that our efforts to commercialize
our  Generation I iQ Battery will be successful  or that we will not  experience
delays in introducing our 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 June 30, 2001,  the Company had cash and
cash equivalents of $493,000, and working capital of $142,000. From inception to
June 30,  2001,  the  Company  had raised  approximately  $8.1  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.

     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 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 and the
offering was  conducted  pursuant to Regulation S as  promulgated  by the United
States Securities and Exchange Commission.

     Subsequent to June 30, 2001,  the Company has negotiated and has approved a
term  sheet  for a  private  placement  of  common  shares  of the  Company  for
approximate financing proceeds to the Company of $1,000,000.  The final terms of
the private placement are subject to negotiations and entering into a definitive
agreement among the parties.  The negotiations and the definitive  agreement are
anticipated to be finalized  during August 2001. The  prospective  investor is a
non-U.S.  person outside the United States and the private placement is intended
to comply with Regulation S. The Company has agreed to pay a 10% finder's fee in
connection with the private placement,  payable in common shares of the Company.
As of August 10,  2001,  the  Company  has not yet  closed  any  portion of this
investment or received any funds from the prospective investor.

     The  Company   anticipates  that  the  proceeds  of  the  proposed  private
placements  will be  sufficient  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 the
proceeds of the private  placement,  cash flow from operations,  if any, the net
proceeds of their  securities  offerings and interest thereon and, to the extent
available,  lines of credit.  There can be no  assurance  that the Company  will
successfully  complete the private  placement as planned.  If the Company cannot
complete the private placement, the Company's business and results of operations
could be materially adversely affected.

Obligations and Commitments

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



                                       14
<PAGE>

     On May 7, 2001,  the Company  entered  into a European  Investor  Relations
Consulting Agreement with Magdalena Finance Corp. ("Magdalena"). Under the terms
of the agreement,  Magdalena agreed to provide the Company with certain investor
relations services in Europe for a term of one year,  beginning May 1, 2001. The
Company  agreed to pay  Magdalena a consulting  fee in the amount of $62,500 for
such  services,  payable by issuing  Magdalena a total of 250,000  common shares
with a deemed  value of $0.25 per share,  issuable  as  follows:  20,850  common
shares of the Company during the first eleven months and 20,650 common shares in
the final month of the agreement.  As of August 13, 2001, the Company has issued
Magdalena 41,700 common shares under the agreement.

     On May 5, 2001, the Company  entered into a Finders Fee Agreement with EH&P
Investments AG. ("EH&P").  Under the terms of the agreement,  the Company agreed
to pay EH&P a finder's  fee of $30,000 in  connection  with  arranging a private
placement of the Company's  common  stock.  The finder's fee was paid by issuing
EH&P 120,000 common shares of the Company.

     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:

     o    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.

     o    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.

     o    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.

     o    Since July 2000,  the Company has been  preparing  the formation 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.

     o    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.



                                       15
<PAGE>

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

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  $1,000,000 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  $150,000 on capital
raising efforts during 2001.

Personnel

     The Company  anticipates  no  significant  changes in the number of Company
employees  during the fiscal year 2001 and for the next twelve calendar  months.
Similarly,  the  Company  does  not  anticipate  making  purchases  or  sales of
significant  physical facilities or manufacturing  equipment for the next twelve
months.

Administrative and General Operating Budget

     The Company estimates that its general  administrative and operating budget
will be approximately $450,000 during the year ending December 31, 2001.

     The Company  anticipates  that its total operating  budget for 2001 will be
approximately  $1,750,000.  The financing agreed upon in July 2001 satisfies the
Company's additional working capital  requirements of approximately  $750,000 to
$1,000,000  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 steps:

     o    reduce expenditures on research and development;



                                       16
<PAGE>

     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.

Any of these  actions  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 June 30, 2001, 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.  Subsequent  to June 30,  2001,  iQ Power and iQ Battery  entered  into a
settlement agreement with Mr. Trenz.

     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.

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

          a)   Authorization of Company Preferred Stock.

     At the annual general  meeting of  shareholders  held June 28, 2001, all of
the shares present at the meeting  ratified,  confirmed,  approved and adopted a
resolution  that the  Articles of the Company be amended to create a class of an
unlimited number of preferred shares, without par value, issuable in one or more
series,  on those  terms  set forth in the  Management  Proxy  Circular  sent to
Company shareholders  consistent with the Canada Business  Corporations Act. The
shareholders  also authorized the Directors of the Company to forego,  delay the
implementation of, or revoke the special resolution.

          b)   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 to EH&P, a non-U.S.  person
outside the United States, in connection with the offering



                                       17
<PAGE>

consisting of 120,000  common shares at the deemed value of $30,000.  The shares
were issued to EH&P pursuant to an exemption from  registration  available under
Regulation S of the Securities Act.

     On May 7, 2001,  the Company  entered  into a European  Investor  Relations
Consulting  Agreement  with  Magdalena,  a non-U.S.  person  outside  the United
States.  The Company  agreed to pay Magdalena a consulting  fee in the amount of
$62,500  for such  services,  payable  by issuing  Magdalena  a total of 250,000
common  shares  with a deemed  value of $0.25 per share,  issuable  as  follows:
20,850  common  shares of the Company  during the first eleven months and 20,650
common shares in the final month of the  agreement.  As of August 13, 2001,  the
Company has issued  Magdalena  41,700  common  shares under the  agreement.  The
shares  were issued to  Magdalena  pursuant to an  exemption  from  registration
available under Regulation S of the Securities Act.

     Subsequent to June 30, 2001,  the Company has negotiated and has approved a
term  sheet  for a  private  placement  of  common  shares  of the  Company  for
approximate financing proceeds to the Company of $1,000,000.  The final terms of
the private placement are subject to negotiations and entering into a definitive
agreement among the parties.  The negotiations and the definitive  agreement are
anticipated to be finalized  during August 2001. The  prospective  investor is a
non-U.S.  person outside the United States and the private placement is intended
to comply with Regulation S. The Company has agreed to pay a 10% finder's fee in
connection with the private placement, payable in common shares of the Company.

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

          None.

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

     The Company's 2001 annual general meeting of shareholders  was held on June
28,  2001  in  Vancouver,  British  Columbia  pursuant  to the  Canada  Business
Corporations  Act.  A total of  4,819,445  common  shares  of the  Company  were
represented  in  person  or by  proxy  at  the  annual  meeting,  consisting  of
approximately  36%  of  the  total  number  of  common  shares  of  the  Company
outstanding on June 4, 2001, the record date for the annual general meeting.  At
the annual general  meeting,  18 shareholders  were  represented in person or by
proxy.

     Ratification of Actions by Directors.

     At the annual  general  meeting,  all of the shares  present at the meeting
ratified,  confirmed,  approved and adopted all of the acts, deeds, things done,
and  proceedings  taken by the  directors  and officers of the Company since the
last annual general meeting of shareholders held in fiscal year 2000.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
            4,589,776              128,805                       0                   0
</TABLE>

     Approval of Designation of Preferred Stock.

     At the annual  general  meeting,  all of the shares  present at the meeting
ratified,  confirmed, approved and adopted a resolution that the Articles of the
Company be amended to create a class of an unlimited number of preferred shares,
without par value,  issuable in one or more series,  on those terms set forth in
the Management Proxy Circular sent to Company  shareholders  consistent with the
Canada Business Corporations Act. The shareholders also authorized the Directors
of the  Company to forego,  delay the  implementation  of, or revoke the special
resolution.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
          4,406,498                 258,805                      0                53,280
</TABLE>



                                       18
<PAGE>

     Approval of Name Change.

     At the annual  general  meeting,  all of the shares  present at the meeting
ratified,  confirmed, approved and adopted a resolution that the Articles of the
Company be amended to change the name of the Company to 30099458 Canada Inc., or
such other name as approved by the Directors.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
            4,588,581              130,000                       0                   0
</TABLE>

     Amendment of 1998 Stock Option Plan.

     At the annual  general  meeting,  the  shareholders  approved an  amendment
related to the Company's 1998 Stock Option Plan to increase the number of shares
issuable  under the plan.  Under the  amendment to the Stock  Option  Plan,  the
Company is authorized  to grant stock options  pursuant and subject to the terms
and conditions of the Amended 2000 Plan entitling the option holders to purchase
up to 3,448,000 common shares of the Company.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
            4,406,496               182,085                      0               130,000
</TABLE>

     Approval of 2001 Stock Incentive Plan.

     At the annual general meeting, the shareholders approved the Company's 2001
Incentive  Plan.  Under the terms of the 2001  Incentive  Plan,  the  Company is
authorized  to issue up to  1,500,000  common  shares  to  qualified  employees,
officers and  directors of the Company at a nominal  consideration  of $0.01 per
share.  The  shares  sold and  issued  under the 2001  Incentive  Plan  shall be
forfeited to the Company if the Company shall not have generated  cumulative net
profits from  inception of  $1,000,000 or more,  calculated  in accordance  with
United States generally accepted  accounting  principles,  prior to December 31,
2006. The forfeiture  provisions expire in the event (i) the Company is involved
in a  corporate  merger,  consolidation,  acquisition  of  property  or  shares,
separation,  reorganization  or  liquidation to which the Company or a parent or
subsidiary  corporation of the Company is a party,  or (ii) any other event with
substantially  the same effect occurs.  Termination of the Plan shall not affect
the forfeitability of shares issued under the 2001 Incentive Plan.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
           4,589,776               128,805                       0                   0
</TABLE>

     Approval of Director Remuneration Proposal.

     At the annual  general  meeting,  all of the shares  present at the meeting
ratified, confirmed, approved and adopted the Director Remuneration Proposal set
forth in the  Management  Proxy  Circular for the annual  general  meeting.  The
proposal  essentially  provides for an annual  payment to the Directors of $2500
and an honorarium  of $250 for each Director for each board meeting  attended by
such Director.

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
            4,459,776                 0                          0               258,805
</TABLE>



                                       19
<PAGE>

     Appointment of Auditors.

     At the annual general meeting, the shareholders ratified the appointment of
Deloitte & Touche,  Chartered  Accountants  as the  Company's  auditors  for the
fiscal year ending  December  31, 2001 and  approved  the  authorization  of the
directors to fix the  remuneration  of the auditors.  The  following  table sets
forth the information regarding the voting on the proposal:

<TABLE>
          Votes Cast          Votes Cast Against
              For                                         Votes Withheld        Abstentions       Not Voted
         ---------------      ------------------          --------------        -----------       ---------
         <S>                  <C>                           <C>                 <C>               <C>
           4,589,776                  0                      128,805                0
</TABLE>

     Election of Directors.

     At the annual general meeting, all of the current Directors of the Company,
were  elected to serve as  Directors  until the 2002 Annual  General  Meeting or
until their earlier  retirement,  resignation,  or removal.  The following table
sets forth the voting in the election held at the annual meeting for Directors:

<TABLE>
                                  Votes Cast      Votes Cast   Votes Withheld
  Nominee                        For Nominee       Against                       Abstentions      Not Voted
-----------------------------  --------------- --------------  --------------- --------------  --------------
<S>                                 <C>               <C>              <C>            <C>
       Peter E. Braun               4,718,581         0                0              0

    Dr. Gunther C. Bauer            4,589,776         0          128,805              0

       Russel French                4,718,581         0                0              0

         Hans Ambos                 4,718,581         0                0              0

     Gregory A. Sasges              4,718,581         0                0              0

        John Lawson                 4,718,581         0                0              0
</TABLE>


     ITEM 5. OTHER INFORMATION

          None.

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits.

     Exhibit
     Number         Description
     ------         -----------
     2.1(1)         Certificate  of  Incorporation  dated December 20, 1994, for
                    3099458 Canada Inc.

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

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



                                       20
<PAGE>

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

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

     6.1(1)         Form of Atypical Share Exchange Agreement

     6.2(1)         Share Exchange  Agreement dated August 25, 1998,  between iQ
                    Power  Technology  Inc., iQ Battery Research and Development
                    GmbH  and  the  Shareholders  of  iQ  Battery  Research  and
                    Development GmbH

     6.3(1)         Pooling  Agreement  No. 1 dated August 25, 1998,  between iQ
                    Power Technology Inc.,  Montreal Trust Company of Canada and
                    the Shareholders of iQ Power Technology Inc.

     6.4(1)         Pooling Amendment  Agreement dated August 15, 1998,  between
                    iQ Power Technology  Inc.,  Montreal Trust Company of Canada
                    and the Shareholders of iQ Power Technology Inc.

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

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

     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  GmbH  dated
                    December 9, 1997 (Translated to English)

    6.12(1)         Commercial   Lease  Agreement  by  and  between  iQ  Battery
                    Research and  Development  GmbH and Josef  Landthaler,  GmbH
                    dated May 9, 1996, as amended (Translated to English)

    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 Aktiengesellschaft  (Translated to
                    English)

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

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

    6.18(1)         Confidentiality  Agreement  between iQ Battery  Research and
                    Development GmbH and Mercedes Benz Aktiengessellschaft dated
                    March 21, 1997 (Translated to English)

    6.19(1)         Letter Agreement between iQ Battery Research and Development
                    GmbH and Manufacturer of Batteries Moll Ltd. dated August 3,
                    1998 (Translated to English)



                                       21
<PAGE>

     Exhibit
     Number         Description
     ------         -----------
    6.20(1)         Mutual Confidentiality Agreement between iQ Battery Research
                    and  Development  GmbH and  Manufacturer  of Batteries  Moll
                    dated September 8, 1997 (Translated to English)

    6.21(1)         Loan Contract by and between Karin Wittkewitz and iQ Battery
                    Research  and  Development  GmbH  dated  December  28,  1996
                    (Translated to English)

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

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

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

    6.25(1)         Consulting  Contract by and between iQ Battery  Research and
                    Development  GmbH and Peter  Braun  dated  August  28,  1994
                    (Translated to English)

    6.26(1)         Consulting  Contract by and between iQ Battery  Research and
                    Development  GmbH and Dr.  Gunther  Bauer dated  October 30,
                    1996 (Translated to English)

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

    6.28(1)         Agreement  (Debt  Deferral)  by and between iQ Research  and
                    Development  GmbH and Gunther Braun dated  December 27, 1996
                    (Translated to English)

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

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

    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 Ltd.

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

    6.37(2)         Pooling  Agreement  No. 2 dated  December 1, 1998 between iQ
                    Power Technology, Inc., Montreal Trust Company of Canada and
                    certain shareholders of iQ Power Technology, Inc.

    6.38(2)         Lease  Agreement  effective  as of February 16, 1999 between
                    Dr. Arne Curt Berger and iQ Battery Research and Development
                    GmbH (Translated to English)



                                       22
<PAGE>

     Exhibit
     Number         Description
     ------         -----------
    6.39(2)         Rescission  Agreement  dated  January 13, 1999 between Spima
                    Spitzenmanufaktor   GmbH  and  iQ   Battery   Research   and
                    Development GmbH

    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)   Investor
                    Relations and iQ Power Technology Inc.

    6.41(4)         Corporate  Consulting  Agreement  May 1, 2000,  between  TRT
                    Capital  Projects  Inc.  and iQ Power  Technology  Inc.  and
                    Letter of Amendment dated July 31, 2000

    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 Battery Research
                    and Development GmbH

    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 Battery  Research and
                    Development GmbH

    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  between  IQ  Power
                    Technology Inc. and iQ Battery Research and Development GmbH
                    dated May 2, 2001

    6.50(5)         Amendment  No. 3 to iQ Power  Technology  1998 Stock  Option
                    Plan

    6.51(5)         iQ Power Technology 2001 Incentive Plan

    6.52            Finder's  Fee  Agreement  by and  between  iQ Power and EH&P
                    Investments AG dated May 5, 2001

    6.53            European  Investor  Relations  Agreement  by and  between iQ
                    Power Technology  Inc.and  Magdalena Finance Corp. dated May
                    7, 2001

    7.1(1)          List of Material Foreign Patents

   99.1             Management Information Circular dated May 31, 2001
---------------------

(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.

(4)  Previously filed as an exhibit to the registrant's  registration  statement
     on Form S-8 on July 25, 2001 (File No. 333-65848).



                                       23
<PAGE>

          (b)  Reports on Form 8-K.

               None.








                                       24
<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: August 20, 2001                 By:    /s/ Peter E. Braun
                                             -----------------------------------
                                      Name:  Peter E. Braun
                                      Title: President
                                             (Principal Executive, Financial and
                                             Accounting Officer)






                                       25
<PAGE>

                                  EXHIBIT INDEX

     Exhibit
     Number         Description
     ------         -----------
     2.1(1)         Certificate  of  Incorporation  dated December 20, 1994, for
                    3099458 Canada Inc.

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

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

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

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

     6.1(1)         Form of Atypical Share Exchange Agreement

     6.2(1)         Share Exchange  Agreement dated August 25, 1998,  between iQ
                    Power  Technology  Inc., iQ Battery Research and Development
                    GmbH  and  the  Shareholders  of  iQ  Battery  Research  and
                    Development GmbH

     6.3(1)         Pooling  Agreement  No. 1 dated August 25, 1998,  between iQ
                    Power Technology Inc.,  Montreal Trust Company of Canada and
                    the Shareholders of iQ Power Technology Inc.

     6.4(1)         Pooling Amendment  Agreement dated August 15, 1998,  between
                    iQ Power Technology  Inc.,  Montreal Trust Company of Canada
                    and the Shareholders of iQ Power Technology Inc.

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

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

     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  GmbH  dated
                    December 9, 1997 (Translated to English)

    6.12(1)         Commercial   Lease  Agreement  by  and  between  iQ  Battery
                    Research and  Development  GmbH and Josef  Landthaler,  GmbH
                    dated May 9, 1996, as amended (Translated to English)

    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 Aktiengesellschaft  (Translated to
                    English)

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

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

    6.18(1)         Confidentiality  Agreement  between iQ Battery  Research and
                    Development GmbH and Mercedes Benz Aktiengessellschaft dated
                    March 21, 1997 (Translated to English)

    6.19(1)         Letter Agreement between iQ Battery Research and Development
                    GmbH and Manufacturer of Batteries Moll Ltd. dated August 3,
                    1998 (Translated to English)

<PAGE>

     Exhibit
     Number         Description
     ------         -----------
    6.20(1)         Mutual Confidentiality Agreement between iQ Battery Research
                    and  Development  GmbH and  Manufacturer  of Batteries  Moll
                    dated September 8, 1997 (Translated to English)

    6.21(1)         Loan Contract by and between Karin Wittkewitz and iQ Battery
                    Research  and  Development  GmbH  dated  December  28,  1996
                    (Translated to English)

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

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

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

    6.25(1)         Consulting  Contract by and between iQ Battery  Research and
                    Development  GmbH and Peter  Braun  dated  August  28,  1994
                    (Translated to English)

    6.26(1)         Consulting  Contract by and between iQ Battery  Research and
                    Development  GmbH and Dr.  Gunther  Bauer dated  October 30,
                    1996 (Translated to English)

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

    6.28(1)         Agreement  (Debt  Deferral)  by and between iQ Research  and
                    Development  GmbH and Gunther Braun dated  December 27, 1996
                    (Translated to English)

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

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

    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 Ltd.

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

    6.37(2)         Pooling  Agreement  No. 2 dated  December 1, 1998 between iQ
                    Power Technology, Inc., Montreal Trust Company of Canada and
                    certain shareholders of iQ Power Technology, Inc.

    6.38(2)         Lease  Agreement  effective  as of February 16, 1999 between
                    Dr. Arne Curt Berger and iQ Battery Research and Development
                    GmbH (Translated to English)



<PAGE>

     Exhibit
     Number         Description
     ------         -----------
    6.39(2)         Rescission  Agreement  dated  January 13, 1999 between Spima
                    Spitzenmanufaktor   GmbH  and  iQ   Battery   Research   and
                    Development GmbH

    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)   Investor
                    Relations and iQ Power Technology Inc.

    6.41(4)         Corporate  Consulting  Agreement  May 1, 2000,  between  TRT
                    Capital  Projects  Inc.  and iQ Power  Technology  Inc.  and
                    Letter of Amendment dated July 31, 2000

    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 Battery Research
                    and Development GmbH

    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 Battery  Research and
                    Development GmbH

    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  between  IQ  Power
                    Technology Inc. and iQ Battery Research and Development GmbH
                    dated May 2, 2001

    6.50(5)         Amendment  No. 3 to iQ Power  Technology  1998 Stock  Option
                    Plan

    6.51(5)         iQ Power Technology 2001 Incentive Plan

    6.52            Finder's  Fee  Agreement  by and  between  iQ Power and EH&P
                    Investments AG dated May 5, 2001

    6.53            European  Investor  Relations  Agreement  by and  between iQ
                    Power Technology  Inc.and  Magdalena Finance Corp. dated May
                    7, 2001

    7.1(1)          List of Material Foreign Patents

   99.1             Management Information Circular dated May 31, 2001
---------------------

(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.

(4)  Previously filed as an exhibit to the registrant's  registration  statement
     on Form S-8 on July 25, 2001 (File No. 333-65848).