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                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(MARK ONE)
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 For the fiscal year ended December 31, 2004     OR

 [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
      For the transition period from __________ to __________

                        Commission File Number 000-31291

                                 RPM TECHNOLOGIES, INC.
                      (Name of small business issuer in its charter)

                     Delaware                             36-4391958
               (state or other jurisdiction           (I.R.S. Employer
              Incorporation or Organization)          Identification No.)

         24001 S. Western Avenue, Park Forest, Illinois        60466
          (Address of principal of Executive Offices)        (Zip Code)

Issuer's telephone number: 708-668-7400

         Securities registered under Section 12(b) of the Exchange Act:
          Title of each class      Name of each exchange on which registered
                None                                   None

            Securities registered under Section 12(g) of the Exchange Act:
                           Common Stock, no par value
                                (Title of Class)
                              _____________________

Check whether  the issuer  (1) filed  all reports  required to  be filed by
Section 13 or 15(d) of the Exchange  Act 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 | |

Check if there is  no disclosure of delinquent filers in response to  Item
405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. |  |

The Company's revenue for the twelve months ended December 31, 2004
was $2,191,373.

As of May 17, 2005, the aggregate market value of the common equity held by
nonaffiliates of the registrant was approximately $2,300,000. As of May 17,
2005, the number of shares outstanding  of the registrant's only class of
common stock was 19,480,520.

Transitional Small Business Disclosure Format (check one):YES |  | NO |X|

DOCUMENTS INCORPORATED BY REFERENCE: None.

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                             PART I

        SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    This report contains forward-looking statements, including among
others:

        o   our product development activities;

        o   our business strategy for establishing a presence in the pallet
            market;

        o   anticipated trends in our financial condition and results of
            operations;

        o   the impact of the continuing threat of terrorism and the responses
            to such threat by military, government, business and the public; and

        o   our ability to distinguish ourselves from our current and future
            competitors.

    You can identify forward-looking statements generally by the use of
forward-looking terminology such  as "believes," "expects,"  "may," "will,"
"intends," "plans," "should," "could," "seeks," "pro forma," "anticipates,"
"estimates," "continues," or other variations thereof, including their use
in the negative, or by discussions of strategies, opportunities, plans or
intentions. You may find these forward-looking statements under the
captions "Risk Factors," "Management's Discussion and Analysis or Plan of
Operation," and "Description of Business," as well as captions elsewhere in
this report. A number of factors could cause results to differ materially from
those anticipated by forward-looking statements, including those discussed under
"Risk Factors" and "Description of Business."

    These forward-looking statements necessarily depend upon assumptions  and
estimates  that may  prove to  be incorrect.  Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we  cannot guarantee  that we  will achieve our plans,
intentions or  expectations. The forward-looking  statements involve known
and  unknown risks,  uncertainties and  other factors  that may cause
actual  results  to differ  in  significant ways  from any future  results
expressed or implied by the forward-looking statements.

ITEM 1.  DESCRIPTION OF BUSINESS.

Overview

    We were incorporated in Delaware on April 10, 1996 under the name Mann
Enterprise, Inc. On March 17, 2000, Mann Enterprise acquired RPM Technologies,
Inc., a Colorado corporation ("RPM Colorado"), in a stock-for- stock exchange
transaction. RPM Colorado had been engaged in the business of developing,
producing and marketing plastic pallets since its inception in December 1997. On
April 17, 2000, RPM Colorado was merged with and into Mann Enterprise.
Immediately following the merger, Mann Enterprise changed its name to RPM
Technologies, Inc.

    We are engaged in the business of developing, producing through subcontract
manufacturers, marketing and selling plastic pallets and other material-
handling products throughout the United States, Canada and South America. We
subcontract the manufacture of our plastic pallets to large injection, extrusion
and compression molders on a competitive bid basis. These manufacturers are
selected on the basis of their equipment and manufacturing capabilities. We
supply them with the molds and resins that we have developed for specific
product applications.

    At our direction, these manufacturers utilize a proprietary processing
system to produce a strong, durable and cost-effective plastic pallet. Our
pallets are made from recycled plastic material and overcome many of the
drawbacks associated with wood pallets, such as limited durability, heaviness,
the causing of injuries by splintered wood and nails, and environmental issues.

<page>1

    The demand for and sales of our plastic pallet products is increasing. As of
the date of this report, we have received orders from and delivered product
to customers that include Toyota, Goodyear, Dow Chemical, Exxon-Mobil, the
United States Department of Defense, the National Guard, the United States
Department of Forestry, Wm. Wrigley Jr. Company, Kraft, Sara Lee, Armstrong
World, Smurfit- Stone, General Dynamics, Black & Decker, Fuji Film, Baxter
Laboratories, Romer, Pollack Paper, Lee Carpet, Bechtel Power, Organic Valley,
Transgeonomic, Numatech Industries, Unisea, Leader Manufacturing, Cyber Power
Systems, Rockwell International, North American, Biokyowa, Georgia Pacific and
others. We have also received product sales inquiries from potential customers
located in Canada, Europe and the Middle East.

    We continue to promote our line of material-handling products through
internet marketing and promotion with numerous different optimized websites,
each directed to a specific market segment. These websites include:
www.rpmplasticpallets.com, www.rpmtechnologiesinc.com, www.pallet-container-
quotes.com, www.shelving-quotes.com, www.locker-quotes.com, www.pallet-rack-
stack-racks.com, www.plastic-pallets-usa.biz, www.plastic-pallets.com,
www.plastic-pallets.org, www.plastic-pallets-use.info and www.plastic- pallets-
usa.ws. In the near future we intend to add new variations of the suffixes,"
usa," "us," "com," "biz," "org," "net," "info," "us" and "ws."

    We continue to add sales volume in the custom plastic pallet market. As
funds are available, we plan to introduce new mold designs, purchase new molds,
install new grinding equipment and add other molds. These enhancements are
expected to reduce costs and increase operating efficiency. Custom-size plastic
pallet sales have increased principally among exporters that previously used
wood pallets but are now switching to alternative materials due to wood
treatment requirements, which are specified in International Standard for
Phytosanitary Measures, or ISPM, number 15.

    ISPMs are prepared by the Secretariat of the International Plant Protection
Convention, or IPPC, as part of the United Nations Food and Agriculture
Organization, or FAO, global program of policy and technical assistance in
plant quarantine.  The IPPC is an international treaty relating to plant health
to which approximately 124 governments currently adhere.  ISPM 15, which was
adopted in March 2002, describes measures to reduce the risk of introduction
and/or spread of pests associated with wood packaging material. ISPM 15
requires wood packaging, including wood pallets, made from raw wood to be heat
treated or fumigated in a specified manner.  Many nations, including the United
States, Canada, Mexico, New Zealand, Korea, China, and European Union
countries, have already imposed requirements adopting the ISPM 15 standard.

    We believe we have developed a breakthrough in the technology and production
of a non-slip custom plastic pallet and we further believe that we will be the
first to bring such a product to the market. This pallet will feature a unique
surface technology designed to virtually eliminate sliding or shifting during
transport of goods placed on the pallet. We expect that this pallet will be
offered in two popular sizes, 48" x 48" and 40" x 48". We have researched and
tested the designs and ordered the molds, which typically take several months
to be produced. We have received tentative nonbinding commitments from two
large U.S. pharmaceutical companies to order the pallets when production is
underway. We expect production to begin, in May 2005.

Industry Overview

    Pallets are used in virtually all industries in which products are broadly
distributed, including, but not limited to, the automotive, chemical, consumer
products, grocery, produce and food production, paper and forest products,
retail, and steel and metals industries. Forklifts, pallet trucks and pallet
jacks are used to move loaded pallets, reducing the need for costly hand loading
and unloading at distribution centers and warehouses.

    The size of the pallet industry is difficult to gauge due to the large
number of small companies in the industry and the lack of standard information.
The Wood Pallet Association estimates that the United States wood pallet
industry is served by approximately 3,600 companies, most of which are small,
privately held firms that operate in only one location. The Newia Polytechnic
and State University Pallet and Container Research Laboratory has estimated,
that approximately 500 million new pallets are now manufactured in the U.S.
each year, of which wood pallets comprise over 90%.

<page>2

    The pallet industry has experienced significant change and growth during the
past several years as businesses continue to attempt to improve the logistical
efficiency of their manufacturing and distribution systems. With the
progression of these systems, expedited product movement has become
increasingly important. We believe that the plastic pallet industry will  grow
along with the overall pallet industry.

Our Solution

    We develop, produce, market and sell plastic pallets and other material-
handling products throughout the United States, Canada and South America. We
believe that we are strongly positioned in the marketplace because of the
following:

        o   processing and manufacturing advantages over other plastic pallet
            producers;

        o   product advantages over wood pallets; and

        o   long-term cost advantages of our pallets compared to both wood
            pallets and other plastic pallets.

  Processing and Manufacturing Advantages

    We believe we are capable of providing a lower priced plastic pallet than
our competitors because:

        o   we subcontract our manufacturing in rural areas where utility costs
            are lower;

        o   we subcontract pallets at a fixed cost;

        o   we specify that our molder use only recycled plastic resins, which
            are considerably less expensive than new resin;

        o   our designs feature lightweight construction, which translates into
            less cost per pallet because of lower resin content;

        o   our blend of recycled resins and additives contributes to
            predictable and consistent quality of our pallets; and

        o   our state-of-the-art molding equipment improves cycle time
            efficiency.

    Our manufacturing process provides us with a competitive advantage because
it allows us to accept raw materials in a variety of forms.  Our ability to use
raw materials from a variety of sources increases the likelihood that an
abundant supply of low-cost raw materials will continue to exist. We believe
that this makes our manufacturing process more cost-effective because it enables
our subcontract manufacturers to accept raw materials in a variety of forms,
including regrind, post-industrial scrap, post-consumer plastic, post-
institutional recyclable plastic, and off-grade new resin. Quality control is
also assured by an ongoing measurement of resin content, confirming that each
batch conforms to our resin specifications.

    We believe the conversion feature of our nestable pallet also reduces our
cost.  The conversion feature enables our nestable pallet to be easily
transformed into a rackable pallet by the addition of one component. The tops
and bottoms are approximately the same size and are locked into position with a
simple snap-lock appendage creating a rackable pallet. This convertibility
reduces mold costs and facilitates improved production time, thereby increasing
profit margins.

<page>3

    Our pallets are based upon proprietary designs that enable molders to
accept and process most high-density plastic materials. A thermoplastic
additive, developed by independent scientists, enables the amalgamation of
chemically incompatible polymers. The additive acts as a catalyst to make
commingled dissimilar polymers compatible, which would normally have little or
no affinity for each other. It reduces melt viscosity and acts as a wetting
agent for inorganic substances. The thermoplastic additive is purchased by our
contract manufacturers, which use the additive in molding the pallets. We have
no legal rights to the additive. Because additives with similar attributes to
the one used by our contract manufacturer are readily available, we believe we
are not heavily dependent on this additive.

    Tests on the thermoplastic additive we have performed under laboratory
conditions have indicated a marked improvement in bonding. The additives we use
enable polymers to be molded at lower processing temperatures and also serve as
a filler or extender to thermoplastics, thereby lowering the cost of the end
product. We also believe that the additive permits a significant reduction in
raw material and processing costs, while producing an end product which we
believe to be of superior strength and durability.

    We and our subcontract manufacturers keep abreast of developments in the
additive field and evaluate new additives to determine their effectiveness
and applicability to our manufacturing processes.

    In 2002, we purchased six extrusion molds, which are used to manufacture
components for our custom-size plastic pallets. Management, in conjunction with
its consulting engineers, has identified other markets and applications for
these plastic runners, deck-boards and rounds. While still in the development
stage, numerous non-pallet applications for plastic components appear to be a
promising adjunct to our plastic-parts business.

    In the third quarter of 2004, we opened two resin processing centers, one in
Park Forest, Illinois (12,000 sq. ft.) and the other in Norman, Oklahoma (10,000
sq. ft.). These facilities are fully equipped with heavy-duty grinding and
processing machinery and equipment. Both facilities recycle post-industrial and
post-consumer plastic scrap. The majority of reground plastic produced in the
form of high density polyethylene (HDPE) and polypropylene (PP) flake is
supplied to our contract manufacturers who produce our plastic pallets and
custom plastic lumber. These facilities have the combined capacity of
processing approximately 20 million pounds of plastic scrap annually. Resin not
used in the manufacture of our products is sold to other plastic product
manufacturers, which defrays some of our costs to operate the facilities and has
the potential to generate additional profits or reduce our losses.

  Product Advantages

    We believe that our plastic pallets offer the following advantages over
wood pallets:

        o   lighter weight;

        o   more can fit in a shipping container;

        o   more user friendly and less likely to cause injuries;

        o   more environmentally friendly; and

        o   more sanitary.

    Our nestable pallet is considerably lighter than a wood pallet of
comparable size. For example, our nestable 40" x 48" pallet weighs
approximately 22 pounds, while a wood pallet of similar dimensions weighs
approximately 45 pounds. Because shipping costs are often calculated based on
weight, shippers that use our plastic pallets immediately realize significant
freight and shipping savings.

    Because of the interlocking, nesting feature, more of our nestable pallets
can be shipped in a container or trailer. Wood pallets are typically stacked one
atop the other with no accommodations for nesting.

<page>4

    Our plastic pallets are user friendly. In addition to being lightweight, our
plastic pallets are designed and molded to eliminate sharp edges, burrs and
other protuberances that make wood pallets difficult to handle and cause worker
injuries. Some shippers require that two workmen handle a wood pallet.
Splintering, gouging, or puncture wounds from nails or sharp edges are
eliminated by utilization of our plastic pallets.

    Additionally, our plastic pallets are environmentally friendly and we
contribute to the nation's recycling efforts. The use of plastic allows us to
recycle older pallets and save on disposal costs. Wood pallets deplete our
forests and present a serious disposal problem for many communities.

    Finally, our plastic pallets are more sanitary than wood pallets.  Wood
pallets have been identified as harboring vermin, bacteria and insects. For this
reason, many nations have recently passed regulations requiring the costly
treatment of certain wood pallets before they can be exported to such nations.
Our pallets do not harbor pests and can be used for export to these companies
without extra treatment.  In contrast, our pallets resist contamination and can
be easily cleaned. They are scuff-resistant and do not leech, absorb odors or
lose color.

  Long-Term Cost Advantages

    Sales of plastic pallets have not significantly penetrated the overall
pallet market, due in large part to their cost. Heavy-duty plastic pallets
typically cost between $45.00 and $100.00, whereas new heavy-duty wood pallets
typically cost approximately $20.00 and less sturdy wood pallets typically cost
between $5.00 and $11.00. Based on results of our surveys of plastic pallet
manufacturers' websites conducted in 2004 and 2005, we believe that the prices
of our pallets, which range between $15.00 and $39.00, are significantly below
the industry average.

    With an average selling price of $15.00 or less per pallet, depending on the
quantity ordered, our nestable pallet competes directly with grade one wood
pallets and is considerably less expensive than most plastic pallets currently
being produced. The same is true for the rackable pallet. When evaluating total
pallet cost, our plastic pallet initially costs more but can be used for many
more trips. We believe that our pallet is ideal for closed loop shipping where a
pallet is used for multiple trips before being discarded. For example, we
believe that a grade one wood pallet, which typically costs about $10.00, makes
approximately seven trips before disposal, repair or recycling is required.
Heavy-duty plastic pallets, as currently manufactured, have a useful life of
approximately 75 trips.  Because our plastic pallets have a useful life
approximately ten times longer than grade one wood pallets, our plastic pallets
offer a significantly lower cost per use.

Our Strategy

    We have strived to develop expertise relating to plastic pallets and
material handling services. Our goal is to become one of the nation's leading
providers of plastic pallets.  Our business strategy to achieve this goal
includes the following elements:

        o   Develop Strategic Relationships. As our business grows, we intend
            to enter into additional arrangements with agents and distributors
            across the country to increase the market awareness of our
            products, while maintaining and building upon solid relationships
            with current and future suppliers, subcontract manufacturers and
            customers.

        o   Continue to outsource manufacturing while gradually establishing an
            internal manufacturing facility.  Our strategic decision to
            outsource the manufacturing of our pallets has assisted us in
            keeping start-up costs to a minimum while we have developed our
            products. We plan to continue to outsource the production of our
            pallets until we are prepared to establish our own production
            facility.  As a first step to the establishment of our own
            production facility, we have leased an office building with
            sufficient space to serve as a production facility as well as our
            corporate headquarters. This facility includes grinding equipment
            with which we can grind post-industrial and post-consumer plastic
            products for use in connection with the manufacturing of our
            pallets.  Over time we intend to add presses to our production
            facility that will enable internal production of our pallets.

<page>5

        o   Continue to promote our products. In addition to establishing
            further relationships with agents and distributors, we intend to
            extend our marketing activities through direct mail programs, trade
            organizations, trade journals and website promotions, among other
            activities. See "Business - Sales and Marketing."

        o   Place a special focus on marketing to closed-loop shippers. Due to
            the durability of our pallets, we are ideally situated to target
            the "closed-loop" shipping market. A closed-loop is a shipping and
            warehousing environment where pallets are shipped from a central
            warehouse or distribution center to outlets and returned to the
            same central warehouse for re-use, rather than being discarded.
            Because closed-loop shippers can use pallets many times, their
            primary concern is the cost per use for pallets, rather than the
            initial cost of the pallet.  Because plastic pallets have a useful
            life of approximately 10 times that of wood pallets, the cost per
            use of plastic pallets is often lower than the cost per use of wood
            pallets.

        o   Continue to develop new products to meet our customers' needs. We
            are currently working to introduce three new pallets to the market,
            as well as a non-slip pallet that we expect to largely reduce the
            drawback of slippage which can be associated with plastic pallets.
            In addition, we continue to look for ways to reduce costs
            sufficiently to produce a low-cost one way plastic pallet capable
            of competing with low-cost wood pallets in the one- way shipping
            market.

        o   Continue to target environmentally-conscious customers.  Because our
            plastic pallets are more environmentally friendly than wood
            pallets, we intend to continue to target entities that are
            particularly conscious about protecting the environment, including
            many governmental agencies.

Competition

    We compete directly with domestic and, to some extent, foreign manufacturers
of wood and plastic pallets. We compete mainly on the basis of price per usage
and, to a lesser degree, on the basis of the superior environmental and safety
advantages of our pallets. Despite the competitive advantages that we believe we
possess, the market for plastic and wood pallets and the market for materials
handling products and related services are both extremely competitive.  There
are also no substantial barriers to entry to these markets.

    We have identified approximately 25 United States-based companies that
currently produce some type of plastic pallet, and we expect that competition
will intensify in the future. The majority of these manufacturers are believed
to be selling to a limited market in direct response to special orders, which we
believe results in higher costs and prices. Two direct competitors producing
large-scale plastic pallets are Orbis, Inc. in Oconomowoc, Wisconsin, and
Buckhorn, Inc. in Milford, Ohio.

    We believe that there is only one major competitor producing plastic lumber
in our marketplace and management believes that our product line is better and
less expensive than that of this competitor.

    We believe that our ability to compete successfully depends on a number of
factors, including the availability of capital, the quality of our supplier
services, governmental regulations, our ability to eventually acquire other
plastic and/or pallet-producing companies, the pricing policies of our
competitors and suppliers, our ability to establish co-marketing relationships,
and general economic trends.

<page>6

    One of the major competitive obstacles we face is the predominance of wood
pallet usage. Most shippers that use low cost pallets for one-way shipping are
primarily concerned with initial pallet cost. The initial cost of a low cost
wood pallet is typically far less than the initial cost for a plastic pallet.
Thus, we cannot currently compete effectively in the one-way market segment.
However, we believe that we compete successfully in the market for closed-loop
shippers which are required to use grade one pallets. A closed-loop is a
shipping and warehousing environment where pallets are shipped from a central
warehouse or distribution center to outlets and returned to the same central
warehouse for re-use. Because closed-loop shippers can use pallets many times,
their primary concern is the cost per use for pallets.  Because plastic pallets
have a useful life of approximately 10 times that of wood pallets, the cost per
use of plastic pallets is often lower than the cost per use of wood pallets.
The cost per use for plastic pallets is further reduced by recycling.  Damaged
pallets that are to be returned to us are stockpiled in a central warehouse and
eventually picked up by us to be recycled. The closed loop distributor receives
recycle credits on future orders for damaged pallets returned to us. Because of
the competitive advantage of plastic pallets when a shipper's primary concern
is cost per use, we intend to continue to focus our marketing efforts on
closed-loop distributors that benefit most from long pallet life.

    We believe we can capture a significant market share of the low cost wood
pallet market if and when we are able to produce a pallet directly competitive
with inexpensive wood pallets.  We believe this can be achieved as we develop
and process less expensive recycled resins and composites. We are currently
engaged in a study that utilizes otherwise unusable waste material and we are
testing it to determine if it will be a viable substitute for high density
polyethylene or polypropylene. Should this be the case, we believe that we
would be able to reduce raw material costs, which typically account for 60% to
70% of the pallet's cost, and offer a plastic pallet competitive with low-cost
new and used wood pallets. We are continuing our research and development in
this area and hope to have developed solutions by the end of 2005.

    Another obstacle we must overcome is the long-term relationships that
existing wood pallet manufacturers have developed with their customers. These
relationships will require us to focus on marketing RPM Technologies as a long-
term supplier of material management products and a reliable source for pallet
requirements.

Our Products and Services

    Pallets come in a wide range of shapes and sizes, depending on their purpose
and use. However, the grocery industry, which we believe accounts for
approximately one-third of the demand for new pallets, uses a standard 40" x 48"
pallet. This has essentially become the standard pallet size in most industries
in the United States.

    Block edge, rackable pallets are heavy-duty pallets with nine blocks between
the pallet decks that allow true four-way entry by forklifts, pallet trucks, and
pallet jacks. These types of pallets are often used to transport goods from
manufacturers to distribution centers where they are racked. Nestable pallets
are easily converted into rackable pallets through the addition of an easily
added single component. "Feet" are added to nestable pallets to create rackable
pallets that can be easily stacked. Nestable pallets are often used to transport
goods between distribution centers and retail stores.

    We currently offer the following types of pallets for sale to markets
throughout North America:

        o   Heavy Duty Nestable Pallet.  This pallet measures 40" x 48" and can
            handle a 10,000 pound static load capacity and a 2,400 pound dynamic
            load capacity. One-piece construction maximizes durability and ease
            of use with true four- way forklift and pallet jack entry. Our
            stable Plastic Pallet is nestable at a 2:1 ratio.

        o   Plastic Utility Pallet.  This all-purpose pallet measures 40" x 48,"
            has a static load capacity of 15,000 pounds and a dynamic load
            capacity of 2,500 pounds.

<page>7

        o   Rackable Pallet.  This pallet measures 40" x 48" and has a 15,000
            pound static load capacity and a 3,000 pound dynamic load capacity.

    We have the capability of producing, through our subcontract
manufacturers, other high-grade, low-cost plastic pallets in most common pallet
sizes and configurations, including both rackable and nestable pallets. Our
recycled plastic pallets can be made to specification, including color
variations and logo inscription. These modifications typically result in
approximately a 10% surcharge. Special standard features can include a non-
slide, surface and bottom texture to reduce pallet sliding and shifting loads.
An interlocking, nesting feature saves space and facilitates easier shipping and
storage. Strategically placed drainage holes enable easy cleaning. Our pallets
do not have undesirable characteristics such as leeching, color-transfer and
odor retention.

    We are currently in the final stages of design and engineering of three
additional pallets, including two rackable pallets and one pallet designed
specifically for the pharmaceutical industry which we expect will be introduced
in the second quarter of 2005.

    We also manufacture custom-size pallets made of plastic stringers and deck
boards. These pallets can be made in sizes up to 90" in length and width.
Components for our custom-size plastic pallets are produced from extrusion and
compression molds. We acquired ten extrusion molds to produce this custom line.

    We believe that we will continue to benefit from the adoption by many
nations of ISPM 15, an international standard imposed upon exporters to such
nations using soft-wood packaging materials. ISPM 15 requires wood packaging,
including wood pallets, made from raw wood to be heat treated or fumigated to
reduce the risk of introduction and/or spread of pests. These requirements
increase the cost and reduce the desirability of using wood pallets for export
to countries that have adopted ISPM 15 or similar regulations.  Since March
2002, when ISPM 15 was finalized, approximately 120 nations have adopted it or
similar regulations, including the United States, Canada, Mexico, New Zealand,
Korea, China, and all of the European Union nations.

    We have identified a viable market for a 48" x 48" plastic pallet with
applications in the pharmaceutical industry. We have completed preliminary
designs and field tested the concepts. We have entered into negotiations with
two large potential customers that currently purchase 18,000 of these pallets
annually. We expect to produce a mold for this application and expect to market
the product during the fourth quarter of 2004. This mold will be designed to
also produce a 45" x 48" version, which has widespread application in the
automotive industry.

    Management continues to research and explore the possibilities of producing
very inexpensive plastic pallets that would compete directly with low-cost wood
pallets. One-way wood pallets, which typically sell for $5.00 to $7.00,
constitute a market estimated by management at $6 billion in annual sales in the
United States alone. Management believes that a 40" x 48" plastic pallet, which
could be sold for a near equal amount would capitalize on the ongoing movement
from wood to plastic.

    We have designed and purchased a new mold that we expect will produce very
competitively priced 48" x 48" plastic pallets with true non-slip surfaces. We
believe that this is a breakthrough product and we expect to begin selling this
product during the second quarter of 2005. We have scheduled pre-production
orders for this new product with two major pharmaceutical companies located in
the United States and Puerto Rico. We expect to begin producing this 48" x 48"
pallet by July 2005.

<page>8

Operations

    We do not currently own or operate any manufacturing facilities, although we
plan to lease a facility prior to the end of 2004. Manufacturing and assembly
of our pallets is currently being provided by Polytec Manufacturing, Inc., or
Polytec, located in Wheaton, Minnesota, and ERP Inc., or ERP, located in
Liberty City, Iowa. Both companies have large-scale production facilities, with
the appropriate presses and equipment to produce our pallets. We own the pallet
molds and specify the resin used in production.

    Our contractual relationship with Polytec and ERP is, in our opinion,
customary in the plastic molding field and enables us to utilize other
subcontract manufacturers at any time. Contacts with manufacturers throughout
the United States also allow us greater flexibility in providing delivery and
shipping savings to potential clients located in different areas. Polytec, ERP
and others from whom we have received quotes have agreed to manufacture our
pallets at a fixed price per pallet. Polytec and ERP have given us a firm quote
to manufacture our pallets, but we do not have a formal binding contract, which
we believe is normal and customary in the molding industry.

    Subcontract manufacturing has significantly reduced our start-up costs.
However, a disadvantage of subcontract manufacturing is that we do not have
complete control over the manufacturing process or the facility. Our inability
to oversee unique client demands could compromise our manufacturing. In the
event we face these problems, we intend to resolve them by providing our
existing molds to other contract manufacturers who will then serve our
manufacturing needs. We believe there are other molders and manufacturers that
are ready, willing and able to replace our existing molders and manufacturers
should the need arise.

    In the fourth quarter of 2004, we leased a building to serve as our
corporate headquarters as well as an operational and manufacturing facility. We
are using the manufacturing facility to grind post-consumer and post-industrial
plastics, which are used in the production of our pallets.

    Polytec and ERP order raw materials that we specify as appropriate for
molding our products. There is no shortage of recyclable material and no
shortage is anticipated. Major recyclers, large hospital corporations, local
government officials, major manufacturers and other public and private
organizations have expressed interest in providing raw materials to us. The
volume of plastics these organizations generate far exceeds our current
requirements. These materials are purchased at rates ranging from $0.05 to
$0.32 per pound. In some cases, these materials are obtained at no charge, with
costs limited to cartage and processing.

Proprietary Technology

    Our manufacturing and plastic pallet processing systems and our development
efforts involve confidential operating systems and procedures, which are
considered proprietary information owned by us.  This proprietary information
is not considered by us to be capable of patent protection.

    We believe that we have intellectual property rights in our pallet
processing system, although we have no verification of such, and we cannot
give any assurances that the processing system can withstand any threat of
infringement. These rights are protected by non-disclosure and non- competition
agreements, which have been executed by our sales agents, distributors and
employees. The material terms of these agreements prohibit divulging marketing
strategies, names of prospects and customers or manufacturing or operational
techniques or procedures to any third party without our written consent.

    Our pallets are based upon proprietary designs that enable molders to
accept and process most high-density plastic materials. A thermoplastic
additive, developed by independent scientists, enables the amalgamation of
chemically incompatible polymers. The additive acts as a catalyst to make
commingled dissimilar polymers compatible, which would normally have little or
no affinity for each other. It reduces melt viscosity and acts as a wetting
agent for inorganic substances. The thermoplastic additive is purchased by our
contract manufacturers, which use the additive in molding the pallets. We have
no legal rights to the additive. Because additives with similar attributes to
the one used by our contract manufacturer are readily available, we believe we
are not heavily dependent on this additive.

<page>9

    Tests on the thermoplastic additive we have performed under laboratory
conditions have indicated a marked improvement in bonding. The additives we use
enable polymers to be molded at lower processing temperatures and also serve as
a filler or extender to thermoplastics, thereby lowering the cost of the end
product. We also believe that the additive permits a significant reduction in
raw material and processing costs, while producing an end product which we
believe to be of superior strength and durability.

    We and our subcontract manufacturers keep abreast of developments in the
additive field and evaluate new additives to determine their effectiveness and
applicability to our manufacturing processes.

Sales and Marketing

    Currently, our sales and marketing activities primarily involve promoting
our products and services through our multiple websites. However, we plan to
initiate supplemental media advertising and promotion in 2005 to escalate our
growth and market penetration.

    We promote our websites through a variety of techniques, including the
purchase of preferred positions on searched pages from providers such as Google,
MSN, Overture and others.  We manage and optimize our key words on our websites
to promote an optimal level of contact activity and lead volume, which is
directly proportional to the preferred position placements that we are either
able to buy or acquire through manipulation. We believe that having multiple
websites, all linking directly or indirectly to one another, creates an internet
marketing environment conducive to volume inquiries.  We plan to promote our
websites in vertical print media to be directed to shippers and
warehouse management in a variety of industries.

    In addition, we have appointed a number of sales agents and distributors
that present our products to a wide variety of shippers throughout most of the
United States. All of our sales agents are independent contractors that sell our
products on a commission basis, which reduces overhead. We also have agreements
with distributors in the Chicago area, Florida and Michigan. Our distributors
are intermediaries that resell our products to their customers, also on a
commission basis.

    All of our sales agents and distributors are independent contractors who
have signed our standard independent contractor's agreement. They bear all
expenses, unless otherwise agreed and are paid commissions that range from 5% to
10% of gross sales. The term of our agreements with our independent consultants
is normally five years. We can cancel the agreement at any time for non-
performance with no obligation of any kind other than paying commissions on
sales made prior to the cancellation of the agreement.

    All sales agents and distributors are expected to adhere to our selling and
pricing strategies, including maintaining the confidentiality of our price list,
which provides pricing for various classes of buyers. In the future, we may
provide each distributor with a protected territory and refer all queries from
prospects within such territory to this local distributor.

    We plan to implement during the first six months of 2005 the following
marketing activities, prioritized in the following order:

    o place trade advertisements in selected trade journals that are circulated
      to material handling personnel, plant managers and purchasing agents,
      potentially utilizing an advertising agency;

    o launch a targeted direct mail program to pallet buyers in a wide cross-
      section of industries in the United States and Canada. Recipients' names
      will be given to our sales agents for follow-up;

    o produce a video presentation of our pallets, featuring their
      characteristics and benefits, summarizing test results, and showing the
      pallet subjected to a variety of in-use tests. Computer-generated
      graphics, in tape and CD-ROM formats, will show the pallet in actual
      application situations. This will be part of the sales kit used by sales
      agents and our management in making sales presentations;

<page>10

    o join selected trade organizations that serve the material handling
      industry, and participate in national and international trade shows;

    o sponsor seminars and/or trade conferences in key markets where customers
      will be invited to luncheon presentations on contemporary material
      handling and shipping techniques. Our pallets will be featured, showing
      the savings realized by shipping goods on the lighter, more durable
      plastic pallet;

    o conduct an in-house telemarketing program to contact prospective pallet
      buyers. Leads generated from this medium will be referred to the
      appropriate sales agents and distributors;

    o prepare technical bulletins and manuals that present and illustrate the
      features of our pallets;

    o implement a high-tech customer service department that will provide
      technical information through toll free telephone numbers;

    o retain a public relations firm or publicity agent to generate product-use
      stories and features in selected trade and business publications;

    o prepare press kits with photo-caption stories.  Reprints of these stories
      will be used in direct mail campaigns and agents sales kits; and

    o continue to promote our websites.


Our growth in custom plastic pallet sales has necessitated the enlargement
of our production capabilities.

    To keep pace with customer demands, we expect to install new molds and
extrusion lines in our Park Forest facility during the third quarter of 2005,
which will automate the production and assembly of plastic wood components
under our direct control. We expect that these enhancements will reduce costs,
increase operating efficiency and improve quality control.  Custom-size plastic
pallet sales have increased principally among exporters that had previously
used wood but are now required to switch to alternate materials due to
requirements imposed by approximately 90 foreign countries.

Recycle Program

    We have established a recycle program in an effort to increase sales.
Under this program, we grant credit to customers who return unusable or damaged
pallets. When we deliver new pallets to a client in truckload quantities, we
agree to accept and dispose of the client's unusable plastic pallets,
irrespective of the condition of such pallets.  Because an unusable plastic
pallet possesses valuable resin content, plastic pallets can be recycled by
regrinding and remolding. To determine the amount of credit provided to a
customer, we estimate the current market price for un-ground plastic parts and
deduct the freight charges to ship it to a grinder.  We then credit the
customer with a portion of the balance, which is valid on the customer's next
order.

Trial Order Program

    To generate new sales, we permit potential new customers to participate in
our trial order program. This program is offered to large pallet users who want
to try our pallets in actual warehouse conditions before committing to a larger
purchase. Under the program, we conditionally sell the prospect a small number
of pallets at the truckload price, with payment contingent upon subsequent
acceptance of the pallets. The prospective customer pays for the trial order
only if the customer orders additional pallets. If the prospective customer
decides against using the pallets, there is no charge for the initial order and
we retrieve pallets that are not acceptable to the shipper.

<page>11

Employees

    We currently have nine full-time employees and two part-time employees.
These employees are experienced in materials handling and plastic pallet
operations, and they are involved in executive, corporate administration,
operations and sales and marketing functions. We also utilize the services of
outside consultants and experts on many of our projects to help reduce costs.
Additional staffing will occur on an as-needed basis, dictated by the sales
volume we achieve.

ITEM 2. DESCRIPTION OF PROPERTY.

    Currently, our corporate office space under lease is located at 24001 S.
Western Avenue, Park Forest, Illinois 60466. At this location, which consists
of approximately 12,000 sq. ft., we also process and grind plastic scrap, which
is used in the manufacture of our products. This facility also serves as a
warehouse to store our custom plastic pallet components. We lease this facility
under a five-year lease that requires monthly base rental payments of $4,200
per month for the first three years, $4,700 per month for the next year and
$5,200 per month for the final year of the lease term. In addition, we conduct
many executive office functions from the separate personal offices of Randy
Zych, our Chairman and Charles Foerg, our President. No formal lease agreement
exists for the use of these offices. During 2004 and 2003, we paid these
officers an aggregate approximately $70,800 and $61,900, respectively, for the
use of these offices and for the reimbursement of expenses paid personally by
these officers on our behalf. We believe that our facilities are adequate for
our needs for the near future.

ITEM 3.   LEGAL PROCEEDINGS.

    There are no legal proceedings filed, or to our knowledge,
threatened against us that we believe would have,
individually or in the aggregate, a material adverse effect upon our
financial condition or results of operations.

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

    During the quarter ended December 31, 2004, no matters were submitted to a
vote of the holders of our securities.

<page>12

                            PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    Our common stock trades on the OTC Bulletin Board under the symbol "RPMM."
The table below shows, for each fiscal quarter indicated, the high and low
closing bid prices of our common stock. This information has been obtained from
Pink Sheets LLC, a research service that compiles quote information reported on
the National Association of Securities Dealers composite feed or other
qualified interdealer quotation medium. The prices shown reflect inter-dealer
prices, without retail mark-up, mark-down or commissions, and may not represent
actual transactions.

                                                              High       Low
                                                             --------  --------
Year Ended December 31, 2003:
  First Quarter..........................................      $0.90      $0.25
  Second Quarter.........................................       0.63       0.15
  Third Quarter..........................................       0.55       0.20
  Fourth Quarter.........................................       0.70       0.20

Year Ending December 31, 2004:
  First Quarter..........................................      $0.55      $0.28
  Second Quarter.........................................       0.60       0.16
  Third Quarter .........................................       0.43       0.16
  Fourth Quarter.........................................       0.33       0.13

    As of May 17, 2005, we had 19,480,520 shares of common stock
outstanding and held of record by approximately 586 shareholders. Within the
holders of record of our common stock are depositories such as Cede & Co. that
hold shares of stock for brokerage firms which, in turn, hold shares of stock
for beneficial owners. On May 17, 2005, the last reported sale price of
our common stock on the OTC Bulletin Board was $0.13 per share.

    We have never paid cash dividends on our common stock and do not currently
intend to pay cash dividends on our common stock in the foreseeable future. We
are restricted from paying dividends on our common stock under state law, and
the terms of our outstanding convertible term note. We currently anticipate that
we will retain any earnings for use in the continued development of our
business.

Recent Sales of Unregistered Securities

    On September 3, 2002, we issued an option to purchase 250,000 shares of
Class A Preferred Stock at an exercise price of $5.00 to Randy Zych exercisable
until September 1, 2005. In June of 2004, our current securities counsel advised
us that the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Randy Zych options to
purchase 2,500,000 shares of our common stock, exercisable until September 1,
2005 at $0.50 per share.

    On September 30, 2002, Charles Foerg was granted a fully-vested three-year
option to purchase up to 250,000 shares of Class A Preferred Stock at an
exercise price of $5.00 per share, which is $.50 per share of common stock on an
as-converted basis, which was the closing price of a share of our common stock
on that date. In June of 2004, our current securities counsel advised us that
the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Charles Foerg options
to purchase 2,500,000 shares of our common stock, exercisable until September 1,
2005 at $0.50 per share.

    On July 9, 2004, we issued $2.5 million in principal amount of a secured
convertible term note due July 9, 2007 to Laurus Master Fund, Ltd., in exchange
for gross proceeds of $2.5 million in cash, much of which has been placed in a
restricted cash account to be released to us. The convertible note has an
initial fixed conversion price of $0.24 per share, and is initially convertible
into approximately 16,375,000 shares of common stock (including amounts on
account of interest, penalties and anti-dilution shares). In connection with
the private placement, we also issued warrants to purchase up to an aggregate
of 1,125,000 shares of our common stock to Laurus Master Fund, Ltd.

<page>13

    In March 2004, we issued 235,000 shares of common stock in a private
offering to five accredited investors in exchange for $33,000 in cash.

    In April 2004, we issued 250,000 shares of common stock in a private
offering to one accredited investor in exchange for $35,000 in cash.

    In May 2004, we issued 292,000 shares of common stock in a private
offering to four accredited investors in exchange for $46,300 in cash.

    In June 2004, we issued 250,000 shares of common stock in a private
offering to one accredited investor in exchange for $35,000 in cash.

    In July 2004, we issued 10,000 shares of common stock in a private
offering to two accredited investor in exchange for $10,000 in cash.

    In July 2004, we issued 2,160,000 shares of common stock valued at $190,000
to three consultants for services rendered.

    In October 2003, we issued 836,364 shares of common stock valued at $75,273
to three consultants for services rendered.

    Exemption from the registration provisions of the Securities Act of 1933
for the transactions described above is claimed under Section 4(2) of the
Securities Act of 1933, among others, on the basis that such transactions did
not involve any public offering.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

    The following discussion and analysis should be read in conjunction with our
consolidated financial statements and notes and the information included under
the caption "Risk Factors" included elsewhere in this report. Except for
historical information, the following discussion contains forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions and our current beliefs regarding
revenues we might earn if we are successful in implementing our business
strategies. See "Special Note Regarding Forward-Looking Statements" for further
information regarding forward-looking statements. Our actual results may differ
materially from the results discussed in the forward-looking statements as a
result of a number of factors, many of which are beyond our control, including
those factors discussed under "Risk Factors" and other headings in this
report, which could, among other things, cause the price of our common stock
to fluctuate substantially.

Overview

    We are engaged in the business of developing, producing through subcontract
manufacturers, marketing and selling plastic pallets and other material-
handling products throughout the United States, Canada and South America. We
subcontract the manufacture of our plastic pallets to large injection,
extrusion and compression molders on a competitive bid basis. These
manufacturers are selected on the basis of their equipment and manufacturing
capabilities. We supply them with the molds and resins that we have developed
for specific product applications.

    On July 9, 2004 we entered into a financing with Laurus Master Fund, Ltd.
under which we issued a $2.5 million principal amount secured convertible term
note and warrants to purchase up to 1,125,000 shares of our common stock in
exchange for proceeds of $2.5 million dollars. A large portion of these
proceeds is held in a restricted cash account to be released to us over time as
certain events occur.

    We  have established a more formal corporate headquarters and a production
facility where we manufacture our plastic pallets. We purchased equipment that
enables us to grind post-industrial and post-consumer plastic products used in
the production of our plastic pallets. We do not have the proceeds sufficient
for us to purchase enough molding equipment and presses to fully enable us to
produce all of our plastic pallets internally. Therefore we will to continue to
outsource the manufacturing of our plastic pallets until we raise additional
capital enabling us to purchase extra molds and presses.

<page>14

    Our main method of selling our plastic pallets and material handling
products is currently through our websites. Our websites include:
www.rpmplasticpallets.com, www.rpmtechnologiesinc.com, www.pallet- container-
quotes.com, www.shelving-quotes.com, www.locker-quotes.com, www.pallet-rack-
stack-racks.com, www.plastic-pallets-usa.biz, www.plastic- pallets.com,
www.plastic-pallets.org, www.plastic-pallets-usa.info and www.plastic-pallets-
usa.ws. In the near future we intend to add new variations of the
suffixes,"usa," "us," "com," "biz," "org," "net," "info," "us" and "ws."

    We promote our websites through a variety of techniques, including the
purchase of preferred positions on searched pages from providers such as
Google, MSN, Overture and others.  We manage and optimize our key words on our
websites to promote an optimal level of contact activity and lead volume, which
is directly proportional to the preferred position placements that we are
either able to buy or acquire through manipulation. We believe that having
multiple websites, all linking directly or indirectly to one another, creates
an internet marketing environment conducive to volume inquiries.  We plan to
promote our websites in vertical print media, which will be directed to
shippers and warehouse management in a variety of industries.

    We also sell our plastic pallets and material handling products through
sales agents and distributors. We currently have contractual relationships with
five agents and/or distributors based primarily in the Midwest and Southeast
regions of the United States and we intend to develop further relationships
with agents and distributors in other locations as our business grows.
Operating Performance and Financial Condition

    We focus on numerous factors in evaluating our operating performance and
our financial condition. In particular, in evaluating our operating
performance, we focus primarily on revenues, net product margins, as well as
operating expenses and net income.

    Revenue.  Revenue is a key indicator of our operating performance. We
closely monitor overall revenues, as well as revenues from specific customers,
and seek to increase revenues by expanding sales to additional customers and
expanding sales to existing customers both by increasing sales of existing
products and introducing new products. As revenues increase or decrease from
period to period, it is critical for management to understand and react to the
various causes of these fluctuations, such as successes or failures of
particular products, product pricing, customer decisions, seasonality and other
causes. Where possible, management attempts to anticipate potential changes in
sales revenues and seeks to prevent adverse changes and stimulate positive
changes by addressing the expected causes of adverse and positive changes.

    Profit margins.  Profit margins, from pallet-to-pallet and across all of
our pallets as a whole, is an important measurement of our operating
performance. We monitor margins on a pallet-by-pallet basis to ascertain
whether particular pallets are profitable or should be phased out as
unprofitable pallets. In evaluating particular levels of pallet margins on a
pallet-by-pallet basis, we seek to attain a level of gross profit margin
sufficient to contribute to normal operating expenses and to provide a net
profit.

    Operating expenses.  We focus on operating expenses to keep these expenses
within budgeted amounts in order to achieve or exceed our targeted
profitability. We budget certain of our operating expenses in proportion to our
projected sales revenues, including operating expenses relating to production
and shipping of our plastic pallets. However, most of our expenses relating to
general and administrative costs and product design are essentially fixed.
Deviations that result in operating expenses in greater proportion than
budgeted signal to management that it must ascertain the reasons for the
unexpected increase and take appropriate action to bring operating expenses
back into the budgeted proportion.

    Net income.  Net income is the ultimate goal of our business. By managing
the above factors, among others, and monitoring our actual results of
operations, our goal is to generate net income at levels that meet or exceed
our targets.

<page>15

    In evaluating our financial condition, we focus primarily on cash on hand,
available financing, anticipated near-term cash receipts, and accounts
receivable as compared to accounts payable. Cash on hand, together with our
other sources of liquidity, is critical to funding our day-to-day operations.

    Funds available under our financing from Laurus Master Fund, Ltd. are also
an important source of liquidity to us. In addition to utilizing such funds for
non-ordinary course purchases of equipment and office space, we intend to use
these funds to pay accounts payable that cannot currently be paid from our day
to day operations.

    Anticipated near-term cash receipts are also regarded as a short-term
source of liquidity, but are not regarded as immediately available for use
until receipt of funds actually occurs.

    The proportion of our accounts receivable to our accounts payable and the
expected maturity of these balance sheet items is an important measure of our
financial condition. We attempt to manage our accounts receivable and accounts
payable to focus on cash flows in order to generate cash sufficient to fund our
day-to-day operations and satisfy our liabilities. Typically, we prefer that
accounts receivable are matched in duration to, or collected earlier than,
accounts payable. If accounts payable are either out of proportion to, or due
far in advance of, the expected collection of accounts receivable, we will
likely use our cash on hand or funds from the Laurus financing to satisfy our
accounts payable obligations.

Seasonality

    We have not identified any seasonality in the sales of our plastic pallets
or material handling products to date. We continue to monitor for seasonal
trends in the sales of our products.

Critical Accounting Policies and Estimates

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to
make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts
of revenues and expenses during the reporting period. Some of our accounting
policies require us to make difficult and subjective judgments, often as a
result of the need to make estimates of matters that are inherently uncertain.
The following accounting policies involve a critical accounting estimate
because they are particularly dependent on estimates and assumptions made by
management about matters that are highly uncertain at the time the accounting
estimates are made. In addition, while we have used our best estimates based on
facts and circumstances available to us at the time, different estimates
reasonably could have been used in the current period and changes in the
accounting estimates we used are reasonably likely to occur from period to
period, which may have a material impact on the presentation of our financial
condition and results of operations.

    Our most critical accounting estimates include revenue recognition, the
valuation of inventory, which impacts gross margin; assessment of
recoverability of long-lived assets, which primarily impacts operating expense
when we impair assets or accelerate depreciation; deferred income tax assets
and liabilities, which impacts our tax provision; reserve for warranty costs,
which impacts gross margin; and stock-based compensation. We also have other
policies that we consider to be key accounting policies, such as our policies
for the valuation of accounts receivable, reserves for sales returns and
allowances, and reserves for commitments and contingencies; however, these
policies either do not meet the definition of critical accounting estimates
described above or are not currently material items in our financial
statements. We review our estimates, judgments, and assumptions periodically
and reflect the effects of revisions in the period that they are deemed to be
necessary. We believe that these estimates are reasonable; however, actual
results could differ from these estimates.

<page>16

    Revenue Recognition

    We derive revenues primarily from the sale of standard and customer-
specific products and services of plastic pallets. Our revenues occasionally
include nonrecurring engineering revenues related to the development of
customer-specific products. Sales of our products are generally made through
either our internet site or independent manufacturers' representatives or
through our stocking distributor. The majority of our shipments are made
directly to our customers, with shipments to our manufacturing representatives
and our stocking distributor, accounting for less than 10% of total revenues
during 2004.

    Revenues from the sale of standard and customer-specific products are
recognized when title to the products pass to the buyer. Revenues from our
distributor are recognized when the product is sold to the distributor. Our
distribution agreements provide for selling prices that are fixed at the date
of sale, although we occasionally offer price concessions, which are specific,
of a fixed duration and are reserved for. Further, the distributor is obligated
to pay the amount and it is not contingent on reselling the product; the
distributor takes title to the product and bears substantially all of the risks
of ownership; the distributor has economic substance; we have no significant
obligations for future performance to bring about resale; and the amount of
future returns can be reasonably estimated. We allow our distributor to return
products for warranty reasons as well as for exchange products, within certain
limitations. Customers can only return product for warranty reasons. If we are
unable to repair or replace products returned under warranty, we will issue a
credit for a warranty return.

    Inventories

    We state our inventories at the lower of cost or market. We use a
combination of standard cost and moving average cost methodologies to determine
our cost basis for our inventories. This methodology approximates actual cost
on a first-in, first-out basis. In addition to stating our inventory at a lower
of cost or market valuation, we also evaluate it each period for excess
quantities and obsolescence. This evaluation includes identifying those parts
specifically identified as obsolete and reserving for them, analyzing
forecasted demand versus quantities on hand and reserving for the excess,
identifying and recording other specific reserves, and estimating and recording
a general reserve based on historical experience and our judgment of economic
conditions. If future demand or market conditions are less favorable than our
projections and we fail to reduce manufacturing output accordingly, additional
inventory reserves may be required and would have a negative impact on our
gross margin in the period the adjustment is made.

    Long-Lived Assets

    We evaluate long-lived assets for impairment of their carrying value when
events or circumstances indicate that the carrying value may not be
recoverable. Factors we may consider in deciding when to perform an impairment
review include significant negative industry or economic trends, significant
changes or planned changes in our use of the assets, plant closure or
production line discontinuance, technological obsolescence, or other changes in
circumstances which indicate the carrying value of the assets may not be
recoverable. If impairment appears probable, we evaluate whether the sum of the
estimated undiscounted cash flows attributable to the assets in question is
less than their carrying value. If this is the case, we recognize an impairment
loss to the extent that carrying value exceeds fair value. Fair value is
determined based on market prices or discounted cash flow analysis, depending
on the nature of the asset. Any estimate of future cash flows is inherently
uncertain. The factors we take into consideration in making estimates of future
cash flows include product life cycles, pricing trends, future capital needs,
cost trends, product development costs, competitive factors and technology
trends as they each affect cash inflows and outflows. Our markets are not
highly cyclical and are not characterized by rapid shifts in demand that are
difficult to predict in terms of direction and severity. If an asset is written
down to fair value that becomes the asset's new carrying value, which is
depreciated over the remaining useful life of the asset.

<page>17

    Income Taxes

    We are subject to taxation from federal, state and international
jurisdictions. We spend a significant amount of management time with our annual
provision for income taxes and the calculation of resulting deferred tax assets
and liabilities. We evaluate liabilities for estimated tax exposures in
jurisdictions of operation. Any exposures are settled primarily through the
completion of audits within these tax jurisdictions, but can also be affected
by other factors. Changes could cause management to find a revision of past
estimates appropriate. The liabilities are frequently reviewed by management
for their adequacy and appropriateness. As of December 31, 2004, we were not
currently under audit by the U.S. taxing authorities. To the extent audits or
other events result in a material adjustment to the accrued estimates, the
effect would be recognized during the period of the event. Management believes
that an appropriate liability has been established for estimated exposures,
though the potential exists for results to vary materially from these
estimates.

    We record a valuation allowance to reduce deferred tax assets when it is
more likely than not that some portion or all of the deferred tax assets may
not be realized. We consider future taxable income and prudent and feasible tax
planning strategies in determining the need for a valuation allowance. We
evaluate the need for a valuation allowance on a regular basis and adjust as
needed. These adjustments have an impact on our financial statements in the
periods in which they are recorded. We make this determination based on the
criteria of Statement of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes.

    Warranty Costs

    We sell our products with warranties that they will be free of faulty
workmanship or defective materials and that they will conform to our published
specifications or other specifications mutually agreed to with a customer. An
accrual for expected warranty costs results in a charge to the financial
results in the period recorded. This liability can be difficult to estimate
and, if we experience warranty claims in excess of our projections, we may need
to record additional accruals, which would adversely affect our financial
results.

    We allow only our distributor to exchange product for other than warranty
reasons. If we are unable to repair or replace a product returned under
warranty, we will issue a credit for a warranty return.

    Stock-Based Compensation

    We account for compensation cost related to employee stock options and
other forms of employee stock-based compensation plans in accordance with the
provisions of Accounting Principles Board Opinion ("APB") No. 25, Accounting
for Stock Issued to Employees , and related interpretations. As such,
compensation expense would be recorded on the date of grant only if the current
market prices of the underlying stock exceeded the exercise price. We apply
Financial Accounting Standards Board ("FASB") SFAS No. 123, Accounting for
Stock-Based Compensation, which allows entities to continue to apply the
provision of APB No. 25 and provide pro forma net income and pro forma earnings
per share disclosures for employee stock option grants as if the fair value
based method defined in SFAS No. 123 had been applied.

    The accounting for stock-based compensation involves a number of estimates
about the expected lives of stock options, interest rates, stock volatility,
and assumptions as well as the selection of a valuation model. We have elected
to use the Black-Scholes option valuation model. A change in any of these
estimates or a selection of a different option-pricing model could have a
material impact on our pro forma net income (loss) disclosures. Beginning in
the first quarter of 2006, we will be required to account for stock-based
compensation under SFAS No. 123(R), "Share-Based Payment", which will require
us to recognize the estimate on our financial statements.

<page>18

Results of Operations

      Comparison of Results of Operations for the Years Ended December 31, 2004
      and 2003

    Our revenues increased by $699,000, or 47%, from $1,492,000 in 2003 to
$2,191,000 in 2004. Our growth in revenues in 2004 as compared to 2003 is
primarily attributable to repeat orders from our customers, our acquisition of
new customers and our continued marketing and e-commerce promotions.

    Our cost of sales increased by $813,000, or 77%, from $1,050,000 in 2003 to
$1,863,000 in 2004 and our gross profit decreased by $114,000, or 26%, from
$443,000 in 2003 to $329,000 in 2004. The increase in cost of sales was
primarily attributable to increased sales of our products and the decrease in
gross profit was primarily attributable to decreased gross margins. Our gross
margins declined by 50% from 30% in 2003 to 15% in 2004. The decline in our
gross margins was primarily attributable to an increase in the price of
petroleum, which is the main ingredient in the plastic resin used to make our
products. We were not able to pass along this increase in price to our
customers. Over at least the past two years, the price of petroleum has
fluctuated substantially and in general has risen significantly. We anticipate
that the cost of our products may continue to fluctuate substantially to the
extent that the price of petroleum also fluctuates. These increased costs may
not be able to be passed through to our customers, resulting in continued
downward pressures on our product margins.

    Total operating expenses increased by $2,496,000, or 216%, from $1,154,000
in 2003 to $3,650,000 in 2004. The increase in operating expenses was primarily
due to  a $1.7 million in non-cash compensation expenses related to the grant
of stock options in lieu of shares of preferred stock that were invalidly
issued to two of our executive officers. The increase in operating expenses was
also due to a $433,000 increase in fees associated with professional and
consulting services, a $109,000 increase in sales and marketing expenses and a
$133,000 increase in general and administrative expenses associated with our
increased revenues. In addition, interest expense increased by $87,000 as a
result of our borrowings from Laurus Master Fund, Ltd.

    Our net loss increased by $2,597,000, or 365%, from $711,000 in 2003 to
$3,308,000 in 2004. The substantial increase in our net loss resulted primarily
from the $1.7 million in non-cash compensation expenses related to the grant of
stock options to two of our executive officers and the other increases in
expenses discussed above. In addition, our gross margins declined by 50% from
30% of revenues to 15% of revenue, which we believe contributed to the
substantial increase in our net loss.

    Our total current liabilities increased by $413,000, or 44%, from $946,000
as of December 31, 2003 to $1,359,000 as of December 31, 2004.  This increase
was largely due to a $236,000 increase in accrued officer compensation from
$656,000 as of December 31, 2003 to $892,000 as of December 31, 2004, a
$105,000 increase in trade payables associated with increased revenues and a
$72,000 increase in accrued interest payable as a result of our borrowings from
Laurus Master Fund, Ltd. We are currently experiencing no pressure to pay the
accrued compensation from the individuals to whom we owe this compensation as
it consists primarily of unpaid salaries of Randy Zych and Charles Foerg.
However, we plan to pay amounts owed to Messrs. Zych and Foerg as funds become
available, but we have agreed not to pay these amounts out of the funds
obtained from our financing with Laurus Master Fund, Ltd.

      Our total current assets increased by $219,000, or 33%, from $659,000
as of December 31, 2003 to $878,000 at December 31, 2004. The increase in total
current assets is primarily attributable to our borrowings from Laurus Master
Fund, Ltd.

<page>19

Liquidity and Capital Resources

    At December 31, 2004 and 2003, we had cash of approximately
$593,000 and $316,000, respectively.  As of those dates, we had a working
capital deficit of approximately $481,000 and $287,000, respectively.
Cumulative accrued compensation owed to our executive officers reduced our
working capital by approximately $892,000 and $656,000, respectively, at
December 31, 2004 and 2003. We are currently experiencing no pressure to pay
the accrued compensation from the individuals to whom we owe this compensation
as it consists primarily of unpaid salaries of Randy Zych and Charles Foerg.
However, we plan to pay amounts owed to Messrs. Zych and Foerg as funds become
available, but we have committed not to pay these amounts out of the funds
obtained from our financing with Laurus Master Fund, Ltd. In addition, we may
reduce all or part of this accrued officer compensation liability through
issuances of our common stock.

    Cash used in our operating activities totaled $285,000 for the year ended
December 31, 2004 as compared to  $118,000 for the year ended December 31,
2003.

    Cash used in our investing activities totaled $2.1 million for the year
ended December 31, 2004 as compared to $11,000 for the year ended December 31,
2003. The substantial increase in cash used in our investing activities in 2004
as compared to 2003 resulted primarily from a $1.7 million increase in
restricted cash associated with our convertible term note with Laurus Master
Fund, Ltd., aggregate purchases in the amount of $113,000 of equipment held for
sale and aggregate purchases in the amount of $229,000 of property and
equipment.

    Cash provided by our financing activities totaled $2.6 million for the
year ended December 31, 2004 as compared to $340,000 for the year ended
December 31, 2003. We raised $2.5 million of the cash provided by our financing
activities during the 2004 through the issuance of a convertible term note and
$265,000 from sales of our common stock, which amounts were partially offset by
$125,000 in cash used to acquire shares of our capital stock.

    During the year ended 2004 and the year ended 2003, we financed our
operations through cash generated through sales of our products and through
private placements of our equity securities.

    On July 9, 2004, we completed a financing transaction with Laurus, whereby
Laurus purchased from us a secured convertible term note and warrants to
purchase up to 1,125,000 shares of our common stock in exchange for up to $2.5
million in cash. Of the $2.5 million, $1.1 million has been released to us and
$100,000 is available to be released to us, subject to certain restrictions,
for immediate use. Of the $2.5 million, $1.3 million of the proceeds of the
convertible term note remain in a restricted cash account subject to the terms
of a Restricted Account Agreement and a Letter Agreement we entered into with
Laurus in connection with the financing. These funds are under the control of
Laurus until they are released to us pursuant to the Letter Agreement. The
Letter Agreement provides for the release of funds not yet released of up to an
additional $100,000 when we provide written evidence to Laurus that we have
entered into an agreement or agreements to consummate one or more purchases of
certain manufacturing equipment (the amount released to us will be equal to the
corresponding dollar amount necessary to purchase the equipment). The funds to
be released for the equipment purchases will not be released to us if we have
not first provided Laurus with evidence of satisfactory insurance for such
equipment. The remaining $1.3 million will not be released to us unless we have
reduced the outstanding principal amount of the secured convertible note (other
than amounts still in the restricted cash account) to zero. In that event,
amounts equal to outstanding principal subsequently converted into common stock
will be released to us until all funds have been released. None of the funds
described above will be released to us if we are in default of our obligations
under the financing. It is possible that we will never obtain control of some
or all of the proceeds held in the restricted account. If this happens, our
business could be materially and adversely affected.

<page>20

    We believe current and future available capital resources, revenues
generated from operations, and other existing sources of liquidity, including
the Laurus financing, will be sufficient to fund our anticipated working
capital and capital expenditure requirements for at least the next twelve
months.
    Our continued operations are dependent on maintaining adequate sources of
liquidity through accounts receivable collections and/or the future
availability of new debt and/or equity financing.

Restatement of Financial Statements

    In conjunction with a change in securities counsel during the second
quarter of 2004, management discovered that an amendment to our Certificate of
Incorporation to allow for the issuance of preferred stock had not been
properly approved and effectuated in accordance with Delaware law. Accordingly,
the September 3, 2002 transaction whereby shares of our preferred stock were
issued to Charles Foerg and Randy Zych was invalid.

    We have restated our financial statements for all quarterly and annual
periods, commencing with the Annual Report on Form 10-KSB for the period ended
December 31, 2002 through the quarterly period ended March 31, 2004. The
balance sheet has been restated to reverse the previously recorded transaction
where preferred stock was issued to certain of our officers as partial payment
for accrued compensation.  There was no change to the previously reported
results of operations for any of the aforementioned periods.

    The effect of this transaction affects the presentation of accrued officers
compensation, the par value of preferred stock and additional paid-in capital
only.  All references to outstanding Preferred Stock have been deleted from our
financial statements.

Risk Factors

    An investment in our common stock involves a high degree of risk. In
addition to the other information in this report, you should carefully
consider the following risk factors before deciding to invest in shares of our
common stock. If any of the following risks actually occurs, it is likely that
our business, financial condition and operating results would be harmed. As a
result, the trading price of our common stock could decline, and you could lose
all or part of the money you paid to buy our common stock.

    We have no history of significant revenues, have incurred losses, could have
    continued losses and may never achieve or sustain profitably. If we continue
    to incur losses, we may have to curtail our operations, which may prevent us
    from selling our plastic pallets.

    We have no history of significant revenues, have not been profitable and may
experience continued losses. Historically, we have relied upon cash from
financing activities to fund all of the cash requirements of our business and
have incurred significant losses and experienced negative cash flow. As of
December 31, 2004, we had an accumulated deficit of $12.3 million. For the year
2004, we incurred a net loss of $3.3 million and for the year 2003, we incurred
a net loss of $711,018. For the year ended December 31, 2002, we incurred a net
loss of $2,882,530. We cannot predict when we will become profitable or if we
ever will become profitable, and we may continue to incur losses for an
indeterminate period of time and may never achieve or sustain profitability. An
extended period of losses and negative cash flow may prevent us from
successfully selling our plastic pallets.

    Our losses have resulted principally from costs incurred in connection with
the development of our pallets and from costs associated with our marketing and
administrative activities. Even if we are able to achieve profitability, we may
be unable to sustain or increase our profitability on a quarterly or annual
basis.

<page>21

    Without profits from our operations or additional financing, we may be
    unable to achieve the objectives of our current business strategy, which
    could force us to delay, curtail or eliminate our product development
    programs.

    We require additional funds to produce molds for our cost-reduced plastic
pallets for large-scale manufacturing. If we are unable to obtain these funds,
either by achieving profitability or by obtaining additional financing, we
could be forced to delay, curtail or eliminate certain product development
programs. In addition, our inability to obtain additional funds could have such
a material adverse effect on our business, prospects, results of operations or
financial condition, that we may be forced to restructure, file for bankruptcy,
sell assets or cease operations entirely, any of which could jeopardize an
investment in our common stock.

    If we do not achieve profitability, we will need and may be unable to
    obtain additional financing on satisfactory terms, which may require us to
    accept financing on burdensome terms that may cause substantial dilution to
    our shareholders and impose onerous financial restrictions on our business.

    We require additional funds to meet our business objectives. If we do not
achieve profitability, we will require additional financing. Future financing
may not be available on a timely basis, in sufficient amounts or on terms
acceptable to us. This financing may also dilute existing shareholders' equity.
Any debt financing or other financing of securities senior to our common stock
will likely include financial and other covenants that will restrict our
flexibility. Our current financing restricts our ability to pay dividends on
our common stock, and we expect that any future financing will similarly
prohibit us from paying dividends on our common stock. Any failure to comply
with these covenants would have a material adverse effect on our business,
prospects, financial condition and results of operations because we could lose
any then- existing sources of  financing and our ability to secure new sources
of financing may be impaired.

    Many companies with greater resources and operating experience are
    developing and selling plastic pallets similar to ours. These companies
    could use their greater resources to gain market share at our expense.

    We have significant competition and although we believe that our pallets
are competitive in the marketplace, we cannot assure you that these or other
companies with greater experience and greater resources than us will use their
greater resources to gain market share at our expense. We have identified
approximately 25 United States-based companies producing some type of plastic
pallet. Two direct competitors producing large-scale plastic pallets are Orbis,
Inc. in Oconomowoc, Wisconsin, and Buckhorn, Inc. in Milford, Ohio.

    We rely heavily on our Chief Executive Officer, Randy Zych, and our
    President, Charles Foerg. The loss of their services could adversely affect
    important relationships with our suppliers and subcontract manufacturers and
    therefore adversely affect our business.

    Our success depends, to a significant extent, upon the continued services of
Randy Zych, who is our Chief Executive Officer and Chairman of the Board, and
Charles Foerg, who is our President, Secretary and Treasurer. For example,
Messrs. Zych and Foerg have developed key personal relationships with our
suppliers and subcontract manufacturers. We greatly rely on these relationships
in the conduct of our operations and the execution of our business strategies.
The loss of either or both of Messrs. Zych and Foerg could, therefore, result in
the loss of our favorable relationships with one or more of our suppliers or
subcontract manufacturers. Although we have entered into employment agreements
with these executive officers, those agreements are of limited duration and are
subject to early termination at the executive officer's option under certain
circumstances. In addition, we do not maintain "key person" life insurance
covering the lives of Mr. Zych or Mr. Foerg. The loss of Mr. Zych or Mr. Foerg
could significantly delay or prevent the achievement of our business objectives
and therefore have a material adverse affect on our business.

<page>22

    Because we believe that proprietary rights are material to our success,
    misappropriation of those rights or claims of infringement or legal actions
    related to intellectual property could adversely impact our financial
    condition.

    We believe we have proprietary rights in our molds, designs and the specific
mix of inputs we utilize in connection with our plastic pallets. However, we
have not obtained patents in connection with these proprietary rights, and we
believe such rights may not be patentable. If our competitors infringe upon our
proprietary rights we may be unable to enforce our rights.  Also, although we do
not believe we are infringing upon any third party's intellectual property
rights, we may receive infringement claims from third parties relating to our
products. In those cases, we intend to investigate the validity of the claims
and, if we believe the claims have merit, to respond through licensing or other
appropriate actions. If we are unable to license or otherwise resolve the issue
on a cost-effective basis, we could be prohibited from marketing products
containing that intellectual property, incur substantial costs in redesigning
products incorporating that intellectual property, or incur substantial costs
defending any legal action taken against us.

    A portion of the financing we have recently obtained has been placed in a
    restricted cash account and will be released to us over time so long as we
    are in compliance with our obligations in connection with the financing.

    On July 9, 2004, we completed a financing transaction with Laurus Master
Fund, Ltd., or Laurus, whereby Laurus purchased from us a secured convertible
term note and warrants to purchase up to 1,125,000 shares of our common stock
in exchange for up to $2.5 million in cash. Of the $2.5 million, $1.1 million
has been released to us and $100,000 is available to be released to us, subject
to certain restrictions, for immediate use. Of the $2.5 million, $1.3 million
of the proceeds of the convertible term note remain in a restricted cash
account subject to the terms of a Restricted Account Agreement and a Letter
Agreement we entered into with Laurus in connection with the financing. These
funds are under the control of Laurus until they are released to us pursuant to
the Letter Agreement. The Letter Agreement provides for the release of funds
not yet released of up to an additional $100,000 when we provide written
evidence to Laurus that we have entered into an agreement or agreements to
consummate one or more purchases of certain manufacturing equipment (the amount
released to us will be equal to the corresponding dollar amount necessary to
purchase the equipment). The funds to be released for the equipment purchases
will not be released to us if we have not first provided Laurus with evidence
of satisfactory insurance for such equipment. The remaining $1.3 million will
not be released to us unless we have reduced the outstanding principal amount
of the secured convertible note (other than amounts still in the restricted
cash account) to zero. In that event, amounts equal to outstanding principal
subsequently converted into common stock will be released to us until all funds
have been released. None of the funds described above will be released to us if
we are in default of our obligations under the financing. It is possible that
we will never obtain control of some or all of the proceeds held in the
restricted account. If this happens, our business could be materially and
adversely affected. The Restricted Account Agreement and the Letter Agreement
containing a full description of the release of funds in the restricted account
are attached as exhibits to this report, and we refer you to those documents
for the full description. It is possible that we will never obtain control of
some or all of the proceeds held in the restricted account. If this happens,
our business could be materially and adversely affected.

    Our common stock price is subject to significant volatility, which could
    result in substantial losses for investors and in litigation against us.

    The stock market as a whole and individual stocks, including our common
stock, historically have experienced wide price and volume fluctuations. During
the year ended December 31, 2004, the high and low closing bid prices of our
common stock were $0.33 and $0.13, respectively. The market price of our common
stock may exhibit significant fluctuations in the future in response to various
factors, many of which are beyond our control, and which include:

<page>23

    o variations in our quarterly operating results, which variations could
      result from, among other things, changes in the needs of one or more of
      our customers;
    o changes in market valuations of similar companies and stock market price
      and volume fluctuations generally;
    o economic conditions specific to the plastic pallet industry;
    o announcements by us or our competitors of new or enhanced products, or
      services or significant contracts, acquisitions, strategic relationships,
      joint ventures or capital commitments;
    o regulatory developments; and
    o future sales of our common stock or other debt or equity securities.

    If our operating results in future quarters fall below the expectations of
market makers, securities analysts and other investors, our stock price will
likely decline. Consequently, the  price at which you purchase shares of our
common stock may not be indicative of the price that will prevail in the trading
market and you may be unable to sell your shares of common stock at or above
your purchase price. In the past, securities class action litigation often has
been brought against a company following periods of volatility in the market
price of its securities. We may in the future be the target of similar
litigation. Securities litigation could result in substantial costs and
liabilities and could divert management's attention and resources.

    Because we are subject to the "Penny Stock" rules, the level of trading
    activity in our stock may be reduced. If the level of trading activity is
    reduced, you may not be able to sell your shares of our common stock.

    Broker-dealer practices in connection with transactions in "penny stocks"
are regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks are generally, equity securities with a price of less
than $5.00 that trade on the OTC Bulletin Board or the Pink Sheets. The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and,
if the broker-dealer is the sole market maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed control over the market, and monthly
account statements showing the market value of each penny stock held in the
customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These requirements may have the effect of reducing the level of trading activity
in a penny stock, such as our common stock, and investors in our common stock
may find it difficult to sell their shares.

    Because our common stock is not listed on a national securities exchange,
    you may find it difficult to dispose of or obtain quotations for our common
    stock.

    Our common stock trades under the symbol "RPMM" on the OTC Bulletin Board.
Because our stock trades on the OTC Bulletin Board rather than on a national
securities exchange, you may find it difficult to either dispose of, or to
obtain quotations as to the price of, our common stock.

    Shares of our common stock eligible or to become eligible for public sale
    could adversely affect our stock price and make it difficult for us to
    raise additional capital through sales of equity securities.

<page>24

    As of May 17, 2005, we had outstanding 19,480,520 shares of common
stock. We also have outstanding options to purchase up to 9,100,000 shares of
our common stock, outstanding warrants to purchase up to 1,125,000 shares of
our common stock, and an outstanding convertible term note, the principal
portion of which is currently convertible into approximately 10,417,000 shares
of our common stock (plus applicable interest, penalties and any anti-dilution
adjustments). The shares underlying the convertible term note and the warrants
have been registered for resale pursuant to a registration statement and may be
sold under the Securities Act. We cannot predict the effect, if any,
that future sales of shares of our common stock into the market will have on
the market price of our common stock. However, sales of a substantial number of
shares of our common stock in the public market, or the perception that sales
could occur, could adversely affect the market price of our common stock. Any
adverse effect on the market price of our common stock could make it difficult
for us to raise additional capital through sales of equity securities at a time
and at a price that we deem appropriate.

    Conversion or exercise of our outstanding convertible securities could
    substantially dilute your investment and the existence of our convertible
    securities could negatively effect the price of our common stock.

    We have issued a convertible term note that is convertible at prices that
are subject to adjustment due to a variety of factors, including the issuance
of securities at, or at an exercise or conversion price, less than the current
fixed conversion price of $0.24. As of May 17, 2005 the principal portion
of the convertible term note was convertible into approximately 10,417,000
shares of our common stock (plus applicable interest, penalties and any anti-
dilution adjustments). You could, therefore, experience substantial dilution of
your investment as a result of the conversion of our outstanding convertible
term note. We also have outstanding options to purchase up to 9,100,000 shares
of our common stock and warrants to purchase up to 1,125,000 shares of our
common stock that could have a dilutive effect on your shares. The existence of
these securities could also mean that an increase in the trading price of a
share of our common stock will result in a limited benefit to existing security
holders.  This possibility could negatively affect the price of our common
stock.

    If our security holders engage in short sales of our common stock,
    including sales of shares to be issued upon conversion or exercise of
    derivative securities, the price of our common stock may decline.

    Selling short is a technique used by a shareholder to take advantage of an
anticipated decline in the price of a security. A significant number of short
sales or a large volume of other sales within a relatively short period of time
can create downward pressure on the market price of a security. Further sales of
common stock issued upon conversion or exercise of our derivative securities
could cause even greater declines in the price of our common stock due to the
number of additional shares available in the market, which could encourage short
sales that could further undermine the value of our common stock. You could,
therefore, experience a decline in the value of your investment as a result of
short sales of our common stock.

    Our current financing arrangements could prevent our common stock from
    being listed on Nasdaq or other principal markets.

    Nasdaq and other principal markets require that, to be eligible for
inclusion in the stock market, a company's common stock have a specified minimum
bid price per share. Convertible note financings characteristically exert
downward pressure on the market for a company's common stock. This pressure,
which may be applied against the market for our common stock while our
convertible term note is outstanding, may prevent our common stock from being
listed on Nasdaq or other principal markets

    If the ownership of our common stock continues to be highly concentrated, it
    may prevent you and other stockholders from influencing significant
    corporate decisions and may result in conflicts of interest that could cause
    our stock price to decline.

<page>25

    As a group, our executive officers and directors beneficially own or control
approximately 37% of our outstanding shares of common stock (after giving effect
to the exercise of all outstanding vested options exercisable within 60 days
from May 17, 2005). As a result, our executive officers and directors,
acting as a group, have substantial control over the outcome of corporate
actions requiring stockholder approval, including the election of directors, any
merger, consolidation or sale of all or substantially all of our assets, or any
other significant corporate transaction. Our executive officers and directors
may have interests different than yours. For example, the executive officers and
directors may delay or prevent a change in control of our company, even one that
would benefit our stockholders, or pursue strategies that are different from the
wishes of other investors. The significant concentration of stock ownership may
adversely affect the trading price of our common stock due to investors'
perception that conflicts of interest may exist or arise.

    We cannot assure you that an active market for our shares of common stock
    will develop or, if it does develop, will be maintained in the future. If an
    active market does not develop, you may not be able to readily sell your
    shares of our common stock.

    Our common stock began trading on the OTC Bulletin Board in February of
2002. Since that time, there has been limited trading in our shares, at widely
varying prices, and the trading to date has not created an active market for our
shares. We cannot assure you that an active market for our shares will be
established or maintained in the future. If an active market is not established
or maintained, you may not be able to readily sell your shares of our common
stock.

ITEM 7. FINANCIAL STATEMENTS.

    Our consolidated financial statements are filed with and begin on
page F-1 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

        None.

ITEM 8A.  CONTROLS AND PROCEDURES

    Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have
concluded, based on their evaluation as of December 31, 2004 (the "Evaluation
Date"), that the design and operation of our "disclosure controls and
procedures" (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) are effective to ensure that information
required to be disclosed by us in the reports filed or submitted by us under
the Exchange Act is accumulated, recorded, processed, summarized and reported
to our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding whether
or not disclosure is required.

    During the year ended December 31, 2004, there were no changes in
our "internal controls over financial reporting" (as defined in Rule 13a-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting.

ITEM 8B.  OTHER INFORMATION.

        None.
<page>26

                             PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

    The directors and executive officers of RPM Technologies, Inc. and their
ages, positions, business experience and education as of May 17, 2005 are
as follows:

Name                  Age                  Position Held
------------------  -------  ----------------------------------------------
Randy Zych             60    Chairman of the Board & Chief Executive Officer
Charles Foerg          72    President, Secretary/Treasurer and Director
David Lade             44    Chief Financial Officer, Controller and Director

Business Experience

    Randy Zych has served as our Chairman of the Board of Directors and
Chief Executive Officer since our inception in 1997. Mr. Zych has spent most of
the past twenty-five years working as an entrepreneur, developing and promoting
various new businesses, including several manufacturing companies. For example,
Mr. Zych developed and promoted an organic fertilizer for Earthlife Products,
Inc. He also developed and promoted financial services for Cambridge Capital
Group, Ltd. Between 1990 and our inception in 1997, Mr. Zych worked as an
independent consultant in the areas of marketing and distribution strategies for
the two preceding companies. Mr. Zych attended the University of Illinois,
Chicago, concentrating his studies in finance and business management.

    Charles W. Foerg has served as our President, Secretary/Treasurer and a
Director since 1997. Immediately prior to his association with us, he was self-
employed as a management consultant from 1991 to 1996. He has accumulated more
than 25 years of experience in financing, building and managing several
companies across many industries, with jobs and duties covering executive
management, marketing, technology acquisitions, quality control and
manufacturing operations. Mr. Foerg's experience in advertising includes
working as Account Supervisor and Vice President for Young & Rubicam
Advertising and BBD&O Advertising. Mr. Foerg received a BS degree in Economics
from Shurtleff College, Alton, Illinois and completed graduate studies in
Business Administration at the University of Detroit. Mr. Foerg served in the
U.S. Army in Europe and Korea.

    David A. Lade has served as our Chief Financial Officer and as a Director
since 1999.  Mr. Lade also serves as our Controller. From 1995 until 1999, Mr.
Lade was an independent financial consultant, and served as part-time
controller for several closely held corporations. As a consultant, Mr. Lade
contributed in all areas of accounting, budgeting, cash management, bank
relations and acquisition analysis.  From 1987 until 1995, Mr. Lade worked as
Controller for AGA Gas Central, where he was responsible for financial
reporting and analysis, strategic planning, customer service and branch
administration. From 1983 until 1987, Mr. Lade was Experienced Audit Senior for
Arthur Anderson & Co., where he served as a member of the commercial audit
division.  Mr. Lade became a Certified Public Accountant in 1984, and a
Registered Securities Representative (Series 6 Exam) in 1992.

Section 16(a) Beneficial Ownership Reporting Compliance

    Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than 10% of a
registered class of our common stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
These officers, directors and stockholders are required by the Securities and
Exchange Commission regulations to furnish us with copies of all such reports
that they file.

    Based solely upon a review of copies of these reports furnished to us
during 2004 and thereafter, or written representations received by us from
reporting persons that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our reporting persons during
2004 were complied with, except as described below.

<page>27

    The following individuals did not timely file the following numbers of
Forms 4 to report the following numbers of transactions:  Mr. Randy Zych - 1
report, 1 transaction; Mr. Charles Foerg - 1 report, 1 transaction.

  Board and Board Committees

    All directors hold office until the next annual meeting of shareholders or
until their respective successors are elected or until their earlier death,
resignation or removal.

    Our board of directors has an audit committee, a compensation committee and
a nominating committee.  The audit committee consists of Randy Zych, Charles
Foerg and David Lade, the compensation committee consists of Messrs. Zych and
Foerg and the nominating committee consists of Messrs. Zych and Foerg. The
duties and responsibilities of our audit committee and our nominating committee
have been set forth in a written charter governing such committees.

Codes of Ethics

    Our board of directors has adopted a written code of ethics applicable to
our Chief Executive Officer, our Chief Financial Officer and any other current
or future senior financial officers.

    We intend to satisfy the disclosure requirement under Item 10 of Form 8-K
relating to amendments to or waivers from provision of these codes that relate
to one or more of the items set forth in Item 406(b) of Regulation S-K, by
describing on our main Internet website at www.rpmtechnologiesinc.com, within
five business days following the date of a waiver or a substantive amendment,
the date of the waiver or amendment, the nature of the amendment or waiver, and
the name of the person to whom the waiver was granted.

    Information on our Internet website is not, and shall not be deemed to be,
a part of this report or incorporated into any other filings we make with
the Securities and Exchange Commission.

Compensation Committee Interlocks and Insider Participation

    No member of our board of directors has a relationship that would
constitute an interlocking relationship with executive officers and directors
of another entity.

<page>28

ITEM 10.  EXECUTIVE COMPENSATION.

    The Summary Compensation Table below provides information concerning the
annual and long-term compensation for services in all capacities of Randy Zych,
our Chief Executive Officer and Charles Foerg, our President, Secretary and
Treasurer, or the named executives, during the years 2004, 2003 and 2002 that
they were entitled to pursuant to employment agreements. No other employee of
RPM was compensated in amounts exceeding $100,000 during the year ended December
31, 2004.

                            Summary Compensation Table
                            ---------------------------
                                                    Long-Term
                                                  Compensation
                                                  ------------
                                                    Awards
                                                  ------------
                              Annual Compensation  Securities
     Name and                                      Underlying
     Principal Position       Year     Salary($)   Options(#)
     -------------------      -------  ---------  ------------
     Randy Zych               2004     $125,000(1)  2,500,000
     Chief Executive Office   2003     $125,000           --
                              2002     $ 95,000     2,500,000

     Charles Foerg,           2004     $ 85,000(1)  2,500,000
     President, Secretary     2003     $ 85,000           --
     and Treasurer            2002     $ 85,000(2)  1,000,000
     -------------------
    (1) In 2004, cash salaries of $30,000 were paid to Mr. Zych and $22,000 to
        Mr. Foerg and the remainder of their salaries were added to accrued
        compensation. Pursuant to his employment agreement, Randy Zych is
        entitled to receive $125,000 annually. We intend to pay such amount if
        we are able to do so, but will not pay Mr. Zych from the funds of the
        recent financing from Laurus Master Fund, Ltd.  Pursuant to the terms
        of his employment agreement, Charles Foerg is entitled to receive
        $85,000 annually. We intend to pay such amount if we are able to do so,
        but will not use the funds of the recent financing from Laurus Master
        Fund, Ltd. to do so.

    (2) Includes the fair market value of non-cash salary paid in restricted
        common stock totaling 1,000,000 shares of restricted common stock issued
        in 2002; 500,000 shares to Randy Zych and 500,000 shares to Charles
        Foerg.

Stock Option Grants in 2004

    On September 3, 2002, we issued an option to purchase 250,000 shares of
Class A Preferred Stock at an exercise price of $5.00 to Randy Zych exercisable
until September 1, 2005. In June of 2004, our current securities counsel advised
us that the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Randy Zych options to
purchase 2,500,000 shares of our common stock, exercisable until September 1,
2005 at $0.50 per share.

    On September 30, 2002, Charles Foerg was granted a fully-vested three-year
option to purchase up to 250,000 shares of Class A Preferred Stock at an
exercise price of $5.00 per share, which is $.50 per share of common stock on
an as-converted basis, which was the closing price of a share of our common
stock on that date. In June of 2004, our current securities counsel advised us
that the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Charles Foerg options
to purchase 2,500,000 shares of our common stock, exercisable until September
1, 2005 at $0.50 per share.

<page>29

Option Exercises and Year-End Values

    The following table sets forth the number of shares acquired and value
realized upon exercise of options during the year ended December 31, 2004 and
the number of exercisable and unexercisable in-the-money stock options and
their values at December 31, 2004 for the named executives. An option is "in-
the-money" if the fair market value for the underlying securities exceeds the
exercise price of the option.
<table>




                                                              Number of Securities Underlying      Value ($)of Unexercised
                                Shares                               Unexercised Options           In-the-Money Options at
                                Acquired on     Value                December 31, 2004             December 31, 2004 (1)
Name                       Exercise       Realized ($)   Exercisable    Unexercisable       Exercisable    Unexercisable
---------------------      ------------   ------------   -------------- ----------------  --------------  ----------------
                           <C>            <C>            <C>            <C>               <C>             <C>
Randy Zych                   ---             ---          5,000,000 (2)       ---               ---             ---
Charles Foerg                ---             ---          3,500,000 (2)       ---               ---             ---
---------------------
(1) The closing sale price of our common stock on the OTC Bulletin Board as of
    December 31, 2004 was $0.20.

(2) Includes options to purchase 2,500,000 shares of common stock, issued to
    each of Randy Zych and Charles Foerg on July 1, 2004, exercisable on or
    prior to September 1, 2005 at the exercise price of $0.50 per share.
</table>
Long-Term Incentive Plan Awards

    During the year ended December 31, 2004, no awards were given to named
executives under long-term incentive plans.

Compensation of Directors

    Our directors do not receive any compensation in their capacity as members
of the board of directors, but may be reimbursed for reasonable expenses
incurred in connection with attendance of meetings of the board of directors.
No amounts were reimbursed to directors in 2004 for expenses that
may have been incurred by such directors in connection with
attendance of meetings of the board of directors.

Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

    We entered into an employment agreement with Randy Zych, our Chairman and
Chief Executive Officer, on September 1, 2002.  The employment agreement has a
term of three years and automatically renews for additional five year terms
unless either party terminates it by giving at least 180 days notice to the
other party.  Mr. Zych's annual salary under the employment agreement is
$125,000.  During subsequent terms, we are to negotiate in good faith increases
in Mr. Zych's salary.  Mr. Zych received 300,000 shares of restricted common
stock upon signing his employment agreement.  Mr. Zych also received the option
to purchase up to 2,500,000 shares of restricted common stock at an option price
of $0.50 per share.  This option is exercisable during the initial three year
term of the employment agreement, with an option to renew said option for an
additional three years.  All stock options are vested and irrevocable unless Mr.
Zych is terminated for cause for any of the following reasons, in which case all
stock options are automatically revoked:  refusing to carry out the reasonable
and lawful directions of the corporation, defrauding the corporation, embezzling
funds of the corporation, engaging in willful misconduct, or engaging in fraud
or dishonesty in performance of duties.  If we terminate Mr. Zych without cause,
we are obligated to pay Mr. Zych an amount equal to his salary and benefits for
a period of 180 days.

<page>30

    We entered into an employment agreement with Charles Foerg, our President,
on September 1, 2002.  The employment agreement has a term of three years and
automatically renews for additional five year terms unless either party
terminates it by giving at least 180 days notice to the other party.  Mr.
Foerg's annual salary under the employment agreement is $85,000.  During
subsequent terms, we are to negotiate in good faith increases in Mr. Foerg's
salary.  Mr. Foerg received 300,000 shares of restricted common stock upon
signing his employment agreement.  Mr. Foerg also received the option to
purchase up to 1,000,000 shares of restricted common stock at an option price of
$0.50 per share.  This option is exercisable during the initial three year term
of the employment agreement, with an option to renew said option for an
additional three years.  All stock options are vested and irrevocable unless Mr.
Foerg is terminated for cause for any of the following reasons, in which case
all stock options are automatically revoked:  refusing to carry out the
reasonable and lawful directions of the corporation, defrauding the corporation,
embezzling funds of the corporation, engaging in willful misconduct, or engaging
in fraud or dishonesty in performance of duties.  If we terminate Mr. Foerg
without cause, we are obligated to pay Mr. Foerg an amount equal to his salary
and benefits for a period of 180 days.

Report on Repricing of Options and SARs

    No adjustments to or repricing of stock options or stock appreciation rights
previously awarded to the named executives occurred during the year ended
December 31, 2004.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of May 17, 2005, certain information
with  respect to  (i) each  director of  our company,  (ii) the named
executives,  and (iii)  all directors  and executive  officers of our
company as a  group, and (iv)  each person known  to our company  to be the
beneficial owner of more than 5% of our common stock. The information  with
respect to each person specified is as supplied or confirmed by such person
or based upon statements filed with the Commission.
<table>

Name and Address of             Title of        Amount and Nature of
of Beneficial Owner (1)        Class           Beneficial Ownership(2)     Percent of Class
--------------------------     ---------       ------------------------   ------------------
                               <C>             <C>                        <C>
Randy Zych                      Common              6,100,000(3)                24.9%

Charles Foerg                   Common              4,102,000(4)                17.9%

David Lade                      Common                 72,000                     *

All directors and executive
officers as a group
(3 persons)                     Common             10,274,000(5)                36.7%
--------------------------
*       Less than 1.0%

(1)     The address of each director and executive officer named in this
        table is c/o RPM Technologies, Inc., 21061 West Braxton,
        Plainfield, IL 60544.

(2)     Beneficial ownership is determined in accordance with the rules  of
        the  Securities  and  Exchange  Commission   and generally includes
        voting or investment power with  respect to securities. Except as
        indicated by footnote, and subject to community  property laws
        where applicable,  the persons named in the  table above have  sole
        voting and  investment power with respect to all  shares of common
        stock shown  as beneficially owned by them. Shares of common stock
        subject to options currently exercisable, or exercisable within  60
        days after May 17, 2005, are deemed to be outstanding in
        calculating the percentage ownership  of a person or  group but are
        not deemed to be outstanding as to any other person or group.

(3)     Includes 5,000,000 shares of common stock underlying options.

(4)     Includes 3,500,000 shares of common stock underlying options.

(5)     Includes 8,500,000 shares of common stock underlying options.
</table>

<page>31

Equity Compensation Plan Information

    The following table and the accompanying footnotes give information about
our common stock that may be issued upon the exercise of options, warrants and
rights under our stock option plans, as well as warrants and rights issued
outside of any formal plan as of December 31, 2004.
<table>

                                                                          Weighted Average       Number of
                                            Number of Securities to        Exercise Price        Securities
                                            be Issued Upon Exercise       of Outstanding          Remaining
                                               of Outstanding Options,    Options, Warrants      Available for
              Plan Category                    Warrants and Rights            and Rights         Future Issuance
----------------------------------------    ----------------------------  ------------------   ------------------
                                            <C>                           <C>                  <C>
Equity compensation plans approved by
  security holders.....................              -                            -                    -
Equity compensation plans not approved
  by security holders(1)................        9,100,000                       $0.70                 N/A
                                            ----------------------------  ------------------   ------------------
Total                                           9,100,000                       $0.70                 N/A
----------------------------
(1) As of December 31, 2004, we had outstanding options issued outside of any formal
    plan to purchase up to 9,100,000 shares of our common stock.

</table>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    In September 2002, we entered into the employment agreements with Randy Zych
and Charles Foerg. See "Management - Employment Contracts and Termination of
Employment and Change- in- Control Arrangements."

    On September 3, 2002 we issued 500,000 shares of restricted common stock
valued at $50,000 to our Chairman, Randy Zych as partial payment for accrued
compensation.

    On September 3, 2002 we issued 500,000 shares of common stock valued at
$50,000 to our President, Charles Foerg, as partial payment for accrued
compensation.

    We conduct many executive office functions from the separate personal
offices of Randy Zych, our Chairman and Charles Foerg, our President. No formal
lease agreement exists for the use of these offices. During 2004 and 2003, we
paid these officers an aggregate approximately $70,800 and $61,900,
respectively, for the use of these offices and for the reimbursement of
expenses paid personally by these officers on our behalf. We believe that our
facilities are adequate for our needs for the near future.


    On September 1, 2002, we ratified an Employment Agreement (Agreement) with
Randy Zych to serve as our Chairman of the Board and Chief Executive Officer.
The Agreement term was effective as of September 1, 2002 and expires on the
third anniversary date of the Agreement with an automatic five (5) year
extension unless either we or the Mr. Zych provides a 180-day written notice
not to continue the Agreement. This Agreement provides Mr. Zych with an initial
annual base salary of $125,000 per year, payable in cash.  Each subsequent
year's base salary shall be negotiated between us and Mr. Zych in good faith;
however, each subsequent year shall not be at an amount less than the initial
base amount of $125,000.  Further, we paid a signing bonus of 500,000 shares of
restricted, unregistered common stock upon execution of this Agreement.

<page>32

    On September 1, 2002, we ratified an Employment Agreement (Agreement) with
Charles Foerg to serve as our President. The Agreement term was effective as of
September 1, 2002 and expires on the third anniversary date of the Agreement
with an automatic five (5) year extension unless either we or Mr. Foerg
provides a 180-day written notice not to continue the Agreement.  This
Agreement provides Mr. Foerg with an initial annual base salary of $125,000 per
year, payable in cash.  Each subsequent year's base salary shall be negotiated
between us and Mr. Foerg in good faith; however, each subsequent year shall not
be at an amount less than the initial base amount of $125,000.  Further, we
paid a signing bonus of 500,000 shares of restricted, unregistered common stock
upon execution of this Agreement.

    As of December 31, 2004 and 2003, respectively, we had accrued
approximately $892,000 and $656,000 in earned, but unpaid, officer
compensation.

   On September 3, 2002, we issued an option to purchase 250,000 shares of
Class A Preferred Stock at an exercise price of $5.00 to Randy Zych exercisable
until September 1, 2005. In June of 2004, our current securities counsel advised
us that the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Randy Zych options to
purchase 2,500,000 shares of our common stock, exercisable until September 1,
2005 at $0.50 per share.

    On September 30, 2002, Charles Foerg was granted a fully-vested three-year
option to purchase up to 250,000 shares of Class A Preferred Stock at an
exercise price of $5.00 per share, which is $.50 per share of common stock on an
as-converted basis, which was the closing price of a share of our common stock
on that date. In June of 2004, our current securities counsel advised us that
the Class A Preferred Stock and the issuance thereof was not properly
authorized.  In lieu thereof, on July 1, 2004, we granted Charles Foerg options
to purchase 2,500,000 shares of our common stock, exercisable until September 1,
2005 at $0.50 per share.

ITEM 13.  EXHIBITS.

    Reference is made to the Index to Exhibits that follows the consolidated
financial statements contained in this report.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

    The following table shows the fees paid or accrued by RPM for the audit and
other services provided by S.W Hatfield, CPA, Dallas, Texas for the fiscal
years shown.

                              2004             2003
                            --------        --------
    Audit Fees              $ 35,470        $ 11,793
    Audit - Related Fees    $  5,498        $  1,498
    Tax Fees                $    900        $    330
    All Other Fees              --              --
                            --------        --------
    Total                   $ 41,868       $  13,621

    The Audit - Related Fees shown above all related to work performed in
connection with the issuance of Consents of Independent Registered Public
Accounting Firm included in Registration Statements on Forms SB-2 and S-8 and
the review thereof by S. W. Hatfield, CPA, Dallas, Texas.

    We do not have an Audit Committee. Our Board of Directors approved the
Audit Fees for year 2004, but none of the other fees for 2004 were specifically
approved by our Board of Directors.  Our Board of Directors approved the Audit
Fees for year 2003, but none of the other fees for 2003 were specifically
approved by our Board of Directors.

<page>33

                                RPM TECHNOLOGIES, INC.
                            Index to Financial Statements

                                                                           Page
                                                                           ----
Report of Independent Registered Public Accounting Firm                    F-2

Financial Statements

  Balance Sheets
    as of December 31, 2004 and December 31, 2003 (Restated)                F-3

  Statements of Operations and Comprehensive Loss
    for the years ended December 31, 2004 and December 31, 2003 (Restated)  F-4

  Statement of Changes in Stockholders' Equity
    for the years ended December 31, 2004 and December 31, 2003 (Restated)  F-5

  Statements of Cash Flows
    for the years ended December 31, 2004 and December 31, 2003 (Restated)  F-6

  Notes to Financial Statements                                             F-7


<page>F-1

                          LETTERHEAD OF S. W. HATFIELD, CPA
              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
RPM Technologies, Inc.

We have audited the accompanying balance sheets of RPM Technologies, Inc. (a
Delaware corporation) as of December 31, 2004 and December 31, 2003 (Restated)
and the related statements of operations and comprehensive loss, statement of
changes in stockholders' equity (deficit) and statements of cash flows for the
year ended December 31, 2004 and December 31, 2003 (Restated), respectively.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting.  Accordingly, we express no such opinion.  An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RPM Technologies, Inc. as of
December 31, 2004 and December 31, 2003 (Restated) and the results of its
operations and its cash flows for the each of the years ended December 31, 2004
and December 31, 2003 (Restated), respectively, in conformity with generally
accepted accounting principles generally accepted in the United States of
America.

                                            /s/ S. W. Hatfield, CPA
                                            ---------------------------
                                            S. W. HATFIELD, CPA
Dallas, Texas
April 9, 2005

<page>F-2



                            RPM TECHNOLOGIES, INC.
                                BALANCE SHEETS
                          December 31, 2004 and 2003



                                  December 31,      December 31,
                                     2004              2003
                                                     (Restated)
                                  ------------      ------------

                        ASSETS
                        ------
Current Assets
  Cash in bank                    $      592,936    $   316,233
    Accounts receivable - Trade,
    net of allowance for doubtful
    accounts of $-0- and $-0-,
    respectively                         284,963        342,912
                                  --------------    -----------
    Total Current Assets                 877,899        659,145
                                  --------------    -----------
Property and Equipment - at cost
  Molds, tools and dies                  659,889        648,239
  Production equipment                   213,371           -
  Computer equipment                      18,157         14,000
                                  --------------    -----------
                                         891,417        662,239
  Accumulated depreciation              (333,556)      (267,766)
                                  --------------    -----------
    Net Property and Equipment           557,861        394,473
                                  --------------    -----------
Other assets
  Restricted cash                      1,737,280          -
  Equipment held for sale                112,800          -
  Refundable deposits and other           19,853         4,822
                                  --------------    -----------
    Total Other Assets                 1,869,933         4,822
                                  --------------    -----------
Total Assets                      $   3,305,693     $1,058,440
                                  ==============    ===========

           LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
           ----------------------------------------------
Current Liabilities
  Note payable                    $      50,000  $     50,000
  Accounts payable - trade              334,562       229,954
  Accrued officer compensation          892,148       656,161
  Accrued interest payable               82,201         9,890
                                  --------------    -----------
    Total Current Liabilities         1,358,911       946,005

Convertible Term Note                 2,500,000          -
                                  --------------    -----------
Commitments and Contingencies
Stockholders' Equity (Deficit)
  Common stock - $0.001 par value.
    250,000,000 shares authorized.
    18,980,520 and 13,467,156 shares
    issued and outstanding,
    respectively                         18,981        13,497
  Additional paid-in capital          9,526,200     8,671,279
  Deferred compensation -
   fair value of vested stock
   options                            2,225,000       525,000
  Accumulated deficit               (12,301,428)   (8,993,161)
                                  --------------    -----------
                                       (531,247)      216,615
  Stock subscription receivable         (21,971)     (104,180)
                                  --------------    -----------
    Total Stockholders' Equity         (553,218)      112,435
                                  --------------    -----------
Total Liabilities and
     Stockholders' Equity          $   3,305,693   $1,058,440
                                  ==============   ============

<page>F-3

The accompanying notes are an integral part of these financial statements.



                              RPM TECHNOLOGIES, INC.
                  STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                      Years ended December 31, 2004 and 2003



                                             Year ended     Year ended
                                            December 31,    December 31,
                                                2004           2003
                                                             (Restated)
                                           --------------   -------------
Revenues                                     $2,191,373     $1,492,310

Cost of Sales                                 1,862,681      1,049,781

Gross Profit                                    328,692        442,529

Expenses
  Research and development costs                   -              -
  Sales and marketing expenses                  218,082        109,360
  Payroll and related expenses                  309,568        334,033
  Professional and consulting fees              694,130        261,439
  General and administrative expenses           262,634        129,485
  Interest expense                               91,614          5,000
  Depreciation                                   65,790         64,824
  Compensation expense related to fair
    value of granted stock options            1,700,000            -
  Compensation expense related to common stock
    issuances at less than "fair value"         308,586        249,406
                                           --------------   -------------
    Total operating expenses                  3,650,404      1,153,547
                                           --------------   -------------
Loss from operations                         (3,321,712)      (711,018)

Other Income
  Interest income                                13,445            -
                                           --------------   -------------
Loss before Income Taxes                     (3,308,267)      (711,018)

Provision for Income Taxes                         -               -
                                           --------------   -------------
Net Loss                                     (3,308,267)      (711,018)

Other comprehensive income                         -               -
                                           --------------   -------------
Comprehensive Loss                          $(3,308,267)    $ (711,018)
                                           ==============   =============
Loss per weighted-average share of
  common stock outstanding,
  computed on Net Loss - basic and
  fully diluted                                 $(0.20)        $(0.06)
                                           ==============   =============
Weighted-average number of shares of common
  stock outstanding                           16,772,811     11,346,503
                                           =============    =============

The accompanying notes are an integral part of these financial statements.

<page>F-4

                              RPM TECHNOLOGIES, INC.
                    STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                       Years ended December 31, 2004 and 2003
<table>

                                         Additional        Deferred        Stock
                       Common Stock         paid-in      compensation-  subscription Accumulated
                       Shares    Amount       capital    stock options  receivable     deficit       Total
                      -----------------    ----------    -------------- -----------  ------------  ----------
                      <C>                  <C>           <C>            <C>          <C>           <C>
Balances at
  January 1, 2003     9,933,013  $9,933     $7,990,936    $  525,000    $(157,000)   $(8,282,143)   $ 86,726

Common stock issued for
  Cash                2,608,428   2,608        526,577          -          52,820           -        582,005
    Less costs to
      acquire capital     -         -          (55,100)         -            -              -        (55,100)
  Professional fees     920,000     920         204,080         -            -              -        205,000
  Acquisition of pallet
    handling technology
    licensing rights     35,715      36           4,786         -            -              -          4,822

Net loss for the year         -       -               -         -            -          (711,018)   (711,018)
                       --------- --------    ----------  -------------- -----------  ------------  ----------
Balances at
  December 31, 2003
  (Restated)         13,497,156  13,497       8,671,279      525,000     (104,180)    (8,993,161)    112,435

  Cash                1,527,000   1,527         370,059         -          82,209           -        453,795
    Less costs to
      acquire capital     -         -          (124,500)        -            -              -       (124,500)
  Professional fees   3,951,364   3,952         606,867         -            -              -        610,819
  Acquisition of pallet
    handling technology
    licensing rights      5,000       5           2,495         -            -              -          2,500
  Deferred compensation-
    fair value of granted
    stock options           -          -             -     1,700,000         -              -      1,700,000

Net loss for the year       -          -             -            -          -        (3,308,267) (1,608,267)

Balances at
  December 31, 2004  18,980,520  $18,981     $9,526,200   $2,225,000     $(21,971)  $(12,301,428) $ (553,218)
</table>
<page>F-5


                               RPM TECHNOLOGIES, INC.
                             STATEMENTS OF CASH FLOWS
                       Years ended December 31, 2004 and 2003



                                           Year ended    Year ended
                                          December 31,   December 31,
                                              2004          2003
                                                          (Restated)
                                          ------------   -------------
Cash Flows from Operating Activities
  Net Loss                                 $(3,308,267)   $(711,018)
  Adjustments to reconcile net
    income to net cash
    provided by operating activities
      Depreciation                              65,790       64,824
      Expenses paid with common stock          490,818      142,500
      Compensation expense related to fair
        value of granted stock options       1,700,000          -
      Compensation expense related to
       common stock issuances at less
       than "fair value"                       308,586      249,406
      (Increase) Decrease in
        Accounts receivable - trade and other   57,949     (203,112)
        Inventory                                  -         11,000
        Refundable deposits and other          (12,531)         -
      Increase (Decrease) in
        Accounts payable and other             104,608       76,943
        Accrued interest payable                72,311        5,000
        Accrued officers compensation          235,987      246,161
                                          -------------  ----------
    Net cash provided by (used in)
      operating activities                    (284,749)    (118,196)
                                          -------------  ----------

Cash Flows from Investing Activities
  Increase in restricted cash from
       convertible term note                (1,737,280)        -
  Purchase of equipment held for sale         (112,800)        -
  Purchase of property and equipment          (229,178)     (11,260)
                                          -------------  ----------
    Net cash used in investing activities   (2,079,258)     (11,260)
                                          -------------  ----------

Cash Flows from Financing Activities
  Cash received on convertible term note     2,500 000
  Cash paid to acquire capital                (124,500)     (55,100)
  Proceeds from sales of common stock          265,210      395,100
                                          -------------  ----------
    Net cash provided by (used in)
     financing activities                    2,640,710      340,000
                                          -------------  ----------

Increase (Decrease) in Cash and
   Cash Equivalents                            276,703      210,544
Cash and cash equivalents at beginning
   of period                                   316,233      105,689
                                          -------------  ----------
Cash and cash equivalents at end of period   $ 592,936     $316,233
                                          =============  ==========

Supplemental Disclosures of Interest
    and Income Taxes Paid
  Interest paid during the period            $  19,303     $   -
                                             =========     ========
  Income taxes paid (refunded)               $     -       $   -
                                             =========     ========
Supplemental Disclosure of Non-Cash
  Investing and Financing Activities
  Acquisition of pallet handling technology
  rights with common stock                   $   2,500     $  4,822
                                             =========     ========

The accompanying notes are an integral part of these financial statements.

<page>F-6

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS


Note A - Organization and Description of Business

RPM Technologies, Inc. (the "Company") was incorporated on April 10, 1996 in
accordance with the laws of the State of Delaware as Mann Enterprise, Inc.

The Company is in the business to develop, produce, market and sell plastic
pallets to various unrelated entities located throughout the United States,
Canada, Central and South America.  The Company has developed what it believes
is a proprietary process for the manufacture of plastic pallets at costs
comparable to those currently in use constructed of wood which will meet
current and future anticipated environmental standards, encourage the
preservation of trees and promote plastic recycling.

Note B - Restatement of 2003 Financial Information

In conjunction with a change in securities counsel during the 2nd quarter of
2004, management discovered that an amendment to the Company's Certificate of
Incorporation to allow for the issuance of preferred stock had not been
properly approved and effected in accordance with Delaware law.  Accordingly,
the September 3, 2002 transaction whereby shares of preferred stock were issued
to two Company officers was invalid.

The Company has restated its financial statements for all quarterly and annual
periods, commencing with the Annual Report on Form 10-KSB for the period ended
December 31, 2002 through the quarterly period ended March 31, 2004.  The
balance sheet was restated to reverse the previously recorded transaction
where preferred stock was issued to Company officers as partial payment on
accrued officers compensation.  There was no change to the previously
reported results of operations for any of the aforementioned periods.

This restatement affects the presentation of accrued officers
compensation, the par value of preferred stock and additional paid-in capital
only.  All references to Preferred Stock have been deleted from the Company's
restated financial statements.

Note C - Preparation of Financial Statements

The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and
has a year-end of December 31.

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

Management acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud.  The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented

For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial statements
and makes all operating decisions and allocates resources based on the best
benefit to the Company as a whole.

<page>F-7

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note D - Summary of Significant Accounting Policies

1.  Cash and cash equivalents

The Company considers all cash on hand and in banks, certificates of deposit
and other highly-liquid investments with maturities of three months or less,
when purchased, to be cash and cash equivalents.

2.  Property and equipment

Property and equipment is recorded at cost and is depreciated on a straight-
line basis, over the estimated useful lives (generally 3 to 10 years) of the
respective asset.  Major additions and betterments are capitalized and
depreciated over the estimated useful lives of the related assets.
Maintenance, repairs, and minor improvements are charged to expense as
incurred.

3.  Organization and reorganization costs

The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organizational and
initial costs incurred with the incorporation and initial capitalization of the
Company were charged to operations as incurred.

4.  Research and development expenses

Research and development expenses are charged to operations as incurred.

5.  Advertising expenses

The Company does not utilize direct solicitation advertising.  All other
advertising and marketing expenses are charged to operations as incurred.

6.  Income Taxes

The Company utilizes the asset and liability method of accounting for income
taxes.  At December 31, 2004 and 2003, the deferred tax asset and deferred tax
liability accounts, as recorded when material, are entirely the  result of
temporary differences.  Temporary differences represent differences in the
recognition of assets and liabilities for tax and financial reporting purposes,
primarily accumulated depreciation and amortization.

7.  Share-Based Payments

The Company utilizes the fair-value method of accounting for the payment for
goods and/or services with the issuance of equity shares in lieu of cash.

8.  Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing the net income (loss)
available to common shareholders by the weighted-average number of common
shares outstanding during the respective period presented in the Company's
accompanying financial statements.

Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the number
of common stock equivalents (primarily outstanding options and warrants).

<page>F-8

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note D - Summary of Significant Accounting Policies - Continued

8.  Earnings (loss) per share - continued

Common stock equivalents represent the dilutive effect of the assumed exercise
of the outstanding stock options and warrants, using the treasury stock method,
at either the beginning of the respective period presented or the date of
issuance, whichever is later, and only if the common stock equivalents are
considered dilutive based upon the Company's net income (loss) position at the
calculation date.

As of December 31, 2004 and 2003, the Company had outstanding stock options to
acquire up to 9,100,000 and 4,100,000 and outstanding stock warrants to acquire
up to 2,125,000 and 9,013,000 shares of common stock of the Company,
respectively, and the Company's outstanding stock options and warrants are
anti- dilutive due to the Company's net operating loss position.

Note E - Significant 4th Quarter Adjustments

During the 4th quarter of 2004, management recognized compensation expense
related to vested stock options granted to management personnel on June 30,
2004 in the amount of approximately $1,700,000.

Note F - Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.

Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates.  The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully
dependent upon the volatility of these rates.  The company does not use
derivative instruments to moderate its exposure to financial risk, if any.

Note G - Concentrations of Credit Risk

The Company maintains its cash accounts in a financial institution subject to
insurance coverage issued by the Federal Deposit Insurance Corporation (FDIC).
Under FDIC rules, the Company is entitled to aggregate coverage of $100,000 per
account type per separate legal entity per financial institution.  During the
years ended December 31, 2004 and 2003, the Company maintained deposits in
various financial institutions with credit risk exposures in excess of
statutory FDIC coverage.  The Company incurred no losses during 2004 or 2003,
or subsequent thereto, as a result of any unsecured bank balance.


  (Remainder of this page left blank intentionally)

<page>F-9

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note H - Property and Equipment

Property and equipment consist of the following components at December 31, 2004
and 2003, respectively:

                         December 31,  December 31,
                            2004          2003         Estimated life
                         ------------ -------------    --------------
Molds, tools and dies    $ 659,889    $648,239           10 years
Production equipment       213,371        -              20 years
Computer equipment          18,157      14,000            3 years
                         ---------    --------
                           891,417     662,239
Accumulated depreciation  (333,556)   (267,766)
                         ----------   ---------
Net property and equipment $557,861   $394,473
                           ========   ========

Depreciation expense for the years ended December 31, 2004 and 2003,
respectively, was approximately $65,790 and $64,824.

Note I - Note Payable

Note Payable consists of the following:
                                            December 31,  December 31,
                                                2004          2003
                                            ------------  ------------
$50,000 note payable to an individual.
Interest at 10.0% per annum. Principal
and all accrued, but unpaid, interest is
due at maturity in November 2002.
Unsecured.  During 2004, the Company and
the Lender renegotiated the due date and
conversion terms of this debt whereby the
final settlement is deferred until January 3,
2006 and has a fixed conversion rate of $0.25
per share                                     $50,000       $50,000
                                             ==========    ===========

Note J - Convertible Term Note
        Restricted Cash

On July 9, 2004, the Company entered into a financing transaction whereby the
Company issued $2.5 million in principal amount of a secured convertible term
note due July 9, 2007 to Laurus Master Fund, Ltd. (Note Purchaser) in exchange
for gross proceeds of $2.5 million in cash.  The Company also issued warrants
to purchase up to an aggregate of 1,125,000 shares of the Company's common
stock to the Note Purchaser.  The Company's obligations under the financing are
secured by a first priority lien over all of its assets in favor of the Note
Purchaser.  The convertible term note bears interest at an annual rate equal to
the prime rate published from time to time in The Wall Street Journal plus 3%.
However, amounts held in the restricted account bear interest at 1% per annum
until released to the Company.  The initial conversion price of the debentures
is equal to $0.24 per share, and is subject to adjustment under certain
circumstances, including if the Company makes certain issuances of stock in the
future at a price below the conversion price.

  (Remainder of this page left blank intentionally)

<page>F-10

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note J - Convertible Term Note
        Restricted Cash - Continued

Approximately $2,200,000 of the proceeds of the convertible term note were
placed in a restricted cash account subject to the terms of the Restricted
Account Agreement and the Letter Agreement the Company entered into with the
Note Purchaser in connection with the financing.  These funds were under the
control of the Note Purchaser until released to the Company pursuant to the
Letter Agreement, including under the following circumstances: (a) $100,000 Was
to be released to the Company when (1) either the Company has provided evidence
to the Note Purchaser that the Company has obtained general liability insurance
with a coverage limit of at least $1,200,000 or (2) the Note Purchaser has
determined that such insurance is not customary with respect to the Company's
business operations; (b) $100,000 was to be released to the Company when the
Company has entered into a lease on commercially reasonable terms for a
corporate headquarters and operational and manufacturing facility; (c) $100,000
was to be released to the Company when the Company filed with the Securities
and Exchange Commission a Registration Statement registering for resale the
shares of the Company's common stock underlying the convertible term note and
the warrants issued to the Note Purchaser in connection with the financing; and
(d) up to $1,000,000 was to be released to the Company when the Company has
provided written evidence to the Note Purchaser that the Company has entered
into an agreement or agreements to consummate one or more purchases of certain
manufacturing equipment (the amount released to the Company will be equal to
the corresponding dollar amount necessary to purchase the equipment).

The funds to be released to the Company for the equipment purchases were not to
be released to the Company if the Company had not first (1) provided the Note
Purchaser with evidence of satisfactory insurance for such equipment and, (2)
entered into the lease as described in clause (b) above.  None of the funds
described above were to be released to the Company if the Company was in
default of its obligations under the financing.

Of the $2.5 million, $1.1 million has been released to the Company and $100,000
is available to be released to the Company, subject to certain restrictions,
for immediate use. Of the $2.5 million, $1.3 million of the proceeds of the
convertible term note remain in a restricted cash account subject to the terms
of a Restricted Account Agreement and a Letter Agreement the Company entered
into with Laurus in connection with the financing. These funds are under the
control of Laurus until they are released to the Company pursuant to the Letter
Agreement. The Letter Agreement provides for the release of funds not yet
released of up to an additional $100,000 when the Company provides written
evidence to Laurus that it has entered into an agreement or agreements to
consummate one or more purchases of certain manufacturing equipment (the amount
released to the Company will be equal to the corresponding dollar amount
necessary to purchase the equipment). The funds to be released for the
equipment purchases were released to the Company after it provided Laurus with
evidence of satisfactory insurance for such equipment. The remaining $1.3
million will not be released to the Company unless it has reduced the
outstanding principal amount of the secured convertible note (other than
amounts still in the restricted cash account) to zero. In that event, amounts
equal to outstanding principal subsequently converted into common stock will be
released to the Company until all funds have been released. None of the
unreleased funds described above will be released if the Company is in default
of its obligations under the financing. It is possible that the Company will
never obtain control of some or all of the proceeds held in the restricted cash
account.

During the period beginning July 9, 2004 and ending 270 days thereafter, the
Note Purchaser  may elect to purchase an additional note from the Company in an
amount up to $960,000 on substantially identical terms to those of the
convertible term note described above.

The above description is not a complete description of the material terms of
the financing, and is qualified in its entirety by reference to the agreements
entered into in connection with the financing which were included in the
Current Report on Form 8-K, filed with the U. S. Securities and Exchange
Commission, on August 12, 2004.

<page>F-11

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note K - Income Taxes

As of December 31, 2004, the Company had an estimated  net operating loss
carryforward of approximately $4,900,000 to offset future taxable income.
Subject to current regulations, this carryforward will begin to expire in 2018.
The amount and availability of the net operating loss carryforwards may be
subject to limitations set forth by the Internal Revenue Code. Factors such as
the number of shares ultimately issued within a three year look-back period;
whether there is a deemed more than 50% change in control; the
applicable long-term tax exempt bond rate; continuity of historical business;
and subsequent income of the Company all enter into the annual computation of
allowable annual utilization of the carryforwards.

The Company's income tax expense (benefit) for the years ended December 31,
2004 and 2003 differed from the statutory federal rate of 34% as follows:

                                Year ended    Year ended
                                December 31,  December 31,
                                    2004          2003
                                ------------  -------------
Statutory rate applied to
 income before income taxes     $(547,000)    $(242,000)
Increase (decrease) in income
  taxes resulting from:
    State income taxes               -             -
    Other, including reserve
     for deferred tax asset
     and application of net
      operating loss
      carryforward                547,000      242,000
                                ------------  -------------
      Income tax expense        $    -        $    -
                                ============  =============

Temporary differences, consisting primarily of statutory deferrals of expenses
for pre-operations interest expense, research and development expenses and
start-up costs and statutory differences in the depreciable lives for property
and equipment, between the financial statement carrying amounts and tax bases
of assets and liabilities give rise to deferred tax assets and liabilities as
of December 31, 2004 and 2003, respectively:

                                          December 31,  December 31,
                                              2004          2003
                                          ------------  ------------
      Deferred tax assets
        Net operating loss carryforwards    $1,836,000    $1,326,000
        Less valuation allowance            (1,836,000)   (1,326,000)
                                          ------------- -------------
      Net Deferred Tax Asset                $    -        $   -

For the years ended December 31, 2004 and 2003, respectively, the valuation
allowance increased by the approximate following amounts over the previously
reported balances for the years ended December 31, 2003 and 2002: $510,000 and
$476,000.

Note L - Common Stock Transactions

On May 19, 2003, the Company issued 200,000 shares of restricted, unregistered
common stock and 200,000 shares of free-trading stock to Lone Wolf Business
Services for providing business consulting services.  This transaction was
valued at $50,000 (or $0.13 per share), which was below the discounted "fair
value" of the Company's common stock based on the quoted closing price of the
Company's common stock on the date of the respective transaction.  The
differential between the discounted "fair value" (approximately $0.12 per
share) and the selling price resulted in a charge to operations of
approximately $50,000 for compensation expense related to common stock
issuances at less than "fair value".
<page>F-12

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note L - Common Stock Transactions - Continued

On May 27, 2003, the Company sold an aggregate 60,000 shares of restricted,
unregistered common stock to a group of private investors, who were also
existing Company shareholders, for gross proceeds of approximately $30,000 (or
$0.50 per share), which approximates the discounted "fair value" of the
Company's common stock based on the quoted closing price of the Company's
common stock on the date of the respective transaction.

On May 27, 2003, the Company sold 200,000 shares of restricted, unregistered
common stock to a group of investors represented by P&L Trading Co., Inc. for
gross proceeds of approximately $23,000 (or $0.115 per share),  which was below
the discounted "fair value" of the Company's common stock based on the quoted
closing price of the Company's common stock on the date of the respective
transaction.  The differential between the discounted "fair value"
(approximately $0.02 per share) and the selling price resulted in a charge to
operations of approximately $4,000 for compensation expense related to common
stock issuances at less than "fair value".

On June 20, 2003, the Company issued 100,000 shares of restricted, unregistered
common stock to Lone Wolf Business Services for providing business consulting
services.  This transaction was valued at $12,500 (or $0.13 per share), which
was below the discounted "fair value" of the Company's common stock based on
the quoted closing price of the Company's common stock on the date of the
respective transaction.  The differential between the discounted "fair value"
(approximately $0.12 per share) and the selling price resulted in a charge to
operations of approximately $12,500 for compensation expense related to common
stock issuances at less than "fair value".

On June 20, 2003, the Company sold 300,000 shares of restricted, unregistered
common stock to a group of investors represented by P&L Trading Co., Inc. for
gross proceeds of approximately $45,000 (or $0.15 per share),  which was below
the discounted "fair value" of the Company's common stock based on the quoted
closing price of the Company's common stock on the date of the respective
transaction.  The differential between the discounted "fair value"
(approximately $0.10 per share) and the selling price resulted in a charge to
operations of approximately $30,000 for compensation expense related to common
stock issuances at less than "fair value".

On July 25, 2003, the Company sold 400,000 shares of restricted, unregistered
common stock to a group of investors represented by P&L Trading Co., Inc. for
gross proceeds of approximately $50,000 (or $0.13 per share),  which was below
the discounted "fair value" of the Company's common stock based on the quoted
closing price of the Company's common stock on the date of the respective
transaction.  The differential between the discounted "fair value"
(approximately $0.05 per share) and the selling price resulted in a charge to
operations of approximately $20,000 for compensation expense related to common
stock issuances at less than "fair value".

On August 20, 2003, the Company sold 300,000 shares of restricted, unregistered
common stock to a group of investors represented by P&L Trading Co., Inc. for
gross proceeds of approximately $37,500 (or $0.13 per share),  which was below
the discounted "fair value" of the Company's common stock based on the quoted
closing price of the Company's common stock on the date of the respective
transaction.  The differential between the discounted "fair value"
(approximately $0.07 per share) and the selling price resulted in a charge to
operations of approximately $22,500 for compensation expense related to common
stock issuances at less than "fair value".

On August 28, 2003, the Company sold 300,000 shares of restricted, unregistered
common stock to a group of investors represented by P&L Trading Co., Inc. for
gross proceeds of approximately $37,500 (or $0.13 per share),  which was below
the discounted "fair value" of the Company's common stock based on the quoted
closing price of the Company's common stock on the date of the respective
transaction.  The differential between the discounted "fair value"
(approximately $0.02 per share) and the selling price resulted in a charge to
operations of approximately $7,500 for compensation expense related to common
stock issuances at less than "fair value".

<page>F-13

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED


Note L - Common Stock Transactions - Continued

On September 7, 2003, the Company issued 200,000 shares of restricted,
unregistered common stock and 200,000 shares of free-trading stock to Lone Wolf
Business Services for providing business consulting services.  This transaction
was valued at $75,000 (or $0.18 per share), which approximates the discounted
"fair value" of the Company's common stock based on the quoted closing price of
the Company's common stock on the date of the respective transaction.

On September 12, 2003, the Company issued 35,715 shares of restricted,
unregistered common stock to an individual to acquire the licensing rights of
certain pallet handling technology.  This transaction was valued at
approximately $4,821, which approximates the discounted "fair value" of the
Company's common stock based on the quoted closing price of the Company's
common stock on the date of the respective transaction.

On September 16, 2003, the Company issued 500,000 shares of restricted,
unregistered common stock to a group of investors represented by P&L Trading
Co., Inc. for gross proceeds of approximately $62,500 (or $0.13 per share),
which approximates the discounted "fair value" of the Company's common stock
based on the quoted closing price of the Company's common stock on the date of
the respective transaction.

On October 10, 2003, the Company sold 48,428 shares of restricted, unregistered
common stock to an accredited investor for gross proceeds of approximately
$6,780 (or $0.14 per share), which the discounted "fair value" of the Company's
common stock based on the quoted closing price of the Company's common stock on
the date of the respective transaction.  The differential between the
discounted "fair value" (approximately $0.06 per share) and the selling price
resulted in a charge to operations of approximately $2,905 for compensation
expense related to common stock issuances at less than "fair value".

On October 14, 2003, the Company sold 500,000 shares of restricted,
unregistered common stock to a group of investors represented by P&L Trading
Co., Inc. for gross proceeds of approximately $50,000 (or $0.10 per share),
which was below the discounted "fair value" of the Company's common stock based
on the quoted closing price of the Company's common stock on the date of the
respective transaction.  The differential between the discounted "fair value"
(approximately $0.20 per share) and the selling price resulted in a charge to
operations of approximately $100,000 for compensation expense related to common
stock issuances at less than "fair value".

On December 1, 2003, the Company issued 500,000 shares into escrow to be used
as collateral on a prospective credit arrangement.  As of December 31, 2003,
this prospective loan has not materialized and these shares are have not been
"fully paid and assessable" and, accordingly, are not included in the issued
and outstanding totals in the accompanying financial statements.

During 2004, the Company issued an aggregate of 3,951,364 restricted,
unregistered shares of common stock to various consultants for services valued
at approximately $610,818, which includes a non-cash charge to operations of
approximately $120,000 for the difference between the agreed upon value of the
services provided and the estimated "fair value" of the Company's common stock
based on the quoted closing price of the Company's common stock on the date of
each respective transaction.

During 2004, the Company sold approximately 1,527,000 shares of
restricted, unregistered shares of common stock for aggregate proceeds of
approximately $148,350.  The Company incurred a non-cash charge to operations
of approximately $188,586 for the difference between the selling price of the
shares and the estimated "fair value" of the Company's common stock based on the
quoted closing price of the Company's common stock on the date of each
respective transaction.  As of December 31, 2004, the Company has yet to
receive approximately $21,971 in cash proceeds related to these sale
transactions.

<page>F-14

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note L - Common Stock Transactions - Continued

On June 30, 2004, the Company issued an additional 5,000 shares of restricted,
unregistered common stock to an individual as additional compensation related
to the previously acquired licensing rights of certain pallet handling
technology.  This new transaction was valued at approximately $2,500, which
approximates the estimated "fair value" of the Company's common stock based on
the quoted closing price of the Company's common stock on the date of the
respective transaction.

    Exemption from the registration provisions of the Securities Act of 1933
for the transactions described above is claimed by the Company under Section
4(2) of the Securities Act of 1933, among others, on the basis that such
transactions did not involve any public offering.

Note M - Stock Options

2002 Stock Option Plan

On February 28, 2002, the Company filed a Registration Statement on Form S-8 to
register 300,000 shares of common stock to support the 2002 Stock Option Plan
(the "2002 Plan").  Under the 2002 Plan, the Company may grant options, from
time to time, to acquire shares of common stock to employees of the Company or
its subsidiaries.  In addition, at the discretion of the Board of Directors,
options to acquire common stock of the Company may from time to time be granted
under the 2002 Plan to other individuals, including consultants or advisors,
who contribute to the success of the Company or its subsidiaries and are not
employees of the Company or its subsidiaries, provided that bona fide services
shall be rendered by consultants and advisors and such services shall not be in
connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market in
the Company's securities.

The purpose of the 2002 Plan is intended to aid the Company in maintaining and
developing a management team, and in attracting new personnel as needed and to
provide such personnel with an incentive to remain employees of the Company, to
use their best efforts to promote the success of the Company's business, and to
provide them with an opportunity to obtain or increase a proprietary interest
in the Company.  It is also designed to permit the Company to reward those
individuals who are not employees of the Company but who management perceives
to have contributed to the success of the Company, or who are important to the
continued business and operations of the Company.

The 2002 Plan is administered by the Company's Board of Directors.   The
Board of Directors may further delegate administration of the 2002 Plan or
specific administrative duties with respect to the 2002 Plan on such terms and
to such committees of the Board as it deems proper.  The issuance of any
options will be approved as specified by the Company's Board of Directors.

The Board of Directors has initially allocated a total of 300,000 shares of
common stock  to the 2002 Plan.  The number of shares of common stock subject
to, or issued pursuant to, options granted under the 2002 Plan may be increased
or decreased as the Board of Directors deem advisable.  At the time any option
is granted under the terms of the 2002 Plan, the Company will reserve for
issuance the number of shares of supporting common stock subject to such option
until it is exercised or expires.  The Company may reserve either authorized
but unissued shares or issued shares reacquired by the Company.

Each granted option shall have its term established by the Board of Directors,
or their designee, at the time the option is granted but in no event may such
term exceed five (5) years.   Once an option is granted, its term may be
modified only as provided for in the 2002 Plan and under the express written
provisions of the option.

On March 1, 2002, the Company granted an aggregate 280,000 options to purchase
an equivalent number of shares under the 2002 Plan, to three consultants, (Lone
Wolf Business Services, Jamie Spangler and John Dennee) providing various
management and financial consulting services.  These options were exercised
upon grant by the receiving parties as compensation for their respective
services.

<page>F-15

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note M - Stock Options - Continued

2003 Stock Option Plan

On January 29, 2003, the Company filed a Registration Statement on Form S-8 to
register 700,000 shares of common stock to support the 2003 Stock Option Plan
(the "2003 Plan").  Under the 2003 Plan, the Company may grant options, from
time to time, to acquire shares of common stock to employees of the Company or
its subsidiaries.  In addition, at the discretion of the Board of Directors,
options to acquire common stock of the Company may from time to time be granted
under this Plan to other individuals, including consultants or advisors, who
contribute to the success of the Company or its subsidiaries and are not
employees of the Company or its subsidiaries, provided that bona fide services
shall be rendered by consultants and advisors and such services shall not be in
connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market in
the Company's securities.

The purpose of the 2003 Plan is intended to aid the Company in maintaining and
developing a management team, and in attracting new personnel as needed and to
provide such personnel with an incentive to remain employees of the Company, to
use their best efforts to promote the success of the Company's business, and to
provide them with an opportunity to obtain or increase a proprietary interest
in the Company.  It is also designed to permit the Company to reward those
individuals who are not employees of the Company but who management perceives
to have contributed to the success of the Company, or who are important to the
continued business and operations of the Company.

The 2003 Plan is administered by the Company's Board of Directors.   The
Board of Directors may further delegate administration of the 2003 Plan or
specific administrative duties with respect to this Plan on such terms and to
such committees of the Board as it deems proper.  The issuance of any options
will be approved as specified by the Company's Board of Directors.

Initially, the Board of Directors has allocated a total of 1,000,000 shares of
common stock to the 2003 Plan.  The number of shares of common stock subject
to, or issued pursuant to, options granted under the 2003 Plan may be increased
or decreased as the Board of Directors deem advisable.  At the time any option
is granted under the terms of the 2003 Plan, the Company will reserve for
issuance the number of shares of supporting common stock subject to such option
until it is exercised or expires.  The Company may reserve either authorized
but unissued shares or issued shares reacquired by the Company.

Each granted option shall have its term established by the Board of Directors,
or their designee, at the time the option is granted but in no event may such
term exceed five (5) years.   Once an option is granted, its term may be
modified only as provided for in the 2003 Plan and under the express written
provisions of the option.

As of December 31, 2004, no options to acquire common stock under the 2003 Plan
were outstanding.

Other options

On January 15, 2002, the Company granted an aggregate 600,000 fully vested
options to purchase an equivalent number of shares of common stock as follows:
300,000 shares at $3.00 per share and 300,000 shares at $4.00 per share to an
accredited investor in conjunction with the sale of 300,000 shares for gross
proceeds of approximately $45,000.  These options expired without exercise on
March 1, 2005.

On September 3, 2002, the Company issued Randy Zych, the Company's Chairman, a
fully vested three-year option to purchase up to 2,500,000 shares of restricted
common stock at an exercise price of $0.50 per share, exercisable until
September 1, 2005.

On September 3, 2002, the Company issued Charles Foerg, the Company's
President, a fully vested three-year option to purchase up to 1,000,000 shares
of restricted common stock at an exercise price of $0.50 per share, exercisable
until September 1, 2005.

<page>F-16

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note M - Stock Options - Continued

Other options - continued

On June 30, 2004, the Company issued Randy Zych, the Company's Chairman, a
fully vested three-year option to purchase up to 2,500,000 shares of restricted
common stock at an exercise price of $0.50 per share, exercisable until
September 1, 2007.

On June 30, 2004, the Company issued Charles Foerg, the Company's President, a
fully vested three-year option to purchase up to 2,500,000 shares of restricted
common stock at an exercise price of $0.50 per share, exercisable until
September 1, 2007.

The following tables summarize all common stock options granted through
December 31, 2004.

                                                            Weighted average
                                                            price per share
                                                            ----------------
    Options outstanding at January 1, 2003    4,100,000           $0.94
      Issued                                      -                 -
      Exercised                                   -                 -
      Expired/Terminated                          -                 -
                                              ---------
    Options outstanding at December 31, 2003  4,100,000           $0.94
      Issued                                  5,000,000           $0.50
      Exercised                                 -                   -
      Expired/Terminated                        -                   -
                                              ---------
    Options outstanding at December 31, 2004  9,100,000           $0.70
                                              =========

                  Options     Options   Options     Options
                  granted    exercised terminated  outstanding Exercise price
2002 investors    3,100,000   2,500,000    -         600,000   $3.00 - $4.00
2002 officers     3,500,000         -      -       3,500,000   $0.50
2004 officers     5,000,000         -      -       5,000,000   $0.50
                  ---------   ---------  --------  ---------
  Totals         11,600,000   2,500,000    -       9,100,000

The weighted average exercise price of all issued and outstanding options at
December 31, 2004  is approximately $0.70 and all issued and outstanding
options are vested and eligible for exercise.

The weighted-average remaining contractual life of the options outstanding at
December 31, 2004 was 1.73 years.  The exercise prices of the options
outstanding at December 31, 2004 ranged from $0.50 to $4.00 per share.  The
following table summarizes the outstanding options at December 31, 2004:

                                                Weighted-     Weighted-
                                     Weighted-   average       average
                                      average    exercise     exercise
  Range of     Stock     Stock       remaining   price of     price of
  exercise    options   options     contractual   options      options
   prices  outstanding exercisable     life      outstanding outstanding
---------- ----------- -----------   ----------- ----------- -----------
  $0.50      8,500,000  8,500,000       1.84 yrs     $0.50      $0.50
  $3.00        300,000    300,000       0.17 yrs     $3.00      $3.00
  $4.00        300,000    300,000       0.17 yrs     $4.00      $4.00
           ----------- ------------
             9,100,000  9,100,000

<page>F-17

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note M - Stock Options - Continued

In December 2002, FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure".  This statement amends SFAS No. 123
"Accounting for Stock-Based Compensation" and provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation.  This statement also amends the
disclosure requirements of SFAS No. 123 to require more prominent and frequent
disclosures in financial statements about the effects of stock-based
compensation.  The transition guidance and annual disclosure provisions of SFAS
No. 148 are effective for financial statements issued for fiscal years ending
after December 15, 2002.  Effective December 31, 2002, the Company's Board of
Directors, in conjunction with public opinion and SFAS 148, elected to expense
the imputed compensation cost related to stock options granted during Fiscal
2002.

Year ended December 31, 2002
----------------------------
Expected life of the option:  The initial life of the corresponding option,
                              generally three (3) years

Expected volatility in
  the Company's stock price:  500.0%, which was based on fluctuations of the
                              Company's stock price over the past fiscal year.

Expected dividends:           Zero (0.00) based on past performance

Anticipated risk free
   interest rate:             Estimated to be 6.0%.

This calculation resulted in approximately $525,000 being charged to operations
for the year ended December 31, 2002 for stock options issued during the year.

Year ended December 31, 2004
----------------------------
Expected life of the option:  The initial life of the corresponding option, 3
                              years, 2 months.
Expected volatility in
  the Company's stock price:  466.0%, which was based on fluctuations of the
                              Company's stock price over the past fiscal year.

Expected dividends:           Zero (0.00) based on past performance
Anticipated risk free
   interest rate:             Estimated to be 3.0%.

This calculation resulted in approximately $1,700,000 being charged to
operations for the year ended December 31, 2004 for stock options issued during
the year.

The weighted-average fair value of options covering approximately 4,100,000
shares of common stock granted during the year ended December 31, 2002 for
which the exercise price was greater than the market price on the grant date
was $0.40 and the weighted-average exercise price was $0.94.

The weighted-average fair value of options covering approximately 5,000,000
shares of common stock granted during the year ended December 31, 2004 for
which the exercise price was grater than the market price on the grant date was
$0.34 and the weighted-average exercise price was $0.50.

No stock options have been granted at any time where the exercise price was
equal to the market price on the grant date.

<page>F-18

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note M - Stock Options - Continued

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which do not have vesting restrictions and
are fully transferable.  In addition, option valuation models require the input
of highly subjective assumptions, including the expected stock price
volatility.  Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.

Note N - Stock Warrants

In April 2002, the Company in conjunction with the sale of 500,000 shares of
restricted common stock, issued 1,000,000 warrants to purchase one (1) share of
restricted common stock each; 500,000 Class A Warrants to purchase one (1)
share of restricted common stock at a price of $3.00 per share; and 500,000
Class B Warrant to purchase one (1) share of restricted share of common stock
at a price of $4.00 per share, both exercisable until March 1, 2004.

In August 2002, the Company in conjunction with the sale of 500,000 shares of
restricted common stock, issued 1,000,000 warrants to purchase one (1) share of
restricted common stock each; 500,000 Class A Warrants to purchase one (1)
share of restricted common stock at a price of $3.00 per share; and 500,000
Class B Warrant to purchase one (1) share of restricted share of common stock
at a price of $4.00 per share, both exercisable until March 1, 2004.

In September 2002, the Company, in conjunction with the sale of 250,000 shares
of restricted common stock, issued 500,000 warrants to purchase one (1) share
of restricted common stock each; 250,000 Class A Warrants to purchase one (1)
share of restricted common stock at a price of $3.00 per share; and 250,000
Class B Warrant to purchase one (1) share of restricted share of common stock
at a price of $4.00 per share, both exercisable until March 1, 2004.

From November through December 31, 2002, the Company, in conjunction with the
sale of 2,500,000 shares of restricted common stock, issued 2,500,000 Class B
Warrant to purchase one (1) share of restricted share of common stock at a
price of $4.00 per share, both exercisable until March 1, 2004.

On May 27, 2003, the Company, in conjunction with the sale of 200,000 shares of
restricted common stock, issued 400,000 Class B Warrants to purchase one (1)
share of restricted common stock at a price of $4.00 per share, exercisable
until March 1, 2004.

On June 20, 2003, the Company, in conjunction with the sale of 300,000 shares
of restricted common stock, issued 400,000 Class B Warrants to purchase one (1)
share of restricted common stock at a price of $4.00 per share, exercisable
until March 1, 2004.

In October 2003, the Company, in conjunction with various sales of restricted
common stock, issued 2,013,800 warrants to purchase one (1) share of restricted
common stock each; 513,800 Class A Warrants to purchase one (1) share of
restricted common stock at a price of $3.00 per share; and 1,500,000 Class B
Warrant to purchase one (1) share of restricted share of common stock at a
price of $4.00 per share, both exercisable until March 1, 2004.

  (Remainder of this page left blank intentionally)

<page>F-19

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note N - Stock Warrants - Continued

On July 25, 2004, the Company issued 1,000,000 Class D
Warrants to purchase an equivalent number of shares of the Company's common
stock at an exercise price of $3.00 per share, exercisable until August 20,
2006 to Huntleigh Securities acting as trustee for a group of accredited
investors represented by P & L Trading Co., Inc.

On July 9, 2004, the Company issued warrants to purchase an aggregate of up to
1,125,000 shares of the Company's common stock to Laurus Master Fund, Ltd. in
conjunction with a $2,500,000 secured convertible term note due July 9, 2007.
The warrants expire on July 8, 2011. Warrants to purchase 375,000, 375,000 and
375,000 shares of the Company's common stock are each exercisable at $0.30,
$0.36 and $0.42, respectively.

                                       Warrants
                        Warrants    outstanding at
                       originally    December 31,
                        issued             2004    Exercise price

2002 - Series A        2,050,000     2,050,000     $3.00 per share
2002 - Series B        4,150,000     4,150,000     $4.00 per share
                       ---------     ---------
Totals at
   December 31, 2002   6,200,000     6,200,000

2003 - Series A          513,800       513,800     $3.00 per share
2003 - Series B        2,300,000     2,300,000
                       ---------     ---------
Totals at
   December 31, 2003   9,013,000     9,013,000

Issued -
 Trustee warrants      1,000,000     1,000,000     $3.00 per share
 Issued - Note
 Purchaser warrants    1,125,000     1,125,000     $0.30-$0.42 per share
 Expired              (9,013,000)   (9,013,000)
                       ---------     ---------
Totals at
   December 31, 2004   2,125,000     2,125,000
                       =========     =========

Note O - Commitments

Product Development

In January 2000, the Company purchased the rights to a pallet related product
for $1,100 cash.  Additionally, upon successful development of the product and
marketplace acceptance of the product, the Company is obligated to issue 5,000
shares of unregistered,
restricted common stock.

As of December 31, 2003, the Company has completed some initial market demand
studies and remains in the research and development phase on this product.  No
identifiable market demand has been recognized and  no sales have been made.
In September 2003, the Company issued 35,715 shares of restricted, unregistered
stock to complete this transaction to avoid threatened litigation over alleged
non-performance on the part of the Company related to the utilization and
marketing of this product.

In July 2004, the Company issued the additional 5,000 shares to completely
settle this transaction with no further action required by either party.

In the event that the Company can successfully bring this product to market,
the Company will be liable for a royalty payment of approximately $7.50 per
unit sold.

<page>F-20

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note O - Commitments

Executive Compensation

For periods prior to January 1, 2002, the Company's two controlling
shareholders/officers had an informal, unwritten agreement with the Company
whereby they will provided their services to the Company at an annual salary of
$60,000 each, with one-half, or $30,000, to be contributed to the Company as
"additional paid-in capital" and one-half, or $30,000, to be accrued and paid
at a future date when the Company's cash flows will support the repayment.

Effective January 1, 2002, these officers/shareholders have amended their
informal, unwritten agreement whereby the Company will pay each of them an
annual salary of $85,000, to be accrued and paid at a future time when the
Company has the available cash flow to retire the debt.

On September 1, 2002, the Company's Board of Directors ratified an Employment
Agreement (Agreement) with Randy Zych to serve as the Company's Chairman of the
Board and Chief Executive Officer.  The Agreement term was effective as of
September 1, 2002 and expires on the third anniversary date of the Agreement
with an automatic five (5) year extension unless either the Company or Mr. Zych
provides a 180-day written notice not to continue the Agreement. This Agreement
provides Mr. Zych with an initial annual base salary of $125,000 per year,
payable in cash.  Each subsequent year's base salary shall be negotiated
between the Company and Mr. Zych in good faith; however, each subsequent year
shall not be at an amount less than the initial base amount of $125,000.
Further, the Company paid a signing bonus of 500,000 shares of restricted,
unregistered common stock upon execution of this Agreement.

On September 1, 2002, the Company's Board of Directors ratified an Employment
Agreement (Agreement) with Charles Foerg to serve as the Company's President.
The Agreement term was effective as of September 1, 2002 and expires on the
third anniversary date of the Agreement with an automatic five (5) year
extension unless either the Company or the President provides a 180-day written
notice not to continue the Agreement.  This Agreement provides the President
with an initial annual base salary of $125,000 per year, payable in cash.  Each
subsequent year's base salary shall be negotiated between the Company and Mr.
Foerg in good faith; however, each subsequent year shall not be at an amount
less than the initial base amount of $125,000.  Further, the Company paid a
signing bonus of 500,000 shares of restricted, unregistered common stock upon
execution of this Agreement.

As of December 31, 2004 and 2003, respectively, the Company had accrued
approximately $892,000 and $656,000 in earned, but unpaid, officer
compensation.

Building Lease

The Company leases its administrative offices and plant facilities on a long-
term operating lease.  The lease is for a 61 month term from December 1, 2004
through December 31, 2009.  The lease may be extended for two separate three
(3) year periods on terms to be negotiated at the future extension and the
lease requires a 10 month written notice by the Company to the Lessor of its
intent to exercise the renewal option.  The lease requires monthly base rental
payments of approximately $4,200 for the first 37 months, approximately $4,700
for the next 12 months and approximately $5,200 for the final 12 months.
Additionally, the Company is responsible for 100% of all real estate taxes and
assessments on the property, pro rata during the lease term.  Further, the
Company is responsible for the payment of all utility, communication,
maintenance/upkeep and other ancillary services which may be separately metered
or billed at the facility.

  (Remainder of this page left blank intentionally)

<page>F-21

  RPM TECHNOLOGIES, INC.
  NOTES TO FINANCIAL STATEMENTS - CONTINUED

Note O - Commitments

Building Lease - continued

Future maturities of the base rent, as defined, are as follows:

            Year ended
            December 31,    Amount
            ------------    -------
                2005        $50,000
                2006         50,000
                2007         50,000
                2008         56,000
                2009         62,000
                           ---------
              Totals       $268,000


Note P - Related Party Transactions

The Company conducts many executive office functions from the separate personal
offices of Randy Zych, its Chairman and Charles Foerg, its President.  No
formal lease agreement exists for the use of these offices.  During 2004 and
2003, the Company paid the officers an aggregate approximately $70,800 and
$61,900, respectively, for the use of these offices and reimbursement of
Company expenses paid personally on behalf of the Company.

Note Q - Selected Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the years
ended December 31, 2004 and 2003.
<table>
               Quarter ended    Quarter ended   Quarter ended   Quarter ended  Year ended
                  March 31,         June 30,      September 30,  December 31,  December 31,
               -------------    -------------   --------------- -------------- ------------
               <C>              <C>             <C>             <C>            <C>
2004

  Revenues        $477,994         $438,831        $687,763        $586,785     $2,191,373
  Gross profit      67,326           50,842          91,977         118,547        328,692
  Net earnings    (167,789)        (489,523)       (334,906)     (2,316,049)    (3,308,267)
  Basic and fully
  diluted earnings
  per share         $(0.01)          $(0.03)         $(0.02)         $(0.12)        $(0.20)
  Weighted average
    number of shares
    issued and
    outstanding  13,497,156       14,905,387       19,304,008      19,094,947     16,772,811

2003

  Revenues          $95,296         $184,500         $501,692        $710,822     $1,492,310
  Gross profit       14,398           84,213          159,002         184,916        442,529
  Net earnings     (108,199)         (33,849)        (165,207)       (403,763)      (711,018)
  Basic and fully
  diluted earnings
  per share         $(0.01)             nil            $(0.02)        $(0.03)         $(0.06)
  Weighted average
    number of shares
    issued and
    outstanding    9,933,103        9,941,475       10,737,563      13,421,332      11,346,503
</table>
<page>F-22

                               INDEX TO EXHIBITS

Exhibit
Number           Description
-------          -----------
3.1        Certificate of Incorporation of the Registrant, as amended (1)

3.2        Bylaws of the Registrant, as amended (1)

10.1       Employment Agreement dated as of September 1, 2002 between the
           Registrant and Randy Zych (#)(2)

10.2       Employment Agreement dated as of September 1, 2002 between the
           Registrant and Charles Foerg (#)(2)

10.3       Securities Purchase Agreement dated as of July 9, 2004 between the
           Registrant and Laurus Master Fund, Ltd. (3)

10.4       Secured Convertible Term Note dated as of July 9, 2004 issued by the
           Registrant in favor of Laurus Master Fund, Ltd. (3)

10.5       Common Stock Purchase Warrant dated as of July 9, 2004 granted by
           the Registrant to Laurus Master Fund, Ltd. (3)

10.6       Registration Rights Agreement dated as of July 9, 2004 between the
           Registrant and Laurus Master Fund, Ltd. (3)

10.7       Master Security Agreement dated as of July 9, 2004 between the
           Registrant and Laurus Master Fund, Ltd. (3)

10.8      Restricted Account Agreement dated as of July 8, 2004 by and among
          the Registrant, North Fork Bank and Laurus Master Fund, Ltd. (3)

10.9      Letter Agreement dated July 9, 2004 between the Registrant and
          Laurus Master Fund, Ltd. regarding restricted account at North Fork
          Bank. (3)

10.10     Subordination Agreement dated as of July 8, 2004 by and among Randy
          Zych, Charles Foerg and Laurus Master Fund, Ltd. (3)

31.1    Certification pursuant to Section 302 of Sarbanes-
        Oxley Act of 2002 - Chief Executive Officer and
        Chief Financial Officer.

32.1    Certification pursuant to Section 906 of Sarbanes-
        Oxley Act of 2002.
----------------------------
(#)     Management contract or compensatory plan, contract or arrangement
        required to be filed as an exhibit.
(1)     Filed as an exhibit to the Registrant's Form 10 filed with the
        Securities and Exchange Commission on August 24, 2001  (Registration
        No. 000-31291) and incorporated herein by reference.
(2)     Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB
        filed with the Securities and Exchange Commission on March 31, 2003
        (File No. 000-31291) and incorporated herein by reference.
(3)     Filed as an exhibit to the Registrant's Current Report on Form 8-K filed
        with the Securities and Exchange Commission on August 12, 2004 (File No.
        000- 31291) and incorporated herein by reference.

<page>34

                             SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized as of the 18th day of May, 2005.



                                          RPM TECHNOLOGIES, INC.

                                          By:     /S/ RANDY ZYCH
                                                  ----------------------------
                                                  Randy Zych
                                                  Chief Executive Officer
                                                  (Principal Executive Officer)
                                                  and Chairman of the Board

    In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and as
of the dates indicated.

Name                         Title                          Date


/S/ RANDY ZYCH          Chairman of the Board and       May 18, 2005
------------------      Chief Executive Officer
Randy Zych              (principal executive officer)

/S/ CHARLES FOERG       President, Secretary/
------------------      Treasurer and Director          May 18, 2005
Charles Foerg


/S/ DAVID LADE          Chief Financial Officer,        May 18, 2005
------------------      (principal financial and
David Lade              accounting officer) Controller
                        and Director


<page>35

                  EXHIBITS

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

31.1             Certification pursuant to Section 302 of Sarbanes-
                 Oxley Act of 2002 - Chief Executive Officer and
                 Chief Financial Officer.

32.1             Certification pursuant to Section 906 of Sarbanes-
                 Oxley Act of 2002.





<page>36