UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-QSB

QUARTERLY REPORT UNDER
SECTION 13 OR 15(f) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 2004





Commission file number
333-62588





First National Power
Corporation

264 H Street, Suite A

Blaine, WA 98230

(604) 702-5604





IRS TAX ID #
66-0349372

State of
Incorporation: Delaware





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] [ ]



As of June 30, 2004, there were
75,404 shares issued and outstanding of the issuer's common stock.



PART I: FINANCIAL
INFORMATION







Item 1. Financial Statements:





---





(Formerly Capstone International Corporation)

(A Development Stage Company)



JUNE 30, 2004

(Amounts expressed in US Dollars)

(Unaudited)





---



FIRST NATIONAL POWER CORPORATION

(Formerly Capstone International Corporation)

(A Development Stage Company)



JUNE 30, 2004

(Amounts expressed in US Dollars)

(Unaudited)



TABLE OF CONTENTS





Interim Balance Sheets as of June 30,
2004 and December 31, 2003                                        
1





Interim Statements of
Operations for the three month period ended

June 30, 2004 and June 30, 2003                                                                                         
2





Interim Statements of
Operations for the six month period ended

June 30, 2004 and June 30, 2003                                                                                         
3





Interim Statements of
Cash Flows for the six month period ended

June 30, 2004 and June 30, 2003                                                                                         
4





Interim Statements of
Changes in Stockholders' Deficiency for the

six month period ended June 30, 2004 and the year ended

December 31, 2003                                                                                                             
5





Condensed Notes to
Interim Financial Statements                                                                     
6



---







FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Interim Balance Sheets

As of June 30, 2004 and December 31,
2003

(Amounts expressed in US Dollars)

(Unaudited)







|                                                  |                                              | June 30, |           | December 31,
|------------------------------------------------- | -------------------------------------------- | -------- | --------- | ------------
|                                                  |                                              | 2004     |           | 2003        
|                                                  |                                              | $        |           | $           
|ASSETS                                            |                                              |          |          
|CURRENT ASSETS                                    |                                              |          |          
|                                                  |                                              |          |           |             
|                                                  | Cash                                         | 16       |           | -           
|                                                  | Prepaid expenses and deposits                | 29,206   |           | -           
|                                                  |                                              |          |           |             
|                                                  |                                              | 29,222   |           | -           
|LIABILITIES                                       |                                              |          |          
|CURRENT LIABILITIES                               |                                              |          |          
|                                                  | Accounts payable
    and accrued liabilities | 44,763   |           | 7,866       
|                                                  | Loans from
    shareholders                  | 43,394   |           | 43,394      
|                                                  |                                              |          |           |             
|                                                  |                                              | 88,157   |           | 51,260      
|STOCKHOLDERS' DEFICIENCY                          |                                              |          |          
|                                                  |                                              |          |           |             
|CAPITAL STOCK                                     | 75,404                                       |          | 10,768   
|                                                  |                                              |          |          
|CAPITAL STOCK SUBSCRIBED                          | 93                                           |          | -        
|                                                  |                                              |          |          
|ADDITIONAL PAID-IN-CAPITAL                        | 102,841                                      |          | 96,186   
|                                                  |                                              |          |          
|DEFICIT, ACCUMULATED DURING THE DEVELOPMENT STAGE | (237,273)                                    |          | (158,214)
|                                                  | (58,935)                                     |          | (51,260) 
|                                                  | 29,222                                       |          | -        







See condensed notes to
the interim financial statements.







APPROVED ON BEHALF OF
THE BOARD





/s/ Darryl
Mills  Director









/s/ Pete
Wanner  Director



1

---



FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Interim Statements of Operations

For the three month periods ended
June 30, 2004 and June 30, 2003

(Amounts expressed in US Dollars)

(Unaudited)



|                                           |                                     | Three months |            | Three months
|------------------------------------------ | ----------------------------------- | ------------ | ---------- | ------------
|                                           |                                     | ended        |            | ended       
|                                           |                                     | June 30,     |            | June 30,    
|                                           |                                     | 2004         |            | 2003        
|                                           |                                     | $            |            | $           
|                                           |                                     |              |            |             
|                                          
|OPERATING EXPENSES                         |                                     |              |           
|                                           |                                     |              |            |             
|                                           | General and administrative expenses | 20,179       |            | 8,044       
|                                           | Interest                            | 5            |            | 14          
|                                           |                                     | 20,184       |            | 8,058       
|                                           |                                     |              |            |             
|NET LOSS                                   | (20,184)                            |              | (8,058)   
|                                          
|Net loss per share, basic and diluted      | (0.00)                              |              | (0.00)    
|Weighted average common shares outstanding | 75,403,760                          |              | 10,587,680



















See condensed notes to
the interim financial statements.











2

---

FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Interim
Statements of Operations

For the six month periods ended June
30, 2004 and June 30, 2003

(Amounts expressed in US Dollars)

(Unaudited)



|                                           |                                     |           |            |            | Six months |            | Six months  
|------------------------------------------ | ----------------------------------- | --------- | ---------- | ---------- | ---------- | ---------- | ------------
|                                           |                                     |           | Cumulative |            | ended      |            | ended       
|                                           |                                     |           | since      |            | June 30,   |            | June
    30,
|                                           |                                     |           | inception  |            | 2004       |            | 2003        
|                                           |                                     |           | $          |            | $          |            | $           
|OPERATING EXPENSES                         |                                     |           |            |            |            |           
|                                           |                                     |           |            |            |            |            |             
|                                           | General and administrative expenses |           | 234,790    |            | 78,997     |            | 13,525      
|                                           | Long-term debt interest             |           | 2,483      |            | 62         |            | 574         
|                                           |                                     |           | 237,273    |            | 79,059     |            | 14,099      
|NET LOSS                                   |                                     | (237,273) |            | (79,059)   |            | (14,099)  
|Net loss per share, basic and diluted      |                                     |           |            | (0.00)     |            | (0.00)    
|Weighted average common shares outstanding |                                     |           |            | 75,393,427 |            | 10,567,680







































See condensed notes to
the interim financial statements.









3

---

FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Interim Statements of Cash Flows

For the six month periods ended June
30, 2004 and June 30, 2003

(Amounts expressed in US Dollars)

(Unaudited)



|                                     |                                               |                                         |            |          | Six months |          | Six months
|------------------------------------ | --------------------------------------------- | --------------------------------------- | ---------- | -------- | ---------- | -------- | ----------
|                                     |                                               |                                         | Cumulative |          | ended      |          | ended     
|                                     |                                               |                                         | since      |          | June 30,   |          | June 30,  
|                                     |                                               |                                         | inception  |          | 2004       |          | 2003      
|                                     |                                               |                                         | $          |          | $          |          | $         
|CASH FLOWS FROM OPERATING ACTIVITIES |                                               |                                         |            |          |           
|                                     | Net loss                                      | (237,273)                               |            | (79,059) |            | (14,099)
|                                     | Adjustments for
    items not affecting cash  |                                         |            |          |            |         
|                                     |                                               | Shares issued for services rendered     | 15,900     |          | 15,900     |          | -         
|                                     |                                               | (Increase) decrease in prepaid expenses | (29,206)   |          | (29,206)   |          | -         
|                                     |                                               | Increase (decrease) in accounts payable |            |          |            |          |           
|                                     |                                               | and accrued liabilities                 | 44,763     |          | 36,897     |          | (19,707)  
|                                     |                                               | Loans from Shareholders                 | 43,394     |          | -          |          | 33,806    
|                                     | Net cash used in
    operating activities     | 162,422                                 |            | (55,468) |            | -       
|CASH FLOWS FROM FINANCING ACTIVITIES |                                               |                                         |            |          |           
|                                     | Proceeds from
    capital stock subscriptions | 162,438                                 |            | 55,484   |            | -       
|                                     | Net cash provided
    by financing activities | 162,438                                 |            | 55,484   |            | -       
|NET DECREASE IN CASH                 | 16                                            |                                         | 16         |          | -         
|                                     | Cash, beginning of period                     | -                                       |            | -        |            | -       
|CASH, END OF PERIOD                  | 16                                            |                                         | 16         |          | -         
|INCOME TAXES PAID                    | -                                             |                                         | -          |          | -         
|INTEREST PAID                        | 2,483                                         |                                         | 62         |          | -         



See condensed notes to
the interim financial statements.







4

---

FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Interim
Statements of Changes in Stockholders' Deficiency

For the six months period ended June
30, 2004 and the year ended December 31, 2003

(Amounts expressed in US Dollars)

(Unaudited)



|                                |                                     |        |            | Common     |    |            |         | Additional |           | Deficit,   
|------------------------------- | ----------------------------------- | ------ | ---------- | ---------- | -- | ---------- | ------- | ---------- | --------- | -----------
|                                |                                     | Common |            | Stock      |    | Common     |         | Paid-In    |           | accumulated
|                                |                                     | Stock  |            | Number of  |    | Stock      |         | Capital    |           | during the 
|                                |                                     | Amount |            | Shares     |    | Subscribed |         | (Discount) |           | development
|                               
|                                |                                     | $      |            |            |    | $          |         | $          |           | $          
|                               
|Balance as of December 31, 2002 | 2,114                               |        | 2,113,536  |            | -  |            | 24,840  |            | (50,969) 
|                               
|                                | Stock split 5:1                     | 8,454  |            | 8,454,144  |    | -          |         | (8,454)    |           | -          
|                                | Shares issued for services rendered | 200    |            | 200,000    |    | -          |         | 79,800     |           | -          
|                                | Net loss for the year               | -      |            | -          |    | -          |         | -          |           | (107,245)  
|                               
|Balance as of December 31, 2003 | 10,768                              |        | 10,767,680 |            | -  |            | 96,186  |            | (158,214)
|                               
|                                | Stock split 7:1                     | 64,606 |            | 64,606,080 |    | -          |         | (64,606)   |           | -          
|                                | Shares issued for services rendered | 30     |            | 30,000     |    | -          |         | 15,870     |           | -          
|                                | Shares subscribed                   | -      |            | -          |    | 93         |         | 55,391     |           |            
|                                | Net loss for the period             | -      |            | -          |    | -          |         | -          |           | (79,059)   
|                               
|Balance as of June 30, 2004     | 75,404                              |        | 75,403,760 |            | 93 |            | 102,841 |            | (237,273)





























See condensed notes to the interim
financial statements.









5

---



FIRST NATIONAL POWER
CORPORATION

(Formerly Capstone
International Corporation)

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2004

(Amounts expressed in US Dollars)

(Unaudited)





> 1.         
>   NOTES TO INTERIM FINANCIAL STATEMENTS

The accompanying
    unaudited interim financial statements have been prepared in accordance with
    the instructions to Form 10-Q and do not include all the information and
    footnotes required by generally accepted accounting principles for complete
    financial statements. In the opinion of management, all adjustments
    (consisting of all recurring accruals) considered necessary for fair
    presentation) have been included. Operating results for the interim periods
    are not necessarily indicative of the results that may be expected for the
    year ended December 31, 2004. Interim financial statements should be read in
    conjunction with the Company's annual audited financial statements.





> 2.         
>   GENERAL

The Company was
    incorporated on November 16, 2000 under the laws of the State of Delaware.
    The business purpose of the Company was to acquire funeral facilities and
    the selling of prepaid funeral programs. In January of 2004 the Company
    changed its business purpose to provision of wind-driven solutions to power
    generation requirements.



On January 19,
    2003 the Company changed its name to First National Power Corporation.





> 3.        
>   GOING CONCERN



The Company's
    financial statements are prepared using accounting principles generally
    accepted in the United States of America and applicable to a going concern,
    which contemplates the realization of assets and liquidation of liabilities
    in the animal course of business. However, the Company has not generated any
    revenues from its planned principal operations through June 30, 2004.
    Without realization of additional capital, it would be unlikely for the
    Company to continue as a going concern.





> 4.        
>   STOCK SUBSCRIPTION AGREEMENTS



The company has
    executed subscription agreements to sell 136,000 shares of its common stock
    at a price or $.50 per share, a total of $68,000. As of June 30, 2004,
    $55,484 has been received by the Company.



> 5.        
>   AGREEMENT TO FORM SUBSIDIARY



On July 26, 2004,
    the company agreed with a Western European investor group, to establish a
    subsidiary that would hold the licenses to the Green Oasis and the Propless
    Wind Power Generation projects and that they would sell 15% of the
    Subsidiary to the investor group for $1 million. As at the date of the
    release of these statements, the promised funds had not arrived.





6

---





Item 2: Management's Discussion and
Analysis:



On May 1, 2004, Mr. Kevin Murphy resigned as President and CEO of the Company
and was replaced by Mr. Darryl Mills. Mr. Mills is joined by Mr. Peter Wanner as
Treasurer and CFO, and Mr. Christopher Pennell as Secretary.

The company is continuing its review and exploration of opportunities in the
power generation and utilities industry. As previously announced, First National
has a number of projects in various stages of development: the Prop-less Wind
Powered Generator currently under development by way of a proprietary contract
with world-renown inventor Alvin Snaper and his team at Impactive Technology of
Las Vegas Nevada; the Green Oasis Project with inventor Chaz Haba of Lithium
House in California; and several biomass power generation projects, one in the
North Eastern United States and one in the Caribbean area.

Management intends to continue to work closely with each of these projects,
provide encouragement and support and to make timely and efficient strategic
choices when it comes to resource allocation. We are currently completing a
management audit that will determine a strategic timetable. Once this has been
determined, we will be better able to focus our attention and resources where
best spent. Management completed a trip to Las Vegas in May where the progress
of the Snaper Project was reviewed. The Green Oasis Project is currently being
reviewed and further details of our plans for that project are expected to be
released soon.

As mentioned previously, First National is in the midst of discussions
concerning two biomass power generation projects, one in the North Eastern
United States and one in the Caribbean region. The US project is an existing
privately held facility with all necessary licensing and permits in place. We
are in negotiations to purchase the land and facility.

The final project is a new project. We are in preliminary discussions with
the national government in that jurisdiction and have a meeting planned with
them later this year. While this project is only in its infancy, we are very
encouraged by the progress of the discussions.

We recently reached an agreement with a Western European group to purchase
15% of the shares of a soon-to-be-formed subsidiary company that will develop
one or more specific projects. That agreement is worth $1,000,000 to FNPR. We
are advised that the investor group has transferred funds and we expect arrival
of the funds any day.

Item 3. Effectiveness of the registrant's disclosure controls and procedures

Within the 90-day period prior to the filing of this report, the Company
carried out an evaluation of the effectiveness of the Company's disclosure
controls and procedures (as defined by Rule 13a-14(c) under the Securities
Exchange Act of 1934) under the supervision and with the participation of the
Company's chief executive officer and chief financial officer. Based on and as
of the date of such evaluation, the aforementioned officers have concluded that
the Company's disclosure controls and procedures were effective.

The Company also maintains a system of internal accounting controls that is
designed to provide assurance that assets are safeguarded and that transactions
are executed in accordance with management's authorization and properly
recorded. This system is continually reviewed and is augmented by written
policies and procedures, the careful selection and training of qualified
personnel and an internal audit program to monitor its effectiveness. During the
second quarter of fiscal year 2004, there were no significant changes to this
system of internal controls or in other factors that could significantly affect
those controls.

---



PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Exhibits:

|Exhibit No. | Document                                  | Location        
|----------- | ----------------------------------------- | ----------------
|3.1         | Articles of
    Incorporation             | Previously Filed
|3.2         | Bylaws                                    | Previously Filed
|31          | Rule
    13a-41(a)/15d-14(a) Certificates | Included        
|32          | Section 1350
    Certifications           | Included        

Reports on Form 8-K

On May 6, 2004, the Company filed a
Current Report on Form 8-K announcing the resignation of a director and officer,
and the appointment of a new director and officer.



On August 19, 2004, the Company filed a
Current Report on Form 8-K announcing a change in the Company's independent
auditors.



SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

FIRST NATIONAL POWER CORPORATION

DATE: August 23, 2004



/s/ Darryl Mills

Darryl Mills

President and duly authorized officer



/s/ Peter Wanner

Peter Wanner

Chief Financial Officer



---