UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2003

Commission file number 000-27853



SUN POWER CORPORATION(Exact name of registrant as specified in its charter)

|Nevada                                   | 86-0913555            
|---------------------------------------- | ----------------------
|(State or other jurisdiction of          | (I.R.S. Employer      
|incorporation or organization)           | Identification Number)
|                                        
|414 Viewcrest Road                      
|Kelowna, British Columbia, Canada        | V1W 4J8               
|(Address of Principal Executive Offices) | (Zip Code)            

(800) 537-4099(Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the last 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  X     
No ____

The number of shares of Common Stock, $0.001 par value,
outstanding on August 14, 2003, was 32,681,000 shares, held by approximately 75
shareholders.

Transitional Small Business Disclosure Format (check one):

Yes       
No __X__

---

ITEM 1. FINANCIAL STATEMENTS

Item 1. Financial Statements.

Sun Power Corporation

(A Development Stage Enterprise)

Consolidated Balance Sheets

(Expressed in United States dollars)



|                                                                                  | June 30, 2003                 | December 31, 2002                 
|--------------------------------------------------------------------------------- | ----------------------------- | ----------------------------------
|                                                                                  |                               |                                   
|Assets                                                                            |                               |                                   
|                                                                                  |                               |                                   
|Current assets:                                                                   |                               |                                   
|Cash                                                                              | $                    
      - | $                      
      14  
|Accounts receivable and other                                                     | 100                           | 100                               
|Prepaids and deposits                                                             | 25,000                        | 8,009                             
|Total current assets                                                              | 25,100                        | 8,123                             
|                                                                                  |                               |                                   
|Investment                                                                        | 1                             | 1                                 
|                                                                                  |                               |                                   
|Fixed assets (note 3)                                                             | 16,000                        | 17,644                            
|                                                                                  |                               |                                   
|Deferred financing costs                                                          | -                             | 17,433                            
|Total assets                                                                      | $           
      41,101     | $                
      43,201    
|                                                                                  |                               |                                   
|Liabilities and Stockholders' Deficiency                                          |                               |                                   
|Current liabilities:                                                              |                               |                                   
|Bank indebtedness                                                                 | $            
      2,475     | $                         
      -
|Accounts payable                                                                  | 302,264                       | 228,604                           
|Accrued liabilities                                                               | -                             | 10,000                            
|Accrued mine acquisition costs (note 1)                                           | 259,957                       | -                                 
|Promissory notes                                                                  | 118,700                       | 30,000                            
|Loans from related party                                                          | 312,723                       | 145,722                           
|                                                                                  | 996,119                       | 414,326                           
|                                                                                  |                               |                                   
|Accounts payable to be settled by common shares (note 5(c))                       | 450,054                       | 450,054                           
|                                                                                  |                               |                                   
|Loans from related party to be settled by common shares (note 4)                  | 1,350,050                     | 1,350,050                         
|                                                                                  |                               |                                   
|Stockholders' deficiency:                                                         |                               |                                   
|Capital stock (note 5):                                                           |                               |                                   
|Authorized:                                                                       |                               |                                   
|100,000,000 common shares with a par value of $0.01                               |                               |                                   
|25,000,000 preference shares with a par value of $0.01                            |                               |                                   
|Issued:                                                                           |                               |                                   
|32,681,000 common shares (2002 - 31,681,000)                                      | 566,810                       | 316,810                           
|1,554,562 preference shares                                                       | 1,554,562                     | 1,554,562                         
|Issuable common shares                                                            | -                             | 250,000                           
|Reserved for issuance: 100,000 shares (December 31, 2002 - nil) (note
      5(d)) | 25,000                        | -                                 
|Additional paid-in capital (note 5(a))                                            | 1,135,857                     | 1,135,857                         
|Deficit accumulated during the development stage                                  | (6,037,351)                   | (5,428,458)                       
|Total
      stockholders' deficiency                                              | (2,755,122)                   | (2,171,229)                       
|Total liabilities and
      stockholders' deficiency                              | $ 41,101                      | $ 43,201                          

Future operations (note 1(a))
Commitments (note 7)



See accompanying notes to interim consolidated financial
statements.

2

---

Sun Power Corporation

(A Development Stage Enterprise)

Consolidated Statements of Operations and Deficit

(Unaudited)

(Expressed in United States dollars)



|                                                                      | Three month period ended June 30, 2003 | Three month period ended June 30, 2002 | Six month period ended June 30, 2003 | Six month period ended June 30, 2002 | Period from inception on November 24, 1994 to June 30,
      2003
|--------------------------------------------------------------------- | -------------------------------------- | -------------------------------------- | ------------------------------------ | ------------------------------------ | -----------------------------------------------------------------
|Revenue                                                               | $                       
      -       | $                     
      223       | $                         
      -   | $                     
      223     | $               
      88,357                                    
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Expenses:                                                             |                                        |                                        |                                      |                                      |                                                                  
|Consulting fees                                                       | 101,499                                | 160,400                                | 137,366                              | 424,149                              | 2,012,717                                                        
|Professional fees                                                     | 46,773                                 | 88,238                                 | 68,367                               | 184,372                              | 637,017                                                          
|Product research and development costs                                | 113,568                                | 151,322                                | 142,054                              | 247,163                              | 1,077,479                                                        
|Administrative and other expenses                                     | 55,625                                 | 183,136                                | 107,968                              | 259,377                              | 959,788                                                          
|Interest                                                              | 72,561                                 | 64,500                                 | 151,494                              | 120,800                              | 449,356                                                          
|Mineral property option                                               | -                                      | -                                      | -                                    | -                                    | 250,000                                                          
|Amortization                                                          | 822                                    | 2,558                                  | 1,644                                | 6,170                                | 22,300                                                           
|                                                                      | 390,848                                | 650,154                                | 608,893                              | 1,242,031                            | 5,408,657                                                        
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Loss before undernoted                                                | (390,848)                              | (649,931)                              | (608,893)                            | (1,241,808)                          | (5,320,300)                                                      
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Loss on disposal of Camden-Agro Systems Inc.                          | -                                      | -                                      | -                                    | -                                    | (244,536)                                                        
|Gain on disposal of Renewable Energy Corp.                            | -                                      | -                                      | -                                    | -                                    | 162,900                                                          
|Gain on disposal of Sunspring, Inc.                                   | -                                      | -                                      | -                                    | -                                    | 62,494                                                           
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Loss for the period                                                   | (390,848)                              | (649,931)                              | (608,893)                            | (1,241,808)                          | (5,339,442)                                                      
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Deficit accumulated during the development stage, beginning of period | (5,436,809)                            | (3,968,978)                            | (5,218,764)                          | (3,167,407)                          | -                                                                
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Charge to deficit                                                     | -                                      | -                                      | -                                    | -                                    | (488,215)                                                        
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Deemed dividends on preferred stock                                   | (209,694)                              | -                                      | (209,694)                            | (209,694)                            | (209,694)                                                        
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Deficit, accumulated during the development stage, end of period      | $      
      (6,037,351)              | $         
      (4,618,909)           | $         
      (6,037,351)         | $         
      (4,618,909)         | $        
      (6,037,351)                                      
|                                                                      |                                        |                                        |                                      |                                      |                                                                  
|Basic and diluted loss per share                                      | $               
      (0.01)          | $                  
      (0.02)       | $                  
      (0.02)     | $                  
      (0.04)     | $                 
      (0.22)                                  
|Weighted average number of shares outstanding                         | 32,681,000                             | 31,581,000                             | 32,514,333                           | 31,571,193                           | 24,782,652                                                       

See accompanying notes to interim consolidated financial
statements.

3

---

Sun Power Corporation

(A Development Stage Enterprise)

Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in United States dollars)



|                                                                                   | Six month period ended June 30, 2003 | Six month period ended June 30, 2002 | Period from inception on November 24, 1994 to June 30,
      2003
|---------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------ | -----------------------------------------------------------------
|                                                                                   |                                      |                                      |                                                                  
|Cash flows from (used in) operating activities:                                    |                                      |                                      |                                                                  
|Loss for the period                                                                | $      
      (608,893)              | $       
      (1,241,808)           | $     
      (5,339,442)                                         
|Items not involving the use of cash:                                               |                                      |                                      |                                                                  
|Amortization                                                                       | 1,644                                | 6,170                                | 22,300                                                           
|Stock based compensation                                                           | -                                    | 158,848                              | 826,726                                                          
|Shares issued as a financing fee                                                   | -                                    | -                                    | 5,000                                                            
|Shares issued for settlement of accounts payable                                   | 25,000                               | -                                    | 25,000                                                           
|Mineral property option payment                                                    | -                                    | -                                    | 250,000                                                          
|Loss on disposal of Camden-Agro Systems Inc.                                       | -                                    | -                                    | 244,536                                                          
|Gain on disposal of Renewable Energy Corp.                                         | -                                    | -                                    | (162,900)                                                        
|Gain on disposal of Sunspring, Inc.                                                | -                                    | -                                    | (62,494)                                                         
|Amortization of deferred financing costs                                           | 17,433                               | 39,333                               | 112,766                                                          
|Changes in non-cash operating working capital:                                     |                                      |                                      |                                                                  
|Accounts receivable and other                                                      | -                                    | 25,000                               | 9,093                                                            
|Prepaids and deposits                                                              | (16,991)                             | (8,723)                              | (25,000)                                                         
|Accounts payable and accrued liabilities                                           | 323,617                              | 210,982                              | 1,143,875                                                        
|                                                                                   | (258,190)                            | (810,198)                            | (2,950,540)                                                      
|                                                                                   |                                      |                                      |                                                                  
|Investments:                                                                       |                                      |                                      |                                                                  
|Capital expenditures                                                               | -                                    | (43,115)                             | (47,341)                                                         
|Cash on disposal of Camden-Agro Systems Inc.                                       | -                                    | -                                    | (208)                                                            
|Cash of acquired business                                                          | -                                    | -                                    | 107,568                                                          
|Reduction in cash on disposal of Sunspring, Inc.                                   | -                                    | -                                    | (5,854)                                                          
|Reduction in cash on disposal of Renewable Energy Corp.                            | -                                    | -                                    | (7,001)                                                          
|Advances to Sunspring Inc. and Renewable Energy Corp. prior to
        acquisition | -                                    | -                                    | (175,000)                                                        
|                                                                                   | -                                    | (43,115)                             | (127,836)                                                        
|                                                                                   |                                      |                                      |                                                                  
|Financing:                                                                         |                                      |                                      |                                                                  
|Bank indebtedness                                                                  | 2,475                                | -                                    | 2,475                                                            
|Promissory notes                                                                   | 88,700                               | 27,000                               | 118,700                                                          
|Issuance of common shares for cash                                                 | -                                    | -                                    | 100,657                                                          
|Loans (including accrued interest)                                                 | 167,001                              | 624,966                              | 2,837,112                                                        
|                                                                                   | 258,176                              | 651,966                              | 3,058,944                                                        
|                                                                                   |                                      |                                      |                                                                  
|Effect of exchange rate changes on foreign currency cash balances                  | -                                    | -                                    | 19,432                                                           
|                                                                                   |                                      |                                      |                                                                  
|Decrease (decrease) in cash                                                        | (14)                                 | (201,347)                            | -                                                                
|                                                                                   |                                      |                                      |                                                                  
|Cash, beginning of period                                                          | 14                                   | 217,830                              | -                                                                
|                                                                                   |                                      |                                      |                                                                  
|Cash, end of period                                                                | $                    
      -        | $               
      16,483        | $                      
      -                                  
|                                                                                  
|Cash is defined as cash less bank indebtedness.                                   



4

---

Sun Power Corporation

(A Development Stage Enterprise)

Consolidated Statements of Cash Flows, Continued

(Unaudited)

(Expressed in United States dollars)



|                                           | Six month period ended June 30, 2003 | Six month period ended June 30, 2002 | Period from inception on November 24, 1994 to June
      30,2003
|------------------------------------------ | ------------------------------------ | ------------------------------------ | ----------------------------------------------------------------
|Supplementary information:                 |                                      |                                      |                                                                 
|Interest paid                              | $                    
      -        | $                        
      -    | $                      
      -                                 
|Income taxes paid                          | -                                    | -                                    | -                                                               
|Non-cash transactions:                     |                                      |                                      |                                                                 
|Issuance of common shares:                 |                                      |                                      |                                                                 
|For investment in Camden Agro-Systems Inc. | -                                    | -                                    | 270,590                                                         
|As a financing fee                         | -                                    | 112,766                              | 117,766                                                         
|On acquisition of Sunspring                | -                                    | -                                    | 20,000                                                          
|On acquisition of Renewable Energy Corp.   | -                                    | 158,848                              | 20,000                                                          
|For settlement of accounts payable         | 25,000                               | -                                    | 25,000                                                          
|Stock-based compensation                   | -                                    | -                                    | 786,263                                                         
|Issuance of preference shares:             |                                      |                                      |                                                                 
|On acquisition of Sunspring Inc.           | -                                    | -                                    | 80,000                                                          
|On acquisition of Renewable Energy Corp.   | -                                    | 1,554,562                            | 80,000                                                          
|Fore retirement of debt                    | -                                    | 209,694                              | 1,554,562                                                       
|Deemed dividends on preferred shares       | -                                    | -                                    | 209,694                                                         

See accompanying notes to interim consolidated financial
statements.

5

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

1.                
Nature and continuance of operations:

> Sun Power Corporation (the "Company") was
>     incorporated pursuant to the laws of the State of Nevada on August 20, 1996.
>     It is listed on the National Association of Securities Dealers
>     Over-The-Counter Bulletin Board under the symbol "SNPW". Effective
>     December 31, 2001, the Company held a 100% interest in Sunspring, Inc.
>     ("Sunspring") and Renewable Energy Corp. ("REC").
>     On November 20, 2002, Solar Energy Limited exercised
>     their right to exchange their 8,000,000 shares of the Company's Series A
>     Preferred Stock for the return of all of the issued and outstanding shares
>     of Sunspring. Concurrently, Renewable Energy Limited exercised their right
>     to exchange their 8,000,000 shares of the Company's Series B Preferred
>     Stock for the return of all of the issued and outstanding shares of REC. As
>     a result, on December 6, 2002 and effective as of December 30, 2002, the
>     Company exchanged all of the shares of Sunspring and REC for all of its
>     issued and outstanding Series A and Series B preferred stock.
>     On December 16, 2002, the Company executed an Agreement
>     (the "Agreement") with Securities Trading Services Inc.
>     ("STS") in which STS agreed to assign to the Company its rights to
>     purchase the shares of Minera Real de Cosala SA de CV ("Minera
>     Real"), a Mexican company that holds title to certain mining claims and
>     related assets, as well as certain real property owned by one of the
>     shareholders of Minera Real and a family member (collectively "the
>     Property") located in Sinaloa, Mexico.
>     The terms of the Assignment of Purchase Option Agreement
>     require the Company to pay within ten days after the execution of the
>     Agreement the sum of $250,000, payable in 1,000,000 restricted common shares
>     at a deemed value of $0.25 per common share. These shares had not been
>     issued at December 31, 2002 but were issued in February 2003 and are
>     reflected as issued common shares in stockholders' deficiency at June 30,
>     2003. In the event that the Company exercises the option to purchase, it
>     will then be required to pay to STS an additional sum of $750,000 payable in
>     3,000,000 restricted common shares. The securities issued pursuant to the
>     terms of the agreement are restricted securities but the Company has agreed
>     to register such shares with the Securities and Exchange Commission in the
>     United States not later than six months from the closing date of the
>     acquisition. In the event that the Company fails to meet this provision, it
>     will be required to issue an additional one percent of the total number of
>     securities issued to STS under the agreement, for each month that it is in
>     breach of the registration provisions.

6

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

> The terms of the Purchase Option Agreement (the
>     "Agreement") between STS and the vendors dated November 27, 2002
>     grant to the holder of the option (which is now the Company) the right to
>     acquire all right, title and interest in the Property by way of the
>     acquisition of 100% of the issued and outstanding shares of the vendor,
>     which owns outright all of the surface and underground equipment, together
>     with the mill and related buildings and all interests in the land and
>     improvements which are owned by one of the shareholders of Minera Real and a
>     family member, for the sum of $5,000,000 less current and long-term
>     liabilities. The option is exercisable at any time during the period
>     expiring March 27, 2003, although the Company, as the holder of the option,
>     has the right to extend the option period by two successive 30-day periods.
>     The Company has agreed to pay all taxes pertaining to the Property as they
>     become due and payable during the period that the option remains in effect,
>     such amount not to exceed $25,000.
>     Completion of this acquisition is subject to the
>     satisfactory completion of due diligence and financing.
> (a)               
> Future operations:

> These consolidated financial statements have been
>         prepared on the basis of a going concern, which contemplates the
>         realization of assets and the satisfaction of liabilities in the normal
>         course of business. The Company has suffered recurring losses and has
>         not generated profitable operations since inception. In addition, at
>         June 30, 2003, the Company has a working capital deficiency of $971,019
>         and a stockholders' deficiency of $2,755,122.
>         The continuance of the Company as a going concern is
>         dependent on the continued forebearance of its creditors, obtaining
>         financing for continued operations and the attainment of profitable
>         operations. Management is in the process of identifying sources for
>         additional financing to fund the ongoing development of the Company's
>         business.
>         The Company's future capital requirements will
>         depend on many factors, including costs of completion of the acquisition
>         of the Property, cash flow from operations, costs to complete an
>         expansion of mine production and the mill throughput, and competition
>         and global market conditions. The Company's recurring operation losses
>         and growing working capital needs will require that it obtain additional
>         capital to operate its business before the new businesses generates
>         significant revenue. The Company does not have sufficient funds on hand
>         to complete the acquisition of the Property, however it has proposed to
>         issue a $10 million dollar bond offering to acquire 100% ownership of
>         the silver-copper mine, upgrade the existing mill and provide on-going
>         working capital. The Company has received no firm commitments for
>         financing under this proposal.

7

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

> The Company will depend almost exclusively on outside
>         capital to complete the acquisition and planned modifications to the
>         property. Such outside capital may include the sale of additional stock
>         and/or commercial borrowing. There can be no assurance that capital will
>         be available as necessary to meet these continuing development costs or,
>         if the capital is available, it will be on terms acceptable to the
>         Company. The issuances of additional equity securities by the Company
>         would result in a significant dilution in the equity interests of its
>         current stockholders. Obtaining commercial loans, assuming those loans
>         would be available, will increase the Company's liabilities and future
>         cash commitments. If the Company is unable to obtain financing in the
>         amounts and on terms deemed acceptable, the business and future success
>         may be adversely affected.
>         Given the Company's limited operating history, lack
>         of sales, and the continued operating losses, there can be no assurance
>         that it will be able to achieve or maintain profitability.
> (b)               
> Development stage enterprise:
>     For U.S. accounting purposes the Company is
>         considered to be a development stage enterprise from inception on
>         November 24, 1994 to June 30, 2003 as its efforts have been and continue
>         to be primarily directed towards the development of new products. The
>         identification of an entity as a development stage enterprise does not
>         impact the measurement and recognition principles applied in these
>         consolidated financial statements but does require the disclosure of
>         specified cumulation from inception and other information.

2.                
Significant accounting policies:

> The consolidated financial statements have been prepared
>     in accordance with generally accepted accounting principles in the United
>     States.
>     The interim consolidated financial statements do not
>     include all information and footnote disclosures required under generally
>     accepted accounting principles in the United States for a complete set of
>     annual financial statements.
>     In the opinion of management, these interim consolidated
>     financial statements reflect all adjustments (consisting solely of normal
>     recurring accruals) considered necessary for a fair presentation of the
>     financial position as at June 30, 2003, results of operations and cash flows
>     for the three and six month periods ended June 30, 2003 and 2002.
>     Interim results of the three and six month periods ended
>     June 30, 2003 are not necessarily indicative of the results that may be
>     expected for the fiscal year as a whole or for any other period. These
>     financial statements should be read in conjunction with the financial
>     statements and notes thereto included in the Company's annual report on
>     Form 10-KSB for the fiscal year ended December 31, 2002.

8

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

(a)                   
Principles of presentation:

> These consolidated financial statements include the
>         accounts of Sun Power Corporation ("Sun Power" or the
>         "Company") and its wholly owned subsidiaries, Sunspring, Inc.
>         ("Sunspring") and Renewable Energy Corp. ("REC"),
>         from their respective date of acquisition to their respective dates of
>         disposition. All material intercompany balances and transactions have
>         been eliminated.

(b)                   
Fixed assets:

> Fixed assets are recorded at cost. Amortization is calculated from
>         the date of acquisition using the following methods and rates:

|Asset                      | Basis                    | Rate       
|-------------------------- | ------------------------ | -----------
|                           |                          |            
|Computer equipment         | declining-balance        | 30%        
|Office equipment and tools | double declining-balance | 5 - 7 years
|Tractor                    | double declining-balance | 7 years    

(c)                      
Loss per share:

> Loss per share is calculated using the weighted
>         average number of shares outstanding during the fiscal period. This
>         average includes as outstanding common shares, shares issued in a
>         reporting period from the date of their issuance. Diluted per share
>         amounts do not differ from basic per share amounts as the effect of
>         stock options outstanding during the periods presented is anti-dilutive.

(d)                      
Stock option plan:

> The Company has a stock-based compensation plan. For
>         grants to employees, officers and directors (collectively,
>         "employees"), compensation expense is recognized over the
>         vesting period in an amount equal to the difference, if any, between the
>         market value of the Company's common shares at that measurement date
>         and the exercise price. The value recognized for option grants is
>         expensed in the consolidated statements of operations. Options granted
>         to non-employees are recorded at their fair value as the services are
>         provided and the options earned. No options were granted in the six
>         month period ended June 30, 2003.

9

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

> Set out below is loss and loss per share information
>         as if the Company had determined compensation expense based on the fair
>         value at the grant date for its employee stock options:

|                                                                  | 2003       | 2002        
|----------------------------------------------------------------- | ---------- | ------------
|                                                                  |            |             
|Loss for the period, as reported                                  | $(608,893) | $(1,241,808)
|                                                                  |            |             
|Stock-based compensation expense included in net loss as reported | -          | -           
|                                                                  |            |             
|Pro forma stock-based compensation expense                        | (12,942)   | (158,848)   
|                                                                  |            |             
|Loss for the period, pro forma                                    | $(621,835) | $(1,400,656)
|                                                                  |            |             
|Basic and diluted loss per share:                                 |            |             
|As reported                                                       | $(0.02)    | $ (0.04)    
|Pro forma                                                         | (0.02)     | (0.04)      
|                                                                  |            |             

> (d)              
> Stock option plan (continued):
>     The fair value of stock options granted during 2001, and vesting
>         during 2002 and 2003, was estimated using the Black-Scholes
>         option-pricing model with the following weighted average assumptions:
>         expected dividend yield of 0%, risk-free interest rate of 4.74%, an
>         expected life equal to their maximum term, and a volatility of 59.6%.
> (e)               
> Mineral property costs:
>     Mineral property costs incurred prior to the property having a
>         bankable feasibility study are expensed as incurred.
> (f)               
> Foreign currency translation:
>     These consolidated financial statements are presented in U.S. dollars
>         which is the Company's currency. Transactions denominated in other
>         currencies are translated at exchange rates in effect at the date of the
>         transactions with exchange gains and losses included in the
>         determination of income. To date exchange gains and losses have been
>         nominal.

10

---

> (g)               
> Use of estimates:
>           Management of the Company has made a number of estimates and
>         assumptions relating to the reporting of assets, liabilities, revenues
>         and expenses and the disclosure of contingent assets and liabilities in
>         preparing these financial statements in conformity with accounting
>         principles generally accepted in the United States. Actual results could
>         differ from those estimates. In these consolidated financial statements,
>         significant areas requiring the use of management estimates relate to
>         the recoverability of fixed assets and patents and rates for
>         amortization.

3. Fixed assets:

|2003               |   | Cost   |   | Accumulated amortization |   | Net book value
|------------------ | - | ------ | - | ------------------------ | - | --------------
|                   |   |        |   |                          |   |               
|Computer equipment | $ | 21,964 | $ | 5,964                    | $ | 16,000        
|                   |   |        |   |                          |   |               
|                  
|2002               |   | Cost   |   | Accumulated amortization |   | Net book value
|                   |   |        |   |                          |   |               
|Computer equipment | $ | 21,964 | $ | 4,320                    | $ | 17,644        
|                   |   |        |   |                          |   |               

> (a)              
>     Loans from related party:
>     The loans from related party, who is a shareholder of
>         the Company, bear interest at a rate of 20% per annum with no specific
>         terms of repayment.
>         On January 9, 2002, the Board approved the conversion
>         of loan of $1,554,562 from Mr. Bullock into 1,554,562 Series C
>         convertible preferred shares have a stated value of $1 per share. The
>         preference shares have no voting rights and receive no dividends. As at
>         May 13, 2003, the common shares have not been issued. The remaining
>         loans from Mr. Bullock do not bear interest and no specific terms of
>         repayment.
>         In January 2003, the Company entered into an
>         agreement with Mr. Bullock to issue 5,400,204 common shares to settle a
>         loan in the amount of $1,350,050. As these liabilities are to be settled
>         by equity instruments, they have been classified outside of current
>         liabilities for financial reporting purposes. As at August 12, 2003, the
>         common shares have not been issued.

11

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
      to Consolidated Financial Statements

(Unaudited)

(Expressed
      in United States dollars)

Six
      month period ended June 30, 2003 and 2002

Period
      from inception on November 24, 1994 to June 30, 2003

> (b)              
> Accounts payable:

> Included in accounts payable is $340,051 (December
>         31, 2002 - $188,900) payable to private companies controlled by a
>         significant shareholder or by a director of the Company.
> (c)               
> Fees:

> The Company has been charged administrative,
>         management and consulting fees aggregating $125,000 (six months ended
>         June 30, 2002 - $107,000) by certain officers, directors and private
>         companies controlled by them.

12

---

5. Capital stock:

> (a)               
> Issued:

|                                                                      | Number of shares | Value per share       | Share capital           | Additional paid-in capital 
|--------------------------------------------------------------------- | ---------------- | --------------------- | ----------------------- | ---------------------------
|                                                                      |                  |                       |                         |                            
|Issued for cash at inception, November 24, 1994                       | 1,000            | $        
      0.657 | $            
      657 | $                  
      -
|                                                                      |                  |                       |                         |                            
|Issued and outstanding at all period ends prior to September 30, 1998 | 1,000            |                       | 657                     | -                          
|                                                                      |                  |                       |                         |                            
|Issued during the year ended December 31, 1998:                       |                  |                       |                         |                            
|For investment in CASI                                                | 27,058,000       | 0.01                  | 270,590                 | -                          
|For financing fee                                                     | 500,000          | 0.01                  | 5,000                   | -                          
|Issued and outstanding, December 31, 1998                             | 27,559,000       |                       | 276,247                 | -                          
|                                                                      |                  |                       |                         |                            
|Adjustments resulting in an increase in additional paid-in capital:   |                  |                       |                         |                            
|Shares cancelled                                                      | (3,000)          | 0.01                  | (30)                    | 687                        
|Authorized par value change                                           | -                |                       | (657)                   | -                          
|Stock based compensation options                                      | -                |                       | -                       | 222,500                    
|Issued and outstanding, December 31, 1999 and 2000                    | 27,556,000       |                       | 275,560                 | 223,187                    
|Issued during the year ended December 31, 2001:                       |                  |                       |                         |                            
|For investment in REC (note 4)                                        | 2,000,000        | 0.01                  | 20,000                  | -                          
|For investment in Sunspring (note 3)                                  | 2,000,000        | 0.01                  | 20,000                  | -                          
|For stock based compensation (note 9(c))                              | -                |                       | -                       | 270,000                    
|Stock based compensation options                                      | -                |                       | -                       | 75,165                     
|Issued and outstanding, December 31, 2001                             | 31,556,000       |                       | 315,560                 | 568,352                    
|Issued during the year ended December 31, 2002:                       |                  |                       |                         |                            
|For cash                                                              | 100,000          | 0.01                  | 1,000                   | 99,000                     
|In settlement of obligation                                           | 25,000           | 2.39                  | 250                     | 59,500                     
|Stock-based compensation options                                      | -                |                       | -                       | 199,311                    
|Deemed dividend on preferred stock                                    | -                |                       | -                       | 209,694                    
|Issued and outstanding, December 31, 2002                             | 31,681,000       |                       | 316,810                 | 1,135,857                  
|                                                                      |                  |                       |                         |                            
|Issued during the period ended June 30, 2003:                         |                  |                       |                         |                            
|To settle Purchase Option Agreement                                   | 1,000,000        | 0.25                  | 250,000                 | -                          
|Issued and outstanding, June 30, 2003                                 | 32,681,000       |                       | $     
      566,810    | $   
      1,135,857       

13

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
    to Consolidated Financial Statements

(Unaudited)

(Expressed
    in United States dollars)

Six
    month period ended June 30, 2003 and 2002

Period
    from inception on November 24, 1994 to June 30, 2003

> (b)               
>     Issuance of shares for non-monetary consideration:
>     Shares issued to consultants for services rendered
>         (including shares transferred by a principal shareholder), settlement of
>         debt and the acquisition of assets or businesses are recorded based upon
>         the fair market value of the shares at the date of the related
>         agreements to issue the shares.
> (c)              
> Commitments to issue common shares:

> In January 2003, the Company entered into agreements
>         to issue 1,800,217 common shares to settle accounts payable aggregating
>         $450,054. As these liabilities are to be settled by equity instruments,
>         they have been classified outside of current liabilities for financial
>         reporting purposes. As at August 12, 2003, the common shares have not
>         been issued.
> (d)              
> Shares reserved for issuance:

> On June 30, 2003, an agreement was reached whereby
>         accounts payable of $25,000 owing to a supplier were settled by the
>         issuance of 100,000 common shares.
> (e)              
> Preferred stock offerings:

> As the Preferred stock was issued in settlement of an
>         outstanding loan (note 8(a)) at a conversion price that was less than
>         the market price of the Company's common shares at the date of
>         agreement for issuance, the difference resulting from the allocation of
>         the proceeds to the beneficial conversion feature of $209,694 was
>         recorded as a deemed dividend or return to the preferred shareholders.
>         On January 20, 2003, the Company entered into an
>         agreement with Mr. Bullock to remove the contingent liability and agreed
>         to exchange all of the series C preferred shares for 1,554,562 common
>         shares at the deemed value of $1.00 per share and $50,000 in cash
>         payable within 150 days. The common shares will not have been registered
>         under the Securities Act of 1933 but the Company agreed to commence
>         registration encompassing the shares on or before 6 months of the date
>         of their issuance. As at August 12, 2003, the common shares have
>         not been issued.

14

---

Sun
Power Corporation

(A
Development Stage Enterprise)

Notes
    to Consolidated Financial Statements

(Unaudited)

(Expressed
    in United States dollars)

Six
    month period ended June 30, 2003 and 2002

Period
    from inception on November 24, 1994 to June 30, 2003

6. Financial instruments:

> (a)              
> Fair value:

> The fair values of financial instruments included in
>         current assets and liabilities (excluding related party amounts) are
>         equal to their carrying values due to their ability for prompt
>         liquidation or the short-term to their settlement.
>         The fair value of loans from related parties cannot
>         be reasonably estimated due to the nature of the amounts due and their
>         relationship between the liable party and the Company and the lack of a
>         ready independent market for such amounts payable.
> (b)              
> Currency fluctuation risk:

> The Company has not entered into any material foreign
>         exchange contracts to minimize or mitigate the effects of foreign
>         exchange fluctuations on the Company's operations or these financial
>         statements. Management does not believe it faces any significant foreign
>         currency fluctuation risk.

7. Commitments:

> Effective as of April 24, 2002, the Company
>         entered into a consulting agreement for administrative, marketing and
>         management services, which expired April 23, 2003. Under the terms of
>         the agreement, the consultant received $8,000 per month plus
>         reimbursement for pre-authorized expenses. At March 31, 2003, accounts
>         payable includes $86,798 related to this arrangement.On April 30, 2003, the Company entered into a
>         consulting agreement for administrative, marketing and management
>         services, which is effective until further notice and for a minimum
>         period of 12 months. Under the terms of the agreement the consultant
>         will receive $7,000 per month plus reimbursement for pre-authorized
>         expenses.
>           On April 20 2001, the Company entered into an
>         advisory agreement for a two year term in which the advisor acted as its
>         international strategic planner and assisted the Company to secure
>         financing new business opportunities. The advisor received $10,000 per
>         month and was reimbursed for all reasonable pre-approved expenses.On April 29, 2003, the Company entered into an
>         advisory agreement for a one year term in which the advisor will assist
>         Sun Power in introducing their common stock for trading in Europe. The
>         advisor will receive $1,500 per month and be reimbursed for all
>         reasonable pre-approved expenses. The agreement may be terminated at any
>         time after 30 days by the Board of Directors of the Company.

15

---

Item 2. Management's Plan of Operation.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "will", "should", "expects",
"plans", "anticipates", "believes",
"estimates", "predicts", "potential" or
"continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

As used in this quarterly report, the terms "we",
"us", "our", and "Sun Power" mean Sun Power
Corporation.

All dollar amounts refer to US dollars unless otherwise
indicated.

The following discussion should be read in conjunction with
our consolidated financial statements and the related notes that appear
elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
quarterly report, particularly in the section entitled "Risk Factors".

General

We are a Nevada corporation formed on August 20, 1996 under
the name "Hayoton Company Incorporated" as a management company for
resorts and hotel properties. On September 24, 1996, we changed our name from
"Hayoton Company Incorporated" to "Hyaton Company
Incorporated" and then to "Hyaton Organics Inc." on October 21,
1999. On November 1, 2001, we changed our name to "Sun Power
Corporation".

We were operating as a development stage company without an
operating business until we acquired 100% of the shares of Sunspring, Inc., a
Nevada company, and Renewable Energy Corporation, a New Mexico company, on
December 10, 2001. Subsequent to our inability to meet certain financing
conditions as defined within the acquisition agreements for the development of
the technologies owned by Sunspring Inc. and Renewable Energy Corporation, on
December 6, 2002, we returned all of the issued and outstanding shares of
Sunspring, Inc. and Renewable Energy Corporation in return for all of our Series
A and Series B Preferred Stock, which had been issued as a part of the purchase
price.

16

---

By an Assignment of Purchase Option Agreement dated December
16, 2002, we acquired all of the purchaser's rights under a Purchase Option
Agreement dated November 27, 2002. This Purchase Option Agreement grants to our
company an option to purchase all of the issued and outstanding shares of Minera
Real de Cosala SA de CV, a Mexican corporation that owns legal and beneficial
title to certain mineral exploration and exploitation rights, mining concessions
and licenses and a mill which, together with the land and improvements owned by
Ms. Ana Lucia Guinea Hernandez, constitute the recently closed La Verde
copper-silver mine. The La Verde mine is located approximately 21 kilometers
from the town of Cosala, in the state of Sinaloa, Mexico. Cosala has a
population of approximately 18,000 people.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and
results of operations, including the discussion of liquidity and capital
resources, are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires that we make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, management re-evaluates its estimates and judgments. Actual
results could differ from the estimates. We believe the following accounting
policy requires significant judgment in the preparation of the consolidated
financial statements.

Our consolidated financial statements have been prepared on
the going concern basis, which assumes that we will be able to realize our
assets and discharge our obligations in the normal course of business. If we
were not to continue as a going concern, we would likely not be able to realize
on our assets at values comparable to the carrying value or the fair value
estimates reflected in the balances set out in the preparation of the
consolidated financial statements. As described elsewhere in this report, at
June 30, 2003, there are certain conditions that currently exist that raise
substantial doubt about the validity of this assumption. While we anticipate
raising additional private placement funds to remove the substantial doubt,
these private placements are not assured. Failure to raise additional funds may
result in the curtailing of our operations or writing our assets and liabilities
down to liquidation values, or both.

Plan of Operation

On December 3, 2002 we announced that we had initiated a
restructuring program involving a change of business, namely to seek out and
acquire revenue producing mining assets through the use of project financing. By
mitigating raw material supply risk, process risk and market risk, we believe
that we can fund the acquisition of targeted mining properties without reliance
upon a corporate equity issue. To qualify as a targeted acquisition, a mining
property must demonstrate; a minimum of three years historic operations with
positive cash flow; low cost production as a defense against lows in the market
cycles; potential for expandable mineral reserves and the ability to increase
production and cash flow through modern mining techniques. We are currently
exploring the acquisition of certain mineral resource properties that fit our
new focus.

17

---

On December 16, 2002 we executed an Assignment of Purchase
Option Agreement with Securities Trading Services Inc. ("STS") in
which STS agreed to assign its rights to acquire title to certain mining claims
and related assets (collectively "the Property"). The terms of the
Assignment of Purchase Option Agreement require that we issue within ten days
after the execution of the agreement, the sum of $250,000 payable in restricted
common shares of our company at a deemed value of $0.25 per common share. In the
event that we exercise the option to purchase, we will then be required to pay
to STS an additional sum of $750,000 payable in restricted common shares of our
company at a deemed value of $0.25 per common share. The securities issued
pursuant to the terms of the agreement will have such hold periods as are
required under applicable securities laws. We have agreed to file a Registration
Statement with the SEC incorporating the securities issued under the agreement
no later than six months from the closing date of the acquisition. In the event
that we fail to meet this provision, we shall issue an additional one percent of
the total number of securities issued to STS under the agreement, for each month
that we are in breach of the registration provisions.

The terms of the Purchase Option Agreement (the
"Agreement") between STS and the vendors dated November 27, 2002 grant
to the holder of the option (which is now Sun Power) the right to acquire all
right, title and interest in the Property by way of the acquisition of 100% of
the issued and outstanding shares of the vendor, which owns outright all of the
surface and underground equipment, the mill and related buildings and all
interests in the land and improvements for the sum of US$5,000,000. The option
is exercisable at any time during the period expiring May 27, 2003, with the
option to extend the term by two successive 30-day periods. We have now, in
cooperation with the vendor, entered into the preparation and formation of the
Formal Agreements to conclude the acquisition. We have agreed to pay all taxes
pertaining to the Property as they become due and payable during the period that
the option remains in effect, such amount not to exceed US$25,000.

The Property consists of three formerly producing
silver/copper mines and a mill encompassing more than 5,000 hectares (5 miles by
3 miles) with excellent local access near deep-sea ports. There is available
power at both the mine and the mill for operation and expansion. The mine has
been producing ore concentrate at the rate of 200 tonnes/day for the last 14
years. Previous mining was from large open slopes accessed by adit ramp and a
six level spiral decline. The mill has a 200-ton per day capacity plant with two
ball mills and a flotation recovery plant producing a bulk copper silver
concentrate. Approximately 2 million tonnes have been mined from the three past
producers at an average grade of about 300 grams Silver, 1% Copper and minor
gold credits. The mine and mill are currently not operating and have been on a
care and maintenance program since closure in mid 2001, due to financial
problems at Grupo Mexico's San Luis Potosi smelter which resulted in a
cessation of payments by the smelter for concentrate. At that time, 100% of the
concentrate production was sold under contract to Grupo Mexico's San Luis
Potosi smelter.

Recent geological reports suggest a significant resource of
mineralization in four additional deposits with surface outcrop, in both
reserves in the active mine workings and in important resources adjacent to the
mine workings on the property.

18

---

Ms. Robyn Storer was retained as by our company as an
independent consultant on December 18th, 2002 to evaluate the
proposed acquisition. Ms. Storer has over 20 years experience in the mining and
metals sector. She spent 5 years working as an exploration geologist with BP
Minerals in Australia. After completing an MBA in Geneva, Switzerland, Robyn
moved to London and worked for over ten years as an equity analyst with Credit
Lyonnais, HSBC and Credit Suisse First Boston, where she assisted in selling
Diamond Fields Resources to Canadian nickel company Inco for $C4.2 billion. For
the past four years, Robyn has worked in New York and London for Barclays
Capital covering the institutional debt markets for the mining, metals and steel
industries. Robyn has visited and evaluated exploration and mining properties
and mineral processing operations in Europe, Russia, South Africa, South
America, USA, Australia, China and Canada.

Ms. Storer visited the mine and mill in early January and has
submitted an Interim Report to the board of directors in which she concluded
that "the proposed acquisition represents a viable commercial opportunity
and should be pursued". We subsequently requested Ms. Storer to prepare a
specialist independent technical and financial assessment report. To that end,
Ms. Storer initiated independent reports for additional due diligence by; Mr.
William Murray of Optimum Project Services Ltd. ("Optimum") to assess
the current condition of the facilities with a view to starting operations at
450-tpd and the practicality and cost of upgrading the facilities to a 600-tpd
operation; Mr. Alex Burton, P. Eng., P. Geo., of Burton Consulting Inc., to
evaluate the mineralization of the Property, focusing on the various categories
of ore reserves and exploration potential; and Mr. Jack Butterfield B.A.Sc.,
MBA, Butterfield Mining Consultants to investigate potential off-take suppliers
and terms for sale of the concentrate.

We also engaged a lawyer in Mexico City to request from the
mining department of Mexico (Direccion de Minas) an official certification that
all of these claims are in good standing. We have received legal opinion in Mexico in accordance with Article 19, Section VII of the
Mexican Mining Law
that the current owner of the claims has the right to transfer full ownership of
the assigned claims to any other parties without any restrictions or
limitations.

In conjunction with the proposed change of business, our
company has proposed a name change to "Cardinal Minerals" and once the
independent geological assessments have been completed, including estimates of
the current reserves and mineral resources adjacent to the previously operating
mine, will use the report to prepare the financial models required in order to
pursue the financing necessary to acquire and develop the Property.

Our company has proposed to issue a U.S. $10 million dollar
bond offering to finance the acquisition and to facilitate the ongoing
development of the Property. If successfully placed, the proceeds will be used
by the Company to purchase all of the issued and outstanding shares of Minera
Real de Cosala, S.A. de C.V., a Mexican corporation that owns legal and
beneficial title to the La Verde copper-silver mine. Through the assistance of
several key financial advisors, we are presently in negotiations on specific
term sheets from both Europe and Pacific Rim interests. The bond, when issued,
will not be registered under the Securities Act of 1933, nor can it be offered
or sold in the United States, pursuant to an exemption provided under Regulation
S.

19

---

In conjunction with the current financing plans, we are
completing the transfer of the Purchase Option Agreement to acquire title to the
Property including the mining claims, mine, mill and related assets to a new
Mexican holding company recently formed, called Recursos Minerales Cardenal, S.
de R.L. de C.V.("MINERALES CARDENAL")
which is a direct wholly owned subsidiary of our company. Minerales Cardenal
will acquire the shares in the mining company and will also own all the shares
in a management company being set up to minimize Mexican taxes.

On June 19, 2003 the Company announced its receipt of a
valuation conducted by Secunda Effekten AG ("Secunda") of Munich,
Germany in which Secunda graded the Company's pending European bond issue as
BBB investment grade. The European bond issue will not be offered to residents
of the United States. The investment grade rating was in part based on the
independent technical feasibility study prepared by Ms. Robyn Storer, MBA, B.Sc
Hons. (Geology) in which she projects the expansion of the existing mining and
processing to an initial rate of 450-tpd rising to 600-tpd in the second quarter
following the restart of production. The proposed mining schedule is anticipated
to average 210,000 tonnes per annum over the first 5 years of production. The La
Verde property currently consists of three formerly producing silver/copper
mines, a working mill and more than 5,000 hectares (5 miles by 3 miles) of
mineral claims with excellent local access near deep-sea ports. Over the past
decade the mine output and mill throughput have averaged in the order of 200
tonnes per day ("-tpd"). Approximately 2 million tonnes have been
mined from the three past producers at an average grade of about 300 grams
Silver, 1% Copper and minor gold credits.

Cash Requirements

Presently, we have no revenues and we cannot meet operating
and capital expenses. We have incurred operating losses since inception, and
this is likely to continue into fiscal 2003. We have projected that we may
require up to $10 million to fund our acquisition and upgrade the La Verde mine,
as well as to meet ongoing operating expenses and working capital requirements
for the next twelve months, broken down as follows:



|Estimated Funding Required During the Next Twelve
      Months
|--------------------------------------------------------------
|Operating expenses                                            
|Marketing                                                     
|General and Administrative                                    
|Engineering research and development                          
|Capital Expenditures                                          
|Working capital                                               
|Total                                                         

We plan to raise the capital required to meet our estimated
funding requirements for the balance of fiscal 2003 primarily through the
placement of a $10,000,000 bond offering in Europe and with our bond issue as
BBB investment grade, we will continue with the current business plan now under
development. We do not anticipate that we will be able to satisfy any of these
funding requirements internally until after such time as we have acquired and
upgraded the La Verde mine and mill and begin to generate revenues.

20

---

Due to the uncertainty of our ability to meet our current
operating and capital expenses, in their report on the annual consolidated
financial statements for the year ended December 31, 2002, our independent
auditors included an explanatory paragraph regarding concerns about our ability
to continue as a going concern. Our consolidated financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.

Over the past decade the mine output and mill throughput have
averaged in the order of 100 to 200-tpd. The business plan now formulated, is
based on the expansion of existing mining and processing of a silver-copper-gold
deposit. It is planned to mine the silver-copper-gold deposit at an initial rate
of 450 tonnes per day ("tpd") rising to 600-tpd in the second quarter
following the restart of production. The proposed mining schedule is anticipated
to average 210,000 tonnes per annum ("tpa") over the first 5 years of
production. The mine is accessible from two existing adits connected underground
by a ramp. Existing mining faces will provide the initial ore feed to the mill.
New underground development work will focus on delivering high-grade ore to the
mill in the early years. The proposed work program, encompassing modifications
to the existing mine and mill, is anticipated to commence in September 2003. The
start of continuous production of saleable concentrate is proposed for December
2003. The capital cost to achieve the planned production rates, including
contingencies, is estimated at US$2.7 million.

Product Research and Development

The Property consists of about 6000 hectares (5 miles by 3
miles) of mining exploitation and exploration concessions encompassing four past
producing mines. The most recent production was from the north end of the
property. Almost all of the rock units in the mine area are volcanic derived as
lavas, sediments formed from volcanic debris and chemical sediments formed from
hot springs near volcanic vents. All units were formed underwater with most of
the older units in deep water and some of the youngest possibly formed in very
shallow water. The mine is a unique variety of a volcanogenic massive sulphide
("VMS") deposit. The volcanic horizon which hosts the mine, extends in
a northwest-southeast direction for approximately 4 km.

There are at least 3 mineralized zones in the mine sequence.
Historic mining was confined, until recent years, to the first sequence from a
series of 3.0 to 6.0 meter wide parallel ore horizons. There are still portions
within the mine that are both underground and on surface. It has been estimated
that around 45% of the ore grade beds in the first sequence remain un-mined.
This residual ore resides in pillars, bridges and two un-mined crown pillars.
This ore could be recovered using cut and fill methods, and once the backfill
was in place could be extracted.

21

---

The second sequence is composed of two horizons, separated by
a narrow un-mineralized unit. This sequence has provided the major portion of
ore mined in recent years. There has been sufficient mining to establish grade
and make reserve projections. The reserve calculation goes from near surface
down to the 4th level. It has been predicted by geophysics and substantiated by
drilling that the mineralized beds continue below the 4th level for at least an
additional 100 meters of depth.

The third sequence is a geophyisically anomalous and drill
confirmed mineralized horizon that has not yet been explored underground. It is
not yet considered in any reserve calculation.

Additional targets with potential to host additional
mineralization have been identified within the mineral leases. The
volcanoclastic rocks which host the mine host an additional 6 known occurrences
of mineralization that are considered excellent exploration targets. Southeast
along 1.5 kilometers of strike there are nearly continuous mineralized zones,
respectively known as the Apomo, San Antonio, and Los Indios. In the next
kilometer along strike there are two past producing mines, the Mamut and El
Cajon, each of which are reported to have produced 500,000 tonnes grading
approximately 525 gpt of silver. Approximately 0.5 km northwest of the mine, old
small workings were discovered in 1998. None of these zones have been explored
using modern exploration tools and methods.

It is planned to undertake an I.P geophysical exploration
program concentrating on the areas of known mineralization on the concessions.
To this end $250,000 has been budgeted for exploration in Year 1 of the project.
I.P geophysics, a relative inexpensive exploration tool, was tested at the mine
and was successful in identifying at least one 'blind' ore horizon.

Purchase of Significant Equipment

Mr. William Murray of Optimum Project Services Ltd.
("Optimum") was retained by our company to assess the current
condition of the facilities with a view to starting operations at 450-tpd and
the practicality and cost of upgrading the facilities to a 600-tpd operation.
After a site visit and review of the existing mill, Optimum concluded that
"the overall condition of the plant is reasonable. It can be upgraded to
the 450-tpd level by de-bottlenecking certain aspects of the plant and
eliminating some poorly executed parts of the installation. The next stage of
upgrade to 600-tpd will be relatively easy to accomplish after the mine has
achieved sustained performance at 450-tpd."

The conclusions in regard to the proposed expansion in mine
production, were that "the equipment in this area is not in good
condition... essentially, most of it has to be replaced. The basic elements are
in place but they all need a significant upgrading. The identification of new
production levels (450-tpd and 600-tpd) from this mine is a simple extrapolation
of historic production; while incorporating the improvements prescribed in this
[Optimum] report."

"The upgrade to 600-tpd requires the inclusion of a new
mill line and provision of adequate surge capacity in the fine ore bins. A new
secondary crusher and larger conveyor belts will be required. It is anticipated
that the planned modifications, to expand Mill capacity and production and Mine
production to an initial 450-tpd, would take approximately four months from
commencement to commissioning. Commissioning is expected to be rapid."

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Optimum's estimate of capital cost to achieve the planned
production rates, including contingencies, was US$2.7 million as at February
2003.

Employees

We do not currently have any employees. We have 7 key
consultants on retainer to assist us in our transition from our former business,
including our president and the various professionals who are assisting us with
our due diligence review of the La Verde mine. If we acquire the La Verde mine,
we will be required to hire approximately 30 employees to assist us in the
upgrades planned for the four month period immediately following the closing.
When we are ready to begin production at the mine, we will be required to hire
approximately 50 people. When we are ready to increase our production capacity
to 600 tons-per-day, we will need to hire an additional 15 people.

The La Verde mine has historically provided non-agricultural
employment in the town of Cosala. When the mine closed in 2001, it employed 27
people, including its key employees, from this area. We hope to find that the
majority of these workers, including key personnel, would be available for
employment at the mine when production recommences. We will need as many as 65
employees once production upgrades have been completed, and we hope to recruit
and train these employees from the local area.

RISK FACTORS

Much of the information included in this quarterly report
includes or is based upon estimates, projections or other "forward looking
statements". Such forward looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein.

Such estimates, projections or other "forward looking
statements" involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward looking statements".

Our common shares are considered speculative during the
development of our new business operations. Prospective investors should
consider carefully the risk factors set out below.

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WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING
HISTORY AND HAVE NOT EARNED ANY SIGNIFICANT REVENUES SINCE OUR FORMATION WHICH
MAKES IT DIFFICULT TO EVALUATE WHETHER WE WILL OPERATE PROFITABLY.

We are a development stage company in the process of
acquiring revenue producing mineral resource assets through the use of project
financing. By mitigating raw material supply risk, process risk and market risk,
we believes that we can fund the acquisition of targeted mining properties
without reliance upon a corporate equity issue. As a relatively new company
involved in the acquisition of certain mineral resource properties we do not
have a historical record of sales and revenues nor established business track
records. We have not earned any revenues since our formation.

Unanticipated problems, expenses and delays are frequently
encountered in acquiring resource properties. Our ability to successfully
acquire, produce and eventually sell the ore concentrate and to eventually
generate operating revenue will depend on our ability to, among other things:

> successfully complete the modifications to the
>         existing mine and mill for the processing of the silver-copper-gold
>         deposit; and
>           successfully commence the start of continuous
>         production of saleable concentrate as planned for December 2003; and
>           successfully enter into contracts with potential
>         offtakers on acceptable terms for the sale of the concentrate; and
>           successfully confirm the existence of sufficient
>         ore reserves and additional mineralization to justify the expansion of
>         mine production beyond 600-tpd; and
>           obtain the financing needed to enable
>         implementation of our business plan and plan of operations; and
>           other factors which may include, but are not
>         limited to, metals prices and price volatility, amount of metals
>         production, costs of production, remediation, reclamation, and
>         environmental costs, regulatory matters, cash flow; and project
>         development risks.

Given our limited operating history, lack of sales and
operating losses, there can be no assurance that we will be able to achieve any
of these goals and achieve or maintain profitability.

THE FACT THAT WE HAVE A HISTORY OF NET LOSSES AND HAVE NOT
EARNED ANY SIGNIFICANT REVENUES SINCE INCORPORATION RAISE SUBSTANTIAL DOUBT
ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

We incurred a consolidated loss for the period ended June 30,
2003 of $608,893 and a loss of $2,051,357 for the year ended December 31, 2002.
This loss is due to our activities relative to the development of the
technologies of Sunspring Inc. and Renewable Energy Corporation (in 2002) and in
consulting and other professional expenses (in 2002 and 2003). Although we
anticipate that we will be able to generate revenues in the future, we also
expect development costs and operation costs to increase as well. Consequently,
we expect to incur operating costs and negative cash flows until:

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> we complete the modifications to the existing mine and
>     mill for the processing of the silver-copper-gold deposit;
>       we commence the start of continuous production of
>     saleable concentrate;
>       we have achieved a level of sales of the concentrate
>     such that we are operating in a profitable manner.

These circumstances raise substantial doubt about our ability
to continue as a going concern as described in an explanatory paragraph to our
independent auditor's opinion on the December 31, 2002 consolidated audited
financial statements, which were filed with our Annual Report on Form 10-KSB.
The consolidated financial statements do not include any adjustments as a result
of this uncertainty. To the extent that such expenses are not followed by
revenues in a timely manner, our business, results of operations, financial
condition and prospects would be materially adversely affected.

WE ARE UNCERTAIN THAT WE WILL BE ABLE TO OBTAIN ADDITIONAL
CAPITAL THAT MAY BE NECESSARY TO ESTABLISH OUR BUSINESS.

We incurred a cumulative net loss for the period from
November 24, 1994 (inception) to June 30, 2003 of $5,339,442. As a result of
these losses and negative cash flows from operations, our ability to continue
operations will be dependent upon the availability of capital from outside
sources unless and until we achieve profitability.

Our future capital requirements will depend on many factors,
including cash flow from operations, progress of the proposed work program for
an expansion of mine production and mill throughput approximately 4 months from
the date of acquisition, competition and global market conditions and an ability
to successfully deliver sufficient quantities of concentrate to offtakers. Our
recurring operation losses and growing working capital needs will require that
we obtain additional capital to operate our business before we have established
that our new businesses will generate significant revenue. We do not have
sufficient funds on hand to complete the acquisition of the mineral however we
have proposed to issue a U.S. $10 million dollar bond offering to acquire 100%
ownership of the silver-copper mine, upgrade the existing mill and provide
on-going working capital. We have predicted that we will require approximately
$1,500,000 over the period ending December 31, 2003 in order to accomplish our
goals of expanding the mine and mill to the 450-tpd production levels and an
additional $1,200,000 to reach production levels of 600-tpd. However, there is
no assurance that actual cash requirements will not exceed our estimates. In
particular, additional capital may be required in the event that we:

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> incur unexpected costs in the planned modifications to
>     the mine and mill or encounter any unexpected equipment supply, labor,
>     regulatory or other difficulties; and
>       incur delays and additional expenses as a result of
>     the extraction and development of ore reserves; and
>       are unable to realize projected demand and markets for
>     our concentrate; and
>       incur any significant unanticipated expenses.

The occurrence of any of the aforementioned events could
adversely affect our ability to meet our business plans.

We will depend almost exclusively on outside capital to
complete the acquisition and planned modifications to the mine and mill. Such
outside capital may include the sale of additional stock and/or commercial
borrowing. There can be no assurance that capital will continue to be available
if necessary to meet these continuing development costs or, if the capital is
available, it will be on terms acceptable to our company. The issuances of
additional equity securities by our company would result in a significant
dilution in the equity interests of its current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
company's liabilities and future cash commitments. If we are unable to obtain
financing in the amounts and on terms deemed acceptable, our business and future
success may be adversely affected.

TRANSITION FROM ACQUISITION TO COMMERCIAL PRODUCT.

During the period of modification to the mill, the mine would
concentrate on developing sufficient working faces to supply the expanded mill
capacity. Commissioning of the modified mill is expected to be rapid due to the
existence of a skilled and experienced workforce, the simple nature of the flow
sheet and relatively minor modifications to the historic flow sheet and
equipment.

The ready availability of good second-hand and refurbished
mining and processing equipment, both in North America and worldwide, is a
significant factor in reducing capital cost of the proposed modifications and
capacity expansions. It is common practice amongst smaller mining and processing
equipment in the metals and mining industry to use second-hand and refurbished
equipment, The availability of good quality and inexpensive equipment has been
boosted in recent years by the closure of a number of mining operations as a
result of low base metal prices.

It is planned that the mill be shut and upgraded over a
four-month period. The increase in capacity to 600-tpd will principally require
installation of a new mill line and upgrades in the crusher and screening area.
It is expected that the expansion can be undertaken while the 450-tpd section
continues to work, with minor shutdowns to change circuits.

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Apart from the provision for working capital and on-going
replacement capital (estimated at approximately $150,000 per annum), no
additional capital expenditure over an above is anticipated. If a decision is
taken to expand the plant capacity or to build a new processing facility to
expand production, based on the success of exploration and reserve delineation,
capital expenditure provisions will require review.

NEED FOR ADDITIONAL FINANCING.

We anticipate that we will require approximately $8,553,000
in additional financing over the year ended December 31, 2003. We will likely
secure any additional financing necessary through the further issuance of our
equity securities or by debt financing. There can be no assurance that, if
required, any such financing will be available upon terms and conditions
acceptable to us, if at all. Our inability to obtain additional financing in a
sufficient amount when needed and upon terms and conditions acceptable to us
could have a materially adverse effect upon our company. Although we believe
that we have funds sufficient to meet our immediate needs, we may require
further funds to finance the development of the technologies of our newly
acquired businesses. There can be no assurance that such funds will be available
or available on terms satisfactory to us. If additional funds are raised by
issuing equity securities, further dilution to existing or future shareholders
is likely to result. If adequate funds are not available on acceptable terms
when needed, we may be required to delay, scale back or eliminate the
development of the technologies of our newly acquired businesses. Inadequate
funding could also impair our ability to compete in the marketplace, which may
result in the dissolution of our company.

WE EXPECT TO EXPERIENCE SIGNIFICANT AND RAPID GROWTH IN THE
SCOPE AND COMPLEXITY OF OUR BUSINESS AS WE PROCEED WITH THE DEVELOPMENT OF OUR
PROPERTY. IF WE ARE UNABLE TO HIRE STAFF TO HANDLE PRODUCTION AND MANAGE OUR
OPERATIONS, OUR GROWTH COULD HARM OUR FUTURE BUSINESS RESULTS AND MAY STRAIN OUR
MANAGERIAL AND OPERATIONAL RESOURCES.

As we proceed with the development of our mineral properties,
we expect to experience significant and rapid growth in the scope and complexity
of our business. We will need to add staff to assist with the proposed expansion
of the Mine and Mill operations and with the exploration for additional
mineralized zones using modern exploration tools and methods. We will be
required to hire a broad range of additional personnel in order to successfully
advance our operations. This growth is likely to place a strain on our
management and operational resources. The failure to develop and implement
effective systems, or to hire and retain sufficient personnel for the
performance of all of the functions necessary to effectively service and manage
our potential business, or the failure to manage growth effectively, could have
a materially adverse effect on our business and financial conditions.

The majority of the workforce for the mine and mill is drawn
form the local township of Cosala, including key personnel. There can be no
guarantee that they will be available to rejoin the operations once production
recommences. However, the mine and mill have historically provided the major
non-agricultural employment in the town and environs of Cosala. When the mine
closed there were 27 mine employees working on a single shift. It is proposed to
incorporate a second shift to meet the initial production target of 450-tpd,
bringing manning at the mine to an estimated 45. The move to 600-tpd will
require working 2.5 shifts per day with two production and 2.5 development
shifts, requiring additional personnel. All of these new employees will need
training and there can be no assurances that we will not incur difficulties with
employees and staffing to maintain proposed production schedules.

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IF WE ARE UNABLE TO ACHIEVE MARKETS FOR ORE CONCENTRATES WE
WILL BE UNABLE TO BUILD OUR BUSINESSES.

Our success will depend on the realization of significant
grades of ore concentrate. We cannot assure you that our mining and milling
efforts will achieve the desired results, nor can we assure you that our
proposed acquisition or future acquisitions will achieve sufficient levels of
return to support our operations and build our business.

THE LOSS OF OUR KEY TECHNICAL INDIVIDUALS WOULD HAVE AN
ADVERSE IMPACT ON FUTURE DEVELOPMENT AND COULD IMPAIR OUR ABILITY TO SUCCEED.

Our performance is substantially dependent on the assistance
of technical expertise such as that of Ms. Robyn Storer, or those of Roland
Vetter and Victor Cardenas and our ability to continue to hire and retain
qualified personnel to assist them. The loss of any key consultants, employees
or officers could have a materially adverse effect on our business, development,
financial condition, and operating results. We do not maintain "key
person" life insurance on any of our directors or senior executive
officers.

On May 5, 2003 we announced the appointment of Roland Vetter
as Chief Financial Officer and acting President. Our former interim President,
Secretary and Treasurer, Andrew Schwab, who was appointed to assist us during
our initial restructuring and through the acquisitions of the Property, will
remain as Secretary. Mrs. Carol O'Shea, our accounting technician for the past
two years, has consented to act as our Treasurer. We intend to add additional
strength to the Board of Directors and to the Officers as the business plan is
developed, but it may be difficult to find a sufficiently qualified individuals
to fill these roles and accordingly, our company may not be able to successfully
expand our operations until such an individuals are located and retained.

THE GLOBAL WORLD MARKETS FOR ORE CONCENTRATE AND COMPETITION
FROM OTHER SUPPLIERS MAY REDUCE DEMAND FOR OUR PRODUCTS, WHICH WOULD ADVERSELY
AFFECT OUR NET SALES.

Despite our efforts to protect our offtake supply contracts,
we believe that global demand and supply could have an adverse effect on our
planned expansion and future proposed acquisition program. If we are unable to
obtain or maintain our offtake contracts for ore concentrate, our business could
be materially adversely affected. In addition, the laws of some foreign
countries, and the enforcement of those laws, could adversely affect our ability
to deliver concentrate. We cannot assure you that unit production costs will
remain in line with historic costs at around U.S.$18/tonne of ore, including
overheads and concentrate freight charges. While there is reasonable basis to
believe that once the mining and milling operation have reached steady state
operations, that cash operating costs will be lower than historic levels, we
cannot assure you that we will be able to maintain our sales targets.

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Offtake contracts for the silver-rich copper concentrate are
in the process of negotiation and expressions of interest have been received.
Indicated terms suggest a significant decline in concentrate smelter terms
vis-a-vis historic treatment and refining charges. While it is expected that
the result of these negotiation could result in FOB Mill terms which could
result in unit cash production costs below those used in our business plan
models, we are not able to confirm these rates nor that these rates will not
change or be affected by changes in the global world market demand at any time
in the future or that our competitors will not independently deliver concentrate
at lower prices.

In addition, we may initiate claims or litigation against
third parties for infringement of our contract rights to establish the validity
of our supply agreements. This litigation, whether or not it is resolved in our
favor, could result in significant expense to us and divert the efforts of our
technical and management personnel.

WE MAY FROM TIME TO TIME BE SUBJECT TO CLAIMS OF INFRINGEMENT
OF PROPERTY RIGHTS OR CLAIMS THAT OUR OWN PROPERTY RIGHTS ARE INVALID, AND IF WE
WERE TO SUBSEQUENTLY LOSE OUR PROPERTY RIGHTS, OUR BUSINESS WOULD BE MATERIALLY
ADVERSELY AFFECTED.

We may from time to time receive claims that we are
infringing third parties' property rights or claims that our own property rights
are invalid. The resolution of any claims of this nature, with or without merit,
could be time-consuming, result in costly litigation, cause product shipment
delays, require us to redesign our facilities or require us to enter into
royalty or licensing agreements, any of which could harm our operating results.
Royalty or licensing agreements, if required, might not be available on terms
acceptable to us or at all. The loss of access to any key property rights could
harm our business.

WE ARE SUBJECT TO ENVIRONMENTAL POLICIES AND PRACTICES

All of our exploration, development and production activities
in Mexico are subject to regulation by governmental agencies under one or more
of the various environmental laws. These laws address emissions to the air,
discharges to water, management of wastes, management of hazardous substances,
protection of natural resources, protection of antiquities and reclamation of
lands which are disturbed. The Property is believed to be in substantial
compliance with applicable environmental regulations.

A tailings dam is located immediately adjacent to the mill.
The tailings dam method used is similar to the evaporative depositional method
commonly used. The size of the existing dam is adequate for a 450-tpd operation.
The system will need to be upgraded to simplify the pumping system for 600-tpd
production. Broad guidelines for the safe building of such dams require that the
rate of rise should not exceed 125 mm. per month and the angle of the outer
walls should not exceed 35 degrees. Work will be needed on the tailings dam to
comply with these industry practices.

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Current capacity of the tailings dam needs verification, but
it is expected that after the first three years of increased production a
tailings disposal site will be needed. While it is not anticipated that any
significant problems will be encountered in identifying and establishing a new
tailings area close to the mill, we cannot assure you that future changes in
environmental policies and practices may not adversely affect the scheduled
operations or proposed expansion of the mill.

Environmental legislation in many countries is evolving in a
manner which will likely require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments
of proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees.

WE ARE SUBJECT TO CERTAIN MEXICAN LEGAL MATTERS

In Mexico, the exploration and exploitation of minerals may
only be carried out by individuals of Mexican nationality, or by companies
incorporated in accordance with Mexican law, through mining concessions granted
by the Secretariat of Economy. Mining operations in Mexico are subject to
inspection and regulation under provisions of the Federal Mine Safety and Health
Act of 1977.

Regulation governing smelters to which we may sell our
metallic concentrates and products, in and outside Mexico have substantially
increased over the past several years. We have no control over the smelters'
operations or their compliance with environmental laws and regulations. If the
smelting capacity available to the mill was significantly reduced because of
environmental requirements or otherwise, it is possible that its silver
operations could be adversely affected.

Per the Federal Mexican Constitution, the Federal Mexican
Government owns and holds all the mineral and petroleum resources located under
the surface of the ground. The owner of land in Mexico only owns the surface
thereof and any non-restricted treasure therein. Foreigners are required to own
mining concessions thorough a Mexican mining corporation. Mexican mining law
allows direct foreign investment with up to 100% ownership of the capital stock
of the Mexican mining corporation holding the mining concessions.

Mexico's mining activities are governed by four legislative
enactments: 1) Article 27 of the Federal Constitution; 2) the Mining Act of
1992, as amended on December of 1996; 3) the corresponding Mining Regulations of
1993; and 4) the Mining Manual for Public Service. Matters of administrative
procedure involving entities of Mexico's federal public administration,
whether in mining or in any other areas, are regulated by the Federal Act of
Administrative Procedure of 1994.

The two types of mineral concession that may exist are
Beneficial Plant, Exploration & Exploitation. The Exploration Concession is
the concession first granted to permit the miner to explore and extract mineral
to proof-up the mine. These concessions may be good for up to 6 years. Once
certain activities set in a mining program by the mining authority are complied
with in a determined time period, then the Ministry of Mining will permit the
application for an Exploitation Concession. The Exploitation Concessions permit
the full exploitation of the minerals that were approved in the concession.
These concessions may be good for up to 50 years.

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As the Property is located in Mexico and as such is subject
to political and economic risks such as the effects of local political and
economic developments, exchange controls, currency fluctuations and taxation.
Consequently, exploration, development and production activities may be
substantially affected by factors beyond our control any of which could
materially adversely affect our financial position or results of operations.

Mexico has from time to time experienced economic or
political instability. The operations our Mexican subsidiary may be materially
adversely affected in varying degrees by changes in mining laws, investment
policies and government regulations with respect to production restrictions,
price controls, export controls, income and other taxes, maintenance of claims,
environmental legislation, foreign ownership restrictions, foreign exchange and
currency controls, welfare benefit policies, land use, land claims of local
residents, water use and Mine safety. We cannot accurately predict the effect of
these factors.

TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY
STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR
STOCK.

The U.S. Securities and Exchange Commission has adopted
regulations which generally define "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and "accredited investors." The term
"accredited investor" refers generally to institutions with assets in
excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 in a form prepared by the SEC which 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 monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer 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 disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of, our common stock.

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INSIDER CONTROL OF COMMON STOCK.

As of August 14, 2003 two shareholders beneficially owned
approximately 61% of our outstanding common shares. As a result, these
shareholders will be able to influence all matters requiring shareholder
approval, including the election of directors and approval of significant
corporate transactions. Such control may have the effect of delaying or
preventing a change in control.

WE DO NOT EXPECT TO DECLARE OR PAY ANY DIVIDENDS.

We have not declared or paid any dividends on our common
stock since our inception, and we do not anticipate paying any such dividends
for the foreseeable future.

BECAUSE OF OUR LIMITED OPERATING HISTORY, IT IS DIFFICULT TO
PREDICT OUR FUTURE REVENUES.

As a result of our limited operating history and until such
time as we can complete on the acquisition of the Property and on the prove-up
of production capability and ore reserves, we are unable to accurately forecast
our revenues. Our current and future expense levels are based largely on our
plan of operation and estimates of future revenues and are to a large extent
fixed.

Future sales and operating results generally depend on our
ability to develop a base of customers and businesses. We may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in estimated revenues in
relation to our planned expenditures would have an immediate adverse effect on
our business, prospects, financial condition and results of operations.

Further, as a strategic response to changes in the
competitive environment, we may from time to time make certain pricing, service
or marketing decisions that could have a materially adverse effect on our
business and financial condition and results of operations.

WE CANNOT PREDICT THE AVAILABILITY AND SUPPLY OF COMMODITY
PRICES FOR PRECIOUS MINERALS.

On the supply side, scrap supply (mostly from the
photographic sector) remained about static in 2001 at about 180 million ounces,
while silver supply from mines increased about one percent to about 590 million
ounces. Supply declined in the United States and grew in Mexico, Peru and
Kazakhstan. There was a pronounced lack of investment demand until mid-September
2001, and there may even have been net "supply" through speculative
short selling based on the world economic slowdown, rumors of large Chinese
stockpile sales and misinformation concerning the digital threat to silver.

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Despite all these bearish factors in 2001, the silver
"deficit" (the difference between silver scrap and mine supply and
silver demand) remained large in 2001, at about 70 million ounces. This deficit
was filled almost entirely, according to Gold Fields Mineral Serves ("GFMS"),
through disposals of 59 million ounces by the Chinese central bank from its
silver inventory that was built up before Chinese silver markets were opened in
1999. For the third consecutive year since this declining investment began in
1999, the enormous Chinese silver exports had a major negative effect on the
silver price.

Silver is a commodity that is traded 24 hours a day in the
world's market centers - London, Zurich, New York, Chicago and Hong Kong.
The London market started trading in the 17th century, and it -
like other major markets - provides a vehicle for those who wish to trade in
physical silver on a spot basis, or on a forward basis for hedging purposes. The
London market has a "fix" which offers the chance to buy or sell
silver at a single price. The fix begins at 12:15 p.m. and is a balancing
exercise; the price is fixed at the point at which all the members of the
"Fixing" can balance their own, plus clients', buying and selling
orders. Although London remains the centre of the physical silver trade for most
of the world, the most significant paper contracts trading market for silver in
the United States is the COMEX division of the New York Mercantile Exchange.
Spot prices for silver are determined by levels prevailing at the COMEX and
although there is no equivalent to the London fix, Handy & Harman, a
precious metals company, also publishes a price at noon each working day.

Copper is an internationally traded commodity, and its price
is effectively determined by the two major metals exchanges -- the New York
Commodity Exchange ("COMEX") and the London Metal Exchange ("LME").
The prices on these exchanges generally reflect the world-wide balance of copper
supply and demand, but also are influenced significantly from time to time by
speculative actions and by currency exchange rates. Internationally, the copper
selling prices are generally based on the LME spot price for cathode. The LME
spot price per pound of copper averaged 71 cents in 2002, 72 cents in 2001, 82
cents in 2000 and 71 cents in 1999. The LME spot price per pound over the 5-year
period (1998-2002) averaged 74 cents.

The strong growth trend in world mine production that began
in 1995 came to an abrupt halt in 2002 when producers, primarily in the United
States and Chile, instituted cutbacks, The reduced output occurred despite a
growth of more that 400,000 short tons in world mine capacity and production.
However, according to preliminary data compiled by the International Copper
Study Group, world refinery production for the first 7 months of 2002 was
essentially unchanged from that in the same period in 2001. World copper use for
the first 7 months of 2002, buoyed by a 19% rise in China's apparent
consumption, rose about 1%. The surplus of refined copper production saw global
inventories rise at mid-year.

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Silver, copper and gold are internationally traded
commodities. The prices are reflective of the world-wide balance of demand and
supply and various international macroeconomic and political conditions. Prices
are also sometimes influenced significantly by numerous other factors, including
speculative actions, the availability and cost of substitute materials, and
currency exchange fluctuations. Silver is expected to account for some 73% and
copper some 23% of metal revenues. Consequently, a sustained and uninterrupted
period of unusually low silver and or copper prices could reduce the company's
ability to repay the principal notes, or meet other obligations, in a timely
manner. Our planned production is in the order of 2 million ozs of silver and 4
million lbs. of copper per annum. Accordingly, each 10 cent change in silver
prices per ounce and each 10 cent per pound change in the average annual copper
price causes a variation in annual operating income before taxes of
approximately $190,000 and $370,000 respectively. We cannot provide any
assurances as to the volatility and cyclical nature of the silver and copper
markets.

WE CANNOT GUARANTEE OUR PRIMARY ESTIMATES ON ORE RESERVES AND
THAT MINING WILL RECOVER THE INDICATED QUANTITIES OF THESE MATERIALS.

Ore reserves are based on primary estimates and are not
guarantees that mining will recover the indicated quantities of these metals.
Reserve estimation is an interpretative process based upon available data. These
estimates are imprecise and depend on geological interpretation and statistical
inferences drawn from geophysical data, drilling, existing mine workings,
drifting and sampling which may prove to be unreliable. Further, reserves are
valued based on estimates of costs and metals prices. The economic value of ore
reserves may be adversely affected by declines in the market price of the
various metals mined, increased production or capital costs, or reduced recovery
rates.

Short-term operating factors relating to ore reserves, such
as the need to sequentially develop ore bodies and the processing of new or
different ore grades, may adversely affect profitability. The processing of the
ore is simple and well understood. However, delays in sourcing and installing
equipment for the expansion would have a negative impact on results of
operations and financial condition.

WE EXPECT FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS IN
THE FUTURE.

We expect to experience significant fluctuations in our
future quarterly operating results due to a variety of factors, many of which
are outside our control. Factors that may adversely affect our quarterly
operating results include but are not limited to:

> incur unexpected costs in the planned expansion of the
>     mine and mill or encounter any unexpected delays in equipment supply, labor
>     supply or other difficulties; and
>       additional expenses as a result of the extraction and
>     development of ore reserves; and
>       changes in projected demand and markets for our
>     concentrate; and
>       any significant unanticipated expenses; and
>       our ability to attract new personnel in a timely and
>     effective manner; and
>       the amount and timing of operating costs and capital
>     expenditures relating to expansion of our business, operations and
>     infrastructure; and

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> governmental regulation; and
>       general economic conditions.

WILL HAVE TO EXPEND SUBSTANTIAL FUNDS ON ADVERTISING, SALES
AND MARKETING IN THE FUTURE.

We have not incurred significant advertising, sales and
marketing expenses to date. Eventually, we will need to increase awareness of
our business and plan of operations and as a result, we expect to spend
significantly more on advertising, sales and marketing in the future. If our
marketing strategy is unsuccessful, we may not be able to recover these expenses
or even generate any revenues. We will be required to develop long-term sales
agreements for the delivery of ore concentrate. To date, our experience with
respect to marketing is very limited. We may also elect to enter into agreements
or relationships with third parties regarding the promotion or marketing of our
ore. There can be no assurance that we will be able to establish adequate sales
and marketing capabilities, that we will be able to enter into marketing
agreements or relationships with third parties on financially acceptable terms
or that any third parties with whom we enter into such arrangements will be
successful in securing offtake contracts.

Expressions of interest for the sale of copper concentrate
from the mill have been received from a number of large, reputable offtakers.
However, no contract terms have been finalized and no contract signed. Sales
conditions can change, sometimes quickly. However, the expectation is that
conditions will favor the mines for the next two or three years both with the
copper smelters and lead smelters. The reason for this is that the low prices
for copper, lead and zinc have led to shutdowns of mine production causing a
shortage of feed world-wide. This is expected to result in both demand for the
concentrate and favorable smelter terms.

OUR FUTURE REVENUES ARE DEPENDENT ON THE DELIVERY OF
ACCEPTABLE GRADES OF ORE CONCENTRATE AT ECONOMIC RATES OF RETURN.

Our future revenues and our ability to generate profits in
the future are substantially dependent upon the expanded capacity of the mill,
particularly the installation of a third ball mill to bring nominal capacity to
600-tpd of ore feed and to raise production of the mill beyond the level of
nominal capacity.

Known existing mineralization is sufficiently large to
justify an evaluation of the feasibility and economics of expanding production
beyond the planned 600-tpd of mine production. Occurrences of surface
mineralization and old mine workings on the Property evidence significant
potential to host other economic ore horizons in addition to those already known
at the mine. The success of I.P geophysics in identifying blind ore bodies at
the mine site may provide a relatively inexpensive tool for at least a first
pass regional exploration program. However, until such time as the results of
these programs and the completion of the expansion of the facilities has been
undertaken, there can be no assurances that we will be able to meet our planned
objectives or deliver acceptable grades of ore concentrate at economic rates of
return.

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The profitability of the Property depends, in part, on actual
economic returns and actual costs of restarting and expanding production, which
may differ significantly from estimates and involve unexpected problems and
delays. Estimates of economic returns are based, in part, on assumptions about
future metals prices. Whilst the mine and mill have an operating history upon
which we can base estimates of future cash operating costs, estimates of cash
operating costs are based upon, among other things; anticipated tonnage, grades
and metallurgical characteristics of ore to be mined and processed; anticipated
recovery rates of silver and other metals from the ore; and anticipated climatic
conditions. Actual cash operating costs, production and economic returns may
differ significantly from those anticipated by this studies and estimates.

There are a number of uncertainties inherent in the
development and expansion of any mine. These uncertainties include the timing
and cost of the modification of mining and processing facilities, the
availability and cost of skilled labor, the availability and cost of power and
the availability and cost of appropriate smelting and refining arrangements.
Accordingly, there is no assurance that the future development activities will
result in profitable mining operations.

THERE ARE INHERENT MINING RISKS AND LIMITS OF INSURANCE
COVERAGE

It is not possible to guarantee that it will be possible to
insure against all of the risks associated with mining. The business of mining
is subject to a number of risks and hazards, including adverse environmental
effects, industrial accidents, labor disputes, technical difficulties due to
unusual or unexpected geologic formations, failures of slopes, flooding and
periodic interruptions due too inclement or hazardous weather conditions.

These risks can result in, among other things, damage to and
destruction of mineral properties or production facilities, personal injury,
environmental damage, delays in mining, monetary losses and legal liability.

Although we expect to seek and maintain insurance with
respect to the mine, mill and mineral properties within ranges of coverage
consistent with industry practice, there can be no assurance that insurance will
be available at economically feasible premiums. Insurance against environmental
risks is not generally available. These environmental risks include potential
liability for pollution or other disturbances resulting from mining exploration
and production. In addition, not all risks associated with developing and
producing silver, copper and other metals are included in coverage and some
covered risks may result in liabilities which exceed policy limits. Further, we
may elect to not seek coverage for all risks. The occurrence of an event that is
not fully covered, or covered at all, by insurance, could have a material
adverse effect on our financial condition and results of operations.

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SINCE OUR SHARES ARE THINLY TRADED, AND TRADING ON THE OTC
BULLETIN BOARD MAY BE SPORADIC BECAUSE IT IS NOT AN EXCHANGE, STOCKHOLDERS MAY
HAVE DIFFICULTY RESELLING THEIR SHARES.

Our common shares are currently listed for public trading on
the Over the Counter Bulletin Board and the Berlin Stock Exchange. The trading
price of our common shares has been subject to wide fluctuations. Trading prices
of our common shares may fluctuate in response to a number of factors, many of
which will be beyond our control. The stock market has generally experienced
extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of companies with no current
business operation. There can be no assurance that trading prices and price
earnings ratios previously experienced by our common shares will be matched or
maintained. These broad market and industry factors may adversely affect the
market price of our common shares, regardless of our operating performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of management's attention and resources.

INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS.

Our by-laws contain provisions with respect to the
indemnification of our officers and directors against all expenses (including,
without limitation, attorneys' fees, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the fact that the person is one of our officers or
directors) incurred by an officer or director in defending any such proceeding
to the maximum extent permitted by Nevada law.

FUTURE DILUTION

Our constating documents authorize the issuance of
100,000,000 common shares and 25,000,000 preferred shares. In the event that we
are required to issue any additional shares or enter into private placements to
raise financing through the sale of equity securities, investors' interests in
our company will be diluted and investors may suffer dilution in their net book
value per share depending on the price at which such securities are sold. If we
issue any such additional shares, such issuances also will cause a reduction in
the proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.

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On December 20, 2002 we agreed to execute a Debt Settlement
and Private Placement Agreement whereby the parties agree to reduce outstanding
debts relating to our former business activities through a share for debt
private placement in the aggregate amount of $1,807,105.28 through the issuance
of 7,200,421 common shares at a deemed price of $0.25 per common share to the
respective creditors for services rendered. This transaction has not completed
at the date of this quarterly report.

On June 30, 2003 we executed a Debt Settlement and Private
Placement Agreement with Wolverton Securities (USA) Ltd. in the aggregate amount
of $25,000 through the issuance of 100,000 common shares at a deemed price of
$0.25 per common share for financial and advisory services in conjunction with
our proposed financing and business plan development. The transaction has not
completed as of the date of this report.

ANTI-TAKEOVER PROVISIONS

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our By-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors.

ENFORCEABILITY OF CIVIL LIABILITIES AGAINST US

Our principal businesses are located outside the United
States. In addition, some our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of such persons' assets are located outside the United States. As a
result, it may be difficult for investors to enforce within the United States
any judgments obtained against our company or our officers or directors,
including judgments predicated upon the civil liability provisions of the
securities laws of the United States or any state thereof.

Item 3. Controls and Procedures

> Roland Vetter, President and Chief Financial Officer
>     of the Company evaluated the effectiveness of the design and operation of
>     our disclosure controls and procedures, as such term is defined under Rule
>     13a-14(c) promulgated under the Securities Exchange Act of 1934, as amended,
>     within 90 days prior to the filing date of this report. Based on his
>     evaluation, Mr. Vetter concluded that our disclosure controls and procedures
>     are effective.
>       There have been no significant changes (including
>     corrective actions with regard to significant deficiencies or material
>     weaknesses) in our internal controls or in other factors that could
>     significantly affect these controls subsequent to the date of the evaluation
>     referenced in paragraph (a) above.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, active or pending legal proceedings
against us, nor are we involved as a plaintiff in any material proceedings or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our interest.

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Item 2. Changes in Securities.

On December 16, 2002 we executed an Assignment of Purchase
Option Agreement with Securities Trading Services Inc. ("STS") in
which STS agreed to assign its rights to acquire title to certain mining claims
and related assets for the sum of $250,000 payable in restricted common shares
of our company at a deemed value of $0.25 per common share. The 1,000,000 common
shares have been issued pursuant to an exemption provided by Regulation S and
have not been registered under the United States Securities Act of 1933 Act (the
"1933 Act") or any U.S States securities laws and, unless so
registered, may not be offered or sold, directly or indirectly, in the United
States or to a U.S persons except pursuant to an effective registration
statement under the 1933 Act and as may be required under applicable securities
laws. We have agreed to file a Registration Statement with the SEC incorporating
the securities issued under the agreement no later than six months from the
closing date of acquisition. In the event that we fail to meet this provision,
we shall issue an additional one percent of the total number of securities
issued to STS under the agreement, for each month that we are in breach of the
registration provisions.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

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

Form 8-K Current Reports

Item 9 - On May 6, 2003 we filed a current report on Form 8-K
announcing the appointment of Mr. J. Roland Vetter CA, to the position Chief
Financial Officer and acting President. Mr. Vetter replaces Andrew Schwab who
held positions as President, Secretary and Treasurer during the corporation's
formation and who will remain as Secretary. Mrs. Carol O'Shea, the
corporations accounting technician for the last two years, has consented to the
office of Treasurer.

Form 8-K Subsequent to Quarter End

Item 9 - On August 1, 2003 we filed a current report on
Form 8-K announcing that the board of directors of the Company received a
feasibility study on the proposed acquisition of the Minera Real de Cosala and
its La Verde silver-copper mine located in Sinaloa, Mexico. The Company intends
to use this feasibility study in presentations made to brokers, dealers and
marketing agencies. Portions of this feasibility study are contained in the
Corporate Profile, which has been attached to the Form 8-K as Exhibit 99 filed
on August 1, 2003.

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Consolidated Financial Statements Filed as Part of the
Quarterly Report

Our unaudited interim consolidated financial statements
include:

> Consolidated Balance Sheets
> Consolidated Statements of Operations and Deficit
> Consolidated Statements of Cash Flows
> Notes to the Consolidated Financial Statements

Exhibits Required by Item 601 of Regulation S-B

|Exhibit Number and Description      
|------------------------------------
|                                    
|(3) Articles of Incorporation/Bylaws
|3.1                                 
|3.2                                 
|3.3                                 
|3.4                                 
|                                    
|(10) Material Contracts             
|10.1                                
|10.2                                
|10.3                                
|10.4                                
|10.5                                
|                                    
|(31)                                
|                                    
|(32)                                
|                                    
|(99)                                

40

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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.





SUN POWER CORPORATION







/s/ Ronlad
    Vetter

By: Roland Vetter

President and Chief Financial Officer

(Principal Executive Officer, Principal Accounting Officer and Principal
Financial Officer)



Date: August 14, 2003



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



Signatures





/s/ Andrew
Schwab

By: Andrew Schwab, Secretary and Director

Date: August 14, 2003





/s/ Milton Datsopoulos

By: Milton Datsopoulos, Director

Date: August 14, 2003





/s/ Dana
Hansen

By: Dana Hansen, Director

Date: August 14, 2003



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