UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB

(Mark One)

[ X ]

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 OR



[    ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______



Commission file number:_000-25529



REDCELL POWER CORPORATION

____________________________________________________________________________________

(Exact name of small business issuer in its charter)



|Delaware                                                       |  | 13-4044390                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|1650  1180 West Georgia Street
Vancouver, British Columbia    |  | V6E 4A2                             
|(Address of principal executive offices)                       |  | (Zip Code)                          



Issuers telephone number:  (604) 629-2461



Securities Registered Under Section 12(b) of the Exchange Act:

None



Securities Registered Under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

(Title of class)



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

Yes [X] No [  ]



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



State issuers revenues for most recent fiscal year:  $Nil



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:  8,345,502 issued and outstanding as at December 31, 2004.



Documents Incorporated by Reference:  None.



Transitional Small Business Format.   Yes [  ]   No [X]



---



PART I





ITEM 1.

DESCRIPTION OF BUSINESS



The Company was incorporated in the State of Delaware in February 1998.  On May 23, 2002 the Company changed its name to RedCell Power Corporation.



On May 23, 2002 the Company, acquired 100,000 common shares, $1.00 par value, of RedCell Batteries Inc., (RBI) a company incorporated under the laws of the province of Alberta.



The acquisition was consummated by the execution of an Acquisition Agreement dated May 23, 2002.  The shares acquired by the Company represented one hundred percent (100%) of all of RBIs then currently issued and outstanding common stock in a tax free stock-for-stock acquisition.  The aggregate purchase price paid by the Company for the RBI common shares was 8,000,000 newly issued shares of post-reverse split shares of voting common shares of the Company, $0.001 par value.  These shares were issued to the sellers of the RBI shares subsequent to a 1 for 10 reverse split by the Company of its voting common stock. Additionally, pursuant to the terms of the Acquisition Agreement, the sum of 257,501 common shares of the Company, held by the previous majority shareholders of the Company, were cancelled.



As a result of the foregoing transaction, there was a change in control of the Company to the shareholders of RBI.  The shareholders of RBI now hold approximately 99% of the outstanding common shares of the Company.  As a result of this acquisition and change of control, the Company changed its name to RedCell Power Corporation.



Subsequent to the acquisition, the Company determined that the operations of RBI were not viable and accordingly adopted a formal plan of disposal.  On December 30, 2003 the Company sold the beneficial right to, title, and interest of its shares in RBI for US$1.00.  This sale resulted in a gain on sale of subsidiary of $3,868,925, as the difference between the assets held for sale and liabilities held for sale.







ITEM 2.

DESCRIPTION OF PROPERTY



The Company is currently looking to locate and consummate a merger or acquisition with an operating entity.  The Company is considered to be in the development stage.







ITEM 3.

LEGAL PROCEEDINGS



None.





ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



There were no matters submitted to a shareholder vote during the fiscal year ended December 31, 2004.







PART II





ITEM 5

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



The Companys common stock is currently not traded nor quoted in any market place, nor is the Company aware of any established public trading market for RedCells common stock.





ITEM 6.

MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



Overview



We are a development stage company.



The Company currently maintains an office in Canada at 1650  1180 West Georgia Street, Vancouver, British Columbia V6E 4A2.





RESULTS OF OPERATIONS



Restructuring



Since the sale of the beneficial right, title, and interest of shares in RedCell Batteries Inc. completed in December 2003, we have been looking to locate and consummate a merger or acquisition with an operating entity.  The Company is considered to be in the development stage.



Liquidity and Capital Resources



To date we have incurred significant net losses.  The net loss for the year ended December 31, 2004 is $141,531, and the accumulated deficit as at December 31, 2004 is $949,420.  The Company has no current operations and is currently looking to locate and consummate a merger or acquisition with an operating entity. These factors raise substantial doubt about our ability to continue as a going concern.  We anticipate that we may continue to incur significant operating losses for the foreseeable future.  There can be no assurance as to whether or when we will generate material revenues or achieve profitable operations.





RISK FACTORS



There are inherent risk factors associated with an investment in RedCell and management wishes to alert investors to these risks.



Limited Operating History



RedCell has a limited operating history upon which an evaluation of its business and prospects can be based.  There can be no assurance that an investment in our Company shall be profitable or that we will realize revenue growth or be profitable on a quarterly or annual basis.  In addition, any plans to increase our operating expenses to further develop our operations and increase our administration resources will require capital.  A relatively high percentage of our expenses will be typically fixed in the short term as our expense levels are based, in part, on its expectations of future revenue.  To the extent that such expenses precede or are not subsequently followed by increased revenue, our business, financial condition, operating results, and cash flows would be materially adversely affected.  Management believes that period-to-period comparisons of financial results are not necessarily meaningful at this stage and should not be relied upon as an indication of future performance.



Inflation



As we are a development stage company, inflation has not had a material affect on our operations.  In the event we are no longer considered a development stage entity, inflation may affect our ability to generate profits as increased costs may be associated with development and marketing of our products.  In the opinion of management, inflation at this time has not and will not have a material affect on our operations. Management will evaluate the possible affects of inflation on RedCell as it relates to our business and operations and will proceed accordingly.



Ability to Raise Capital



Our ability to further develop our business and operations is dependent on our ability to raise capital.  RedCell will seek to raise capital through equity funding and private placement of securities as well as securing lines of credit with credit institutions.  There is no guarantee that we will be able to raise capital to further develop our business and operations.  Additionally, we may encounter significant costs or unfavourable terms in our efforts to raise capital.  Investors are further alerted that any efforts to raise capital through a private placement of equity securities will result in dilution to shareholders of the Company.





ITEM 7.

FINANCIAL STATEMENTS



The Annual Financial Statements for the year ended December 31, 2004 will follow the text of this Form 10-KSB.





ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.





ITEM 8A.

CONTROLS AND PROCEDURES



As of the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures and its internal controls and procedures for financial reporting.  This evaluation was done under the supervision and with the participation of management, including the President and Chief Financial Officer.  In accordance with SEC requirements, the President and Chief Financial Officer note that, since the date of the evaluation to the date of this Annual Report, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.  Based upon the Companys evaluation, the President and Chief Financial Officer have concluded that the Companys disclosure controls are effective to ensure that material information relating to the Company is made known to management, including the President and Chief Financial Officer, particularly during the period when the Companys periodic reports are being prepared, and that the Companys internal controls are effective to provide reasonable assurance that the Companys financial statements are fairly presented in conformity with generally accepted accounting principles.





ITEM 8.B.

OTHER INFORMATION



None.

PART III



ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT



Identification of Directors



The list presented below sets forth the names and ages of all directors of the Company indicating all positions and offices with the Company held by each such person and his term of office as director and the period during which he has served as such:



|Name         | Age | Positions | Director Since
|------------ | --- | --------- | --------------
|             |     |           |               
|Cameron King | 43  | Director  | March 2003    





Identification of Executive Officers



The list presented below sets forth the names and ages of all executive officers of the Company indicating all positions and offices held by such person and the period during which he has served as such:



|Name         | Age | Positions                             | Director Since
|------------ | --- | ------------------------------------- | --------------
|             |     |                                       |               
|Cameron King | 43  | President and Chief Executive Officer | March 2003    



(1)

All officers serve at the discretion of the Board of Directors



Business Experience



Mr. King, holds an MBA from Michigan State University and is a finance graduate of McMaster University, with over 20 years of senior management experience developing expertise in capital markets, sales, marketing and public relations. Mr. King was a key member of the corporate banking team with the Bank of Nova Scotia in Toronto, Canada, specializing in merger and acquisition due diligence.



Since 1995, Cameron has operated a successful venture capital company by incubating, structuring, and publicly listing several companies ranging from internet based technology, mining, oil and gas exploration, and telecommunications.



Involvement in Certain Legal Proceedings



None.



Promoters and Control Persons



Not applicable.



Section 16(a) Beneficial Ownership Reporting Compliance



The Company believes that its officers, directors, and 10% beneficial owners have filed on a timely basis all required Forms 3, 4, and 5 under Section 16(a) of the Exchange Act due in or in respect of the 2004 fiscal year.







ITEM 10.

EXECUTIVE COMPENSATION



(a)  Summary Compensation Table



The following table reflects cash and non-cash compensation paid or accrued by the Company during the fiscal years ended December 31, 2004, 2003, and 2002 to or for the account of the chief executive officer and each executive officer whose cash compensation exceeded $100,000, and all executives of the Company as a group:



|                            | Annual Compensation | Long-term Compensation
|--------------------------- | ------------------- | ----------------------
|Name and
Principal Position | Year Ended
Nov. 30  | Salary                
|                            |                     |                       
|Cameron King,               | 2004                | $120,000              
|President                   | 2003                | $120,000              
|                            | 2002                | $120,000              
|                            |                     |                       





(b)

Option/SAR Grants in Last Fiscal Year

% of Total

Options/SARs

Granted to

|Number of Securities Underlying Options/SARs | Employees in
Fiscal | Exercise or Base Price/ | Market Price on Date | Expiration | Grant Date Present
|-------------------------------------------- | ------------------- | ----------------------- | -------------------- | ---------- | ------------------



NONE



(c)

Aggregated Option/SAR Exercises and Last Fiscal Year and Year-End Option/SAR Values







|Name | Shares Acquired on Exercise | Value Realized | Number of Securities Underlying Unexercised Options/SARs at FY-end (all exercisable) | Value of Unexercised In-The-Money Options/SARs at FY-end (all exercisable)
|---- | --------------------------- | -------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------------------------------



NONE









ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



(a)

Security Ownership of Certain Beneficial Owners



The Company is not aware of any of any persons who own beneficially more than 5 percent of the outstanding shares of its Common Stock.  The Company has no other class of voting securities.





(b)

Security Ownership of Management



Not Applicable



(c) Changes in Control



None.





ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



(a)

Transactions With Management and Others



None.



(b)

Certain Business Relationships



None.



(c)

Indebtedness of Management



None.



(d)

Transactions with Promoters



Not applicable.





ITEM 13.

EXHIBITS



31

Certifications by the Chief Executive Officer and the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32

Certificate of Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.







ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES



(a)  Fees paid to MacKay, LLP



For the fiscal years ended December 31, 2004 and December 31, 2003, MacKay LLP provided services in the following categories and amounts:



|                   | Fiscal Year Ended 
|------------------ | ------------------
|                   | December 31,
2004 
|                   |                   
|Audit Fees         | $            7,500
|Audit-Related Fees | 1,000             
|Tax Fees           |                   
|All Other Fees     |                   





(b)  Policies and Procedures for Approval of Audit and Non-Audit Services:



The Company has approved an audit committee, through which all audit and non-audit services are approved.





---





SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



REDCELL POWER CORPORATION



September 27, 2005



By: Cameron King_____________________

Cameron King, President,

and Chief Executive Officer









---













RedCell Power Corporation

(a Development Stage Company)



Consolidated Financial Statements





Years ended December 31, 2004 and 2003



(Stated in US Dollars)









---

RedCell Power Corporation

(a Development Stage Company)

Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004











Report of Independent Registered Public Accounting Firm



Consolidated Statements of Operations and Deficit



Consolidated Statements of Stockholders Equity



Consolidated Balance Sheets



Consolidated Statements of Cash Flows



Notes to the Consolidated Financial Statements











---



[form10ksb002.gif]



Report of Independent Registered Public Accounting Firm



To the Shareholders of

RedCell Power Corporation

(a Development Stage Company)



We have audited the consolidated balance sheets of RedCell Power Corporation (a Development Stage Company)as at December 31, 2004 and 2003 and the related consolidated statements of operations and deficit, stockholders equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with the generally accepted auditing standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2004 and 2003 and the results of their operations and their cash flows for the years then ended in accordance with generally accepted accounting principles in the United States of America.



The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company is in the development stage, and has no permanently established source of revenue and is dependent on its ability to raise capital from shareholders or other sources to sustain operations.  These factors, along with other matters as set forth in Note 1, raise substantial doubt that the Company will be able to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.







Vancouver, Canada

MacKay LLP

June 8, 2005

Chartered Accountants











---

RedCell Power Corporation

(a Development Stage Company)

Consolidated Statements of Operations and Deficit

(Stated in US Dollars)





|Year Ended December 31,                       | 2004                      | 2003                       
|--------------------------------------------- | ------------------------- | ---------------------------
|                                              |                           |                            
|                                              |                           |                            
|Administrative expenses                       |                           |                            
|Accounting and legal                          | $                 19,310  | $                 17,266   
|Bank charges                                  | 96                        | -                          
|Consulting                                    | 120,000                   | 150,394                    
|Filing fees                                   | -                         | 2,425                      
|Travel                                        | 2,125                     | 6,712                      
|                                              |                           |                            
|                                              | 141,531                   | 176,797                    
|                                              |                           |                            
|Loss before other item                        | (141,531)                 | (176,797)                  
|                                              |                           |                            
|Income on investment in subsidiary            |                           |                            
|Recovery of investment in subsidiary (note 5) | -                         | 3,868,925                  
|                                              |                           |                            
|Income (loss) for the year                    | (141,531)                 | 3,692,128                  
|                                              |                           |                            
|Deficit, beginning of year                    | (807,889)                 | (4,500,017)                
|                                              |                           |                            
|Deficit, end of year                          | $            (949,420)    | $              (807,889)   
|                                              |                           |                            
|Income (loss) per share                       | $                  (0.02) | $                      0.44
|                                              |                           |                            
|Weighted average shares outstanding           | 8,345,502                 | 8,345,502                  











---

RedCell Power Corporation

(a Development Stage Company)

Consolidated Statements of Stockholders Equity

(Stated in US Dollars)



December 31, 2004



|                                                                 | Number of shares | Par value      | Additional Paid in Capital | Accumulated
Deficit  | Total                
|---------------------------------------------------------------- | ---------------- | -------------- | -------------------------- | -------------------- | ---------------------
|For the period February 25, 1998 to January 31, 1999             | -                | $            - | $                 -        | $                  - | $                   -
|Issued (note 4(a))                                               | 250,000          | 250            | 9,750                      | -                    | 10,000               
|Capital contribution for the period                              | -                | -              | 9,000                      | -                    | 9,000                
|Net loss for the period                                          | -                | -              | -                          | (19,050)             | (19,050)             
|                                                                 |                  |                |                            |                      |                      
|Balance January 31, 1999                                         | 250,000          | 250            | 18,750                     | (19,050)             | (50)                 
|                                                                 |                  |                |                            |                      |                      
|Capital contribution for the year                                | -                | -              | 31,050                     | -                    | 31,050               
|Net loss for the year                                            | -                | -              | -                          | (34,550)             | (34,550)             
|                                                                 |                  |                |                            |                      |                      
|Balance January 31, 2000                                         | 250,000          | 250            | 49,800                     | (53,600)             | (3,550)              
|                                                                 |                  |                |                            |                      |                      
|Issued (note 4(b))                                               | 16,250           | 16             | 9,984                      | -                    | 10,000               
|Issued (note 4(c))                                               | 2,500            | 3              | 297                        | -                    | 300                  
|Issued (note 4(e))                                               | 10,000           | 10             | 1,990                      | -                    | 2,000                
|Capital contribution for the year                                | -                | -              | 35,425                     | -                    | 35,425               
|Net loss for the year                                            | -                | -              | -                          | (45,475)             | (45,475)             
|                                                                 |                  |                |                            |                      |                      
|Balance January 31, 2001                                         | 278,750          | 279            | 97,496                     | (99,075)             | (1,300)              
|                                                                 |                  |                |                            |                      |                      
|Issued (note 4(f))                                               | 5,000            | 5              | 45                         | -                    | 50                   
|Capital contribution for the year                                | -                | -              | 32,300                     | -                    | 32,300               
|Net loss for the year                                            | -                | -              | -                          | (33,107)             | (33,107)             
|                                                                 |                  |                |                            |                      |                      
|Balance January 31, 2002                                         | 283,750          | 284            | 129,841                    | (132,182)            | (2,057)              
|                                                                 |                  |                |                            |                      |                      
|Stock dividend paid                                              | -                | -              | (50)                       | -                    | (50)                 
|Stock issued to effect the acquisition of subsidiary (note 4(h)) | 8,000,000        | 8,000          | -                          | -                    | 8,000                
|Stock cancelled by majority  shareholders May 2002 (note 4(i))   | (258,248)        | (257)          | 257                        | -                    | -                    
|Issued (note 4(j))                                               | 320,000          | 320            | -                          | -                    | 320                  
|Net loss for the period                                          | -                | -              | -                          | (4,367,835)          | (4,367,835)          
|                                                                 |                  |                |                            |                      |                      
|Balance December 31, 2002                                        | 8,345,502        | 8,347          | 130,048                    | (4,500,017)          | (4,361,622)          
|Net income for the year                                          | -                | -              | -                          | 3,692,128            | 3,692,128            
|                                                                 |                  |                |                            |                      |                      
|Balance December 31, 2003                                        | 8,345,502        | 8,347          | 130,048                    | (807,889)            | (669,494)            
|Net loss for the year                                            | -                | -              | -                          | (141,531)            | (141,531)            
|                                                                 |                  |                |                            |                      |                      
|Balance, December 31, 2004                                       | 8,345,502        | $    8,347     | $   130,048                | $      (949,420)     | $     (811,025)      

---

RedCell Power Corporation

(a Development Stage Company)

Consolidated Balance Sheets

(Stated in US Dollars)



|December 31,                                     | 2004               | 2003                  
|------------------------------------------------ | ------------------ | ----------------------
|                                                 |                    |                       
|Assets                                           |                    |                       
|                                                 |                    |                       
|Current                                          |                    |                       
|Cash                                             | $          10,212  | $                    -
|                                                 |                    |                       
|                                                 |                    |                       
|Liabilities                                      |                    |                       
|                                                 |                    |                       
|Current                                          |                    |                       
|Accounts payable and accrued liabilities         | $           25,405 | $           13,430    
|Due to related parties (note 3)                  | 795,832            | 656,064               
|                                                 |                    |                       
|                                                 | 821,237            | 669,494               
|                                                 |                    |                       
|Stockholders Equity (Deficit)                   |                    |                       
|                                                 |                    |                       
|Common stock,$0.001 par value (note 4)           |                    |                       
|25,000,000 shares authorized                     |                    |                       
|8,345,502 shares outstanding                     | 8,347              | 8,347                 
|                                                 |                    |                       
|Additional paid in capital                       | 130,048            | 130,048               
|                                                 |                    |                       
|Deficit Accumulated during the Development Stage | (949,420)          | (807,889)             
|                                                 |                    |                       
|                                                 | (811,025)          | (669,494)             
|                                                 |                    |                       
|                                                 | $          10,212  | $                    -





Nature of Operations (note 1)



Approved by the Directors:



Cameron King

___________________________ Director





---

RedCell Power Corporation

(a Development Stage Company)

Consolidated Statements of Cash Flows

(Stated in US Dollars)



|Year ended December 31,                   | 2004                     | 2003                        
|----------------------------------------- | ------------------------ | ----------------------------
|                                          |                          |                             
|Cash provided by (used for)               |                          |                             
|                                          |                          |                             
|Operating activities                      |                          |                             
|Income (loss) for  the year               | $            (141,531)   | $        3,692,128          
|Recovery of investments in subsidiary     | -                        | (3,868,925)                 
|                                          |                          |                             
|                                          | (141,531)                | (176,797)                   
|                                          |                          |                             
|Changes in non-cash working capital items |                          |                             
|Accounts payable and accrued liabilities  | 11,975                   | 4,643                       
|Due to related party                      | 120,000                  | 120,000                     
|                                          |                          |                             
|                                          | (9,556)                  | (52,154)                    
|                                          |                          |                             
|Financing activity                        |                          |                             
|Due to related parties                    | 19,768                   | 52,154                      
|                                          |                          |                             
|Increase in cash during the year          | 10,212                   | -                           
|Cash, beginning of year                   | -                        | -                           
|Cash, end of year                         | $                 10,212 | $                          -









---

RedCell Power Corporation

(a Development Stage Company)

Notes to the Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004 and 2003



1.

Nature of Operations



The Company was incorporated in the State of Delaware in February 1998.  On May 23, 2002 the Company changed its name to RedCell Power Corporation.



As a result of the change in business, cumulative from inception figures have not been presented as management does not consider that these figures would provide meaningful information.



The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern.  Accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. The Companys ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters can not be predicted at this time.





2.

Significant Accounting Policies



(a)

Development stage company



The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards No. 7.  On December 30, 2003, the Company sold its shares of Redcell Batteries, Inc. (RBI).



(b)

Consolidated and comparative figures



The comparative figures in these financial statements are consolidated and include the accounts of the Company and the accounts of its wholly-owned subsidiary RedCell Batteries Inc. to December 30, 2003 (formerly RedCell Canada Inc.).



(c)

Estimates



The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



(d)

Foreign currency translation



The Companys functional currency is the U.S. dollar.  Transactions in foreign currency are translated into U.S. dollars as follows:



-  Monetary items at the rate prevailing at the balance sheet date;

-  Non-monetary items at the historical exchange rate;

- Revenue and expenses at the average rate of exchange in effect during the applicable accounting period.

---

RedCell Power Corporation

(a Development Stage Company)

Notes to the Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004 and 2003



2.

Significant Accounting Policies (continued)



(e)

Stock-based compensation



SFAS 123 Accounting for stock based compensation, defines a fair value based method of accounting for employee stock options.  Under this fair value method, compensation cost is measured at the date of grant based on the fair value of the award and is recognized over the vesting period.  However SFAS 123 allows an entity to continue to measure compensation costs related to stock option costs in accordance with Accounting Principle Board Statement No. 25 (APB 25).  The Company has elected to measure compensation related to stock options in accordance with APB 25.  Accordingly, since the fair value of the shares was less than the price of the stock options at the date of grant, there is no compensation to be recognized under US GAAP.  There are no outstanding options or warrants as at December 31, 2004 and 2003.



In December 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure.  SFAS 148 amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation.  In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  SFAS 148 is effective for fiscal years beginning after December 15, 2002.  The company adopted SFAS No. 148, on January 1, 2003 with no material impact on its financial statements.



(f)

Loss per share



Basic loss per share is calculated based on the weighted average number of shares outstanding during the period, in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share.



(g)

Fair value of financial instruments



All significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.  Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.



(h)

Income taxes



Income taxes are provided for using the liability method of accounting in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes.  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.



(i)

Comprehensive loss



In June 1997, the FASB issued SFAS No. 130 Reporting comprehensive income. SFAS 130 requires that total comprehensive income and comprehensive income per share be disclosed with equal prominence as net income and net income per share.  Comprehensive income is defined as changes in shareholders equity exclusive of transactions with owners such as capital contributions and dividends.  There are no comprehensive income items for the years reported.

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RedCell Power Corporation

(a Development Stage Company)

Notes to the Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004 and 2003



3.

Related Party Transactions



Of the total due to related parties, $555,832 (2003 - $536,064) is secured against the assets of the Company.  These advances do not bear interest, and have no fixed terms, accordingly the fair value cannot be practicably determined.



During the year the Company incurred consulting fees of $120,000 (2003 - $120,000) with respect to services rendered by a company in which a director has an interest.  As at December 31, 2004 the total amount due to the related company was $240,000 (2003 - $120,000).



These transactions were in the normal course of operations and have been valued in these financial statements at the exchange amount which is the amount of consideration established and agreed to by the related parties.





4.

Common Stock



(a)

On May 18, 1998 the Company issued 1,000,000 common shares for $10,000 cash.

(b)

On February 1, 2000 the Company issued 65,000 common shares for $10,000 cash.

(c)

On August 1, 2000 the Company issued 10,000 common shares for $300 cash.

(d)

On August 1, 2000 the Company completed a 2.5 for 1 stock split.  This has been reflected in the statement of stockholders equity on a retroactive basis.

(e)

On January 15, 2001 the Company issued 100,000 common shares for $2,000 cash.

(f)

On August 10, 2001 the Company issued 50,000 common shares for $50 cash.

(g)

On May 24, 2002 the company completed a reverse stock split 1 for 10.  This has been reflected in the statement of stockholders equity on a retroactive basis.

(h)

On May 24, 2002 the Company issued 8,000,000 common shares with a par value of $8,000 in exchange for all of the issued and outstanding shares of RedCell Batteries Inc., a former legal subsidiary.

(i)

On May 29, 2002 majority shareholders cancelled 258,248 common shares with a par value of $257.

(j)

On July 25, 2002 the Company issued 320,000 common shares for $320 cash.





5.

Recovery of Investment in Subsidiary



On December 31, 2003 the Company sold the beneficial right, title and interest of its shares in RBI for US$1.00.  This sale resulted in a gain on sale of subsidiary of $3,868,925 as the difference between the assets held for sale and liabilities held for sale.



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RedCell Power Corporation

(a Development Stage Company)

Notes to the Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004 and 2003



6.

New Accounting Pronouncements



SFAS No. 123 (revised 2004), Share-Based Payment.  For public companies, the cost of employee services received in exchange for equity instruments generally should be measured at fair value at the grant date.  The cost of employee services received in exchange for an award of liability instruments should be measured initially at fair value and re-measured subsequently at each reporting date through the settlement date. Public entities that file as small business issuers must comply as of the beginning of the first interim or annual reporting period that begins after December 15, 2005.



SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.  This Statement was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003, except for:



Mandatorily redeemable noncontrolling interests that would not have to be classified as liabilities by the subsidiary, under the "only upon liquidation" exception in paragraph 9 of SFAS 150, but would be classified as liabilities by the parent in consolidated financial statements, the classification and measurement provisions (but not the disclosure provisions) of SFAS 150 are deferred indefinitely pending further Board action.



Other mandatorily redeemable noncontrolling interests that were issued before November 5, 2003, the measurement provisions of SFAS 150 are deferred indefinitely, both for the parent in consolidated financial statements and for the subsidiary that issued the instruments that result in the mandatorily redeemable noncontrolling interest, pending further Board action.  However, the classification and disclosure provisions are not deferred.



SFAS No. 153, Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29.  This amendment to Opinion No. 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  The Statement is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005.



In addition, the FASB and Emerging Issues Task Force (EITF) have issued a variety of interpretations including the following interpretations with wide applicability.



EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.  The effective date for the measurement and recognition guidance contained in paragraphs 10 through 20 of Issue 03-1 is delayed.  The disclosure guidance in paragraphs 21 and 22 of Issue 03-1 remains effective.



EITF Issue No. 03-13, Applying the Conditions in Paragraph 42 of FASB Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", in Determining Whether to Report Discontinued Operations.  This Issue describes an approach for evaluating whether criteria have been met for classifying as discontinued operations the results of operations of a component of an entity that either has been disposed of or is classified as held for sale in fiscal periods beginning after December 15, 2004.



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RedCell Power Corporation

(a Development Stage Company)

Notes to the Consolidated Financial Statements

(Stated in US Dollars)



December 31, 2004 and 2003



6.

New Accounting Pronouncements (continued)



EITF Issue No. 04-1, Accounting for Preexisting Relationships between the Parties to a Business Combination.  This Issue concludes that a business combination between two parties having a preexisting relationship is a multiple-element transaction with one element being the business combination and the other element being the settlement of the preexisting relationship.  The consensuses should be applied to business combinations consummated and goodwill impairment tests performed in reporting periods beginning after October 13, 2004.



The adoption of these new pronouncements is not expected to have a material effect on the Companys financial position or results of operations.





7.

Comparative Figures



The financial statements have been reclassified, where applicable, to conform to the presentation used in the current year.  The changes do not affect prior year earnings.