<PAGE>

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

                                   FORM 10-KSB

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

                   For the fiscal year ended January 31, 2003

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

                         Commission File Number: 0-24857
                         -------------------------------

                             POWER TECHNOLOGY, INC.
                             ----------------------
                 (Name of small business issuer in its charter)

             NEVADA                                    88-0395816
             ------                                    ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

               15 OCEAN VIEW ROAD, LIONS BAY, B.C. V0N 2E0 CANADA
               --------------------------------------------------
                    (Address of principal executive offices)

ISSUER'S TELEPHONE NUMBER:  (604) 925-0716

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:

 Title of each class                  Name of each exchange on which registered
 -------------------                  -----------------------------------------
         N/A                                               N/A

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

                          COMMON STOCK, PAR VALUE $.001

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

         State issuer's revenues for its most recent fiscal year: $ 25,000

         The aggregate market value of voting stock held by non-affiliates of
         the registrant as of May 13, 2003:
                  Common stock, $.001 par value:  $2,964,772

         The number of shares of the registrant's common stock outstanding as of
         May 13, 2003: 44,924,488 shares.

         Documents incorporated by reference:  None

         Transitional Small Business Disclosure Format:
                   Yes [ ] No [X]





<PAGE>

                             POWER TECHNOLOGY, INC.

                       INDEX TO FORM 10-KSB ANNUAL REPORT

PART I

Item 1.  Description of Business............................................. 3

Item 2.  Description of Property............................................. 8

Item 3.  Legal Proceedings................................................... 8

Item 4.  Submission of Matters to a Vote of Security Holders................. 9

PART II

Item 5.  Market of and Dividends on the Registrant's Common Equity and
         Other Stockholder Matters........................................... 9

Item 6.  Management's Discussion and Analysis or Plan of Operations..........11

Item 7.  Financial Statements................................................14

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure................................................15

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act...................15

Item 10. Executive Compensation..............................................16

Item 11. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters.....................................17

Item 12. Certain Relationships and Related Transactions......................18

Item 13. Exhibits and Reports on Form 8-K....................................18

Item 14.  Controls and Procedures............................................21

Financial Statements.........................................................F-1

Signatures...................................................................22

Exhibit Index................................................................23

                                       2





<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         Power Technology, Inc. (the "Company"), a Nevada corporation, was
incorporated on June 3, 1996. The Company is a research and development company.
It is presently engaged in research and development activities regarding (i)
batteries for the automotive and electric car industries, (2) electronic
sensors, (3) pipeline connection technology, and (4) grain drying equipment.

Batteries
---------

         The primary business of the Company has been to develop improved
technology for batteries to be used in the automotive and electric car industry,
and other uses. Its battery technology has passed from the "proof of principle"
stage to the "preliminary prototype" stage of development.

         The goal of the Company has been the development of batteries that (i)
are lighter than conventional car batteries, (ii) have a higher charge/ quicker
recharge rate, (iii) provide greater range, (iv) will be more cost effective,
and (v) will be more environmentally friendly.

         Electric cars currently being produced have battery packs that last
between 25,000 and 30,00 miles, weigh about 1,100 pounds, require a two to eight
hour recharge period using a 220-volt outlet (or six to ten hours using a
110-volt outlet) and cost about $3,000 to $20,000 to replace. These operating
and recharge statistics only apply to electric cars or batteries operating at
room temperature. At higher temperatures, like those found on sun-soaked asphalt
highways (approximately 50% of North America), battery life of conventional
batteries is drastically diminished. At lower temperatures (the other half of
North America), there is power loss in conventional batteries. Using today's
state-of-the-art technology, electric vehicles will run on lead-acid batteries
and carry two people about 50 miles on a hot day.

         The Company intends to continue its development efforts to be funded in
part through licensees and industrial joint venture partners in order to broaden
and build upon its products and technological base.

         The Company recognizes the need to protect its technology and has a
patent pending covering its battery structure and materials.

         The importance of electric vehicles in the United States and abroad has
increased because of concerns regarding air pollution, global climactic changes,
ozone layer depletion, noise abatement, the price of gasoline, and dependence on
imported oil. However, because of the costs and limited range of currently
available batteries, the production and sales of electric vehicles has been very
limited. There appears to be substantial demand for a high power, durable, high
charge/discharge rate battery for electric cars and other hybrid electric
vehicles (such as two and three wheeled vehicles that are numerous in Europe and
third world countries).

         The Company's future business prospects are substantially dependent
upon the ability of the Company, its joint venture partners and licensees to
develop, manufacture and sell products based on the Company's battery
technologies. Additional development efforts will be required before products
based on the Company's technologies can be manufactured and sold commercially.
There can be no assurance that certain products based on the Company's
technologies can be manufactured cost effectively on a commercial scale, that
such products will gain market acceptance or that competing products and
technologies will not render products based on the Company's technologies
obsolete or noncompetitive.

         In certain fields, the Company may enter into licensing or joint
venture agreements with established companies. Any revenues or profits which may
be derived by the Company from these arrangements will be substantially
dependent upon the willingness and ability of the Company's licensees and joint
venture partners to devote their financial resources and manufacturing and
marketing capabilities to commercialize products based on the Company's
technologies.

                                       3


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         The Company's ability to compete effectively with other companies will
depend, in part, on its ability to protect and maintain the proprietary nature
of its technology. There can be no assurance that the Company's patents or other
proprietary rights will be determined to be valid or enforceable if challenged
in court or administrative proceedings or that the Company's patents or other
proprietary rights, even if determined to be valid, will be broad enough in
scope to enable the Company to prevent third parties from producing products
using similar technologies or processes. There can also be no assurance that the
Company will not become involved in disputes with respect to the patents or
proprietary rights of third parties.

Battery Technology
------------------

         The battery being developed by the Company is an electrochemical
battery of the type having a positive plate, a negative plate, an electrolyte
contacting and bridging the plates, and a transducer in contact with the
plate(s) to apply electronic energy to the plate(s). Each plate is comprised of
a rigid metal structure which significantly increases the exposed surface area
of the plates for the electrolyte to be in contact. The metal structure of the
plates are specially coated with an electrically conductive metal.

         Electrochemical batteries typically include a pair of oppositely
charged plates (positive and negative) with electrolyte to convey ions from one
plate to the other when the circuit is completed. This is a well developed
technology, typically utilizing a lead- acid electrolyte which is more
expensive, more volatile, and environmentally unfavorable than the Company's
battery technology.

         Because the capability of a battery is directly related to the surface
area of its plates which is in contact with electrolyte, their capability is
usually enhanced by sculpting their surfaces to increase and open up their
surface areas. The technology of the Company further increases the surface areas
of the plates without compromising their strength or resistance to vibration,
corrosion and loss of material. Because the Company's plates can be placed
closer together due to their rigidity, the size of the battery and the amount of
required electrolyte is significantly reduced. For this reason, it also
increases the energy density for both the weight and size of the battery.

         The physical movement of electrolyte at the interface of the plates is
increased which materially enhances the ion migration and transfer between the
plates. Stagnation of electrolyte at the plates of conventional batteries is a
problem because it inhibits the transfer and migration of ions between the
plates, commonly known as ion depletion.

Prototype Batteries
-------------------

         The Company is in the process of producing preliminary prototype
versions of its battery that will be built and tested in a variety of
configurations. Preliminary testing by the Company indicates that various
configurations of the battery meet or exceed some of the performance goals
established by major governmental and industry groups for electric vehicle
batteries. The Company also believes its battery has a number of applications
other than electric vehicles, such as hybrid powered vehicles, portable power
tools, electric power management, uninterruptible power and for starting,
lighting and ignition ("SLI") batteries for automobiles, aircraft and marine
craft. The Company is designing various prototype batteries for such
applications.

         GLOSSARY OF TECHNICAL TERMS. Certain technical terms used herein
         have the following meanings:

         Cycle Life - the number of times a rechargeable battery can be charged
                  and discharged.
         Electrode (battery) - the chemically active portions of a battery.
         Energy Density - the amount of energy stored in a specific volume or
                  weight.
         EV (Electric Vehicle) - a vehicle propelled exclusively by an
                  electric drive system powered by an electrochemical energy
                  storage device, typically a rechargeable battery.
         HEV (Hybrid Electric Vehicle) - a vehicle that is propelled both
                  by an electrochemical energy storage device coupled to an
                  electric drive and an auxiliary power unit powered by a
                  conventional fuel such as reformulated gasoline, direct
                  injection diesel or compressed natural gas.
         Hydrides - solid materials that store hydrogen.
         Power Density - the amount of power a battery can delivery per unit
                  volume or weight.

                                       4


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Battery Competition
-------------------

         The market for batteries and other proposed products of the Company is
highly competitive, subject to rapid change and significantly affected by new
product introductions and other market activities of industry participants. The
Company's proposed battery products are targeted at an emerging market of
electric powered automobiles and other vehicles, and the Company's competitors
offer a variety of products and services to address this market. Further, the
Company currently faces direct and indirect competition from traditional
batteries.

         The lead-acid battery industry is mature, well-established and highly
competitive. The industry is characterized by a few major domestic and foreign
producers including Exide, Delphi, A.C. Delco, Johnson Controls, Inc., GNB,
Electrosource, Inc., Energy Conversion Devices, Inc., Hawker and Yuasa, all of
which have substantially greater financial resources than the Company.
Accordingly, the Company's ability to succeed in this market depends upon its
ability to demonstrate superior performance and cost attributes of its
technology. The Company has historically concentrated its activities in the
electric vehicle segment of the market with a view to demonstrating improved
energy to weight and longer battery life in comparison to traditional lead-acid
batteries. The principal competitors of the Company in the electric vehicle
market have directed their efforts to other battery types, such as nickel-
cadmium, nickel-metal hydride, nickel-iron and sodium-sulfur batteries, rather
than lead-acid formulations, although at least one major automobile manufacturer
and one major battery company are known to have research and development
projects underway to develop lead-acid batteries for electric vehicles.

         In the future, because there are relatively low barriers to entry in
the battery industry, the Company could experience additional competition from
other established or emerging companies as the market continues to develop and
expand. Many potential competitors may have well-established relationships with
the Company's potential customers, have extensive knowledge of the industry,
better name recognition and significantly greater financial, technical, sales,
marketing and other resources and are capable of offering batteries which have
multiple applications. It is also possible that new competitors or alliances
among competitors may emerge and rapidly acquire significant market share. The
Company also expects that competition will increase as a result of industry
consolidations. The Company's competitors may be able to respond more quickly to
new or emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their battery
products.

         Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could adversely affect the
Company's business, financial condition or results of operations. There can be
no assurance that the Company will be able to compete successfully against
current or future competitors or that competitive pressure will not adversely
affect its business, financial condition or results of operations.

         The Company believes that the principal competitive factors affecting
its market include features such as functionality, weight, adaptability, ease of
use, product reputation, quality, price, performance, customer service and
support, effectiveness of sales and marketing efforts and company reputation.
Although the Company believes that it will compete favorably with respect to
such factors, there can be no assurance that the Company can establish a
competitive position against current and potential competitors, especially those
with greater financial, marketing, service, support, technical and other
resources than the Company.

Shuan Deng Power Source Company  Venture
----------------------------------------

         The Company entered into an exclusive agreement with Shuang Deng Power
Source Company ("Shuang") to establish a Foreign Invested Joint Venture in The
Peoples Republic of China to jointly develop, manufacture, and distribute
Batteries for the automotive market, trucks, buses and electric vehicles. Shuang
is an established major battery supplier in China. The Company Also entered into
an agreement with the College of Chemistry and Molecular Engineering of the
University of Beijing and PU Lead, a university invested Manufacturer of lithium
ion batteries to further develop its technologies.

         The Company expects to move forward with its Shuang joint venture
Beginning this summer 2003 when it completes its research and development Work
with BC Research Inc.

                                       5


<PAGE>

NxCell Batteries
----------------

         To accelerate research and development for its advanced battery
technology and to bring its batteries to the commercial market, the Company
intends to enter into an agreement with B.C. Research Inc. ("BCR"), a technology
research and development company in Canada.

         The Company and BCR intend to create a new corporation in Canada to be
called NxCell Batteries and Power Inc. ("NxCell") to conduct research and
development activities based upon the battery technology of the Company. The
Company will own 65% (15% to be held in escrow subject to certain events) of
NxCell and BCR and its management and technical staff will own 35% of NxCell.
The batteries of NxCell will be branded under the trade name "NxCell Batteries".

         The Company will license and transfer its advanced lightweight lead
acid battery technology to NxCell, exclusively and unconditionally. NxCell will
have the exclusive right to sub-license this technology.

         In addition to its stock ownership in NxCell, the Company will be
entitled to 50% of all royalties and fees of NxCell from sub-licenses of its
battery technology. The Company will also receive an annual license fee of
$120,000 for a period of three years from NxCell, payable $10,000 per month,
commencing when the capitalization of NxCell exceeds $1,000,000.

Pipeline Connection Technology
------------------------------

         The Company is conducting research and development operations regarding
its patented pipeline connection technology. The Company is developing equipment
designed to join large diameter pipe utilizing magnetic pulse methods, a cold
form method joining a metal sleeve around the ends of two abutting pipes.

         A hinged magnetic work coil developed by the Company is clamped around
the sleeve joining two pipes to produce a ringed shaped crimping force forcing a
uniform joint with uniform stress distributions. The pipes may have annular
grooved ends, grooved to approximately 1/3 of its depth, to be gripped by the
grooves of the sleeve. A pressure sensitive adhesive may be applied to the pipe
ends to improve the performance and seal of the splice. When the magnetic pulse
is applied by the equipment, it instantly crushes the sleeve onto the pipe and
into the shallow grooves milled into the pipe ends, which improves its pullout
resistance.

         This pipeline connection technology is particularly useful for joining
oil and gas pipelines, oil and gas well casings, and other large pipe
connections such as those at refineries, chemical plants and other industrial
operations. Because arc welding or other forms of extreme heat are hazardous,
which are avoided by the Company's technology, there are substantial advantages
in safety, avoidance of property damage, and avoidance of microcracks that can
form splits and rupture under stress. The cold magnetic impulse method creates a
uniform joint connection between pipes. The process is significantly faster than
arc welding, requires less operator skill than welding, and avoids costly and
complicated post-welding inspections. The magnetic impulse method also has the
advantage that it can be performed in the field in any weather condition.

         The Company's pipeline connection technology is based upon the
principle that whenever a rapidly changing magnetic flux cuts across a
conductive material, such as the grooved sleeve to be used by the Company, a
current is induced in the material. The current is proportional to the initial
intensity and time rate of change of the magnetic flux. The induced current
creates an associated magnetic field of such polarity as to oppose the magnetic
field producing the current, creating very significant forces of repulsion. This
effect is commonly called "Lenz's Law of Repulsion". This repulsion force of the
Company's work coil pinches the conductive sleeve around the pipes.

Alloy Sensor Technology
-----------------------

         The Company is conducting research and development operations regarding
its patented alloy sensor technology.

                                       6


<PAGE>

         The Company has been developing its alloy sensor technology as a
permanently installed water detection device to check for the presence of water
in storage tanks, fuel tanks and other systems. The alloy sensor is mounted on a
valve socket that is connected to a meter. A plug inserted into the valve
permits periodic inspection and reads the meter. Only a short time is necessary
to check a number of fuel tanks, for example by the use of the plug and single
ammeter without opening a drain valve (unless it is necessary to drain detected
water out of the tank).

         The alloy sensors of the Company provides positive detection of water
wherever needed and can be connected to a flow system or moisture alarms to
detect leaks.

Grain Drying Technology
-----------------------

         The Company is researching and developing microwave technology to
develop a method to dry grain to acceptable levels for storage and sale on
behalf of Fluidic/Microwave Systems, Inc., an affiliate of the Company. The
Company owns 20% of Fluidic/Microwave Systems, Inc. The MicroDry process is
being designed to move grain within harvesting machinery (ie, a combine) via air
pressure.

         For example, grain such as wheat, soybeans, and corn all have a certain
moisture content. To be properly stored, grain must be dried to the proper
moisture level to prevent spoilage and mold, some of which is toxic to humans
and livestock. While wheat and soybeans typically are harvested at lower
moisture levels and are therefore easier to dry to safe levels in the field and
after harvesting, corn in the United States is typically harvested at an average
of 25% moisture content and must be dried to 10% to 15% moisture content for
safe storage and acceptance at elevators for sale.

         A grain harvester has an elevator duct that lifts the grain into the
storage tank located at the top of the harvester. The MicroDry process would
replace this duct with an air lift structure that would begin the drying process
while lifting the corn, or other grain, to the tank by using the warm air.

Research and Development
------------------------

         Research and development efforts are directed at improving the
performance and expanding the capabilities of its prospective products. Although
the Company expects that certain of its products will be developed internally,
the Company may, based on timing and cost considerations, acquire technology and
products from third parties or retain consultants.

         There can be no assurance that the Company will be successful in
developing or marketing product enhancements or new products that respond to
technological change or evolving industry standards, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or that its new products or
enhancements will adequately meet the requirements of the marketplace and
achieve market acceptance. If the Company is unable, for technological or other
reasons, to develop and introduce new products or enhancements, the Company's
business, financial condition or results of operations will be adversely
affected.

Proprietary Rights and Licensing
--------------------------------

         The Company's success is dependent upon proprietary technology. The
Company will rely primarily on a combination of patents, trade secrets,
confidentiality procedures and contractual provisions with its employees,
consultants and business partners and in its license agreements to protect its
proprietary rights. In addition to its patents, the Company seeks to protect its
products, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
reverse engineer or otherwise copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. While the
Company is not aware that any of its products infringe upon the proprietary
rights of third parties, there can be no assurance that third parties will not
claim infringement by the Company with respect to current or future products.

                                       7


<PAGE>

Employees
---------

         As of January 31, 2003, the Company had one full-time employee. None of
the Company's employees is represented by a labor union with respect to his or
her employment by the Company. The Company has experienced no organized work
stoppages and believes its relationship with its employees is good. The Company
believes that its future success will also depend to a significant extent upon
its ability to attract, train and retain highly skilled technical, management,
sales, marketing and consulting personnel. Competition for such personnel in the
industry in the United States is intense. There can be no assurance that the
Company will be successful in attracting or retaining such personnel, and the
failure to attract or retain such personnel could have a material adverse effect
on the Company's business or results of operations.

Consultants
-----------

         Because the Company has only one management officer, the Company has
relied upon consultants to provide necessary services to the Company on a as
needed basis. For research and development and development services, the Company
has previously used Neo-Dyne Research, Inc., a Nevada corporation owned by Alvin
A. Snaper, a former director and officer of the Company. The Company terminated
its research consulting arrangements with Neo-Dyne Research, Inc. in September
2002. The Company has relied heavily upon BC Research Inc., a research company
located in Vancouver, British Columbia, Canada, for advanced research for its
battery technology.

         The Company also engages other consultants for the purpose of locating
and negotiating with potential joint venture partners, identifying and
negotiating with potential customers with special battery needs and
requirements, financial planning, corporate finance and public relations.

         Except for Neo-Dyne Research, Inc. which was paid $144,894 for its
research and development services during the fiscal year ended January 31, 2003,
consultants are generally paid by the Company through the issuance of shares of
its Common Stock, stock options or warrants.

Banking Arrangements
--------------------

         The Company has no banking arrangements for a line of credit or other
borrowings to finance the Company. The Company intends to rely primarily upon
equity financing and joint ventures to finance its operations.

ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company currently leases its executive and research and development
facilities located at 15 Ocean View Road, Lions Bay, B.C. V0N 2E0, Canada on a
month-to-month basis. The lease covers approximately 900 square feet at a
monthly rental of approximately $1,000 per month. The Company believes that its
current facilities are adequate for its needs through 2003, and that, should it
be needed, suitable additional or alternative space is expected to be available
in the future on commercially reasonable terms.

ITEM 3.  LEGAL PROCEEDINGS.

         On March 27, 2003, the Company filed a civil action against Alvin A.
Snaper, a former director and officer of the Company, and Neo-Dyne Research,
Inc., a research and development company owned by Mr. Snaper, in the District
Court of Clark County, Nevada (Case No. A465306, Dept IV). The civil action
asserts claims for breach of fiduciary duty and breach of contract and seeks an
injunction and declaratory relief regarding the ownership of the Company's
batters technology patents and rights, and the turnover of Company property. Mr.
Snaper and Neo-Dyne Research, Inc. filed their Answer and asserted counterclaims
against the Company alleging fraud and misrepresentation, breach of contract,
and intentional interference with prospective economic advantage, and seeks an
injunction and declaratory relief. The Company intends to vigorously pursue this
litigation and to defend the counterclaims asserted against it. The Company is
not presently able to reasonably evaluate the outcome of this litigation. The
Company considers the ownership of its battery technology to be its most
important asset and critical to the future operations of the Company.

                                       8


<PAGE>

         The Company may also become engaged in various legal proceedings which
arise in the ordinary course of its business. In the opinion of management, the
amount of ultimate liability with respect to those proceedings, if any, is not
expected to be material to the Company's financial position or results of
operations.

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

         None.

                                     PART II

ITEM 5.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.

General
-------

         The Common Stock of the Company is traded on the NASD Electronic
Bulletin Board over-the-counter market, and is quoted under the symbol PWTC.

Common Stock
------------

         The Company's Articles of Incorporation, as amended, authorize
100,000,000 shares of Common Stock, $.001 par value. As of January 31, 2003,
the Company had 31,344,988 shares of Common Stock, $.001 par value, that
were issued and outstanding, which were held by 103 stockholders of record.

Preferred Stock
---------------

         The Company's Articles of Incorporation, as amended, authorize
1,000,000 shares of Preferred Stock, $.01 par value. As of January 31,
2003, the Company had no shares of its Preferred Stock issued and
outstanding.

Options and Warrants
--------------------

         As of January 31, 2003, the Company had outstanding warrants to
purchase 102,850 shares of Common Stock at an exercise price of $.50 per
share.

         As of January 31, 2003, the Company had outstanding stock options to
purchase 1,700,000 shares of Common Stock at exercise prices ranging from $.25
to $.625 per share.

Registrar and Transfer Agent
----------------------------

         The registrar and transfer agent of the Company is Pacific Stock
Transfer Company, P.O. Box 93385, Las Vegas, Nevada 89193; telephone (702)
361-3033.

                                       9


<PAGE>

Market Price
------------

         The following table sets forth the range of high and low closing bid
prices per share of the Common Stock of the Company as reported by Pink Sheets,
L.L.C. for the periods indicated (reflecting inter-dealer prices without retail
mark-up, mark-down or commission and may not represent actual transactions).

Year Ended December 31, 2000(1)                 High Closing      Low Closing
                                                Big Prices (2)    Bid Prices (2)

         1st Quarter . . . . . . . . . .        $1.84375          $.40
         2nd Quarter . . . . . . . . . .        $1.65625          $.53125
         3rd Quarter . . . . . . . . . .        $1.40625          $.625
         4th Quarter . . . . . . . . . .        $1.01             $.40625

------------------------------

Year Ended December 31, 2001(1)

         1st Quarter . . . . . . . . . .        $ .96875          $ .50
         2nd Quarter. . . . . . . . . .         $ .73             $ .50
         3rd Quarter. . . . . . . . . .         $ .70             $ .35
         4th Quarter. . . . . . . . . .         $ .58             $ .35
------------------------------

Year Ended December 31, 2002(1)

         1st Quarter. . . . . . . . . . .       $ .44             $ .25
         2nd Quarter . . . . . . . . . .        $ .36             $ .16
         3rd Quarter . . . . . . . . . .        $ .27             $ .085
         4th Quarter . . . . . . . . . .        $ .13             $ .07
------------------------------
(1)      The Company is unaware of the factors which resulted in the significant
         fluctuations in the prices per share during the periods being presented
         although it is aware that there is a thin market for the Common Stock,
         that there are frequently few shares being traded and that any sales
         activity significantly impacts the market.

         The closing price of the Common Stock of the Company on May 13, 2003,
was $.074 per share.

         When the trading price of the Company's Common Stock is below $5.00 per
share, the Common Stock is considered to be "penny stocks" that are subject to
rules promulgated by the Securities and Exchange Commission (Rule 15-1 through
15g-9) under the Securities Exchange Act of 1934. These rules impose significant
requirements on brokers under these circumstances, including: (a) delivering to
customers the Commission's standardized risk disclosure document; (b) providing
customers with current bid and ask prices; (c) disclosing to customers the
brokers-dealer's and sales representatives compensation; and (d) providing to
customers monthly account statements.

Dividend Policy
---------------

         The Company has not adopted any policy regarding the payment of
dividends on its Common Stock. The Company does not intend to pay any cash
dividends on its Common Stock in the foreseeable future. All cash resources are
expected to be invested in developing the Company's business.

Sale of Unregistered Securities
-------------------------------

         During February 2002, the Company issued 108,000 shares of restricted
Common Stock to Gist Inc., as executive compensation to Ulf Lindqwister, the
former Vice President - Business Development of the Company, in reliance upon
Section 4(2) of the Securities Act of 1933.

         During March 2002, the Company issued 165,000 restricted shares of
Common Stock to Dorotea Kleva in reliance upon Regulation S under the Securities
Act of 1933 regarding the conversion of a convertible note.

         In April 2002, the Company issued 43,000 shares of restricted Common
Stock to IC Capital for consulting services in reliance upon Section 4(2) under
the Securities Act of 1933.


                                       10


<PAGE>

         In April 2002, the Company issued 200,000 shares of restricted Common
Stock to Wolf Meyerfeld for consulting services in reliance upon Regulation S
under the Securities Act of 1933.

         In June 2002, the Company issued 120,000 shares of restricted Common
Stock to Albert Friedrichs and 87,500 shares of restricted Common Stock to Jens
Peter Schulte at $.30 per share in reliance upon regulation S under the
Securities Act of 1933.

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

General
-------

         The following discussion of the Company's financial condition and
results of operations should be read in connection with the Company's
consolidated financial statements and notes thereto appearing elsewhere in this
document. This discussion contains statements reflecting the opinions of
management as well as forward-looking statements regarding the market and the
Company that involve risk and uncertainty. These statements relate to
expectations and concern matters that are not historical facts. Works such as
"believes", "expects", "anticipates" and similar expressions used throughout
this document indicate that forward-looking statements are being made.

         Although management of the Company believes that the expectations and
opinions reflected in its forward-looking statements are reasonable, these
statements are not guarantees of future performance. They are subject to risks,
uncertainties and other factors that could cause actual performance to differ
materially from projected results. Factors that could cause or contribute to
differences between actual and projected results include, but are not limited
to, the current lack of funding needed for working capital, debt repayment and
capital investment, failure to attract management and staff, the inability to
grow membership subscriptions, and lack of success in launching additional
service offerings. Additional risk factors are disclosed elsewhere in this
document.

         Power Technology, Inc. (the "Company"), a Nevada corporation, was
incorporated on June 3, 1996.

         The Company is in the development stage of developing its batteries and
other products. The Company is in the process of building its initial prototypes
of its batteries, but has not commenced any commercial production or sales of
batteries, pipeline connection equipment, or alloy sensors.

         Historically, the Company has used capital contributions and loans from
Various stockholders to fund its operations. To this point, the Company has not
Had adequate funds to commercially produce, market and sell its batteries,
Pipeline connection equipment and alloy sensors.

         There are no assurances that the Company will be able to obtain a
profitable level of operations.

Year ended January 31, 2003 compared to 2002
--------------------------------------------

         The following table sets forth certain operating information regarding
the Company:

                                            Year Ended          Year Ended
                                            January 31, 2002    January 31, 2003
                                            ----------------    ----------------

Revenues                                    $         0         $    25,000
General and administrative expense          $   274,412         $   286,037
Research and development                    $   260,357         $   144,894
Consulting fees                             $ 2,339,456         $ 1,761,416
Loss from related party advances            $         0         $   127,000
Net Loss                                    $(2,943,692)        $(2,298,550)
Net Loss Per Share                          $     (0.13)        $      (.08)


                                       11


<PAGE>

Revenues
--------

         Total revenues for the fiscal year ended January 31, 2003 were $25,000
and were $0 for the fiscal year ended January 31, 2002, as the operations of the
Company continued to be focused primarily on research and development. To date,
the Company has not established any commercial products nor commenced any
commercial production operations.

General and Administrative Expenses
-----------------------------------

         General and administrative expenses increased from $274,412 in fiscal
year 2002 to $286,037 during the fiscal year ended January 31, 2003, a decrease
of approximately 4.2%.

Research and Development Expenses
---------------------------------

         Research and development expenses decreased from $260,357 in fiscal
year 2002 to $144,894 during the fiscal year ended January 31, 2003, a decrease
of approximately 44.3%, as a result of a decrease in research activities
regarding the Company's battery development.

Consulting Fees
---------------

         Consulting fees decreased from $2,339,456 during fiscal 2002 to
$1,761,416 during the year ended January 31, 2003, a decrease of approximately
25.7%. The decrease in consulting fees was due to the decrease in research and
development activities of the Company.

Net Loss
--------

         The net loss of the Company decreased from $(2,943,692) during fiscal
year 2002 compared to a net loss of $(2,298,500) during the fiscal year ended
January 31, 2003, a decrease of approximately 21.9% The decrease in the net loss
of the Company is attributable primarily to a decrease in consulting fees paid
by the Company during the fiscal year ended January 31, 2003.

Capital Resources
-----------------

         The Company's capital resources have been provided primarily by the
President of the Company and existing stockholders through loans, advances and
convertible notes.

Working Capital and Liquidity
-----------------------------

         At January 31, 2003, the Company had negative working capital of
approximately $956,576 compared to January 31, 2002, negative working capital in
the amount of $748,917. The Company believes that it will be necessary to
increase it working capital to continue its research and development activities
which may be achieved by incurring additional indebtedness from stockholders or
others (see Note 6) or by the sale of Common Stock or other securities of the
Company.

         The ability of the Company to satisfy its obligations will depend in
part upon its ability to successfully complete the offer and sale of additional
shares of its Common Stock and in part upon its ability to reach a profitable
level of operations.

Plan of Operations
------------------

         Because of the costs of development of its battery systems and other
products, and the continuing costs of its battery prototype production, the
Company expects that it will incur a loss during its fiscal year ending January
31, 2004.


                                       12


<PAGE>

         The Company believes that additional equity capital will be required to
accomplish its plan of operations during the next 12 months. As a result, the
Company is offering to sell its Common Stock to further capitalize the Company,
and may also borrow from banks and others to the extent necessary to provide
liquidity for its operations, although no arrangements for any additional
borrowings have been made.

         The Company has maintained its research and development activities and
the associated costs consistent with its plan of operations in order to develop
its batteries and other products for proposed commercial production. However,
the Company expects to continue the development of its batteries and other
products to incorporate technical changes and improvements. In addition, as the
Company establishes its marketing activities, the Company will incur additional
operating and equipments costs.

UNCERTAINTIES

Development Stage Company
-------------------------

         The Company is in the development stage. There is no assurance that the
Company's activities will be profitable. The likelihood of the success of the
Company must also be considered in light of the problems, expenses,
difficulties, complications, delays and all of the inherent risks frequently
encountered in the formation and operation of a relatively new business.

Going Concern
-------------

         The financial statements are presented on the basis that the Company is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time.

         At January 31, 2003, the Company had a deficit in working capital of
$(868,913), a loss from operations for the year ended January 31, 2003, of
$(2,998,550) and an accumulated deficit of $8,751,252 since June 3, 1996, the
date of inception of the Company.

         Management believes that current plans to expand the Company's
operations and a combination of its financing and capital raising plans will
provide sufficient working capital to allow the Company to continue as a going
concern.

Costs of Conducting business
----------------------------

         The Company will be required to incur substantial costs for research
and development and equipment, establishing production and marketing operations,
and related costs. A substantial portion of those costs must be paid whether or
not any of its batteries or other products prove to be commercially successful
on a broad scale. The ability to generate a profit depends, among other factors,
on the amount of equipment acquisition costs incurred, the amount of revenues
from the sale of batteries and other products by the Company, and its operating
costs.

Competition
-----------

         The battery business is highly competitive. Companies in the industry
have substantially greater financial, marketing, and technical resources than
the Company. Further, the entry into this industry does not necessarily require
a large capital expenditure and, accordingly, it can be expected that additional
competitors may enter the industry in the future. It may be particularly
difficult for a relatively small independent company to compete with larger
companies which have significantly greater resources. There can be no assurance
that the Company will be able to successfully compete if such an environment
develops.


                                       13


<PAGE>

Technological Change
--------------------

         The Company expects that many new technologies and products will be
introduced in the battery industry over the next several years. The Company's
success will depend, among other things, on its ability to develop and maintain
a competitive position technologically. There can be no assurance that the
Company will have access to subsequently developed technology by other persons.
Technological advances by a competitor may result in the Company's present or
future products becoming noncompetitive or obsolete. The Company cannot be
assured that competitors will not develop functionally similar or superior
batteries, which event could have an adverse effect on the Company's business.

Contracts
---------

         The Company has no current contracts for the manufacture or sale of its
batteries or other products, and has no back-log. There can be no assurance that
the Company will be able to obtain sufficient and suitable contracts for its
business plan.

Fluctuations in Operating Results
---------------------------------

         The Company's revenues and results of operations may vary significantly
in the future. The Company's revenues and results of operations are difficult to
forecast and could be adversely affected by many factors, some of which are
outside the control of the Company, including, among others, the expected
relatively long sales and implementation cycles for the Company's products; the
size and timing of individual license transactions and joint venture
arrangements; seasonality of revenues; changes in the Company's operating
expenses; changes in the mix of products sold; timing of introduction or
enhancement of products by the Company or its competitors; market acceptance of
new products; technological changes in technology; personnel changes and
difficulties in attracting and retaining qualified sales, marketing, technical
and consulting personnel; changes in customers' budgeting cycles; quality
control of products sold; and economic conditions generally and in specific
industry segments, particularly the automotive industry.

         There can be no assurance that the Company's products will achieve
broad market acceptance or that the Company will be successful in marketing its
products or enhancements thereto. In the event that the Company's current or
future competitors release new products that have more advanced features, offer
better performance or are more price competitive than the Company's products,
demand for the Company's products would decline. A decline in demand for, or
market acceptance of, the Company's batteries or other products as a result of
competition, technological change, or other factors would have material adverse
effects on the Company's business, financial condition and results of
operations.

Raw Materials
-------------

         The basic raw materials and components for the batteries and other
products being developed by the Company are readily available. The Company does
not expect to experience any significant delays in obtaining timely delivery of
its materials and components.

Seasonality
-----------

         The Company does not expect to experience material seasonal variations

in revenues or operating costs, except that sales activity for its batteries may
increase in the summer and winter seasons which is expected to cause the
operations of the Company to increase during such periods.

ITEM 7.  FINANCIAL STATEMENTS.

         The consolidated financial statements of the Company for its fiscal
years ended January 31, 2003 and 2002, are provided with this Form 10-KSB and
are incorporated herein by reference.


                                       14


<PAGE>

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

         There have been no disagreements regarding accounting and financial
disclosure matters with the independent certified public accountants of the
Company.

                                    PART III

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

Directors and Officers
----------------------

         The present directors and officers of the Company are as follows:

         Name(1)(2)                  Age    Position
         ---------------            ------  -----------
         Lee A. Balak               48      Director, President, Treasurer and
                                               Secretary
         F. Bryson Farrill          75      Director
         Hugo P. Pomrehn, Ph.D.     63      Director

---------------
(1)      The Company presently has no executive committee, nominating committee
         or audit committee of the Board of Directors.
(2)      The officers of the Company hold office until their successors are
         elected and qualified, or until their death, resignation or removal.

The background and principal occupations of each director and officer of the
Company are as follows:

         Mr. Balak became a director and the President of the Company during
February 1996. Mr. Balak also became the Secretary and Treasurer of the
Company on December 12, 2002. Mr. Balak also serves as President of Omega
Dynamics, Inc., and serves as a Director on the Board. From February 2000
to the present Mr. Balak has been a director and the President of Fluidic/
Microwave Systems, Inc., an affiliated Nevada corporation, that conducts
farm equipment research and development activities. From 1993 to the present,
Mr. Balak has been the owner and President of No. 90 Corporate Ventures, a
Canadian corporation located in Vancouver, B.C., that makes and holds
personal investments made by Mr. Balak. From 1983 to 1993, he was a corporate
finance consultant. From 1977 to 1982, he was a registered representative of
Canarim Investment Corporation (currently named Canacord Investment
Corporation). While employed by Canarim Investment Corporation, Mr. Balak
was the subject of an administrative proceeding by the British Columbia
Securities Commission regarding various alleged violations of
the Securities Act, S.B.C. 1985, c.83 of British Columbia (the "Act"); and in
November 1990, he undertook and agreed that certain trading exemptions under the
Act would not apply or be available for a period of three years and that he
would not be a director or officer of any reporting issuer for a period of three
years, which period was subsequently reduced to February, 1992, by a variance
order. In 1991, he was discharged in bankruptcy by the Supreme Court of British
Columbia. Mr. Balak attended the University of Winnipeg.

         Mr. Farrill became a director of the Company on October 25, 1999. From
1990 to the present, Mr. Farrill has been a financial consultant to high
technology companies and other companies. Mr. Farrill is a director of Future
link Distributing, Inc., Devine Entertainment, and Daner Partnership. From 1968
to 1964, he was the President and Chairman of McLeod Young Weir International, a
brokerage firm until it was acquired by Scotia Capital Markets. From 1962 to
1979, he was employed by McCleod Young Weir Ltd in Toronto, and was a director
and member of its executive committee from 1964 to 1989. Mr. Farrill received a
B.A. decree in political science and economics from the University of Toronto in
1951.


                                       15


<PAGE>

         Dr. Pomrehn became a director of the Company during July 1998. Dr.
Pomrehn is the Chairman of the Board and a director of Stayhealthy Incorporated,
a closely held health products company. From November 1997 to August 1999, he
was the Executive Vice President of Special Projects of American Technologies
Group, Inc. ("ATG"), a public company engaged in research and development
activities; and has been a consultant to ATG since August 1999 to the present.
Dr. Pomrehn previously served as President, Chief Operating Officer, Vice
Chairman and a director of ATG from April 1995 to November 1997. He was
appointed as Under Secretary of Energy by President George Bush in 1992. He was
employed by Bechtel Corporation from 1967 to 1992, and was a Vice President and
Manager of its Los Angeles regional office from 1990 to 1992. Dr. Pomrehn
graduated from the University of Southern California with a bachelor of science
degree in mechanical engineering in 1960; received a masters degree in
mechanical engineering from George Washington University in 1965; received a
masters degree in industrial engineering from the University of Southern
California in 1969; and received a doctorate in engineering from the University
of Southern California in 1975. Dr. Pomrehn is a member of the American Nuclear
Society and American Society of Mechanical Engineers, and is a registered
professional mechanical and nuclear engineer in the State of California.

Compliance with Section 16(a) of the Securities Exchange Act
------------------------------------------------------------

         Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who beneficially own more than ten percent
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

         To the best of its knowledge on its review of the copies of such forms
received by it, the Company believes that during the year ended January 31,
2003, all such filing requirements applicable to its officers and directors (the
Company not being aware of any ten percent holder other than Lee A. Balak, the
President and a director of the Company) were complied with.

Resignations of Directors and Officers
--------------------------------------

         During the fiscal year ended January 31, 2003, Mr. Alvin A. Snaper
resigned as a director and Vice President- Development of the Company, regarding
a dispute concerning the lack of reserach progress at the Company's Las Vegas,
Nevada facilities by Neo-Dyne Research Inc., a company owned by Mr. Snaper, and
the Company terminated the lease on his office building from which the Company
was leasing space at $2,000 per month, on a month-to-month basis.

         Mr. Wolf Meyerfeld resigned as a director of the Company effective
March 3, 2003. Mr. Meyerfeld also served as the President of the Company from
November 4, 2002 until December 12, 2002.


                                       16


<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

         The following table discloses compensation during the year ended
January 31, 2003, for the former and current President of the Company.

<TABLE>
<CAPTION>
                                                                                    Long-Term Compensation
                                                                            ---------------------------------------
                                     Annual compensation                          Awards                 Payouts
                         -------------------------------------------        ---------------------------     --------
                                                             Other                          Securities
Name and                                                     Annual         Restricted      Underlying                  All Other
Principal                Fiscal                              Compen-        Stock           Options/        LTIP        Compen-
Position                 Year      Salary     Bonus          sation         Awards(3)       SARs            Payouts     sation
--------                 ----      ------     -----          ------         ---------       ----            -------     ------
<S>                      <C>       <C>        <C>            <C>            <C>             <C>             <C>         <C>
Lee A. Balak,
President, Secretary
Treasurer and
Director                 2003      $ 0        $ 0            $ 0             $ 0             $ 0             $ 0         $ 0

Wolf Meyerfeld
former Chief
Executive Officer
and President            2003      $ 0        $ 0            $ 0             $  58,000       $  0            $ 0         $ 0

</TABLE>
---------------

Stock Plan Committees
---------------------

         A Stock Plan Committee of the Board of Directors administers the
Company's stock option, SAR and stock bonus plans. Mr. Lee A. Balak is presently
the sole member of the Committee.

         The Company has five stock option, SAR and stock bonus plans to provide
compensation to consultants to the Company. Directors, officers and employees of
the Company are not eligible to participate in the plans.

Other Committees
----------------

         The Company does not have an audit committee, compensation committee,
nominating committee, an executive committee of the Board of Directors, or any
other committees. However, the Board of Directors may establish various
committees in the future.

Benefit Plans
-------------

         The Company does not have any pension plan, profit sharing plan, or
similar plans for the benefit of its officers, directors or employees. However,
the Company may establish such plans in the future.


                                       17


<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The total number of shares of Common Stock of the Company beneficially
owned by each of the officers and directors, and all of such directors and
officers as a group, and their percentage ownership of the outstanding Common
Stock of the Company as of January 31, 2003, are as follows:

                                            SHARES                  PERCENT OF
MANAGEMENT                                  BENEFICIALLY            COMMON
SHAREHOLDERS(1)                             OWNED(1)                STOCK
---------------------------                 ------------            -----------
Lee A. Balak.(2) . . . . . . . . . . . .      4,672,000                 14.9%
15 Ocean View Road
Lions Bay, B.C. V0N 2E0
Canada

F. Bryson Farrill . . . . . . . . . . . .            0                     0%
77 Verplank Avenue
Stanford, Connecticut 06902

Hugo P. Pomrehn, Ph.D (2). . . . . . . . .     188,000                   0.6%
1017 South Mountain
Monrovia, California 91016

Directors and officers as a group
(3 persons, including the above). . . . .    4,860,000                  15.5%
-------------------
(1)      Except as otherwise noted, it is believed by the Company that all
         persons have full voting and investment power with respect to the
         shares indicated. Under the rules of the Securities and Exchange
         Commission, a person (or group of persons) is deemed to be a
         "beneficial owner" of a security if he or she, directly or indirectly,
         has or shares the power to vote or to direct the voting of such
         security, or the power to dispose of or to direct the disposition of
         such security. Accordingly, more than one person may be deemed to be a
         beneficial owner of the same security. A person is also deemed to be a
         beneficial owner of any security which that person has the right to
         acquire within 60 days, such as options or warrants to purchase the
         Common Stock of the Company.

(2)      Includes 80,000 shares that are held by the Pomrehn Family Trust of
         which Mr. Hugo P. Pomrehn is a trustee.

         The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock by each shareholder who
beneficially owns more than five percent (5%) of the Company's Common Stock, the
number of shares beneficially owned by each and the percent of outstanding
Common Stock so owned of record as of January 31, 2003.

                                                SHARES OF           PERCENT
                             TITLE OF           OUTSTANDING         BENEFICIALLY
NAME AND ADDRESS             CLASS              COMMON STOCK(1)      OWNED
-------------------          --------           -------------       ------------
Lee A. Balak                 Common Stock       4,672,000(2)        14.9%
15 Ocean View Road
Lions Bay, B.C. V0N 2E0
Canada

Cede & Co.                   Common Stock       22,600,244(2)       72.1%
P.O. Box 222
Bowling Green Station
New York, New York 10274
--------------------
(1)      Except as otherwise noted, it is believed by the Company that all
         persons have full voting and investment power with respect to the
         shares indicated. Under the rules of the Securities and Exchange
         Commission, a person (or group of persons) is deemed to be a
         "beneficial owner" of a security if he or she, directly or indirectly,
         has or shares the power to vote or to direct the voting of such
         security, or the power to dispose of or to direct the disposition of
         such security. Accordingly, more than one person may be deemed to be a
         beneficial owner of the same security. A person is also deemed to be a
         beneficial owner of any security which that person has the right to
         acquire within 60 days, such as options or warrants to purchase the
         Common Stock of the Company.

(2)      Cede & Co. is a depository that holds securities as nominee for various
         broker-dealers and others to facilitate stock transfers.

                                       18


<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Neo-Dyne Research, Inc., a company owned by Alvin A. Snaper, a former
director and officer of the Company, was paid $144,894 for research and
development fees during the fiscal year ended January 31, 2003 and was paid
$258,500 for such services during the fiscal year ended January 31, 2002.

         The Company previously leased approximately 5,000 square feet of
offices and research facilities on a month-to-month basis for $2,000 per month
from Mr. Alvin A. Snaper, a former director, Vice President-Development of the
Company and his partner. This lease was terminated September 2002. During the
fiscal years ended January 31, 2002 , the Company paid $24,000 in lease payments
for these facilities and paid $18,000 during the year ended January 31, 2003..

         The Company entered into a consulting agreement with Mr. Hugo P.
Pomrehn, a director of the Company, effective September 1, 1998, for research
and development services. The consulting fee is charged at a rate of $150 per
hour, and he is reimbursed for travel and other expenses.

         As of January 31, 2003, Mr. Lee A. Balak had loaned $188,959 to the
Company. The loans are on demand and are non-interest bearing.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Reports on Form 8-K

                  The Company did not file any reports on Form 8-K during its
fiscal year ended January 31, 2003.

         (b)      Exhibits


                                       19


<PAGE>


EXHIBITS                               DESCRIPTION
--------                               -----------

3(i) Articles of Incorporation of the Registrant

                  The Articles of Incorporation are incorporated herein by
                  reference to Exhibit 3(i) to the Form 10-SB registration
                  statement of the Company (File No. 0-24857)

3(ii)Amendment to Articles of Incorporation

                  The Amendment to the Articles of Incorporation is incorporated
                  herein by reference to Exhibit 3(ii) to the Form 10-SB
                  registration statement of the Company (File No. 0-24857)

3(iii)By-Laws of the Registrant

                  The By-Laws are incorporated herein by reference to Exhibit
                  3(iii) to the Form 10-SB registration statement of the Company
                  (File No. 0-24857)

10. Material Contracts

         10(a)    Consulting Agreement with Reed Wallace dated May 5, 2002, is
                  incorporated by reference to Exhibit 10.1 of the Form 10-QSB
                  quarterly report of the Company for its quarter ended April
                  30, 2002.

         10(b)    Allen Consulting Agreement dated May 5, 2002, is incorporated
                  by reference to Exhibit 10.2 of the Form 10-QSB quarterly
                  report of the Company for its quarter ended April 30, 2002.

         10(c)    Intercontinental Capital Corp. consulting agreement dated May
                  15, 2002, is incorporated by reference to Exhibit 10.3 of the
                  Form 10-QSB quarterly report of the Company for its quarter
                  ended April 30, 2002.

         10(d)    Robert A. Young consulting agreement dated January 23, 2002,
                  is incorporated by reference to Exhibit 10.4 of the Form
                  10-QSB quarterly report of the Company for its quarter ended
                  April 30, 2002.

         10(e)    Agreement in Principal with Key Capital Group, Inc. dated June
                  5, 2002, is incorporated by reference to Exhibit 10.5 of the
                  Form 10-QSB quarterly report of the Company for its quarter
                  ended April 30, 2002.

         10(f)    Agreement with the Swedish Consortium dated August 26, 2002,
                  is incorporated by reference to Exhibit 10.1 of the Form
                  10-QSB quarterly report of the Company for its quarter ended
                  July 31, 2002.

         10(g)    Agreement in Principle between PowerXcell Batteries Inc and
                  Power Technology, Inc. dated October 30, 2002, is incorporated
                  herein by reference to Exhibit 10.1 of the Form 10-QSB
                  quarterly report of the Company for its quarter ended October
                  31, 2002.

         10(h)    Confidentiality, Non-Competition, Non-Circumvention Fee
                  Agreement with Dr. Robert B. Honea dated October 2002.

         10(i)    Consulting Agreement with John Gray dated March 1, 2003.

         10(j)    Consulting Agreement with Barry Clark dated March 4, 2003.

         10(k)    Amended and Restated Agreement in Principle to form NxCell
                  Batteries and Power Inc. dated April 6, 2003.

                                       20



<PAGE>

EXHIBITS                               DESCRIPTION
--------                               -----------

11. Statement re: computation of per
         share earnings

                  Reference is made to the Consolidated Statements of Operations
                  of the Consolidated Financial Statements which are
                  incorporated herein.

12. A description of the subsidiary of
         the Company

                  A description of the subsidiary of the Company is incorporated
                  herein by reference to Exhibit 21 of the Form S-8 registration
                  statement of the Company (SEC File No. 333-66845)

99.1 Certification of Lee A. Balak

                  Certification of Lee A. Balak

99.2 Certification of Lee A. Balak

                 Certification of Lee A. Balak

ITEM 14. CONTROLS AND PROCEDURES

         Our President and Treasurer are responsible for establishing and
maintaining internal controls and have designed these controls to ensure that
material information, financial or otherwise, relating to accounting and
financial reporting of our operations and activities, including those of our
consolidated subsidiary, were made known to him in his capacity as executive
officer, particularly during the period that this report was prepared. This
executive officer has evaluated the effectiveness of our internal controls
within the preceding 90 days of this Form 10-KSB annual report, having concluded
that our internal controls were fully effective as of the date of this report,
and there were no significant deficiencies or material weaknesses discovered and
have reported this conclusion to our auditors. In conducting his evaluation of
our internal controls, this executive officer did not discover any fraud that
involved management or other employee who have a significant role in our
internal controls. Furthermore, there were no significant changes in our
internal controls or in other factors that could significantly affect our
internal controls subsequent to the date of their evaluation. Because no
significant deficiencies or material weaknesses were discovered, there were no
necessary corrective actions taken to correct significant deficiencies and
material weaknesses in our internal controls.


                                       21


<PAGE>
BECKSTEAD AND WATTS, LLP
------------------------
CERTIFIED PUBLIC ACCOUNTANTS
                                                         3340 Wynn Road, Suite B
                                                             Las Vegas, NV 89102
                                                                    702.257.1984
                                                              702.362.0540 (fax)

                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Power Technology, Inc.
Las Vegas, Nevada

We have audited the Balance Sheets of Power Technology, Inc. (the "Company"), as
of January 31, 2003 and 2002, and the related Statements of Operations,
Stockholders' Equity, 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 financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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
statement presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Power Technology, Inc. as of
January 31, 2003 and 2002, and the results of its operations and cash flows for
the years then ended, in conformity with generally accepted accounting
principles in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has had limited operations and has not commenced planned
principal operations. This raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Beckstead and Watts, LLP
May 13, 2003

                                      F-1





<PAGE>
<TABLE>

                                     POWER TECHNOLOGY, INC.
                                  (a Development Stage Company)
                                   Consolidated Balance Sheets
<CAPTION>

                                                                  JANUARY 31,     JANUARY 31,
                                                                    2003              2002
                                                                --------------   --------------
<S>                                                             <C>              <C>
Assets

Current assets:
    Cash and equivalents                                        $         153    $      27,543
    Employee advances                                                   1,000            1,000
    Due from related party                                                 --          127,000
                                                                --------------   --------------
      Total current assets                                              1,153          155,543

Fixed assets, net                                                       9,163           12,283

Other assets:
    Prepaid expenses                                                       --           56,225
    Patents                                                            78,500           78,500
                                                                --------------   --------------
                                                                $      88,816    $     302,551
                                                                ==============   ==============

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current liabilities:
    Accounts payable                                            $      68,923    $      56,660
    Advances from MikroDri                                                 --           25,000
    Loans payable                                                     700,000          700,000
    Loans payable - related party                                     188,959          150,343
                                                                --------------   --------------
      Total current liabilities                                       957,882          932,003
                                                                --------------   --------------

Convertible notes                                                          --           80,270
                                                                --------------   --------------

                                                                      957,882        1,012,273
                                                                --------------   --------------

Stockholders' (deficit):
    Preferred stock, $0.01 par value, 1,000,000 shares
      authorized, none issued or outstanding                               --               --
    Common stock, $0.001 par value, 100,000,000 shares
      authorized, 31,510,488 and 23,328,610 shares issued
      and outstanding as of 1/31/03 and 1/31/02, respectively          31,511           23,329
    Additional paid-in capital                                      7,850,675        5,719,651
    (Deficit) accumulated during development stage                 (8,751,252)      (6,452,702)
                                                                --------------   --------------
                                                                     (869,066)        (709,722)
                                                                --------------   --------------

                                                                $      88,816    $     302,551
                                                                ==============   ==============

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

                                              F-2
</TABLE>





<PAGE>
<TABLE>

                                         POWER TECHNOLOGY, INC.
                                     (a Development Stage Company)
                                 Consolidated Statements of Operations
                 for the years ended January 31, 2003 and 2002 and for the period June
                                3, 1996 (inception) to January 31, 2003

<CAPTION>
                                                              FOR THE YEARS ENDED        JUNE 3, 1996
                                                                  JANUARY 31,           (INCEPTION) TO
                                                         -----------------------------    JANUARY 31,
                                                             2003            2002             2003
                                                         -------------   -------------   -------------
<S>                                                      <C>             <C>             <C>

Consulting Revenue                                       $     25,000    $         --    $     26,663
                                                         -------------   -------------   -------------

Expenses:
   General administrative expenses                            286,037         274,412       2,633,425
   Research & development - related party                     144,894         260,357       1,350,083
   Consulting fees                                          1,761,416       2,339,456       4,567,322
   Loss from impairment of related party advances             127,000              --         127,000
   Depreciation and amortization                                3,120           5,607          16,757
                                                         -------------   -------------   -------------
                                                            2,322,467       2,879,832       8,694,587

Other income (expense):
   Interest expense                                            (1,087)        (64,633)        (82,189)
   Interest income                                                  4             773             777
   Loss on foreign currency                                        --              --          (1,916)
                                                         -------------   -------------   -------------

Net (loss)                                               $ (2,298,550)   $ (2,943,692)   $ (8,751,252)
                                                         =============   =============   =============

Weighted average number of
   common shares outstanding - basic and fully diluted     27,419,549      23,328,610
                                                         =============   =============

Net (loss) per share - basic and fully diluted           $      (0.08)   $      (0.13)
                                                         =============   =============

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

                                                  F-3
</TABLE>





<PAGE>
<TABLE>

                                                      POWER TECHNOLOGY, INC.
                                                   (a Development Stage Company)
                             Consolidated Statements of Changes in Stockholders' Equity for the period
                                           June 3, 1996 (Inception) to January 31, 2003
<CAPTION>

                                                                                       (Deficit)
                                                                                      Accumulated
                                                Common Stock             Additional      During         Prior            Total
                                          ---------------------------     Paid-in      Development      Period       Stockholders'
                                            Shares          Amount        Capital         Stage        Adjustment      (Deficit)
                                          ------------   ------------   ------------   ------------   ------------   ------------
<S>                                         <C>          <C>            <C>            <C>             <C>           <C>
Balance, June 3, 1996                       2,500,000    $     2,500    $    22,500    $        --             --    $    25,000
Net (loss) for the period ended
   January 31, 1997                                                                       (139,907)                     (139,907)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 1997                   2,500,000          2,500         22,500       (139,907)            --       (114,907)

Net (loss) for the year ended
   January 31, 1998                                                                        (51,374)            --        (51,374)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 1998                   2,500,000          2,500         22,500       (191,281)            --       (166,281)
Reorganization of Company,
   reverse acquisition of Zepplin, Inc.     2,800,000          2,800         (2,573)                                         227
Shares issued for cash                      6,900,000          6,900        683,300                                      690,200
Shares issued for patents                     200,000            200         19,800                                       20,000
Shares issued for consulting services         134,700            135        134,565                                      134,700
Net (loss) for the year ended
   January 31, 1999                                                                       (700,909)            --       (700,909)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 1999                  12,534,700         12,535        857,592       (892,190)            --        (22,063)

Shares issued for cash                      2,900,000          2,900        287,099                                      289,999
Shares issued for consulting services         548,800            549        329,001                                      329,550
Shares issued for debt conversion           1,034,000          1,034        205,766                                      206,800
Prior period adjustment                      (200,000)          (200)       (20,000)                       20,000           (200)
Net (loss) for the year ended
   January 31, 2000                          (908,475)      (908,475)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 2000                  16,817,500         16,818      1,659,458     (1,800,665)        20,000       (104,389)

Shares issued for cash                      1,155,000          1,155        597,720                                      598,875
Shares issued for consulting services       1,055,000          1,055        465,395                                      466,450
Reversal of prior period adjustment                                                                       (20,000)       (20,000)
Net (loss) for the year ended
   January 31, 2001                                                                     (1,708,345)                   (1,708,345)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 2001                  19,027,500         19,028      2,722,573     (3,509,010)            --       (767,409)

Shares issued for consulting services       2,874,330          2,874      2,336,582                                    2,339,456
Shares issued for debt conversion           1,050,000          1,050        523,950                                      525,000
Shares issued for interest expense            171,780            172         59,951                                       60,123
Shares issued for cash                        205,000            205         76,595                                       76,800
Net (loss) for the year ended
   January 31, 2002                                                                     (2,943,692)                   (2,943,692)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 2002                  23,328,610         23,329      5,719,651     (6,452,702)            --       (709,722)

Shares issued for cash                        207,500            208        182,083                                      182,290
Shares issued for debt conversion             293,958            294        195,206                                      195,500
Shares issued for consulting services       7,680,420          7,680      1,753,736                                    1,761,416
Net (loss) for the year ended
   January 31, 2003                                                                     (2,298,550)                   (2,298,550)
                                          ------------   ------------   ------------   ------------   ------------   ------------
Balance, January 31, 2003                  31,510,488    $    31,511    $ 7,850,675    $(8,751,252)   $        --    $  (869,066)
                                          ============   ============   ============   ============   ============   ============

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

                                                               F-4
</TABLE>





<PAGE>

<TABLE>

                                      POWER TECHNOLOGY, INC.
                                   (a Development Stage Company)
                               Consolidated Statements of Cash Flows
           for the years ended January 31, 2003 and 2002 and for the period June 3, 1996
                                  (inception) to January 31, 2003
<CAPTION>

                                                         FOR THE YEARS ENDED       JUNE 3, 1996
                                                             JANUARY 31,            (INCEPTION)
                                                    -----------------------------  TO JANUARY 31,
                                                        2003            2002           2003
                                                    -------------   -------------   -------------
<S>                                                 <C>             <C>             <C>
Cash flows from operating activities
Net (loss)                                          $ (2,298,550)   $ (2,943,692)   $ (8,751,252)
   Depreciation expense                                    3,120           5,607          16,757
   Loss from impairment of related party advances        127,000              --         127,000
   Stock issued for consulting services                1,761,416       2,339,456       4,567,322
   Stock issued for interest expense                          --          60,123          60,123
   Stock issued to acquire patents                            --              --         (20,000)
Adjustments to reconcile net (loss) to net cash
  (used) by operating activities:
   (Increase) in employee advances                            --          (1,000)             --
   (Increase) in due from related party                       --        (127,000)             --
   Decrease in accounts receivable                            --           4,811              --
   (Increase) in prepaid expenses                         56,225         (36,225)             --
   Increase in accounts payable                           12,263          45,278          68,923
   (Decrease) in accrued expenses                             --         (10,200)             --
                                                    -------------   -------------   -------------
Net cash (used) by operating activities                 (338,526)       (662,842)     (3,931,127)
                                                    -------------   -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from loans                                        --         700,000         700,000
   Proceeds (payments) on loans - related party           38,616         (86,420)        188,959
   Transfer (to) from MikroDri                                --         (20,279)             --
   Purchase of equipment                                      --          (4,527)        (21,667)
   Patent acquisition                                         --              --         (58,500)
                                                    -------------   -------------   -------------
Net cash provided by investing activities                 38,616         588,774         808,792
                                                    -------------   -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from convertible debentures                   94,740              --         175,010
   Issuance of common stock                              182,290          76,800       2,947,478
                                                    -------------   -------------   -------------
Net cash provided by financing activities                277,030          76,800       3,122,488
                                                    -------------   -------------   -------------
Net increase (decrease) in cash                          (22,880)          2,732             153

Cash and equivalents - beginning                          23,033          20,301              --
                                                    -------------   -------------   -------------
Cash and equivalents - ending                       $        153    $     23,033    $        153
                                                    =============   =============   =============

Supplemental disclosures:
   Interest paid                                    $         --    $         --    $         --
                                                    =============   =============   =============
   Income taxes paid                                $         --    $         --    $         --
                                                    =============   =============   =============
   Non-cash investing and financing activities:
     Number of shares issued for services              7,680,420       2,874,330      12,293,250
                                                    =============   =============   =============
     Number of shares issued for debt conversion         293,958       1,050,000       2,377,958
                                                    =============   =============   =============
     Number of shares issued for interest expense             --         171,780         171,780
                                                    =============   =============   =============
     Number of shares issued to acquire patents               --              --         200,000
                                                    =============   =============   =============

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

                                               F-5
</TABLE>





<PAGE>

                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Power Technology, Inc. (the "Company") was originally incorporated as PowerTek
under the laws of the State of Nevada on January 19, 1996. The Company was
organized primarily for the purpose of developing an advanced battery technology
for use in the growing electric car industry. As of the date of these
statements, the Company has been able to advance the battery technology to a
proof of principle stage and is currently seeking additional capital to finance
the development of the technology to a preliminary prototype stage.

The Company is a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. It is concentrating substantially all of its
efforts in raising capital in order to generate significant operations while it
is conducting research and development activities.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenue and expenses during the reporting period. Actual
results could differ significantly from those estimates.

Cash and Cash Equivalents

For the purpose of the statements of cash flows, all highly liquid investments
with the maturity of three months or less are considered to be cash equivalents.

Equipment

Property and equipment are recorded at cost. Minor additions and renewals are
expensed in the year incurred. Major additions and renewals are capitalized and
depreciated over their estimated useful lives. Depreciation is calculated using
the straight-line method over the estimated useful lives as follows:

             Office equipment                   5 years
             Furniture and fixtures             7 years
             Leasehold improvements             7 years

Revenue recognition

The Company recognizes revenue on an accrual basis.

Advertising Costs

The Company expenses all costs of advertising as incurred. There were no
advertising costs included in selling, general and administrative expenses for
the years ended January 31, 2003 and 2002.

Product Development Costs

The products will comprise multiple features and offerings that are currently
under development, and it is anticipated that the offerings will require future
development and refinement. In connection with the development of its products,
the Company will incur external costs for research, development, and consulting
services, and internal costs for payroll and related expenses of its technology
employees directly involved in the development. All costs will be reviewed for
determination of whether capitalization or expense as product development cost
is appropriate.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of January 31, 2003. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
notes receivable and accounts payable and notes payable. Fair values were
assumed to approximate carrying values for these items because they are short
term in nature and their carrying amounts approximate fair values or they are
payable on demand.

                                      F-6





<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long Lived Assets

Long lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable or is impaired.

Earnings per Share

The Company follows Statement of Financial Accounting Standards No. 128.
"Earnings Per Share" ("SFAS No. 128"). Basic earnings per common share ("EPS")
calculations are determined by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during the year. Diluted
earning per common share calculations are determined by dividing net income
(loss) by the weighted average number of common shares and dilutive common share
equivalents outstanding. During periods when common stock equivalents, if any,
are anti-dilutive they are not considered in the computation.

Foreign currency translations

The functional currency for the Company's foreign subsidiaries is the local
currency. Assets and liabilities of the Company's foreign operations are
translated into U.S. dollars at the exchange rates in effect at the balance
sheet date; revenues and expenses are translated using the average exchange
rates in effect during the period. The cumulative translation adjustments are
included in accumulated other comprehensive income or loss, which is a separate
component of stockholders' equity. Foreign currency transaction gains or losses
are included in the results of operations.

Stock-Based Compensation

The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES" and related interpretations and has adopted the disclosure-only
alternative of FAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION." Options
granted to consultants, independent representatives and other non-employees are
accounted for using the fair value method as prescribed by FAS No. 123.

Segment Reporting

The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information". The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.

Income Taxes

The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is
more likely than not to be realized. Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.

                                      F-7





<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Pronouncements

In September 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 143, ASSET RETIREMENT OBLIGATIONS. This statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. The statement will be effective for the Company's fiscal year ending
2003. Management does not expect the adoption of this standard to have a
material impact on the Company's financial statements.

In April 2002, the FASB issued Statement No. 145, RESCISSION OF FASB STATEMENTS
NO. 4, 44, AND 64, AMENDMENTS OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS. The Company does not believe that the adoption of this
pronouncement will have a material effect on its financial statements.

In June 2002, the FASB issued Statement No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES. This statement requires the recognition of a
liability for a cost associated with an exit or disposal activity when the
liability is incurred versus the date the Company commits to an exit plan. In
addition, this statement states the liability should be initially measured at
fair value. The statement is effective for exit or disposal activities that are
initiated after December 31, 2002. The Company does not believe that the
adoption of this pronouncement will have a material effect on its financial
statements.

In January 2003, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION -- TRANSITION AND DISCLOSURE. This statement provides alternative
methods of transition for a voluntary change to the fair value-based method of
accounting for stock-based employee compensation. In addition, this statement
also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in the financial statements about the effects
of stock-based compensation. The transitional guidance and annual disclosure
provisions of this statement is effective starting with the January 31, 2003,
financial statements. The interim reporting disclosure requirements will be
effective for the Company's April 30, 2003, 10-QSB. Because the Company
continues to account for employee stock-based compensation under APB Opinion No.
25, the transitional guidance of SFAS No. 148 has no effect on the financial
statements at this time. However, the January 31, 2003, financial statements
have incorporated the enhanced disclosure requirements of SFAS No. 148, as
presented above under the caption "Employee Stock Plans."

In January 2003, the FASB issued Interpretation No. 45, GUARANTOR'S ACCOUNTING
AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF
INDEBTEDNESS OF OTHERS. FASB Interpretation No. 45 clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing certain guarantees. The 2002
financial statements have incorporated the enhanced disclosure requirements of
Interpretation No. 45, as presented in Note 1 to the financial statements under
the caption "Product warranties." The Company does not expect that this
interpretation will have any other effect on its financial statements.

In January 2003, the FASB issued Interpretation No. 46, CONSOLIDATION OF
VARIABLE INTEREST ENTITIES. This interpretation establishes standards for
identifying a variable interest entity and for determining under what
circumstances a variable interest entity should be consolidated with its primary
beneficiary. Until now, a company generally has included another entity in its
consolidated financial statements only if it controlled the entity through
voting interests. Interpretation No. 46 changes that by requiring a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or
is entitled to receive a majority of the entity's residual returns or both. The
requirements of Interpretation No. 46 will apply to the Company for its quarter
ending January 31, 2003. The adoption of this pronouncement has not had a
material effect on the Company's financial statements.

                                      F-8





<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern which contemplates the recoverability
of assets and the satisfaction of liabilities in the normal course of business.
As noted above, the Company is in the development stage and, accordingly, has
not yet generated revenues from operations. Since its inception, the Company has
been engaged substantially in financing activities and developing its product
line, incurring substantial costs and expenses. As a result, the Company
incurred net losses of $2,298,550 during the year ended January 31, 2003, and
$2,943,692 during the year ended January 31, 2002. In addition, the Company's
development activities since inception have been financially sustained by debt
and capital contributions from its affiliates and others.

The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.

NOTE 3 - FIXED ASSETS

Fixed assets for the years ended January 31, 2003 and 2002 consisted of the
following:

                                                        1/31/03        1/31/02
                                                     ------------   ------------
        Office equipment                             $    18,640    $    18,640
        Manufacturing equipment                            4,076          4,076
        Leasehold improvements                             2,164          2,164
        Less:  Accumulated depreciation                  (15,717)       (12,597)
                                                     ------------   ------------

        Fixed assets, net                            $     9,163    $    12,283
                                                     ============   ============

Depreciation expense for the years ended January 31, 2003 and 2002 is $3,120 and
$5,607, respectively.

NOTE 4 - PATENTS

During January 1998, the Company contracted with Neo-Dyne Research, Inc.
("Neo-Dyne") to develop certain battery technology and secure a patent on the
technology. As consideration for the transaction, the Company issued 900,000 and
600,000 shares of its $0.001 par value common stock to Alvin Snaper and William
McNerney, respectively, the principals of Neo-Dyne, who then became officers and
directors of the Company. Lee Balak, the Company's president, also received
3,500,000 shares of the Company's $0.001 par value common stock under the terms
of the agreement.

         On June 9, 1998, the Company acquired patent number 4,107,997 issued by
the U.S. Patent office in 1978 from Alvin Snaper, a former director and officer
of the Company. The Company paid $45,000 and 100,000 shares of Common Stock
valued at $10,000 for the patent. The patent is for an alloy sensor which
generates a current when in contact with water or other aqueous composition.

         Also during 1998, the Company acquired patent number 5,442,846 from
Alvin Snaper, a former director and officer of the Company, for 100,000 shares
of Common Stock valued at $10,000. This patent is a procedure and apparatus for
cold joining of metallic pipes.

NOTE 5 - NOTES PAYABLE

The Company had notes payable to various entities totaling $700,000. The notes
are convertible into 10,000,000 shares of the Company's $0.001 par value common
stock. On March 19, 2003, the noteholders elected to convert their notes into
the 10,000,000 shares of common stock.

                                      F-9





<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company recognized income totaling $25,000 for research and development
consulting fees advanced by MicroDri, L.P., a related entity with common
shareholders and management, during the year ended January 31, 2003.

Neo-Dyne Research, Inc. is a research and development company under ownership
and control by individuals who were previously Company officers and directors.
The Company paid Neo-Dyne Research, Inc. a total of $144,894 for research and
development fees pursuant to development of the battery patent (see Note 4
above) during the year ended January 31, 2003.

Lee Balak, the Company's president, loaned the Company approximately $188,959 as
of January 31, 2003. The notes are due on demand, and the balance is
non-interest bearing.

The Company previously rented a facility in Las Vegas, Nevada from Bonanza West
Properties, a partnership 50% owned by Alvin A. Snaper, a director and Vice
President of the Company. Rents for the years ended January 31, 2003 and 2002
totaled approximately $18,000 and $24,000, respectively.

NOTE 7 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred tax
assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or realized.

The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:

                U.S federal statutory rate         (34.0%)
                Valuation reserve                   34.0%
                                                  -------
                Total                                  -%
                                                  =======

As of January 31, 2003, the Company has combined net operating loss
carryforwards of approximately $8,700,000 for tax purposes, which will be
available to offset future taxable income. If not used, these carryforwards will
expire during the years 2016-2022. The deferred tax asset relating to the
operating loss carryforwards has been fully reserved at January 31, 2003.

NOTE 8 - STOCKHOLDERS' EQUITY

During the year ended January 31, 2002, the Company issued 2,874,330 shares of
Common Stock in exchange for services valued at $2,339,456, (the fair market
value of the shares on the date of issuance).

During the year ended January 31, 2002, the Convertible Note Holders converted
their $525,000 note into 1,050,000 shares of the Company's Common Stock plus an
additional 171,780 shares for interest expense of $60,123, (the fair market
value of the shares on the date of issuance).

During the year ended January 31, 2002, the Company issued 205,000 shares of
Common Stock for cash totaling $76,800.

During the year ended January 31, 2003, the Company issued 7,680,420 shares of
Common Stock in exchange for services valued at $1,761,416, (the fair market
value of the shares on the date of issuance).

During the year ended January 31, 2003, the Company issued 128,458 shares of its
$0.001 par value Common Stock to satisfy outstanding debts totaling $40,597.

During the year ended January 31, 2003, the Company issued 207,500 shares of
Common Stock for cash totaling $182,290.

                                      F-10





<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - WARRANTS AND OPTIONS

There are three warrants outstanding to purchase a total of 102,850 shares of
the Company's $0.001 par value common stock at an exercise price of $0.50 per
common share. The warrants expire on or before October 31, 2003.

There are stock options issued and outstanding to purchase 150,000 shares of the
Company's $0.001 par value common stock at an exercise price of $0.50 per share.
The options expire on June 21, 2003.

During the first quarter of 2002 the Company's board of directors resolved to
adopt the Company's 2002 Stock Option, SAR, and Stock Bonus Consultant Plan
covering 2,000,000 shares of the Company's $0.001 par value common stock. During
February 2002, The Company filed a Form S-8 Registration Statement with the
Securities and Exchange Commission registering the 2,000,000 shares as
"free-trading" stock.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

In connection with the acquisition of patent number 5,442,846 for the apparatus
for cold joining metallic pipes, the Company is committed to a 3% royalty on
gross sales.

On March 27, 2003, the Company filed a civil action against Alvin A. Snaper, a
former director and officer of the Company, and Neo-Dyne Research, Inc., a
research and development company owned by Mr. Snaper, in the District Court of
Clerk County, Nevada (Case No. A465306, Dept IV). The civil action asserts
claims for breach of fiduciary duty, breach of contract, an injunction, and
declaratory relief regarding the ownership of the Company's battery technology
patents and rights, and the turnover of Company property. Mr. Snaper and
Neo-Dyne Research, Inc. filed their Answer and asserted counterclaims against
the Company alleging fraud and misrepresentation, breach of contract, and
intentional interference with prospective economic advantage, and seeking an
injunction and declaratory relief. The Company intends to vigorously pursue this
litigation and to defend the counterclaims asserted against it. The Company is
not presently able to reasonably evaluate the outcome of this litigation. The
Company considers the ownership of its battery technology to be its most
important asset and critical to the future operations of the Company.

NOTE 11 - SUBSEQUENT EVENTS

Certain holders of approximately $700,000 of corporate notes of the Company
elected to convert their notes into 10,000,000 restricted shares of the
Company's $0.001 par value common stock on March 19, 2003. The holders also
received warrants to purchase up to 10,000,000 shares of the Company's $0.001
par value common stock at an exercise price of $0.10 per share for a term ending
March 24, 2005.

                                      F-11





<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.

                                              POWER TECHNOLOGY, INC.

Date: May 14, 2003

                                              By: /s/ Lee A. Balak
                                                 --------------------
                                              Lee A. Balak
                                              Director, President, Treasurer,
                                              Secretary, Chief Financial Officer
                                              and Principal Accounting Officer


                                              /s/ F. Bryson Farrill
                                              ---------------------
                                              F. Bryson Farrill

                                       22





<PAGE>

                                INDEX OF EXHIBITS

Exhibit No.                         Description
-----------                         -----------

10(h)             Confidentiality, Non-Competition, Non-Circumvention Fee
                  Agreement with Dr. Robert B. Honea dated October 2002.

10(i)             Consulting Agreement with John Gray dated March 1, 2003.

10(j)             Consulting Agreement with Barry Clark dated March 4, 2003.

10(k)             Amended and Restated Agreement in Principle to form NxCell
                  Batteries and Power Inc. dated April 6, 2003.

                                       23