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

                                  FORM 10-KSB/A

          |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, 2004

          | |     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)

               109 N. Post Lane, Suite 422, Houston, Texas 77024
               --------------------------------------------------
                    (Address of principal executive offices)

ISSUER'S TELEPHONE NUMBER:  (713) 621-4310

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: $ -0-.

      The aggregate market value of voting stock held by non-affiliates of the
registrant as of May 24, 2004: Common stock, $.001 par value: $1,583,322

      The number of shares of the registrant's common stock outstanding as of
January 31, 2004:
                  47,424,488 shares.

      Documents incorporated by reference: None

      Transitional Small Business Disclosure Format:

                                 Yes | | No |X|

<PAGE>

EXPLANATORY NOTE

The only changes in this Form 10-KSB/A for the fiscal year ended January 31,
2004 from the Form 10-KSB filed by the Issuer for the fiscal year ended January
31, 2004, which was filed May 28, 2004, are contained in the Report of
Independent Registered Public Accounting Firm, page F-1, and in certain of the
Notes to the Consolidated Financial Statements, specifically note 2, note 4 and
note 9.



<PAGE>

                             POWER TECHNOLOGY, INC.

                       INDEX TO FORM 10-KSB ANNUAL REPORT


PART I

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

Item 2.  Description of Property.............................................. 7

Item 3.  Legal Proceedings.................................................... 7

Item 4.  Submission of Matters to a Vote of Security Holders.................. 7

PART II

Item 5.  Market for Common Equity and Other Stockholder Matters............... 7

Item 6.  Management's Discussion and Analysis or Plan of Operations........... 9

Item 7.  Financial Statements.................................................12

Item 8.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure.............................................12

Item 8A  Controls and Procedures..............................................12

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act....................12

Item 10. Executive Compensation...............................................14

Item 11. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters......................................14

Item 12. Certain Relationships and Related Transactions.......................15

Item 13. Exhibits and Reports on Form 8-K.....................................15

Item 14  Principal Accountant Fees and Services...............................16

Financial Statements..........................................................

Signatures....................................................................

Exhibit Index.................................................................





                                        2

<PAGE>





                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS.

         Power Technology, Inc. (the "Company"), a Nevada corporation, was
incorporated on June 3, 1996. However, the Company did not conduct any
significant operations until March 1998 when it acquired all of the issued and
outstanding capital stock and assets of PowerTek Technology Corporation, Inc.
(formerly called Power Technology, Inc.) which is presently a wholly-owned
subsidiary of the Company. The Company changed its corporate name from "Zepplin
Production Corp." to Power Technology, Inc. during March 1998 to reflect the
change in the purposes and nature of its business.

         The Company is a research and development company. It is engaged in
research and development activities regarding (i) batteries for the automotive
and electric car industries, (2) electronic sensors, and (3) pipeline connection
technology.

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, the price of gasoline,
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.

         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

                                        3



<PAGE>

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 resistence to vibration,
erosion 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 power 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.

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 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


                                        4


<PAGE>

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.

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
resistence.

         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.

                                        5


<PAGE>


ALLOY SENSOR TECHNOLOGY

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

         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 was previously 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. which owns this
technology. The MicroDry process was being designed to move grain within
harvesting machines (I e, a combine) via air pressure. The Company has
discontinued its research and development activities regarding the microwave
technology due to lack of funding from Fluidic/Microwave Systems, Inc. which was
inactive during 2003.

RESEARCH AND DEVELOPMENT

         Research and development efforts have been 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.

         During the fiscal year ended January 31, 2004, research and development
activities were halted because of lack of capital and the pending litigation
filed by the Company against Neo-Dyne Research, Inc. and Alvin A. Snaper. See
Item 3.

NxCELL BATTERIES

         During fiscal 2003, the Company had proposed to enter into an agreement
with B. C. Research Inc. ("BCR") in Canada to conduct further research and
development of its battery technology. However, during fiscal 2004, the Company
and BCR terminated this proposal because of issues regarding the validity of the
patent rights of the Company to its battery technology had not been fully
resolved in the Company's pending litigation against Neo-Dyne Research, Inc. and
Alvin A. Snaper. See Item 3.

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.

EMPLOYEES

         As of January 31, 2004, the Company had two (2) full-time employees and
three (3) consultants. Of the total, none were engaged in product research and
development, and two (2) were in finance and administration. None of the
Company's employees is represented by a labor union with respect to his or her


                                        6


<PAGE>


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.

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 offices located at 15 Ocean
View Road, Lions Bay, B.C. V0N 2E0, Canada on a month-to-month basis. The lease
covers approximately 500 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 2004, 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.

         The Company filed a civil action against Mr. Alvin A. Snaper, a former
director and officer of the Company, and against Neo-Dyne Research, Inc.
("Neo-Dyne"), his research and development company, based upon allegations of
breach of fiduciary relationship and breach of contract, and seeking an
injunction, declaratory relief and the turnover of Company property. Mr. Snaper
and Neo-Dyne filed an answer and asserted counterclaims alleging fraud and
misrepresentation, breach of contract, and intentional interference with
prospective economic advantage, and seeking an injunction and declaratory
relief. The litigation involves the ownership and rights to the battery
technology and patent rights of the Company. Because the principal business
operations of the Company has involved research and development of its battery
technology, the rights to continue its research and development activities
regarding batteries and its rights to license and market such technology is
significantly important to the Company and its future business operations. The
litigation is in the discovery stage and it is not reasonably possible to fully
evaluate and predict the outcome of such litigation.

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 authorize 100,000,000 shares of
Common Stock, $.001 par value. As of January 31, 2004, the Company had
47,424,488 shares of Common Stock, $.001 par value, that were issued and
outstanding, which were held by 126 stockholders of record.

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

         The Company's Articles of Incorporation authorize 1,000,000 shares of
Preferred Stock, $.01 par value. As of January 31, 2004, the Company had no
shares of its Preferred Stock issued and outstanding.

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<PAGE>


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

         As of January 31, 2004, the Company had outstanding warrants to
purchase 11,602,850 shares of Common Stock at exercise prices ranging from $.06
to $.10.

         As of January 31, 2004, the Company had an outstanding stock option to
purchase 200,000 shares of Common Stock at an exercise price of $.625 which
expires on July 26, 2004.

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.

MARKET PRICE

         The following table sets forth the range of high and low bid prices per
share of the Common Stock of the Company as reported by Pink Sheets, L.L.C. for
the periods indicated.

                                                   High Closing    Low Closing
                                                   Bid Prices(1)   Bid Prices(1)
Year Ended December 31, 2001

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

Year Ended December 31, 2002

         1st Quarter . . . . . . . . . .             $.44              $.25
         2nd Quarter . . . . . . . . . .             $.36              $.16
         3rd Quarter . . . . . . . . . .             $.27              $.085
         4th Quarter . . . . . . . . . .             $.13              $.07

Year Ended December 31, 2003

         1st Quarter  . . . . . . . . . .            $.125             $.05
         2nd Quarter . . . . . . . . . .             $.071             $.045
         3rd Quarter . . . . . . . . . .             $.066             $.02
         4th Quarter . . . . . . . . . .             $.03              $.015

Year Ending December 31,2004

         1st Quarter . . . . . . . . . . .           $.06              $.04

---------------
(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 bid price of the Common Stock of the Company on May 27,
2004, was $.037 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.

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<PAGE>


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

         The Company did not sell any unregistered securities during the three
month period ended January 31, 2004.


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

Management's Discussion and Alalysis and Plan of Operation

         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
annual report. 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
annual report.

         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 the sale of its Common Stock,
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, 2004 COMPARED TO 2003

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

                                      Year Ended              Year Ended
                                      January 31, 2004        January 31, 2003
                                      ----------------        ----------------

Revenues                              $           0           $      25,000
General and administrative expense    $      58,878           $     286,037
Research and development              $           0           $     144,894
Consulting fees                       $     254,200           $   1,761,416
Net Loss                              $    (322,246)          $  (2,298,550)
Net Loss Per Share                    $        (.01)          $        (.08)

REVENUES.

         Total revenues for fiscal years 2004 and 2003 were $0 and $25,000,
respectively, as the operations of the Company continued to be focused on
research and development. To date, the Company has not established any
commercial products nor commenced any commercial production operations.

                                        9


<PAGE>


GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses decreased from $286,037 in fiscal
year 2003 to $58,878 during the fiscal year ended January 31, 2004, a decrease
of approximately 79.4%. The principal reason for the decrease was the lack of
research activities of the Company during fiscal 2004.

RESEARCH AND DEVELOPMENT EXPENSES.

         Research and development expenses decreased from $144,894 in fiscal
year 2003 to $ -0- during the fiscal year ended January 31, 2004, a decrease of
100%, as a result of the termination of all research activities during fiscal
20004.

NET LOSS

         The net loss of the Company decreased from $(2,298,550) during fiscal
year 2003 compared to a net loss of $(322,246) during the fiscal year ended
January 31, 2004, a decrease of approximately 85%. 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, 2004, and its
termination of research and development activities.

CAPITAL RESOURCES.

         The Company's capital resources have been provided primarily by the
sale of its Common Stock for cash of $30,000 for 1,207,500 shares of the Common
Stock of the Company.

WORKING CAPITAL AND LIQUIDITY.

         At January 31, 2004, the Company had negative working capital of
approximately $290,780 compared to January 31, 2003, negative working capital in
the amount of $956,729. 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, 2005.

         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.

                                       10


<PAGE>


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, 2004, the Company had a deficit in working capital of
$290,780, a loss from operations for the year ended January 31, 2004, of
$(322,246) and an accumulated deficit of $(9,073,498) 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.

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.

                                       11


<PAGE>


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
year ended January 31, 2004, are provided with this Form 10-KSB annual report
and are incorporated herein by reference.


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.

Item 8A. CONTROLS AND PROCEDURES

         EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's Chief
Executive Officer and principal financial officer, after evaluation the
effectiveness of disclosure controls and procedures of the Company [as defined
in the Securities Exchange Act of 1934 Rule 13a-14(c) and 15d-14(c)] as of the
date within 90 days of the filing date of this report on Form 10-KSB for its
fiscal year ended January 31, 2004, have concluded that as of the evaluation
date, the Company's disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company and the
Company's consolidated subsidiary would be made known to him by others within
those entities, particularly during the period in which this annual report on
Form 10-KSB was being prepared.

         CHANGES IN INTERNAL CONTROLS. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
its disclosure controls and procedures subsequent to the evaluation date, nor
any significant deficiencies or material weaknesses in such disclosure controls
and procedures requiring corrective actions. As a result, no corrective actions
were taken.

                                    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               49      Director, President and Treasurer
         F. Bryson Farrill          76      Director
         Hugo P. Pomrehn, Ph.D.     65      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.

                                       12


<PAGE>


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 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.

         Dr. Pomrehn became a director of the Company in July 1998. From 2001 to
the present, he has been a consultant. Dr. Pomrehn was previously 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. 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.

         Based on its review of the copies of such forms received by it, the
Company believes that during the year ended January 31, 2004, all such filing
requirements applicable to its officers and directors and any ten percent holder
were complied with, except that Mr. Lee A. Balak, Mr. F. Bryson Farrill, and Mr.
Hugo P. Pomrehn were each late in the filing of a Form 4 report during the
fiscal year ended January 31, 2004.


                                       13


<PAGE>


ITEM 10.    EXECUTIVE COMPENSATION

         The following table discloses compensation during the year ended
December 31, 2004, for the Chief Executive Officer, President, Treasurer and
Secretary of the Company.

<TABLE>
<CAPTION>
                                                                                       Long-Term Compensation
                                                                              -------------------------------------
                                           Annual compensation(1)
                                   -----------------------------------                Awards                Payouts
                                                                              ---------------------------   -------
                                                               Other                          Securities
Name and                                                       Annual         Restricted      Underlying                All Other
Principal                Fiscal                                Compen-        Stock           Options/      LTIP        Compen-
Position                 Year      Salary       Bonus          sation         Awards          SARs          Payouts     sation
--------                 ----      ------       -----          ------         ------          ----          -------     ------
<S>                      <C>       <C>          <C>            <C>           <C>              <C>           <C>         <C>
Lee A. Balak, Chief
Executive Officer,
President and Director   2004      $     0      $     0        $    0        $150,000         $      0      $     0     $     0

</TABLE>

(1)      Mr. Balak received 8,571,428 shares of restricted Common Stock in
         exchange for $150,000 of executive compensation for the fiscal year
         ended January 31, 2004.


STOCK PLAN COMMITTEES

         A Stock Plan Committee of the Board of Directors administers the
Company's Stock Option, SAR and Stock Bonus Consultant Plan. Mr. Lee A. Balak is
presently the sole member of the Committee.

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.

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, 2004, are as follows:

                                            SHARES                 PERCENT OF
MANAGEMENT                                  BENEFICIALLY           COMMON
SHAREHOLDERS(1)                             OWNED(1)               STOCK
---------------------------                 ------------           -----------
Lee A. Balak(2). . . . . . . . . . . . . . .  4,872,000              10.1%
15 Ocean View Road
Lions Bay, B.C. V0N 2E0
Canada

F. Bryson Farrill(2) . . . . . . . . . . . .   500,000                1.0%
77 Verplank Avenue
Stanford, Connecticut 06902

Hugo P. Pomrehn, Ph.D (2)(3) . . . . . . . .   760,000                1.6%
1017 South Mountain
Monrovia, California 91016

Directors and officers as a group
(3 persons, including the above) . . . . . . 6,132,000               12.5%

                                       14


<PAGE>


-------------------
(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 a warrant to purchase 500,000 shares of Common Stock of the
         Company at an exercise price of $.06 per share during a period ending
         April 22, 2006.

(3)      Includes 80,000 shares of Common Stock 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, 2004.

<TABLE>
<CAPTION>
                                                              SHARES OF                 PERCENT
                                    TITLE OF                  OUTSTANDING               BENEFICIALLY
NAME AND ADDRESS                    CLASS                     COMMON STOCK(1)           OWNED
-------------------                 --------                  -------------             ------------
<S>                                 <C>                       <C>                       <C>
Lee A. Balak                        Common Stock              4,837,000                 10.1%
15 Ocean View Road
Lions Bay, B.C. V0N 2E0
Canada

Cede & Co.                          Common Stock              28,713,954(3)             60.5%
P.O. Box 222
Bowling Green Station
New York, New York 10274
</TABLE>

--------------------
(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 a warrant to purchase 500,000 shares of Common Stock of the
         Company at an exercise price of $.06 per share during a period ending
         April 22, 2006.

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         During the year ended January 31, 2004, Mr. Lee A. Balak had loaned
$65,423 to the Company. The loans are on demand with interest at 8% per annum.

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

         No reports on Form 8-K were filed by the Company during the three month
period ended January 31, 2004.

                                       15


<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

         Fees paid to principal accountants of the Company are as follows:

<TABLE>
<CAPTION>
Name                            Audit Fees      Audit Related Fees      Tax Fees      All Other Fees
----                            ----------      ------------------      --------      --------------
Beckstead and Watts, LLP for fiscal year ended:
<S>                             <C>             <C>   <C>               <C>   <C>     <C>   <C>
January 31, 2003                $ 13,000        $    -0-                $    -0-      $    -0-

January 31, 2004                $ 13,000        $    -0-                $    -0-      $    -0-
</TABLE>


INDEX TO EXHIBITS

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

3(i)  Articles of Incorporation     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      The Amendment to the Articles of
      Incorporation                 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                       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

                  10.1              Consulting Agreement with John Gray dated
                                    March 1, 2003, is incorporated herein by
                                    reference to Exhibit 10(I) to the Form
                                    10-KSB annual report of the Company for its
                                    fiscal year ended January 31, 2003.

                  10.2              Consulting Agreement with Barry Clark dated
                                    March 4, 2003, is incorporated herein by
                                    reference to Exhibit 10(j) to the Form
                                    10-KSB annual report of the Company for its
                                    fiscal year ended January 31, 2003.

                  10.3              Amended and Restated Agreement in Principle
                                    with NxCell Batteries dated April 6, 2003,
                                    is incorporated herein by reference to
                                    Exhibit 10(k) to the Form 10-KSB annual
                                    report of the Company for its fiscal year
                                    ended January 31, 2003.

                  10.4              Consulting Agreement with James Hill dated
                                    January 15, 2004.

11. Statement re: computation of    Reference is made to the Consolidated
    per share earnings              Statements of Operations of the Consolidated
                                    Financial Statements which are incorporated
                                    herein.

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

                                       16


<PAGE>


99.1 Certification of Lee A. Balak  Certification of Lee A. Balak

99.2 Certification of Lee A. Balak  Certification of Lee A. Balak


                                       17


<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: February 22, 2006


By: /s/ Bernard J. Walter
--------------------------------------------
Bernard J. Walter
Director, President, Treasurer, Chief
Financial Officer and Principal Accounting Officer



                                              /s/ Hugo P. Pomrehn
                                              ----------------------------------
                                              Hugo P. Pomrehn
                                              Director



                                              /s/ Bernard J. Walter
                                              ----------------------------------
                                              Bernard J. Walter
                                              Director


                                       18


<PAGE>

                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                  BALANCE SHEET
                                      AS OF
                                JANUARY 31, 2004

                                       AND

                            STATEMENTS OF OPERATIONS,
                      CHANGES IN STOCKHOLDERS' EQUITY, AND
                                   CASH FLOWS
                  FOR THE YEARS ENDED JANUARY 31, 2004 AND 2003
                               AND FOR THE PERIOD
                                  JUNE 3, 1996
                               (DATE OF INCEPTION)
                                     THROUGH
                                JANUARY 31, 2004



<PAGE>

                                TABLE OF CONTENTS
                                -----------------



                                                                            PAGE
                                                                            ----

Independent Auditors' Report                                                F-1

Balance Sheets                                                              F-2

Statements of Operations                                                    F-3

Statements of Changes in Stockholders' Equity                               F-4

Statements of Cash Flows                                                    F-5

Footnotes                                                                   F-6




<PAGE>

Beckstead and Watts, LLP
Certified Public Accountants

                                                         3340 Wynn Road, Suite B
                                                             Las Vegas, NV 89102
                                                                    702.257.1984
                                                              702.362.0540 (fax)

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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, 2004 and 2003, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and 2003, 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 20, 2004


                                       F-1




<PAGE>

                             POWER TECHNOLOGY, INC.
                          (a Development Stage Company)
                           Consolidated Balance Sheet


                                                                     JANUARY 31,
                                                                            2004
                                                                    ------------
Assets

Current assets:
    Cash and equivalents                                            $       213
    Employee advances                                                     1,000
                                                                    ------------
      Total current assets                                                1,213

Fixed assets, net                                                         5,003

Other assets:
    Patents                                                              78,500
                                                                    ------------
                                                                     $    84,716
                                                                    ============

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current liabilities:
    Accounts payable                                                $    58,273
    Loans payable                                                        79,108
    Loans payable - related party                                       154,612
                                                                    ------------
      Total current liabilities                                         291,993
                                                                    ------------

                                                                         291,993
                                                                    ------------

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, 47,424,488 shares issued and outstanding               47,425
    Additional paid-in capital                                        8,846,596
    (Deficit) accumulated during development stage                   (9,101,298)
                                                                    ------------
                                                                       (207,278)
                                                                    ------------

                                                                     $    84,716
                                                                    ============

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

                                       F-2

<PAGE>

                             POWER TECHNOLOGY, INC.
                          (a Development Stage Company)
                      Consolidated Statement of Operations
                for the years ended January 31, 2004 and 2003 and
           for the period June 3, 1996 (inception) to January 31, 2004


<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED        JUNE 3, 1996
                                                                  JANUARY 31,           (INCEPTION) TO
                                                         -----------------------------    JANUARY 31,
                                                             2004            2003            2004
                                                         -------------   -------------   -------------
<S>                                                      <C>             <C>             <C>
Consulting Revenue                                       $         --    $     25,000    $     26,663
                                                         -------------   -------------   -------------

Expenses:
   General administrative expenses                             58,878         286,037       2,692,303
   Research &development - related party                          --         144,894       1,350,083
   Consulting fees                                            156,500              --         156,500
   Consulting fees - related party                             97,700       1,761,416       4,665,022
   Loss from impairment of related party advances                  --         127,000         127,000
   Depreciation and amortization                                4,160           3,120          20,917
                                                         -------------   -------------   -------------
                                                              317,238       2,322,467       9,011,825

Other income (expense):
   Interest expense                                           (32,810)         (1,087)       (114,999)
   Interest income                                                  2               4             779
   Loss on foreign currency                                        --              --          (1,916)
                                                         -------------   -------------   -------------

Net (loss)                                               $   (350,046)   $ (2,298,550)   $ (9,101,298)
                                                         =============   =============   =============

Weighted average number of
   common shares outstanding - basic and fully diluted     39,384,738      27,419,549
                                                         =============   =============

Net (loss) per share - basic and fully diluted           $      (0.01)   $      (0.08)
                                                         =============   =============
</TABLE>


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

                                       F-3
<PAGE>

                             POWER TECHNOLOGY, INC.
                          (a Development Stage Company)
                      Consolidated Statements of Changes in
                   Stockholders' (Deficit) for the period June
                     3, 1996 (Inception) to January 31, 2004

<TABLE>
<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>
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)

Cancelled shares                            (165,500)          (166)             --                                            (166)
Shares issued for consulting services      1,600,000          1,600         154,900                                         156,500
Shares issued for consulting services
   - related party                         3,272,000          3,272          94,428                                          97,700
Shares issued for debt conversion         10,000,000         10,000         690,000                                         700,000
Warrants issued for interest expense              --             --          27,800                                          27,800
Shares issued for cash                     1,207,500          1,208          28,793                                          30,000
Net (loss) for the year ended
   January 31, 2004                                                                                        (350,046)       (350,046)
                                        -------------  -------------   -------------   -------------   -------------   -------------
                                          47,424,488   $     47,425    $  8,846,596    $ (9,101,298)   $         --    $   (207,278)
                                        =============  =============   =============   =============   =============   =============
</TABLE>


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

                                       F-4

<PAGE>

                             POWER TECHNOLOGY, INC.
                          (a Development Stage Company)
                      Consolidated Statements of Cash Flows
                for the years ended January 31, 2004 and 2003 and
           for the period June 3, 1996 (inception) to January 31, 2004


<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED        JUNE 3, 1996
                                                                   JANUARY 31,             (INCEPTION)
                                                          -----------------------------   TO JANUARY 31,
                                                              2004            2003            2004
                                                          -------------   -------------   -------------
Cash flows from operating activities
<S>                                                       <C>             <C>             <C>
Net (loss)                                                $   (350,046)   $ (2,298,550)   $ (9,101,298)
Adjustments to reconcile net (loss) to net cash
   (used) by operating activities:
   Depreciation expense                                          4,160           3,120          20,917
   Loss from impairment of related party advances                   --         127,000         127,000
   Stock issued for consulting services - related party         97,700       1,761,416       4,665,022
   Stock issued for consulting services                        156,500              --         156,500
   Stock issued for interest expense                                --              --          60,123
   Warrants issued for interest expense                         27,800              --          27,800
   Stock issued to acquire patents                                  --              --         (20,000)
   (Increase) in prepaid expenses                                   --          56,225              --
   Increase (decrease) in accounts payable                     (10,650)         12,263          58,273
                                                          -------------   -------------   -------------
Net cash (used) by operating activities                        (74,536)       (338,526)     (4,005,663)
                                                          -------------   -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from loans                                          80,086              --          80,086
   Proceeds (payments) on loans - related party                (35,490)         38,616         153,469
   Purchase of equipment                                            --              --         (21,667)
   Patent acquisition                                               --              --         (58,500)
                                                          -------------   -------------   -------------
Net cash provided by investing activities                       44,596          38,616         153,388
                                                          -------------   -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from convertible debentures                             --          94,740         875,010
   Issuance of common stock                                     30,000         182,290       2,977,478
                                                          -------------   -------------   -------------
Net cash provided by financing activities                       30,000         277,030       3,852,488
                                                          -------------   -------------   -------------
Net increase (decrease) in cash                                     60         (22,880)            213

Cash and equivalents - beginning                                   153          23,033              --
                                                          -------------   -------------   -------------
Cash and equivalents - ending                             $        213    $        153    $        213
                                                          =============   =============   =============

Supplemental disclosures:
   Interest paid                                          $         --    $         --    $         --
                                                          =============   =============   =============
   Income taxes paid                                      $         --    $         --    $         --
                                                          =============   =============   =============
   Non-cash investing and financing activities:
     Number of shares issued for services                    4,872,000       2,316,200      17,165,250
                                                          =============   =============   =============
     Number of shares issued for debt conversion            10,000,000              --      12,377,958
                                                          =============   =============   =============
     Number of shares issued for interest expense                   --              --         171,780
                                                          =============   =============   =============
     Number of shares issued to acquire patents                     --              --         200,000
                                                          =============   =============   =============
</TABLE>


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

                                       F-5

<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, 2004 and 2003.

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.

                                       F-6

<PAGE>

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

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.

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.

                                       F-7
<PAGE>
                             POWER TECHNOLOGY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Recent Pronouncements

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 $322,246 during the year ended January 31, 2004, and
$2,298,550 during the year ended January 31, 2003. 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 funds and, ultimately, the achievement of
significant operating revenues. The Company's specific plans to raise funds
include the sale of its restricted common stock, the issuance and sale of
convertible notes, the use of proceeds from the sale of its common stock
pursuant to warrants and options and borrowings from shareholders or third
parties. 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, 2004 and 2003 consisted of the
following:

                                                       1/31/04        1/31/03
                                                     ------------   ------------
        Office equipment                             $    18,640    $    18,640
        Manufacturing equipment                            4,076          4,076
        Leasehold improvements                             2,164          2,164
        Less:  Accumulated depreciation                  (19,877)       (15,717)
                                                     ------------   ------------

        Fixed assets, net                            $     5,003    $     9,163
                                                     ============   ============

Depreciation expense for the years ended January 31, 2004 and 2003 is $4,160 and
$3,120, 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. Pursuant to this agreement, Power Technology acquired the
rights to U.S. Patent 6,060,198, an "Electrochemical Battery Structure and
Method" patent which covers the basic invention of a metal battery plate
comprised of rigid elongated tendrils that form a conductive structure with
substantial additional surface area that is exposed to a battery.

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 and is useful in
detecting the presence of water in a fuel tank.

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
joining large diameter pipe utilizing magnetic pulse methods, a cold form method
joining a metal sleeve around the ends of two abutting metallic pipes.


                                       F-9
<PAGE>



Patent asset as of January 31, 2004 consisted of the following:

    Battery patent                                       $  13,500
    Water sending patent          $  55,000
    Pipe joining patent                                  $  10,000
                                                         ---------
    Patents                                              $  78,500

The patent assets were valued at cost. 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 are impaired.
The Company assesses recoverability of the carrying value of the asset by
estimating the future net cash flows expected to result from the asset,
including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset's carrying value and fair value.

                                      F-10
<PAGE>

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


NOTE 5 - NOTES PAYABLE AND CONVERTIBLE DEBT

The Company was loaned $80,086 during the year ended January 31, 2004. The loans
are non-interest bearing and due on demand.

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.

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 $190,102
during the years ended January 31, 2004 and 2003. The notes are due on demand,
and the ending balance of $154,612 is non-interest bearing. The Company repaid a
portion of the loan in the amount of $35,490 during the year ended January 31,
2004.

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, 2004 and 2003
totaled approximately -0- 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, 2004, the Company has combined net operating loss
carryforwards of approximately $9,073,498 for tax purposes, which will be
available to offset future taxable income. If not used, these carryforwards will
expire during the years 2016-2023. The deferred tax asset relating to the
operating loss carryforwards has been fully reserved at January 31, 2004.

                                      F-11
<PAGE>

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


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.

During the year ended January 31, 2004, the Company issued 3,272,000 shares of
its $0.001 par value common stock to various related party individuals and
entities for consulting services valued at $97,700.

During the year ended January 31, 2004, the Company issued 1,600,000 shares of
its $0.001 par value common stock to various unrelated individuals and entities
for consulting services valued at $156,500.

During the year ended January 31, 2004, the Company issued 10,000,000 shares of
its $0.001 par value common stock to convertible noteholders in exchange for
$700,000 of convertible debt.

During the year ended January 31, 2003, the Company issued 1,207,500 shares of
its $0.001 par value common stock to unrelated individuals for cash of $30,000.

NOTE 9 - WARRANTS AND OPTIONS

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.

In conjunction with the conversion of debt to equity discussed in Note 5 above,
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. The fair market value of the Company's common
stock on the date of grant was $0.06. Interest expense totaling $27,800 has been
recorded by the Company as of January 31, 2004. No warrants were exercised or
expired during the year ended January 31, 2004.

Warrants issued by the Company are valued on the date of grant using the
Black-Scholes pricing model using assumptions.


                                      F-12
<PAGE>


During the year ended January 31, 2004 there were no options outstanding,
granted, exercised or forfeited.

Activity of warrants during the year ended January 31, 2004 is as follows:


                                             2004

                                    Warrants         Weighted
                                                     Average
                                                     Share Price
                                                     --------------

Outstanding at                     490,000                    $ 0.81
Beginning of year

Granted                         11,500,000                    $ 0.09
Exercised                               --                        --
Forfeited                               --                        --

Outstanding at                  11,990,000                    $ 0.12
end of year



                                      F-13

<PAGE>

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


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.


                                      F-14