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

                                   FORM 10-KSB

(Mark one)

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

    For the fiscal year ended March 31, 2003

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

    For the transition period from _______________ to ________________

                         Commission File Number: 0-29780


                              SOLPOWER CORPORATION
                 (Name of Small Business Issuer in its Charter)

          Nevada                                                  87-0384678
(State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)

        307 East 22nd Street
           San Pedro, CA                                            90731
(Address of principal executive offices)                          (Zip Code)

                                 (888) 289-8866
                           (Issuer's telephone number)

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, $.01 par value per share
                                (Title of Class)

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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. [ ]

Registrant's revenues for the fiscal year ended March 31, 2003 were $951,195.

The aggregate market value of the common stock held by  non-affiliates  computed
based on the  closing  price of such stock on March 31,  2003 was  approximately
$2,901,201.

The number of shares outstanding of the registrant's classes of common stock, as
of March 31, 2003 was 49,212,127 shares. No shares of the registrant's preferred
stock were outstanding.

Documents incorporated by reference: None.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X].
<PAGE>
                              SOLPOWER CORPORATION

                                   ----------

                        INDEX TO THE FORM 10-KSB FOR THE
                        FISCAL YEAR ENDED MARCH 31, 2003


PART I........................................................................1
   ITEM 1.  DESCRIPTION OF BUSINESS...........................................1
   ITEM 2.  DESCRIPTION OF PROPERTY..........................................12
   ITEM 3.  LEGAL PROCEEDINGS................................................12
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............12

PART II......................................................................12
   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........12
   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........14
   ITEM 7.  FINANCIAL STATEMENTS.............................................16
   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE.........................................43

PART III.....................................................................43
   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT................43
   ITEM 10. EXECUTIVE COMPENSATION...........................................44
   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...45
   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................47
   ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.................................49
<PAGE>
                                     PART I

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

Except for historical  information  contained herein,  this Form 10-KSB contains
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "SECURITIES ACT") and Section 21E of the Securities
Exchange  Act  of  1934,  as  amended  ("EXCHANGE  ACT").  We  intend  that  the
forward-looking  statements  be  subject  to the safe  harbors  created by these
statutory provisions.

Forward-looking  statements involve risks and uncertainties and include, but are
not  limited  to,  statements  of future  events,  our  plans and  expectations,
financial  projections  and  performance  and  acceptance  of our product in the
marketplace.  We may make additional written or oral forward-looking  statements
from  time to time in  filings  with  the  Securities  and  Exchange  Commission
("SEC"),  through  press  releases  or  otherwise.  Wherever  possible,  we have
identified  these  forward-looking  statements  by  words  such  as  "BELIEVES,"
"ANTICIPATES,"   "CONTEMPLATES,"   "EXPECTS,"  "INTENDS,"  "PROJECTS,"  "PLANS,"
"FORECASTS,"  "ESTIMATES" and similar expressions.  These statements reflect our
current views about future events and financial  performance  or operations  and
are  applicable  only as of the date the statements are made. Our actual results
may  differ  materially  from  these  statements.  Factors  that  may  cause  or
contribute to differences  include,  but are not limited to, those  discussed in
"DESCRIPTION  OF  BUSINESS  -  FACTORS   AFFECTING   FUTURE   PERFORMANCE"   and
"MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF  Operations," as well as those
factors discussed elsewhere in this Form 10-KSB and in any exhibits attached.

Although  we  believe  that  the  assumptions   underlying  our  forward-looking
statements  in this Form 10-KSB are  reasonable,  any of the  assumptions  could
prove  inaccurate.  There can be no assurance that the results  contemplated  in
forward-looking  statements  will be realized.  In addition,  as disclosed under
"DESCRIPTION OF BUSINESS - FACTORS  AFFECTING FUTURE  PERFORMANCE," our business
and operations are subject to substantial risks which increase the uncertainties
inherent in the forward-looking statements included in this Form 10-KSB.

The  inclusion  of  forward-looking  information  should  not be  regarded  as a
representation  that  the  future  events,  plans  or  expectations,   financial
projections  and  performance  or acceptance of our products and services in the
marketplace will be achieved.  We disclaim any obligation to subsequently revise
forward-looking  statements to reflect any change in our  expectations or due to
the occurrence of unanticipated events.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

We are in the business of producing,  marketing and distributing  SOLTRON(R),  a
proprietary  enzyme-based  fuel enhancing  product and SP34E(TM),  an ozone safe
alternative  refrigerant.  We  currently  distribute  these  products  primarily
through  sales  channels in Central  America and  American  Samoa,  although our
business plan contemplates distribution throughout the United States, Canada and
Mexico  as  well.   SOLTRON(R)  is  distributed  through  traditional  channels,
including fuel  wholesalers,  oil  distributors  for bulk treatment,  marine and
automotive   after-market  stores,   appointed   distributors  and  directly  to

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end-users.  During the quarter ended  September 30, 2002, we closed our Phoenix,
Arizona  production  facility and relocated our  corporate  headquarters  to San
Pedro, California. Since closing our production facility, we have outsourced the
blending and bottling of SOLTRON(R).

Solpower was originally incorporated in Utah in 1982 as Dynafuel Corporation and
our original  business involved research and development of an experimental fuel
using  alcohol and other  chemicals in a  proprietary  combination  to produce a
gasoline-like motor fuel. In July 1996, we merged into a newly-formed subsidiary
incorporated  in Nevada to change our corporate  domicile.  In November 1996, we
entered into a licensing  agreement  with Dominion  Capital Pty Ltd.  ("DOMINION
CAPITAL") to acquire the exclusive  manufacturing,  distribution,  marketing and
sales rights for SOLTRON(R) in the United States, Canada and Mexico. As a result
of entering into this licensing  agreement,  Dominion Capital and its affiliates
gained control of Solpower and a new Board of Directors and new management  were
installed.   A   corporate   philosophy   of   acquiring   and   commercializing
environmentally friendly products was initiated. In June 1998, we entered into a
second  licensing  agreement  with  Dominion  Capital and acquired the exclusive
manufacturing,   distribution,  marketing  and  sales  rights  for  the  product
SP34E(TM) in the United States, Canada and Mexico. In December 2000, we acquired
the E*COR enzyme division of Perix Industries, Inc., including all the rights to
the  KLEAN  product  line.  KLEAN  was  a  line  of  enzyme-based  cleaners  and
bio-remediation  and petroleum deposit control agents. We discontinued the KLEAN
product line in the fiscal year ended March 31, 2003.

On January 31, 2003, we acquired the outstanding shares of Virtual  Technologies
for 6,000,000 shares of our  unregistered,  restricted common stock. As a result
of  this  acquisition,   we  gained  the  exclusive,   worldwide  manufacturing,
distribution,   marketing   and  sales  rights  to  SP34E(TM)  and  the  related
refrigerant gas products, SP22A, SP22B, SP22C and SP22E.

On  February  20,  2003,  we acquired  the  exclusive  worldwide  manufacturing,
distribution,   marketing  and  sales  rights  to  SOLTRON(R)   pursuant  to  an
Acquisition  Agreement with Dominion  Capital,  under which we issued  9,000,000
shares of our restricted common stock.

PRODUCTS

SOLTRON(R). SOLTRON(R) is an enzyme-based liquid fuel enhancing product that was
developed  over a period of 18 years by a group of  scientists  at the  Japanese
Institute  of  Bio-Energy.  Use data has shown that when added to liquid  fossil
fuels SOLTRON(R) reduces particulate exhaust emissions and smoke,  improves fuel
economy,  controls fuel sludge and other impurities and ultimately lowers engine
maintenance costs. In addition, when mixed with liquid fuels, SOLTRON(R) changes
the fuel's molecular structure and improves its oxygen absorption and combustion
efficiency.   SOLTRON'S(R)   enzymes  are  naturally  powerful  surfactants  and
dispersants.  Damaging  fuel  contaminants  such as  sludge,  fungi and mold are
broken  down and lose  their  ability  to stick to tank  walls  and  lines.  The
resulting  microscopic  particulate is combusted,  while larger contaminants are
filtered out. The dispersion of microbial contamination reduces corrosive attack
on fuel tanks, pumps and injectors. SOLTRON(R) can be added to all liquid fossil
fuels including gasoline, diesel and light and heavy oils at the fuel pump or in
bulk fuel tanks.

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<PAGE>
SOLTRON(R)  is marketed in North America as a natural  enzyme  product that will
reduce emissions, improve fuel economy and reduce engine maintenance. SOLTRON(R)
has been sold  commercially  in Japan since 1993 and in Australia since 1996 and
was  awarded  the 1997 Best New  Aftermarket  Product  Award  (Chemical)  by the
Australian Automotive Aftermarket  Association.  The SOLTRON(R) product has been
accepted and used in the marine industry where biological fuel  contamination is
a persistent problem.

SP34E(TM).  SP34E(TM) is a non-ozone depleting refrigerant developed in Japan by
the  Kinoh-Kinzohu  Company as a  replacement  for  ozone-depleting  fluorinated
refrigerants  commonly  used prior to newly  enacted  environmental  regulations
phasing out  ozone-depleting  fluorinated  refrigerants.  SP34E(TM) is currently
sold in Canada,  Japan,  Australia,  New Zealand and other Asian rim  countries.
Significant  use data has been developed for this product,  the results of which
have  consistently   shown  that  SP34E(TM)  is  an  acceptable  near  "DROP-IN"
replacement  for  CFC-R-12  in  mineral  oil  based  refrigerant   applications.
SP34E(TM)  generally does not require  replacement  of mechanical  components or
removal  of mineral  oils that are found in older  refrigeration  systems.  This
product  may be  used  in  domestic,  automotive,  residential,  commercial  and
transport  refrigeration and air conditioning  systems as an alternative to CFC-
R-12  (Freon)  and other  fluorinated  refrigerants.  In  Australia,  a specific
version of SP34E(TM),  called SP-AUTO,  has been developed  specifically for the
automotive  segment of the market.  This product has an ultraviolet  dye blended
into the product for easy leak detection.

KLEAN. The KLEAN line of products  included  EZKLEAN,  SOILKLEAN and PETROKLEAN.
Applications  for these products  included  degreasing,  odor control,  soil and
groundwater remediation,  wastewater treatment and petroleum deposit removal. We
stopped  producing  and  marketing  these  products as of March 31, 2003. We may
reintroduce  the KLEAN  product  line at some point in the  future,  but have no
current plans to do so.

SUPPLIERS

SOLTRON(R).  SOLTRON(R)  consists of natural organic enzymes mixed with low odor
base solvent.  The enzyme  concentrAte  used in the manufacture of SOLTRON(R) is
produced  exclusively  by Neway  Japan K.K. of Tokyo,  Japan and  supplied to us
through our licensing  agreement  acquired from Dominion Capital.  Low odor base
solvent is readily  available  through  numerous local  suppliers.  We have also
developed  our own  proprietary  bottle  design  for retail  packaging  and have
selected  manufacturers that can produce our bottles in quantities sufficient to
meet our anticipated needs.

SP34E(TM).  The  components  of SP34E(TM)  are readily  available  from numerous
local, national and international suppliers throughout the world.

MARKETING STRATEGIES

We monitor  acceptance  of our  existing  products  through  direct  contact and
feedback  with the end users.  We have  established  a corporate  communications
system supported by an in-house desktop publishing department that enables us to
upgrade our corporate  image with  improved  logos,  Web site  updates,  product
brochures, product labeling and packaging and all related marketing materials.

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<PAGE>
SOLTRON(R).  The  fuel  market  may be  divided  into  distinct  groups  such as
gasoline,  diesel,  bunker and aviation fuel users.  These groups can be further
subdivided  into distinct user segments,  such as commercial  transport  fleets,
government fleets, marine transport fleets, retail and industrial  distribution.
We believe that  SOLTRON(R)  is able to benefit  fuel  consumers in all of these
markets.

The United States Environmental Protection Agency ("EPA") designated a number of
"NON-ATTAINMENT  ZONES" in areas with severe  emission  problems,  resulting  in
certain fleet operators being forced to test or to start using alternative fuels
such as biodiesel,  ethanol, propane or natural gas. New regulations continue to
be imposed to regulate fuel  specifications  and exhaust  emissions.  We believe
that this increased regulation will create opportunities for consumer acceptance
of SOLTRON(R) and we are currently  focusing on all North American  markets.  We
are  also  developing  a  global  marketing  plan to  exploit  opportunities  in
international  territories  that use lower grade  fuels that can better  benefit
from  SOLTRON(R)  and where higher fuel prices  better  reflect the economies of
SOLTRON(R)'S use.

We began  distribution  of SOLTRON(R)  in June 1998. We originally  attempted to
create a  distribution  channel  for  SOLTRON(R)  through a series of  licensing
agreements.  We terminated all such licensing  arrangements  in 1999, and we now
manage all our manufacturing  and distribution  systems at the company level. We
are  currently  utilizing   distributors,   oil  marketers,   independent  sales
representatives  and direct  sales  activities  to  provide a focused  marketing
effort,  which  we  believe  will  expose  SOLTRON(R)  directly  to  prospective
customers.  We  employ a  national  sales  manager  who  develops  and  services
distributors and independent sales representatives throughout the United States,
Canada and Mexico.  We also  utilize  other  traditional  distribution  channels
including a Web site and resale distribution  through retail chains such as NAPA
and West Marine.

SP34E(TM).  Refrigerants  are  widely  used in  motor  vehicle,  commercial  and
residential   air-conditioning  and  refrigeration  units  in  the  residential,
automotive,     commercial    and    transportation    sectors.    Historically,
chlorofluorocarbons    ("CFCS"),    hydrochlorofluorocarbons    ("HCFCS")    and
hydrofluorocarbons  ("HFCS")  have been utilized as  refrigerants.  CFCs used as
refrigerants  include  R-12,  HCFCs  include  R-406A,  and HFCs include  R-134a.
Emissions  of CFCs and HCFCs have been  proven to cause  depletion  of the ozone
layer resulting in global warming.  The EPA has banned production or importation
of CFCs and  production  of HCFCs is  scheduled  to be phased  out in the United
States by 2030.  Although  HFCs also  contain  gases  that have  global  warming
potential, HFCs have not yet been banned or scheduled for phase-out. We obtained
Environmental  Protection  Agency  approval of SP34E(TM) in December  2000.  See
"REGULATIONS"  below.  SP34E(TM) is an environmentally safe replacement for R-12
refrigerants with greater efficiency and less negative environmental impact.

We are not currently  marketing  SP34E(TM) in North  America,  but we are in the
process of formulating a marketing  plan to  reintroduce  the product in various
markets.  Our newly acquired subsidiary,  Virtual  Technologies  (Australia) Pty
Ltd.  ("VIRTUAL  TECHNOLOGIES"),  is  responsible  for  marketing  and  sales of
SP34E(TM)  and related  refrigerant  gases in Australia  and New Zealand,  where
SP34E(TM)  is produced  and sold  pursuant to a licensing  agreement  with A-Gas
(Australia) Pty Ltd.  ("A-GAS").  Pursuant to that  agreement,  dated August 20,
2002,  Virtual   Technologies   granted  A-Gas  the  license  to  the  SP34E(TM)
formulation  and  brand  name,   together  with  exclusive   manufacturing   and
distribution rights for SP34E(TM) in Australia and New Zealand. Also pursuant to
the agreement, Virtual Technologies leased certain plant and equipment necessary

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for the  production  of  SP34E(TM)  to A-Gas.  In  return,  A-Gas  pays  Virtual
Technologies  a royalty  of $4.75 per  kilogram  of  SP34E(TM)  sold,  with such
royalties  being paid on a monthly  basis.  The initial term of the agreement is
five years and it automatically renews for successive  three-year periods unless
terminated by one of the parties.

PRODUCT RIGHTS AGREEMENTS

SOLTRON(R).  In 1996,  we acquired the exclusive  rights to produce,  market and
distribute  SOLTRON(R)  in North  America  through an  agreement  with  Dominion
Capital in consideration  for 5,000,000 shares of our common stock and the grant
of certain options and payment of cash  consideration upon meeting certain sales
levels.  The  agreement  was amended in 1997 and had a  five-year  term that was
renewable at our option for an  additional  five-year  term.  We exercised  this
option to renew for an additional  five years. On February 20, 2003, we acquired
the exclusive worldwide manufacturing,  distribution, marketing and sales rights
to SOLTRON(R) pursuant to an Acquisition Agreement with Dominion Capital,  under
which we issued  9,000,000  shares of our  restricted  common stock.  Under that
agreement,  we obtained exclusive rights to SOLTRON(R) for a period of 20 years,
with an option to renew for an additional 20 years,  subject to termination  for
good cause.

SP34E(TM). In June 1998, we acquired the exclusive rights to produce, market and
distribute SP34E(TM) in North America through an agreement with Dominion Capital
in  consideration  for  6,000,000  shares of our common stock and the payment to
Dominion  Capital of a royalty of $2.25 per  kilogram  (subsequently  amended to
2.5% of  gross  sales)  of  SP34E(TM)  that we sell.  The term of the  agreement
commenced  on July 1, 2000,  continues  for five years and is  renewable  for an
additional  five years at our option.  On January  31,  2003,  we  acquired  the
outstanding  shares  of  Virtual   Technologies  for  6,000,000  shares  of  our
unregistered,  restricted  common  stock.  As a result of this  acquisition,  we
gained the exclusive, worldwide manufacturing, distribution, marketing and sales
rights to SP34E(TM)  and the related  refrigerant  gas products,  SP22A,  SP22B,
SP22C and SP22E.  As  discussed  above  under  "MARKETING  STRATEGIES,"  Virtual
Technologies  has licensed  SP34E(TM) and granted  exclusive  manufacturing  and
distribution rights in Australia and New Zealand to A-Gas.

PROPRIETARY RIGHTS

We rely on a combination of trade secret and copyright laws and  confidentiality
and  non-competition  agreements to establish and protect our proprietary rights
in our products.  However, there can be no assurance that any confidentiality or
non-competition  agreement  between us and our  employees  or  consultants  will
provide  meaningful  protection for our proprietary  information in the event of
any unauthorized use or disclosure of such proprietary information.

We have registered the trademark "SOLTRON(R)" and the service mark "SOLPOWER(R)"
with the United  States  Patent and  Trademark  Office  ("USPTO").  We have also
registered  SOLTRON(R)  with the EPA for use as an aftermarket  additive and for
bulk fuel treatment.

COMPETITION

We compete with numerous  well-established  fuel additive and chemical  products
companies  that  possess   substantially   greater   experience  and  financial,
marketing,  personnel and other  resources  than we do. Many of our  competitors

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have  achieved  significant  national,  retail and local  brand name and product
recognition and engage in extensive advertising and promotional  programs,  both
generally  and in response  to efforts by  additional  competitors  to enter new
markets and to introduce new products.

Some  products  already  in the  marketplace  that  may  compete  directly  with
SOLTRON(R)  include  STP(R) Gas  Treatment,  STP(R) Diesel  Treatment and STP(R)
Smoke  Treatment  (all  produced by First  Brands  Corporation),  Lucas Oil Fuel
Treatment (produced by Lucas Oil Products, Inc.), Slick 50(R) (produced by Slick
50  Products  Corporation),   Valvtect(R)   Dieselguard  (produced  by  Valvtect
Petroleum  Products  Corp.) and  Fuelon(R)  (produced  by Fuelon  International,
Inc.). These fuel additives make similar claims of performance  benefits but are
based upon older conventional  chemical  technologies.  We believe SOLTRON(R) is
the only enzyme-based fuel technology currently on the market, and we believe it
offers a  greater  range  of  benefits  at a lower  cost  than our  competitor's
conventional chemical additives.  Based on SOLTRON'S(R)  penetration in the West
Coast recreational marine industry,  we believe we can differentiate  SOLTRON(R)
from our  competitors'  products,  successfully  compete with these products and
penetrate    additional   fuel   additive    markets.    See   "DESCRIPTION   OF
BUSINESS-PRODUCTS" above.

With  respect  to  SP34E(TM),   we  will  compete  with  numerous  national  and
international  companies  that produce  refrigerants  and blended  alternatives,
including  DuPont(R),  Elf Autochem,  Imperial  Chemical  Industries  and Allied
Signal,  among others.  Certain of our competitors'  products contain HCFCs, the
production  of which is  scheduled  to be  phased  out.  With  respect  to other
products  containing  HFCs,  SP34E(TM)  may be used in existing R-12 mineral oil
based systems with less costly conversions of such systems.  We believe that the
regulatory  ban  and  phase-out  of  certain  refrigerants   combined  with  the
environmentally safe characteristics and product utility of SP34E(TM) will allow
us to compete successfully in the refrigerant market.  However,  there can be no
assurance  that we will be able to  successfully  market  SP34E(TM)  as a viable
alternative  to  the  refrigerants   that  currently  enjoy  widespreAD   market
acceptance.  We are currently  formulating a new marketing  plan to  reintroduce
SP34E(TM) into various markets. At this time we have no formal marketing program
to introduce SP34E(TM) to marketplace in the United States. In addition, Virtual
Technologies is developing a world marketing plan for SP34E(TM).

Our ability to compete  successfully  will depend on our success at  penetrating
each  targeted  market  segment with our  products,  consumer  acceptance of our
products and our ability to license and develop new and improved products. There
can be no  assurance  that we will be able to  successfully  compete,  that  our
products will meet with consumer approval, that competitors will not develop and
market  products that are similar or superior to our products or that we will be
able to successfully  enhance our products or develop new products  meeting with
consumer approval.

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PRODUCTION FACILITY

During part of the fiscal year 2003, our primary production facility was located
in Phoenix,  Arizona.  This facility served as our  production,  warehousing and
distribution plant for SOLTRON(R) and the KLEAN enzyme products,  as well as our
administrative  offices.  See  "DESCRIPTION  OF  PROPERTY"  and  "NOTES  TO  THE
FINANCIAL STATEMENTS - Note 5." In August, 2002, we closed the Phoenix facility,
relocated  our  corporate  headquarters  to  San  Pedro,   California  and  have
outsourced the production, warehousing and distribution of SOLTRON(R) to various
batch-process blending and bottling companies.

REGULATION

The use of certain  chemicals  and other  substances is subject to extensive and
frequently  changing federal,  state,  provincial and local laws and substantial
regulation  under these laws by  governmental  agencies,  including the EPA, the
Occupational Health and Safety Administration, various state agencies and county
and local authorities  acting in conjunction with federal and state authorities.
Among other things,  these regulatory bodies impose requirements to control air,
soil and water pollution, to protect against occupational exposure to chemicals,
including health and safety risks,  and to require  notification or reporting of
the storage,  use and release of certain hazardous chemicals and substances.  We
provide all required  warning labels and  instructions for the handling of these
substances.

Aftermarket  fuel additives are required to be registered with the EPA Fuels and
Energy Division.  We have registered  SOLTRON(R) both as an additive and for the
bulk treatment of fuels.

Like all  companies,  we are also  subject to  regulation  by the Federal  Trade
Commission  ("FTC") with respect to the marketing of our products.  Although the
FTC has a long history of pursuing enforcement actions against fuel saving, fuel
additive  and oil additive  products,  we believe we have  sufficient  research,
independent  testing,  use data and  scientific  evidence  to  substantiate  our
advertising and promotional claims regarding SOLTRON(R).

We  filed  an  Information  Notice  with  the  EPA  under  the  Significant  New
Alternatives  Policy ("SNAP") program in order to categorize the acceptable uses
of SP34E(TM) and in December  2000,  SP34E(TM) was added to the EPA/SNAP list of
acceptable alternatives.

We believe that we are in substantial  compliance  with all laws and regulations
governing  our material  business  operations  and we have obtained all required
licenses  and  permits  for  the  operation  of our  business.  There  can be no
assurance,  however,  that we will be able to comply with, or continue to comply
with, current or future government regulations in every jurisdiction in which we
may  conduct  material   business   operations   without   substantial  cost  or
interruption  of our operations,  or that any present or future federal,  state,
provincial or local environmental  protection  regulations or other laws may not
restrict our present and future  activities.  In the event that we are unable to
comply with such  requirements,  we could be subject to  substantial  sanctions,
including  restrictions  on our  business  operations,  monetary  liability  and
criminal  sanctions,  any of which could have a material adverse effect upon our
business.

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EMPLOYEES

At  March  31,  2003,  we  employed  two  full  time  personnel,  including  one
administrative  and one sales  personnel.  Our  employees are not covered by any
collective  bargaining  agreements  and we consider  our  relationship  with our
employees to be good. Virtual Technologies has one administrative employee.

FACTORS AFFECTING FUTURE PERFORMANCE

LIMITED OPERATING  HISTORY.  Our current  operations have been implemented since
November  1996,  but our  business  plan  has not yet  been  fully  implemented.
Accordingly,  we have only a  limited  operating  history  with  respect  to the
distribution  and  marketing of  SOLTRON(R)  and we are still  formulating a new
marketing  plan for  SP34E(TM)  in various  territories.  Additionally,  we have
discontinued our KLEAN product line.

HISTORY OF LOSSES. We have consistently had negative cash flow, operating losses
and insufficient  liquidity with respect to current operations,  all of which we
expect to continue until our sales revenues increase substantially. There can be
no assurance that we will be able to achieve, or maintain, profitable operations
or positive cash flow at any time in the future.

ADDITIONAL CAPITAL REQUIREMENT.  We will require significant  additional capital
to meet our growth  objectives  and to fully  implement  our  business  plan and
expand our operations.  While we have received  capital  infusions from Dominion
Capital and other  investors in the past,  there can be no assurance  that these
investments will continue.  We may also seek additional debt or equity financing
through banks, other financial  institutions,  companies or individuals,  but no
assurance can be given that we will be able to obtain any such additional equity
or debt financing on satisfactory terms or at all. Further, even if financing is
obtained,  no assurance  can be given that such  financing  would be adequate to
meet our needs for the foreseeable  future.  If we are unsuccessful in obtaining
sufficient  additional  capital,  our ability to  continue as a viable  business
enterprise will be substantially impaired.

NEED TO DEVELOP SALES AND PRODUCT  AWARENESS.  Establishment  of a  distribution
network  sufficient to create and supply  customer demand for SOLTRON(R) will be
critical to our future success. We anticipate  developing thiS network primarily
through traditional  marketing  channels,  such as distributors in the fuel, oil
chemical and automotive aftermarket industries.  We unsuccessfully  attempted to
establish  the  distribution  of  SP34E(TM)  through a company  with a  national
network. However, the refrigerant market is highly competitive and acceptance of
our product will require  substantial  additional  time and  marketing  efforts.
Numerous factors,  including lack of sufficient inventory or capital, or failure
of our products to generate sufficient demand and lack of sufficient  qualified,
experienced  personnel  may  contribute  to the  difficulties  we  will  face in
establishing an efficient distribution network for our products. While we intend
to  engage  qualified  personnel  to  assist in  establishing  our  distribution
network,  no  assurance  can be given  that our  products  will be  accepted  by
industrial or retail consumers,  that a satisfactory distribution network can be
established or that our operations will ever be profitable.

UNCERTAINTY  OF  WIDESPREAD  MARKET  ACCEPTANCE OF PRODUCTS,  LIMITED  MARKETING
EXPERIENCE.  We are  still in the  early  stages  of  marketing  SOLTRON(R)  and
SP34E(TM).  Demand and market  acceptance  for our products is subject to a high

                                       8
<PAGE>
degree of uncertainty.  Achieving  widespread market acceptance for our products
will require  substantial  marketing  efforts and the  expenditure of sufficient
funds to create brand  recognition  and customer  demand and to cause  potential
customers to consider the potential benefits of our products.  The prospects for
our product line will be largely  dependent  upon our ability to achieve  market
penetration,  which  will  require  significant  efforts  on our part to  create
awareness of and demand for our products. Our ability to build our customer base
will depend in large part on our ability to locate,  hire and retain  sufficient
qualified  marketing   personnel  and  to  fund  marketing  efforts,   including
advertising. There can be no assurance that our products will achieve widespread
market acceptance or that our marketing efforts will result in future profitable
operations.

VARIABILITY  OF OPERATING  RESULTS AND  VOLATILITY OF COMMON STOCK  PRICES.  Our
quarterly  operating  results have in the past been, and are  anticipated in the
future to be, highly  volatile.  While we anticipate that increased sales of our
products  will  continue  to  generate  revenue,  the  operating  results of any
quarterly period as compared to the previous quarter or the same quarter for the
prior period will, in all likelihood, vary significantly.  Significant variances
in operating  results from period to period could result in high  volatility  of
the market price for our common stock.

LIMITED PRODUCT LINE. We currently hold the marketing and distribution rights to
SOLTRON(R) and SP34E(TM).  Our future success and profitability  will, to a very
high degree, depend upon the market acceptance of these products and our ability
to improve these products.

SUPPLY,  CAPACITY  AND  DISTRIBUTION  CONSTRAINTS.  To  successfully  market our
products, we must be able to fill orders promptly for our shipment.  Our ability
to meet our  supply  requirements  promptly  will  depend  on  numerous  factors
including  our  ability to  establish  successfully  an  effective  distribution
network and to maintain adequate  inventories.  The ability of our sole supplier
of the SOLTRON(R)  enzyme to adequately  produce the chemicals needed to produce
SOLTRON(R) in volumes  sufficient to meet demand will also affect our ability to
produce  this  product.  Also,  our ability to engage  third party  blenders and
bottlers and the ability of said third parties to timely fulfill our orders will
affect our  ability to  deliver  our  products.  Failure  to  adequately  supply
products to  distributors  and  retailers or of any of our  suppliers or service
providers to produce  sufficient  materials to meet our demand would  materially
adversely impact our operations.

DEPENDENCE  UPON RAW  MATERIALS  AND  SUPPLIERS.  We are  dependent  on a single
supplier  of the  enzyme  concentrate  needed  to make  SOLTRON(R)  and on other
suppliers of chemicals.  Chemicals are subject to price  fluctuations based upon
supply and demand.  In addition,  because the  SOLTRON(R)  enzyme is produced in
Japan,  fluctuations in currency values could adversely  affect our cost of this
product.  Interruption of our product supply could result from several  factors,
such as disruption of supply of raw product,  work  stoppages,  strikes or other
labor  difficulties,  changes in  governmental or  international  regulations or
natural or man caused  disasters  occurring with respect to our  suppliers.  Any
increase in the costs of our raw materials or disruption of our suppliers  could
severely and adversely affect our business operations.

RELIANCE ON MANAGEMENT;  LIMITED PERSONNEL.  Attracting and retaining  qualified
personnel is critical to our business plan. In particular, our success is highly
dependent on the services of our Chief Executive  Officer,  James H. Hirst.  Mr.
Hirst is an at-will  employee and we do not  maintain key man life  insurance on

                                       9
<PAGE>
Mr.  Hirst.  There can be no assurance  that we will not lose the benefit of his
services. The loss of Mr. Hirst's services or our inability to attract or retain
alternative or additional  qualified  personnel would have a materially  adverse
affect on our  business.  No  assurances  can be given  that we would be able to
retain or  attract  such  qualified  personnel  or  agents,  or to  successfully
implement our business plan.

MANAGEMENT  OF GROWTH.  We anticipate  growth in the future,  which will require
effective  management of all aspects of our business.  If achieved,  this growth
may place significant strains on our financial,  managerial, personnel and other
resources.  Failure to effectively  manage our  anticipated  growth could have a
materially adverse effect on our business and profitability.

SEASONAL FLUCTUATIONS. Our limited experience in the refrigerant market suggests
that a greater  demand  for  SP34E(TM)  will  occur in summer  months,  which is
anticipated to result in higher revenues in our first and second fiscal quarters
ending June 30 and September  30,  respectively.  Fluctuations  in our quarterly
operating  results  may impact the market for our common  stock and could  cause
high volatility in its trading price.

COMPETITION.  The  markets for fuel  additives,  refrigerants  and enzyme  based
cleaning and bio-remediation  products are highly  competitive.  We believe that
our  products  and our  management's  qualifications  will  enable us to compete
effectively in these  markets,  but we cannot give any assurance that we will be
successful. We will be competing with established manufacturers and distributors
that have already  developed brand  recognition and gained consumer  acceptance.
Many of these  competitors  have  significantly  greater  financial,  marketing,
personnel,  managerial and other  resources than we do. New competitors may also
enter these  markets.  Even though we believe our products are superior to those
of our competitors, our lack of financial strength and brand recognition will be
significant  disadvantages to our ability to penetrate and compete in our target
markets.

LIMITED PATENT AND PROPRIETARY  INFORMATION  PROTECTION.  We do not believe that
our products or our  proprietary  production  processes  infringe on proprietary
rights of others, but we cannot give any assurance that infringement claims will
not be made  against us. If it is  determined  that our products or processes do
infringe someone else's  proprietary  rights, we could be required to modify our
products or processes or obtain a license to continue our use of them. There can
be no  assurance  that we  would  be able to do this in a  timely  manner,  upon
acceptable  terms and  conditions  or at all.  Our failure to do so would have a
material adverse effect on our business. In addition,  there can be no assurance
that we would have the  financial or other  resources  necessary to prosecute or
defend a patent  infringement or other proprietary rights action.  Moreover,  if
any of our products or processes  were held to infringe  patents or  proprietary
rights of others,  we could,  under  certain  circumstances,  be held liable for
damages,  which could be  significant  in amount and which could  materially and
adversely effect our operations.  We rely on confidentiality  agreements,  trade
secret protection and other methods to protect our processes,  concepts,  ideas,
documentation  and other  information  related to our products  and  proprietary
processes.  However,  these methods may not afford complete protection and there
can be no assurance that others will not independently  develop similar products
and  processes.  All of our  employees  are  required  to  sign  non-disclosure,
non-competition and inventions agreements,  but there can be no assurance that a
court  would  enforce  such  agreements  or that they would  provide us with any
meaningful  protection.  There  can be no  assurance  that  we  will  be able to

                                       10
<PAGE>
adequately  protect our trade secrets or that other  companies  will not acquire
information that we consider proprietary.

PRODUCT ACQUISITION AGREEMENT.  At March 31, 2003, we owned the worldwide rights
to manufacture and distribute SOLTRON(R) and SP34E(TM),  as well as the process,
formulae and other  proprietary  rights  related to such  products,  pursuant to
product  acquisition  agreements  with  Dominion  Capital.  Any  termination  or
impairment of the rights of Dominion  Capital to such  proprietary  rights or to
our  rights  under  these  agreements  would  materially  adversely  affect  our
operations.

NEED FOR ADDITIONAL PRODUCT DEVELOPMENT. We believe that our development work on
SOLTRON(R)  and  SP34E(TM)  is  substantially  complete,  but  testing  of these
products in the United  States has been limited.  We anticipate  that our future
research and  development  activities,  combined with experience we hope to gain
from  commercial  production and use of our products will result in the need for
further  refinement  of our  products  and  development  of new  products.  Such
refinements  and  development  may  be  required  for  our  products  to  remain
competitive.  There can be no assurance  that we will have the experience or the
financial  resources  necessary to make such  improvements  to our product line,
which could have a significant negative impact on our business.

ADEQUACY  OF  PRODUCT  LIABILITY  INSURANCE.  The  use of our  products  entails
inherent  risks that could expose us to product  liability  claims,  which could
have a material adverse effect on our business and financial condition. While we
do maintain product  liability  insurance to cover these types of claims,  there
can be no  assurance  that  we  will  be able  to  maintain  such  insurance  on
acceptable terms or, even if maintained, that such insurance would be sufficient
to cover all potential claims.

CONTROL BY EXISTING SHAREHOLDERS/FOREIGN  SHAREHOLDERS. Several of our principal
shareholders and their affiliates are domiciled or reside in foreign  countries.
These  shareholders,  acting  together,  would  be able to  effectively  control
matters requiring  approval by our  shareholders,  including the election of our
board of directors and approval of certain significant  transactions.  If we, or
our shareholders,  were to bring legal action against these shareholders,  their
domicile or residence in a foreign  country may prevent them from being  subject
to jurisdiction of a United States court.  While we or our  shareholders  may be
able to proceed against these foreign  shareholders in their country of domicile
or residence, such actions may be prohibitively expensive and the foreign courts
may not  recognize  claims or provide  remedies  similar to those  available  in
United States courts.

INTERNATIONAL  TRADE. We currently  anticipate  selling SOLTRON(R) and SP34E(TM)
worldwide,  as well as importing  SOLTRON(R)  concentrate from Japan.  This will
expose  our  business  to certain  additional  risks  related to doing  business
internationally,  which could include,  among others,  fluctuations  in currency
exchange rates, changes in both United States and foreign import and export laws
and  regulations,  increases in tariffs,  customs,  foreign tax  liabilities and
other  adverse  United  States  and  foreign  tax   consequences  and  potential
difficulty in contract enforcement.  Risks of conducting  international business
operations could have a negative impact on our overall business.

                                       11
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY

During part of fiscal year 2003, we leased  approximately  14,000 square feet of
space at 4247 West  Adams  Street,  Phoenix,  Arizona  85009,  which  housed our
SOLTRON(R)  and KLEAN  manufacturing,  warehousing  and  distribution  plant and
served as our administration and corporate sales office.  Monthly lease payments
were  approximately  $7,300.  This lease expired  September  14, 2002.  Prior to
expiration  of the lease,  we sold our  equipment at this site and relocated our
corporate offices to San Pedro, California.

ITEM 3. LEGAL PROCEEDINGS

We have in the past been  involved in various legal  proceedings  arising in the
normal  course  of  business.  The  ultimate  outcome  of  these  various  legal
proceedings  had no  material  effect  on our  financial  position,  results  of
operation  or  liquidity.  There  are no legal  proceedings  pending,  or to our
knowledge,  threatened,  that we  expect  to have  any  material  impact  on our
business.

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

None.

                                     PART II

ITEM 5.MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET AND SHAREHOLDER INFORMATION

Our common stock was traded on the OTC Bulletin  Board under the symbol  "SLPW,"
but was  delisted  from the OTC  Bulletin  Board on July 30, 2002 for failure to
file the  periodic  reports  required by the  Exchange  Act. Our common stock is
currently traded in the "pink sheets" through the National Quotation Bureau. The
following  table sets forth the high and low bid prices for our common  stock as
reported by the OTC  Bulletin  Board and the  National  Quotation  Bureau in the
periods  indicated.  On March 31, 2003, there were  approximately 381 beneficial
holders of our common stock.


     Fiscal Year              Quarter Ended             High              Low
     -----------              -------------             ----              ---
     2002................June 30, 2001..................$0.47............$0.16
                         September 30, 2001.............$0.37............$0.17
                         December 31, 2001..............$0.32............$0.12
                         March 31, 2002.................$0.23............$0.07

     2003................June 30, 2002..................$0.10............$0.05
                         September 30, 2002.............$0.09............$0.001
                         December 31, 2002..............$0.08............$0.001
                         March 31, 2003.................$0.10............$0.01

The prices set forth in this table  represent  quotes between dealers and do not
include  commissions,  markups  or  markdowns,  and  may  not  represent  actual
transactions.

                                       12
<PAGE>
DIVIDEND POLICY

We have not paid,  and do not  currently  intend to pay,  cash  dividends on our
common  stock in the  foreseeable  future.  The  current  policy of the board of
directors is to retain all earnings,  if any, to provide funds for operation and
expansion  of  our  business.  In  addition  to  statutory   requirements,   the
declaration of dividends, if any, will be subject to the discretion of the board
of  directors,  which may consider  such  factors as our results of  operations,
financial condition, capital needs and acquisition strategies, among others.

RECENT UNREGISTERED STOCK ISSUANCES

On April 11,  2002,  the  Company  issued  100,000  shares of its  unregistered,
restricted  Common Stock for services  rendered to the Company.  The shares were
issued in reliance on exemption  from  registration  provided by Section 4(2) of
the Securities Act.

On April 26,  2002,  the  Company  issued  300,208  shares of its  unregistered,
restricted  Common Stock to three vendors in settlement of  outstanding  amounts
due them.  The shares were issued in reliance  on  exemption  from  registration
provided by Section 4(2) of the Securities Act.

On April 26,  2002,  the  Company  issued  180,000  shares of its  unregistered,
restricted  Common Stock for termination pay to four employees.  The shares were
issued in reliance on exemption  from  registration  provided by Section 4(2) of
the Securities Act.

On  June 4,  2002,  the  Company  issued  100,000  shares  of its  unregistered,
restricted  Common Stock for services  rendered to the Company.  The shares were
issued in reliance on exemption  from  registration  provided by Section 4(2) of
the Securities Act.

On  June 4,  2002,  the  Company  issued  300,000  shares  of its  unregistered,
restricted Common Stock pursuant to the terms and conditions of two call options
that were  exercised.  The shares  were issued in  reliance  on  exemption  from
registration provided by Section 4(2) of the Securities Act.

Effective  January  31,  2003,  the  Company  issued  6,000,000  shares  of  its
unregistered,  restricted  Common Stock pursuant to the terms the Share Purchase
and  Sale  Agreement  with  Virtual  Technologies   (Australia)  Pty  Ltd.  This
acquisition delivers the exclusive worldwide sales, distribution,  marketing and
manufacturing rights to the SP34E(TM), SP22A, SP22B, SP22C and SP22E refrigerant
gas products.  The shares were issued in reliance on exemption from registration
provided by Section 4(2) of the Securities Act.

On February 20, 2003, the Company  acquired the worldwide  rights to the product
SOLTRON(R),  under the terms of the  Acquisition  Agreement,  by the issuance of
9,000,000 unregistered restricted shares of its common stock to Dominion Capital
Pty Ltd. This acquisition delivered the exclusive worldwide sales, distribution,
marketing and manufacturing  rights for the enzyme technologies for the product,
SOLTRON(R),  a  fuel-enhancing  product.  The shares  were issued in reliance on
exemption from registration provided by Section 4(2) of the Securities Act.

                                       13
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The  following  discussion  should  be read in  conjunction  with our  financial
statements and related notes included herein.  Certain  statements are not based
on historical  facts,  but are  forward-looking  statements  that are based upon
assumptions  about our  future  conditions  that could  prove to be  inaccurate.
Actual  events,   transactions  and  results  may  materially  differ  from  the
anticipated events, transactions or results described. Our ability to consummate
transactions  and  achieve  events or results  is  subject to certain  risks and
uncertainties,  which  include,  but are not limited to, the existence of demand
for and  acceptance of our  products,  regulatory  approvals  and  developments,
economic  conditions,  the impact of competition and pricing,  and other factors
affecting our business that are beyond our control. See "DESCRIPTION OF BUSINESS
- FACTORS AFFECTING FUTURE PERFORMANCE" above.

We  undertake  no  obligation  and do not intend to update,  revise or otherwise
publicly release the result of any revisions to forward-looking  statements that
may be made to reflect future events or circumstances.

INTRODUCTION

We  continue  to  report  significant  losses.  However,  the  current  trend of
increasing  SOLTRON(R)  product sales and the acquisition of worldwide rights to
SOLTRON(R) and SP34E(TM)  provide an expectation that we will continue to reduce
our  operating  losses  and  achieve   profitability  in  the  future.   Virtual
Technologies is formulating a marketing plan for the SP34E(TM) product line, but
due to limited  operating  capital,  we do not anticipate  significant  sales of
these products in fiscal 2004.  The past year was a year of increased  financial
and   operational   efficiency   and  decreased   overhead.   We  are  currently
concentrating our focus on SOLTRON(R) by identifying additional distributors and
developing  direct sales activities in new markets such as international  sales,
bulk users and small  generation  power plant.  We have not yet begun  marketing
SP34E(TM) in North  America  since the  disposition  of our interest in Protocol
Resource  Management,  Inc.,  in the  quarter  ended March 31,  2002.  Our newly
acquired  subsidiary,   Virtual  Technologies  (Australia)  Pty  Ltd.  ("VIRTUAL
TECHNOLOGIES"),  is responsible for marketing and sales of SP34E(TM) and related
refrigerant gases in Australia and New Zealand,  where SP34E(TM) is produced and
Sold pursuant to a licensing  agreement with A-Gas  (Australia) Pty Ltd. We have
discontinued our KLEAN product line due to poor sales of these products.

RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2003 COMPARED TO YEAR ENDED MARCH 31, 2002

Revenues for the year ended March 31, 2003 were $951,195 as compared to $488,324
for the year ended March 31,  2002.  The  increase  in revenues of $462,871  was
attributable to an expanded  customer base on SOLTRON(R) sales and the inclusion
of revenues of our  wholly-owned  subsidiary for the period  February 1, 2003 to
March 31,  2003,  which  amounted to $64,593.  Our cost of sales for  SOLTRON(R)
decreased as a percentage of revenues due to increased revenues that were spread
over  the  fixed  plant  overhead  and  the   amortization  of  plant  leasehold
improvements.

General and administrative costs for the year ended March 31, 2003 were $571,401
as compared to $891,219 for the same period ended March 31, 2002, a reduction of
$319,818.  The general  and  administrative  amounts  included  amortization  of

                                       14
<PAGE>
marketing  rights of $-0- and $58,330  respectively.  In addition we recorded an
impairment of an intangible  asset for the year ended March 31, 2002 as a result
of  management  determining  to  write-off  the balance of the  SP34E(TM)  North
American  license due to the sale of our 50% interest in Protocol in March 2002.
The 55.6 % decrease resulted primarily from decreased administrative overhead in
the areas of compensation,  consulting professional fees, amortization, interest
expense and legal, audit and accounting fees.

For the year ended March 31, 2003, we incurred a net operating  loss of $109,057
or $0.003 per share  compared to a net loss of $2,670,455 or $0.08 per share for
the year ended March 31, 2002. These losses  contributed to net cash provided in
operating  activities  of  $39,377  for  the  year  ended  March  31,  2003  and
utilization of $261,009 for the year ended March 31, 2002.

SEASONALITY

Sales of our  SOLTRON(R)  product  historically  have  not  shown a  pattern  of
seasonality  of  sales  volumes.  Sales  of  SP34E(TM)  do  show  a  pattern  of
seasonality in Australia,  where the majority of sales occur between October and
March.  We acquired the  marketing  rights to SP34E(TM) in Australia in the last
quarter  of our  fiscal  year  ending  March  31,  2003.  We  believe  that  the
seasonality  of sales of SP34E(TM) in Australia will result in  fluctuations  of
our quarterly revenues in the fiscal year ending March 31, 2004.

IMPACT OF INFLATION

We do not believe that inflation will have any material  impact on  SOLTRON(R)'s
commercial  activities  for the ensuing  year as our  products do not fall under
categories that are traditionally affected.

LIQUIDITY AND CAPITAL RESERVES

Product  sales did provide  sufficient  working  capital to fund our  operations
during the period  ended March 31,  2003.  Operations  provided  $39,377 of cash
during  this  period.  Additional  cash was  acquired  with the  purchase of our
wholly-owned  subsidiary,  which amounted to $25,026.  Additional  liquidity was
provided by the sale of common stock and equipment. As of March 31, 2003, we had
no commitments for capital expenditures.

PLAN OF OPERATIONS FOR FISCAL YEAR 2004

Future marketing  activities will be directed towards expanding existing markets
for  our  SOLTRON(R)  and  SP34E(TM)   products  and  penetrating  new  markets.
Management intends to continue its analysis of our operations with the objective
to curtail  the  current  loss  situation,  we intend to  continue to define our
direction, target markets and methods of distribution.

                                       15
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

                                      INDEX


     Report of Independent Registered Public Accounting Firm.................17

     Consolidated Balance Sheets at March 31, 2003 and 2002..................18

     Consolidated Statements of Operations for the Years Ended
     March 31, 2003 and 2002.................................................19

     Consolidated Statements of Comprehensive Loss for the Years Ended
     March 31, 2003 and 2002.................................................20

     Consolidated Statements of Stockholders' Equity for the Years Ended
     March 31, 2003 and 2002.................................................21

     Consolidated Statements of Cash Flows for the Years Ended
     March 31, 2003 and 2002.................................................22

     Notes to the March 31, 2003 and 2002
     Financial Statements....................................................24

                                       16
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Solpower Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Solpower
Corporation  and  Subsidiaries  as of March  31,  2003 and 2002 and the  related
consolidated   statements  of  operations,   comprehensive   loss,   changes  in
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 audits.

We conducted our audits 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
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Solpower Corporation
and  Subsidiaries at March 31, 2003 and 2002, and the results of its operations,
changes in  stockholders'  equity and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 11 to
the  consolidated  financial  statements,  the Company's  significant  operating
losses and negative working capital raise substantial doubt about its ability to
continue  as a going  concern.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.


/s/ Semple & Cooper, LLP
---------------------------------
Phoenix, Arizona
November 10, 2004

                                       17
<PAGE>
                              SOLPOWER CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2003 AND 2002
<TABLE>
<CAPTION>
                                                                          2003                   2002
                                                                      ------------           ------------
<S>                                                                   <C>                    <C>
                                     ASSETS
Current Assets:
  Cash and cash equivalents                                           $     71,790           $      3,543
  Accounts receivable                                                       60,641                 26,417
  Inventory                                                                 87,346                 24,395
  Prepaid expenses                                                           6,440                  7,779
                                                                      ------------           ------------
      Total Current Assets                                                 226,217                 62,134

Property & Equipment, net                                                   54,250                107,844

Other Assets:
  Marketing licenses, net                                                  119,700                     --
  Goodwill                                                                  75,291                     --
  Receivables from related parties                                          25,666                 24,959
  Goodwill, net                                                             72,781                     --
  Other                                                                         --                 11,094
                                                                      ------------           ------------
                                                                      $    501,124           $    206,031
                                                                      ============           ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current portion of long-term debt                                   $     19,513           $         --
  Vendor advances                                                           78,263                     --
  Accounts payable - trade                                                 285,488                253,464
                   - related parties                                       216,197                149,665
  Customer deposits                                                             --                 50,160
  Accrued interest - related parties                                            --                 45,883
  Accrued interest                                                           7,167                 45,883
  Accrued expenses                                                         148,961                105,945
  Accrued corporate taxes                                                    4,868                     --
                                                                      ------------           ------------
      Total Current Liabilities                                            755,589                605,117

Long-Term Liabilities:
  Notes payable, less current portion                                       34,818                110,000
  Loans payable to related parties, less current portion                   471,365                400,000
                                                                      ------------           ------------
      Total Liabilities                                                  1,261,772              1,115,117
                                                                      ------------           ------------

Commitments and Contingencies                                                   --                     --

Stockholders' Deficit:
  Preferred stock; $0.001 par value, 5,000,000 shares authorized;
   issued and outstanding, none                                                 --                     --
  Common stock; $0.01 par value, 100,000,000 shares authorized;
   issued and outstanding 49,212,127 and 33,231,919, respectively          492,122                332,320
  Additional paid-in capital                                            10,712,158             10,611,689
  Accumulated deficit                                                  (11,965,116)           (11,853,095)
  Foreign currency translation adjustment                                      188                     --
                                                                      ------------           ------------
      Total Stockholders' Deficit                                         (760,648)              (909,086)
                                                                      ------------           ------------
                                                                      $    501,124           $    206,031
                                                                      ============           ============
</TABLE>
                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       18
<PAGE>
                              SOLPOWER CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                  2003                   2002
                                                              ------------           ------------
<S>                                                           <C>                    <C>
Revenues:
  Fuel additive                                               $    951,195           $    488,324
  Miscellaneous                                                         --                 23,167
                                                              ------------           ------------
                                                                   951,195                511,491
                                                              ------------           ------------
Cost of Sales:
  Fuel additive                                                    476,879                511,826
  Miscellaneous                                                         --                    276
                                                              ------------           ------------
                                                                   476,879                512,102
                                                              ------------           ------------
Gross Profit (Loss)                                                474,316                   (611)

Expenses:
  General and administrative                                       568,891                891,219
  Impairment of intangible asset                                     5,474              2,040,000
                                                              ------------           ------------
Operating Loss                                                    (100,049)            (2,931,830)
                                                              ------------           ------------
Other Income (Expense):
  Interest income                                                      804                     21
  Loss on disposition of fixed assets                               (3,752)                    --
  Costs associated with warrants issued                                 --                (94,250)
  Interest expense                                                 (37,854)              (182,725)
  Relief of Debt                                                    31,098                126,708
                                                              ------------           ------------
      Total Other Income (Expense)                                  (9,704)               (55,996)
                                                              ------------           ------------
Net Loss Before Provision for Income Taxes
 and Discontinued Operations                                      (109,753)            (2,987,826)

Provision for Income Taxes                                          (2,268)                    --
                                                              ------------           ------------
Loss From Continuing Operations                                   (112,021)            (2,987,826)
                                                              ------------           ------------
Discontinued Operations:
  Operating loss from discontinued operations                           --                (18,725)
  Gain on sale of discontinued operations                               --                336,096
                                                              ------------           ------------
  Income From Discontinued Operations                                   --                317,371
                                                              ------------           ------------

Net Loss                                                      $   (112,021)          $ (2,670,455)
                                                              ============           ============
Basic Loss Per Share:
  Loss from Operations available to stockholders
    Continuing Operations                                     $         --           $      (0.09)
    Discontinuing Operations                                  $         --                   0.01
                                                              ------------           ------------

Net Loss Per Share                                            $         --           $      (0.08)
                                                              ============           ============

Weighted Average Number of Common Shares Outstanding            36,114,845             32,387,974
                                                              ============           ============
</TABLE>
                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       19
<PAGE>
                              SOLPOWER CORPORATION
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002


                                                     2003               2002
                                                 -----------        -----------

Net Loss                                         $  (112,021)       $(2,670,455)

Other Comprehensive Income (Loss), Net of Tax:

  Foreign currency translation adjustment                188             (6,157)
                                                 -----------        -----------
Comprehensive Loss                               $  (111,833)       $(2,676,612)
                                                 ===========        ===========

                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       20
<PAGE>
                              SOLPOWER CORPORATION
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                      Additional        Common
                                                              Common Stock             Paid In          Stock
                                                          Shares        Amount         Capital        Subscribed
                                                          ------        ------         -------        ----------
<S>            <C> <C>                                 <C>             <C>           <C>              <C>
Balance, March 31, 2001                                31,255,064      $312,551      $10,120,179      $ 256,000
Unit subscriptions received                                    --            --               --        197,750
Common stock and warrant issued for subscriptions       1,567,500        15,675          438,075       (453,750)
Conversion of liabilities to common stock                  19,355           194               --             --
Issuance of common stock for purchase of formula           40,000           400            4,640             --
Common stock issued for services                           50,000           500            6,150             --
Conversion of short-term note payable to common stock     300,000         3,000           27,000             --
Call option issued                                             --            --           11,000             --
Increase in cumulative translation account                     --            --               --             --
Loss, year ended March 31, 2002                                --            --               --             --
                                                       ----------      --------      -----------      ---------

Balance, March 31, 2002                                33,231,919       332,320       10,611,689             --

Common stock issued for compensation and services         280,000         2,800            8,750             --
Conversion of liabilities to common stock                 400,208         4,002           30,219             --
Common stock sold by exercise of call options             300,000         3,000           12,000             --
Purchase of subsidiary with common stock                6,000,000        60,000           19,800             --
Purchase of marketing rights with common stock          9,000,000        90,000           29,700             --
Increase in cumulative translation account                     --            --               --             --
Loss, year ended March 31, 2003                                --            --               --             --
                                                       ----------      --------      -----------      ---------

Balance, March 31, 2003                                49,212,127      $492,122      $10,712,158      $      --
                                                       ==========      ========      ===========      =========

                                                                         Cumulative
                                                        Accumulated     Translation
                                                          Deficit         Account           Total
                                                          -------         -------           -----
Balance, March 31, 2001                                $ (9,182,640)      $(6,157)      $ 1,499,933
Unit subscriptions received                                      --            --           197,750
Common stock and warrant issued for subscriptions                --            --                --
Conversion of liabilities to common stock                        --            --             4,839
Issuance of common stock for purchase of formula                 --            --             5,040
Common stock issued for services                                 --            --             6,650
Conversion of short-term note payable to common stock            --            --            30,000
Call option issued                                               --            --            11,000
Increase in cumulative translation account                       --         6,157             6,157
Loss, year ended March 31, 2002                          (2,670,455)           --        (2,670,455)
                                                       ------------       -------       -----------

Balance, March 31, 2002                                 (11,853,095)           --          (909,086)

Common stock issued for compensation and services                --            --            11,550
Conversion of liabilities to common stock                        --            --            34,221
Common stock sold by exercise of call options                    --            --            15,000
Purchase of subsidiary with common stock                         --            --            79,800
Purchase of marketing rights with common stock                   --            --           119,700
Increase in cumulative translation account                       --           188               188
Loss, year ended March 31, 2003                            (112,021)           --          (112,021)
                                                       ------------       -------       -----------

Balance, March 31, 2003                                $(11,965,116)      $   188       $  (760,648)
                                                       ============       =======       ===========
</TABLE>
                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       21
<PAGE>
                              SOLPOWER CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                              2003                  2002
                                                                          -----------           -----------
<S>                                                                       <C>                   <C>
Cash Flows From Operating Activities:
  Net loss                                                                $  (112,021)          $(2,670,455)
  Income from discontinued operations                                              --               317,371
                                                                          -----------           -----------
  Net loss attributable to continuing operations                             (112,021)           (2,987,826)
  Adjustments to reconcile net loss to net cash used by
   operating activities:
     Impairment of intangible asset                                             5,474             2,040,000
     Depreciation and amortization                                             87,890               353,032
     Non-cash transactions                                                    (19,548)               10,690
     Change in cumulative translation account                                     188                    --
     Net loss (gain) on sale of assets                                          3,752              (336,096)
     Changes in operating assets and liabilities:
       Accounts receivable                                                     68,360                 4,118
       Prepaid expenses                                                         1,339                (7,779)
       Inventory                                                              (62,951)              111,382
       Receivable from affiliated parties                                        (707)              (24,959)
       Accounts payable - trade                                               (21,298)              162,349
                        - related parties                                      66,532                54,204
       Customer deposits                                                      (50,160)               50,160
       Accrued expenses                                                        38,148               (33,505)
       Accrued interest - related parties                                      25,482                32,007
       Accrued interest                                                         7,167                (6,157)
       Accrued corporate taxes                                                  1,730                    --
                                                                          -----------           -----------
          Net Cash Provided (Used) by Continuing Operating Activities          39,377              (578,380)

     Income from Discontinued Operations                                           --               317,371
                                                                          -----------           -----------
          Net Cash Provided (Used) by Operating Activities                     39,377              (261,009)
                                                                          -----------           -----------
Cash Flows from Investing Activities:
  Cash acquired in acquisition                                                 25,026                    --
  Capital expenditures                                                        (17,172)               (5,128)
  Proceeds from sale of equipment                                              22,950                 4,300
                                                                          -----------           -----------
          Net Cash Provided (Used) by Investing Activities                     30,804                  (828)
                                                                          -----------           -----------
Cash Flows From Financing Activities:
  Proceeds from notes payable                                                      --               140,000
  Proceeds from sale of common stock, warrants and option                      15,000               114,500
  Increase in installment notes payable                                        17,413                    --
  Net vendor payments on advances                                             (31,737)                   --
  Payments on installment contracts                                            (2,610)                   --
  Payments to related parties                                                      --                (3,379)
                                                                          -----------           -----------
          Net Cash Provided (Used) by Financing Activities                     (1,934)              251,121
                                                                          -----------           -----------

Increase (Decrease) in Cash and Cash Equivalents                               68,247               (10,716)
Cash and Cash Equivalents, Beginning of Year                                    3,543                14,259
                                                                          -----------           -----------

Cash and Cash Equivalents, End of Year                                    $    71,790           $     3,543
                                                                          ===========           ===========
</TABLE>
                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       22
<PAGE>
                              SOLPOWER CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                  2003                 2002
                                                               -----------          -----------
<S>                                                            <C>                  <C>
SUPPLEMENTAL INFORMATION:
Cash Paid for:
  Interest                                                     $        --          $    40,214
                                                               ===========          ===========
  Income taxes                                                 $        --          $        --
                                                               ===========          ===========
Non-cash Investing and Financing:
  Cost associated with issue of warrants                       $        --          $    94,250
                                                               ===========          ===========
  Loss on discontinued operations                              $        --          $    18,725
                                                               ===========          ===========
  Purchase of subsidiary with common stock                     $    79,800          $        --
                                                               ===========          ===========
  Issuance of common stock for conversion of debt              $    34,221          $    34,839
                                                               ===========          ===========
  Purchase of world marketing rights for common stock          $   119,700          $        --
                                                               ===========          ===========
  Issuance of common stock for compensation                    $    11,550          $     6,650
                                                               ===========          ===========
  Extinguishments of debt                                      $   (31,098)         $  (126,708)
                                                               ===========          ===========
  Amortization of loan discount                                $        --          $    12,934
                                                               ===========          ===========
  Issuance of common stock for purchase of formula             $        --          $     5,040
                                                               ===========          ===========
</TABLE>

                 The Accompanying Notes are an Integral Part of
                     the Consolidated Financial Statements

                                       23
<PAGE>
--------------------------------------------------------------------------------
                                     NOTE 1
           DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

                                    BUSINESS

ORGANIZATION

Solpower  Corporation (the "COMPANY"),  formerly known as Virtual  Technologies,
Inc. and Dynafuel  Corporation,  was incorporated under the laws of the State of
Utah on June 7, 1982.

The Company was originally incorporated with an authorized capital of 30,000,000
shares of  common  stock  with a par value of one cent  ($0.01)  per  share.  On
December 12, 1995, the Company amended its articles of  incorporation,  changing
its name to  Virtual  Technologies,  Inc.  and  authorizing  preferred  stock of
5,000,000  shares at $.25 par value.  On July 22, 1996, the Company  changed its
legal  domicile  to the State of Nevada.  On  November  22,  1997,  the  Company
restated  the  articles  of   incorporation,   changing  its  name  to  Solpower
Corporation  and changing its preferred stock par value to one-tenth of one cent
($.001) per share.  On December 11, 2000, at the Annual  Shareholders'  Meeting,
shareholders approved an amendment to the Company's articles of incorporation to
increase the authorized shares of common stock to 100,000,000.

NATURE OF OPERATIONS

The principal  business  purpose of the Company is the sales and distribution of
SOLTRON(R),  a fuel enhancing product and SP34E(TM), a replacement  refrigerant,
and other environmentally friendly products throughout the world.

The Company has the  exclusive  worldwide  sales,  distribution,  marketing  and
manufacturing rights to the products,  SOLTRON(R),  a fuel-enhancing product and
to SP34E(TM), SP22A, SP22B, SP22C and SP22E refrigerant gas products.

ACQUISITIONS

During  the  year  ended  March  31,  2003,  the  Company  acquired  100% of the
outstanding  stock of Virtual  Technologies  (Australia) Pty Ltd. The subsidiary
was acquired by the issuance of 6,000,000  shares of restricted  common stock by
the  Company.   This  acquisition   delivers  the  exclusive   worldwide  sales,
distribution, marketing and manufacturing rights to the SP34E(TM), SP22A, SP22B,
SP22C and SP22E refrigerant gas products.

During the year ended March 31, 2003, the Company  acquired the worldwide rights
to the product SOLTRON(R) by the issuance of 9,000,000  restricted shares of its
common  stock.  This  acquisition   delivers  the  exclusive   worldwide  sales,
distribution,  marketing and manufacturing rights to the product,  SOLTRON(R), a
fuel-enhancing product.

SALE OF SUBSIDIARY

During the quarter ended March 31, 2002, the Company  negotiated the sale of its
50% ownership of its Canadian  subsidiary to PICO Holdings,  Inc. ("PICO"),  the
owner  of the  other  50% of the  Canadian  company.  As  consideration  for the
Company's  50%  ownership,  PICO  canceled a $500,000  note  payable and accrued
interest  due them from the Company on a  Non-negotiable  Promissory  Note dated

                                       24
<PAGE>
August 24, 2000,  and canceled and  extinguished  a contingent  liability in the
original amount on a  Non-negotiable  Promissory Note dated August 28, 2000. The
referred to Notes were stamped "Canceled" by PICO and returned to the Company.

DISCONTINUANCE OF KLEAN

During the year ended March 31, 2003, the Company discontinued its KLEAN line of
products.  Due to the discontinuance of the KLEAN line of products,  the Company
wrote-off  the  unamortized  balance  of  $5,474,  which  is  presented  in  the
Consolidated  Statements of Operations as Impairment of Intangible Asset for the
year ended March 31, 2003.

GOING CONCERN AND MANAGEMENT PLANS

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company has experienced  significant  losses and negative cash
flows from operations for the year ended March 31, 2003,  which have resulted in
a deficiency in working  capital of  approximately  $529,000 and an  accumulated
deficit of approximately $11,965,000 as of March 31, 2003. (See Note 11)

During the year ended March 31, 2003, the  management  continued to downsize the
operation and reduce operating  overhead.  In September 2002 the Company did not
renew its Phoenix lease at its  production  facility,  eliminated  the plant and
administrative  staff and  negotiated  a  favorable  outsource  program  for the
production of the Company's SOLTRON(R) product line in California.

In  fiscal  year  ended  March  31,  2003,  the  Company  began to  explore  the
distribution  and marketing of its products  through  established  wholesale and
retail  distributors.  The Company believes that this methodology will enable it
to  increase  revenues  while  cutting  costs and thus  increase  cash flow from
operations.

                         SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The  consolidated  balance  sheet of the Company at March 31, 2003  includes the
accounts of Solpower Corporation and Virtual  Technologies  (Australia) Pty Ltd.
("VIRTUAL"), a wholly-owned Australian subsidiary. The consolidated statement of
operations  for the year ended March 31, 2003  includes  the activity of Virtual
from the date of  acquisition,  January 31, 2003  through  March 31,  2003.  All
significant  inter-company  transactions  and accounts  have been  eliminated in
consolidation.  As of March 31, 2002,  the Canadian  subsidiary was sold and the
statements  of  operations  for the year  ended  March  31,  2002  presents  the
subsidiary operations as discontinued operations.

PERVASIVENESS OF ESTIMATES

The preparation of the  consolidated  financial  statements,  in conformity with
generally  accepted  accounting  principles  in  the  United  States,   requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

                                       25
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounts  receivable,  accounts and loans payable,  customer  deposits,  line of
credit,  and accrued  liabilities are  substantially  current or bear reasonable
interest rates. As a result, the carrying values of these financial  instruments
approximate fair value.

REVENUE RECOGNITION

Revenues from sales to  distributors  and resellers are recognized  when related
products  are shipped.  Revenues  from  consignment  sales are  recognized  when
payments are received.

CASH AND CASH EQUIVALENTS

All short-term  investments  purchased with an original maturity of three months
or less are considered to be cash equivalents. Cash and cash equivalents include
cash on hand and amounts on deposit with a financial institution.

ACCOUNTS RECEIVABLE

The Company follows the allowance method of recognizing  uncollectible  accounts
receivable.  The allowance method recognizes bad debt expense as a percentage of
accounts receivable based on a review of the individual accounts outstanding and
the Company's prior history of uncollectible  accounts receivable.  At March 31,
2003  and  2002 an  allowance  has  been  provided  for  uncollectible  accounts
receivable in the amounts of $-0- and $-0-,  respectively.  The Company does not
have a formal policy to charge interest on late payments of receivable amounts.

CONCENTRATION OF CREDIT RISK

The Company  sells its products and extends  credit to various  customers  based
upon their financial  condition.  Exposure to losses on accounts  receivables is
principally  dependent  on each  customer's  financial  condition.  The  Company
monitors its exposure for credit losses and maintains  allowances  for potential
losses when required.

During the current and prior fiscal  years,  one customer  accounted for 88% and
35% of the Company revenues,  respectively.  The customer referred to is a major
distributor of the SOLTRON(R) product.

INVENTORY

Inventory at March 31, 2003 and 2002 consists, primarily, of the SOLTRON(R) fuel
additive  concentrate,  and is stated  at the lower of cost or market  using the
first-in,   first-out  (FIFO)  method.  The  Company  periodically  reviews  its
inventory and makes provisions for damaged or obsolete inventory,  if necessary.
No  provision  for  damaged  or  obsolete  inventory  has been  included  in the
accompanying financial statements.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided for on the
straight-line  and declining  balance methods over the estimated useful lives of
the assets.  Ordinary maintenance and repairs that neither materially add to the

                                       26
<PAGE>
value of the property nor appreciably prolong its life are charged to expense as
incurred. Betterments or renewals are capitalized when incurred. When assets are
retired or disposed,  the cost and accumulated  depreciation are eliminated from
the account and any gain or loss is reflected in the statement of operations.

Estimated useful lives of the assets are as follows:

     Computer and Office Equipment                5 years
     Furniture                                    5-7 years
     Vehicles                                     5 years
     Plant Equipment                              5-7 years
     Leasehold Improvements                       5 years or lease term

RESEARCH AND DEVELOPMENT COSTS

All research and development costs, with the exception of capital  expenditures,
are expensed in the period incurred.  Capital expenditures incurred for research
and  development  activities  are included in fixed  assets.  The Company had no
research and development for the years ended March 31, 2003 and 2002.

COMPREHENSIVE INCOME (LOSS)
Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  130,  REPORTING
COMPREHENSIVE INCOME,  establishes  requirements for disclosure of comprehensive
income and its components, which include, among other items, unrealized gains or
losses from marketable  securities and foreign currency translation  adjustments
that previously were only reported as a component of stockholders'  equity.  The
Company  had  components  of  comprehensive  income  (loss)  during the  periods
presented.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment  whenever events or changes
in  circumstances   indicate  the  carrying  amount  of  an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future  undiscounted  net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets  exceeded the fair value of the assets.  Assets to
be disposed of are  reported at the lower of the  carrying  amount or fair value
less costs to sell.

During the year  ended  March 31,  2002,  management  determined  that the costs
associated  with the marketing  licenses for SP34E(TM)  became impaired when the
Company  sold  its  50%  interest  in its  subsidiary,  which  manufactured  the
SP34E(TM)  for the  Company.  In  addition,  there has not been any  significant
market penetration of SP34E(TM) in the United States.  Accordingly,  the Company
wrote-off  the  balance  associated  with this  license at March 31,  2002.  The
provision  for  impairment of this license  amounted to $2,040,000  for the year
ended March 31, 2002.

During the year ended March 31, 2003,  management  determined to discontinue its
KLEAN line.  As a result,  the costs  associated  with the KLEAN  rights  became
impaired and the Company wrote-off the unamortized  capitalized costs associated
with this product. The provision for impairment of this asset amounted to $5,474
for the year ended March 31, 2003.

                                       27
<PAGE>
GOODWILL

Goodwill represents the excess of the purchase price over the fair values of the
net assets acquired.  On an ongoing basis,  management  reviews the valuation of
goodwill,  taking into  consideration any events and  circumstances  which might
have impaired the fair value. Goodwill is written down to the recoverable amount
when  declines in value are  considered  to be other than  temporary  based upon
expected  future cash flows.  The subsidiary with which this asset is associated
with at March 31, 2003 was  purchased  on January  31, 2003 and in  management's
opinion  there is no  impairment  of the fair  value at March 31, 2003.

INCOME TAXES AND INVESTMENT TAX CREDITS

Deferred  income taxes are provided on an asset and  liability  method,  whereby
deferred tax assets are  recognized  for deductible  temporary  differences  and
operating loss and tax credit  carry-forwards,  and deferred tax liabilities are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
basis.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of management,  there is uncertainty of the utilization of the operating
losses in future  periods.  Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.

Scientific  research and  development  investment  tax credits are recorded on a
project by project  basis in the period  when the  Company  has  determined  the
related  research and development  expenditures  qualify for the tax incentives.
The  Company  had no such  expenditures  for the years  ended March 31, 2003 and
2002.

BASIC LOSS PER COMMON SHARE

Basic  loss per  common  share is  computed  based on  weighted  average  shares
outstanding and excludes any potential dilution from stock options, warrants and
other  common  stock  equivalents.  Basic loss per share is computed by dividing
loss available to common  shareholders by the weighted  average number of common
shares  outstanding  for the period.  Diluted net loss per common share reflects
potential  dilution from the exercise or  conversion  of securities  into common
stock or from other  contracts to issue common  stock.  As of March 31, 2003 and
2002  diluted  net loss per  common  share is not  included,  as the  effect  of
including these shares is anti-dilutive.

At March 31, 2003,  stock  options  representing  1,100,000  common  shares were
outstanding  with exercise prices ranging between $0.25 and $7.00.  The weighted
average exercise price for all outstanding options was $1.88. At March 31, 2003,
stock  warrants  represented  1,567,500  common  shares  were  outstanding  with
exercise price at $0.20.

FOREIGN CURRENCY TRANSLATION

Account  balances and  transactions  denominated  in foreign  currencies and the
accounts of the  Corporation's  foreign  operations  have been  translated  into
United  States funds,  as follows:  (i) assets and  liabilities,  if any, at the
rates of  exchange  prevailing  at the  balance  sheet  date;  (ii)  revenue and
expenses  at average  exchange  rates for the  period in which the  transactions
occurred;  (iii)  exchange  gains  and  losses  arising  from  foreign  currency
transactions  are included in the  determination of net earnings for the period;
and  (iv)  exchange  gains  and  losses  arising  from  the  translation  of the

                                       28
<PAGE>
Corporation's  foreign  operations  are  deferred  and  included  as a  separate
component of stockholders' equity, as reflected at March 31, 2003

The Company sold its 50% owned foreign subsidiary in March 2002. The net foreign
currency  translation  balance  at the time of the sale  became a  component  of
determining the net gain on the sale of the subsidiary.

The Company purchased its wholly-owned Australian subsidiary on January 31, 2003
and the Foreign  Currency  Translation  Adjustment  account is  presented in the
Stockholders' Equity section.

STOCK-BASED COMPENSATION

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
Accounting   for  Stock  Issued  to   Employees   ("APB  25")  and  the  related
interpretations  in accounting  for its employee  stock  options.  Under APB 25,
because the  exercise  price of  employee  stock  options  equals or exceeds the
market  price of the  underlying  stock on the date of  grant,  no  compensation
expense is recorded.  The Company has adopted the disclosure-only  provisions of
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock  Based  Compensation,"  as  amended  by  SFAS  No.  148,  "Accounting  For
Stock-Based Compensation - Transition & Disclosure."

The following  table  illustrates  the pro forma effect on net income (loss) and
earnings  per  share if the  Company  had  applied  the fair  value  recognition
provisions of FASB Statement No. 148, "Accounting For Stock-Based Compensation -
Transition & Disclosure, An Amendment To FASB Statement No. 123," to stock-based
employee compensation.

<TABLE>
<CAPTION>
                                                                             Year Ended March 31,
                                                                          2003               2002
                                                                      -----------        -----------
                                                                      (Unaudited)        (Unaudited)
<S>                                                                   <C>                <C>
Net loss from continuing operations, as reported                      $  (112,021)       $(2,987,826)
Deduct: Total stock-based employee compensation expense
        determined under fair value based method for all awards,
        net of related tax effects                                             --            (21,000)
                                                                      -----------        -----------
Pro forma net loss from continuing operations                            (112,021)        (3,008,826)
Income (loss) from discontinued operations                                     --            317,371
                                                                      -----------        -----------
Pro forma net loss                                                    $  (112,021)       $(2,691,455)
                                                                      ===========        ===========
Loss per share:
  Basic, continuing operations, as reported                           $        --        $     (0.09)
                                                                      ===========        ===========
  Basic, continuing operations, pro forma                             $        --        $     (0.09)
                                                                      ===========        ===========
  Discontinued operations, as reported                                $        --        $      0.01
                                                                      ===========        ===========
  Discontinued operations, pro forma                                  $        --        $      0.01
                                                                      ===========        ===========
  Net loss per share, as reported                                     $        --        $     (0.08)
                                                                      ===========        ===========
  Net loss per share, pro forma                                       $        --        $     (0.08)
                                                                      ===========        ===========
</TABLE>

                                       29
<PAGE>
The fair value of option  grants is estimated as of the date of grant  utilizing
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions  for  all  grants,  expected  life  of  options  of 1.3 to 5  years,
risk-free  interest rates of five percent (5%), and a zero percent (0%) dividend
yield.

The full impact of  calculating  compensation  cost for stock options under SFAS
No.  123 is not  reflected  in the pro forma net loss  amounts  presented  above
because compensation cost is reflected over the vesting period

Transactions in equity instruments with non-employees for goods and services are
accounted for by the fair value method.

RECENT ACCOUNTING PRONOUNCEMENT

In November  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No. 151 (SFAS 151),  "Inventory
Costs."  SFAS 151  amends the  guidance  in APB No.  43,  Chapter 4,  "Inventory
Pricing,"  to clarify  the  accounting  for  abnormal  amounts of idle  facility
expense,  freight,  handling  costs,  and wasted material  (spoilage).  SFAS 151
requires that those items be recognized as current period charges  regardless of
whether they meet the criteria of "so abnormal." In addition,  SFAS 151 requires
that  allocation  of fixed  production  overheads to the costs of  conversion be
based on the normal capacity of the production facilities. SFAS 151 is effective
for financial  statements issued for fiscal years beginning after June 15, 2005.
The  adoption  of SFAS 151 is not  expected  to have a  material  effect  on the
Company's financial position or results of operations.

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 153 (SFAS  153),  "Exchanges  of  Nonmonetary  Assets."  SFAS 153 amends the
guidance in APB No. 29,  "Accounting  for  Nonmonetary  Assets."  APB No. 29 was
based on the principle that  exchanges of nonmonetary  assets should be measured
on the fair  value  of the  assets  exchanged.  AFAS 153  amends  APB No.  29 to
eliminate the exception for nonmonetary  exchanges of similar  productive assets
and replaces it with a general  exception for exchanges of  non-monetary  assets
that do not have commercial substance if the future cash flows of the entity are
expected  to  change  significantly  as a result  of the  exchange.  SFAS 151 is
effective for financial  statements issued for fiscal years beginning after June
15, 2005. The adoption of SFAS 153 is not expected to have a material  effect on
the Company's financial position or results of operations.

In December 2004, the FASB revised Statement of Financial  Accounting  Standards
No. 123 (SFAS 123(R)),  "Accounting for Stock-Based  Compensation." The SFAS 123
(R) revision established  standards for the accounting for transactions in which
an entity  exchanges  its equity  instruments  for goods or services and focuses
primarily on accounting for  transactions  in which an entity  obtains  employee
services in share-based payment transactions.  It does not change the accounting
guidance for share-based payment transactions with parties other than employees.
For public entitles that do not file as small business issuers, the revisions to
SFAS 123 are  effective  as of the  beginning  of the  first  interim  or annual
reporting  period that begins after June 15, 2005. For public entities that file
as small business issuers, the revisions to SFAS 123 (R) are effective as of the
beginning  of the first  interim or annual  reporting  period that begins  after
December  15,  2005.  For  non-public  entities,  the  revisions to SFAS 123 are

                                       30
<PAGE>
effective as of the beginning of the first annual  reporting  period that begins
after  December  15,  2005.  Management  has not yet  determined  the effects of
adopting  this  statement  on the  Company's  financial  position  or results of
operations.

--------------------------------------------------------------------------------
                                     NOTE 2
                             PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------

Property and equipment consists of the following at March 31, 2003 and 2002:

                                                2003                2002
                                             ---------           ---------
     Furniture and Fixtures                  $   1,586           $  52,359
     Computer and Office Equipment              22,350              75,711
     Plant Equipment                            55,960             170,705
     Leasehold Improvements                         --             425,298
                                             ---------           ---------
                                                79,896             724,073

     Less: Accumulated Depreciation            (25,646)           (616,229)
                                             ---------           ---------

                                             $  54,250           $ 107,844
                                             =========           =========

Depreciation  expense  charged to operations  for the years ended March 31, 2003
and 2002, was $82,270 and $235,479, respectively.

--------------------------------------------------------------------------------
                                     NOTE 3
                                MARKETING RIGHTS
--------------------------------------------------------------------------------

On November 4, 1996,  the Company  acquired the exclusive  sales,  distribution,
marketing and manufacturing rights to the Solpower product,  SOLTRON(R),  a fuel
enhancing product, encompassing the North American Market (United States, Mexico
and  Canada),  in  exchange  for  5,000,000  shares  of common  stock  valued at
$500,000.  The contract is for a period of five years. The Company amortized the
marketing  rights  over  the  original  period  of the  contract.  The  original
marketing  rights were fully  amortized  at March 31,  2002.  The  contract  was
automatically renewed effective November 2001 at no cost to the Company.

On February  20,  2003,  the Company  acquired the  exclusive  worldwide  sales,
distribution, marketing and manufacturing rights to the SOLTRON(R) product. This
purchase was made by the issuance of 9,000,000 shares of restricted common stock
of the Company with a valuation of $119,700.

On June 17,  1998,  the Company  acquired  the  exclusive  sales,  distribution,
marketing  and  manufacturing  rights  to the  Solpower  product,  SP34E(TM)  (a
refrigerant)  encompassing the North American Market (United States,  Mexico and
Canada), in exchange for the issuance of 6,000,000 shares of common stock valued
at  $2,400,000.  The contract is for a period of five years,  and pursuant to an
addendum  to the  agreement,  the term of the  agreement  shall  commence on the
Company  achieving ratable sales of SP34E(TM) and in no event later than July 1,
2000.  The  Company is  amortizing  these  marketing  rights  over the period of
contract.

                                       31
<PAGE>
During the year  ended  March 31,  2002,  management  determined  that the costs
associated  with the marketing  licenses for SP34E(TM)  became impaired when the
Company  sold  its  50%  interest  in its  subsidiary,  which  manufactured  the
SP34E(TM)  for the  Company.  Accordingly,  the  Company  wrote-off  the balance
associated with these rights at March 31, 2002.

On January 31,  2003,  the  Company  acquired  the  exclusive  worldwide  sales,
distribution, marketing and manufacturing rights to the refrigerant gas products
consisting of SP34E(TM),  SP22A,  SP22B, SP22C and SP22E. This purchase was made
by the issuance of 6,000,000  shares of  restricted  common stock of the Company
with a valuation of $79,800.

During the year ended March 31, 2003, the Company  acquired the worldwide rights
to the product SOLTRON(R) by the issuance of 9,000,000  restricted shares of its
common stock with a valuation  of  $119,700.  The  effective  purchase  date was
February 20, 2003. This  acquisition  delivered the exclusive  worldwide  sales,
distribution,  marketing and manufacturing rights to the product,  SOLTRON(R), a
fuel enhancing product.

Amortization  charged to operations for marketing rights each of the years ended
March 31, 2003 and 2002 was $-0- and $58,333, respectively.

--------------------------------------------------------------------------------
                                     NOTE 4
                                  ACQUISITIONS
--------------------------------------------------------------------------------

ACQUISITION OF VIRTUAL TECHNOLOGIES (AUSTRALIA) PTY LTD.

During  the  year  ended  March  31,  2003,  the  Company  acquired  100% of the
outstanding  stock of Virtual  Technologies  (Australia)  Pty Ltd on January 31,
2003.  The  subsidiary  was  acquired  by the  issuance of  6,000,000  shares of
restricted  common  stock by the  Company  with a  valuation  of  $79,800.  This
acquisition delivers the exclusive worldwide sales, distribution,  marketing and
manufacturing rights to the SP34E(TM), SP22A, SP22B, SP22C and SP22E refrigerant
gas products.

ACQUISITION OF SOLTRON(R) RIGHTS

During the year ended March 31, 2003, the Company  acquired the worldwide rights
to the product SOLTRON(R) by the issuance of 9,000,000  restricted shares of its
common stock with a valuation  of  $119,700.  The  effective  purchase  date was
February 20, 2003. This  acquisition  delivered the exclusive  worldwide  sales,
distribution,  marketing and manufacturing rights to the product,  SOLTRON(R), a
fuel-enhancing product.

ACQUISITION OF PETROKLEAN FORMULA

On December 22, 2000, the Company  purchased the E*COR enzyme division assets of
Perix  Industries,  Inc., of California.  The Company issued 100,000  restricted
shares of common  stock valued at $19,918 to Perix in  consideration  for enzyme
inventory,  existing  contracts and outstanding  contract bids,  brand names and
proprietary formula for certain of the Klean enzyme products.

                                       32
<PAGE>
On August 28,  2001,  the Company  purchased  the formula and  know-how  for the
PETROKLEAN  formula  for 40,000  shares of  restricted  stock  valued at $5,040.
During the year ended March 31, 2003, the Company discontinued its KLEAN line of
products and wrote off the unamortized balance of assets of $5,474. (See Note 1,
Discontinuance of KLEAN)

--------------------------------------------------------------------------------
                                     NOTE 5
                                   COMMITMENTS
--------------------------------------------------------------------------------

OPERATING LEASES

The Company  did not renew  their  operating  lease in  September  2002 on their
warehouse and  production  facility in Phoenix,  Arizona,  as part of their cost
reduction program.

During the year ended March 31,  2002,  the Company  leased two  vehicles  under
thirty-six  month lease  agreements.  The monthly rental  obligation under these
agreements is $965.

Minimum future rental payments for all  non-cancelable  operating  leases having
original or remaining lease terms in excess of one year as of March 31, 2003 are
as follows:

               Year Ending
                March 31,
                ---------
                  2004               $10,460
                                     =======

Lease expense charged to operations for the years ended March 31, 2003 and 2002,
was $72,914 and $83,172, respectively.

CONVERTIBLE PROMISSORY NOTE

On September 18, 2000, the Company issued a $400,000 Convertible Promissory Note
to Dominion  Capital Pty Ltd.  The note matured on  September  18, 2001,  and is
convertible  into common shares of the Company at the lesser of the market price
on the date conversion notice is given to the Company or $0.40 per share for the
amount of principal  outstanding  at  conversion.  The note bears interest at 8%
percent per annum, payable quarterly in arrears. The note was unpaid at December
11, 2002, with accrued  interest on the note amounting to $71,365.  The note and
accrued  interest  was  assigned  by Dominion  Capital  Pty Ltd.  to  Australian
Agriculture Management Pty Ltd. Pursuant to the provisions of the Assignment and
Amendment  of Debt  Agreement,  the  interest  rate was  reduced  from 8% to 5%,
quarterly  payments  of  $64,813  are to be made,  and the  conversion  rate was
reduced from $0.40 per common share to $0.10 per common  share.  The due date of
the note was also extended an additional  twenty-four  (24) months from the date
of the  Agreement  signing on November 22, 2002.  At March 31, 2003, no payments
have been made on this obligation.

OTHER COMMITMENTS

Effective  April 1, 2000,  the  Company  entered  into an  unwritten  employment
arrangement  with  James H. Hirst for an  initial  term of three (3) years.  The
arrangement  provides  for a base  salary of  $126,000  per  annum;  automobile,
medical,  social security  allowances and such other terms and conditions as may
be agreed upon from time to time;  500,000 stock  options  pursuant to the terms
and conditions of the Solpower  Corporation  Stock Option and Incentive Plan and
such vesting requirements as established by the compensation  committee; a stock

                                       33
<PAGE>
grant of 50,000 common shares  effective April 1, 2000; and monthly stock grants
of 10,000  shares  effective  the  first  day of each  month for the term of the
agreement,  such shares to be issued quarterly  provided agreed upon performance
requirements are fulfilled.  A total of 130,000 common shares were issued to Mr.
Hirst  during the year.  On March 27,  2001,  the  Company  agreed to Mr.  Hirst
returning the shares to the Company and to carry the associated  liability until
such time as Mr. Hirst  requested the shares be re-issued.  Effective  March 31,
2001 the stock grants to Mr. Hirst  ceased.  (Note 9). In April 2003,  Mr. Hirst
verbally extended his employment arrangement with the Company.

--------------------------------------------------------------------------------
                                     NOTE 6
                                  INCOME TAXES
--------------------------------------------------------------------------------

Deferred  income taxes are determined  using the asset and liability  method for
the temporary  differences  between the financial reporting basis and income tax
basis of the Company's  assets and  liabilities.  Deferred  income taxes will be
measured  based on the tax rates  expected  to be in effect  when the  temporary
differences  are included in the Company's  tax return.  Deferred tax assets and
liabilities  are  recognized  based  on  anticipated   future  tax  consequences
attributable to differences  between  financial  statement  carrying  amounts of
assets and liabilities and their respective tax bases.

At March 31, 2003 and 2002, deferred tax assets on United States reported losses
consist of the following:

                                              2003                  2002
                                           -----------           -----------
     Net operating loss carryforwards      $ 1,616,000           $ 1,632,000
     Less: valuation allowance              (1,616,000)           (1,632,000)
                                           -----------           -----------

                                           $        --           $        --
                                           ===========           ===========

At March 31, 2003 and 2002,  the Company had United States federal net operating
loss  carry-forwards  in the approximate  amount of $11,484,000 and $11,372,000,
respectively,  available to offset future taxable income  expiring  through 2023
and 2022,  respectively.  At March 31,  2003 and 2002,  the  Company had Arizona
state net operating loss  carry-forwards in the approximate amount of $9,312,000
and  $10,023,000,  respectively,  available  to  offset  future  taxable  income
expiring through 2008 and 2007, respectively.

In assessing the deferred tax assets,  management  considers  whether it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.  The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those  temporary
differences become deductible. Management believes that the inability to utilize
net operating  loss  carry-forwards  to offset future  taxable income within the
carryforward  periods is more likely  than not.  Accordingly,  a 100%  valuation
allowance has been recorded against the net deferred tax assets.

Virtual Technologies Pty Ltd., the wholly-owned  Australian subsidiary,  reports
its income  under  Australia  taxation  regulations.  The  company  has  pre-tax
operating income approximating $6,900 (US) at March 31, 2003 and related accrued
taxes approximating $2,300 (US).

                                       34
<PAGE>
--------------------------------------------------------------------------------
                                     NOTE 7
                           RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

On September 18, 2000, the Company issued a $400,000 Convertible Promissory Note
to Dominion  Capital Pty Ltd.  The note matured on  September  18, 2001,  and is
convertible  into common shares of the Company at the lesser of the market price
on the date conversion notice is given to the Company or $0.40 per share for the
amount of principal  outstanding  at  conversion.  The note bears interest at 8%
percent per annum, payable quarterly in arrears. The note was unpaid at December
11, 2002, with accrued  interest on the note amounting to $71,365.  The note and
accrued  interest  was  assigned  by Dominion  Capital  Pty Ltd.  to  Australian
Agriculture Management Pty Ltd. Pursuant to the provisions of the Assignment and
Amendment  of Debt  Agreement,  the  interest  rate was  reduced  from 8% to 5%,
quarterly  payments  of  $64,813  are to be made,  and the  conversion  rate was
reduced from $0.40 per common share to $0.10 per common  share.  The due date of
the note was also extended an additional  twenty-four  (24) months from the date
of the  Agreement  signing on November 22, 2002.  At March 31, 2003, no payments
have been made on this obligation.

On December 20, 2000,  the Company  agreed to issue a total of 375,000 shares of
common  stock and  warrants  to  purchase  250,000  shares  of  common  stock in
cancellation  of debt owing to  Dominion  Capital,  Inc.  Of the shares  issued,
125,000 were issued to Trond Matteson and 250,000 shares were issued to Dominion
Capital,  Inc.  All  warrants  were issued to  Dominion  Capital,  Inc.  and are
exercisable  at $0.40 per share and expire on December  31,  2002.  The warrants
expired, unexercised, on December 31, 2002.

Effective  January  31,  2003,  the  Company  issued  6,000,000  shares  of  its
unregistered,  restricted common stock valued at $79,800 to Virtual Technologies
(Australia)  Pty  Ltd.   ("VT").   VT  holds  the  exclusive   worldwide  sales,
distribution, marketing and manufacturing rights to the SP34E(TM), SP22A, SP22B,
SP22C and SP22E refrigerant gas products.

On February 20, 2003, the Company  acquired the worldwide  rights to the product
SOLTRON(R) from Dominion Capital Pty Ltd. in exchange for 9,000,000 unregistered
restricted shares of its common stock valued at $119,700.

--------------------------------------------------------------------------------
                                     NOTE 8
                               SHAREHOLDER EQUITY
--------------------------------------------------------------------------------

STOCK ISSUED FOR SERVICES AND DEBT

On April 1, 2001, the Company issued 19,355 restricted shares of common stock in
settlement of an outstanding account payable amounting to $4,839.

On August 28, 2001, the Company issued 50,000  restricted shares of common stock
to Mr. James Flowers pursuant to stock grants under his employment agreement.

On March 31, 2002, the Company issued 300,000  restricted shares of common stock
in relation to the conversion of a $30,000  short-term  Convertible Note Payable
that was issued on January 23, 2002 and became due on February 23, 2002.

                                       35
<PAGE>
On April 11, 2002, the Company issued 100,000  restricted shares of common stock
for services.

On April 26, 2002, the Company issued 300,208  restricted shares of common stock
in settlement of outstanding account payable.

On April 26, 2002, the Company issued 180,000  restricted shares of common stock
to employees for termination pay.

On June 4, 2002, the Company issued  100,000  restricted  shares of common stock
for services.

COMMON STOCK SOLD

On  June 4,  2002,  the  Company  issued  300,000  shares  of its  unregistered,
restricted  common  stock at $0.05 per share  pursuant  to the  exercise  of two
outstanding call options.

COMMON STOCK ISSUED FOR ACQUISITIONS

On August 28,  2002,  the  Company  issued  40,000  shares of its  unregistered,
restricted  common stock in exchange for the formula and know-how related to its
PETROKLEAN product.

Effective  January  31,  2003,  the  Company  issued  6,000,000  shares  of  its
unregistered,  restricted  common  stock  pursuant  to the  terms  of the  Share
Purchase and Sale Agreement with Virtual Technologies  (Australia) Pty Ltd. This
acquisition delivers the exclusive worldwide sales, distribution,  marketing and
manufacturing rights to the SP34E(TM), SP22A, SP22B, SP22C and SP22E refrigerant
gas products.

On February 20, 2003, the Company  acquired the worldwide  rights to the product
SOLTRON(R),  under the terms of the  Acquisition  Agreement,  by the issuance of
9,000,000 unregistered restricted shares of its common stock to Dominion Capital
Pty Ltd. This acquisition delivered the exclusive worldwide sales, distribution,
marketing and manufacturing  rights for the enzyme technologies for the product,
SOLTRON(R), a fuel-enhancing product.

COMMON STOCK GRANTS

On October 26, 1998, a grant of 25,000 restricted shares under the Plan was made
to a former employee. The former employee was employed by the Company on each of
the vesting dates and is therefore vested in all shares granted. As of March 31,
2001 no shares have been issued as the result of this grant and a liability  has
been recorded for the value of the shares at the vesting dates.  During the year
ended March 31, 2002,  the Company  wrote off the liability for this stock grant
based upon  subsequent  management  conclusions  as to improper  actions by this
former employee.

On April  1,  2000,  subject  to an  employment  agreement,  a grant  of  50,000
restricted  common  shares  was made to  James  Hirst,  Secretary/Treasurer.  In
addition,  the employment  agreement  provides for a grant of 10,000  restricted
shares  of common  stock at the first of each  month,  commencing  May 1,  2000,
during  the  term  of Mr.  Hirst's  employment.  Such  shares  are to be  issued
quarterly provided agreed upon performance  requirements are fulfilled.  On June

                                       36
<PAGE>
28,  2000,  70,000  restricted  shares of common  stock were issued to Mr. Hirst
under this agreement.  On each of November 16, 2000 and January 26, 2001, 30,000
restricted shares of common stock were issued to Mr. Hirst under this agreement.
On March 27, 2001, the Company agreed to Mr. Hirst  returning the 130,000 shares
to the  Company  and to carry the  associated  liability  until such time as Mr.
Hirst  requested  the shares be  re-issued.  Effective  March 31, 2001 the stock
grants to Mr. Hirst  ceased.  As of the balance  sheet date,  March 31, 2003 and
2002,  the Company has recorded a liability  for the value of the shares due Mr.
Hirst that were returned.

STOCK WARRANTS

On December 20, 2000, the Company issued a warrant to Dominion Capital,  Inc., a
related party, to purchase  250,000  restricted  shares of common stock at $0.40
per share and the warrant expired on December 31, 2002, unexercised.

On January 31, 2001, the Company  commenced a private  offering which  contained
provisions for warrants attached to the common share units sold. As of March 31,
2001,  warrants to purchase 1,000,000  restricted shares of common stock at $.20
per share were issued in relation to the offering. Additional common share units
were sold under this offering during period April 1, 2001 through  September 24,
2001  amounting  to 567,500  and  additional  warrants  were  issued to purchase
567,500  restricted  shares of common stock at $0.20 per share.  Warrants issued
under the  offering  originally  expired  on January  31,  2004 and the Board of
Directors subsequently extended the expiration date to June 30, 2005.

A summary of total stock warrants outstanding is as follows:

                                                                Weighted
                                             Number of           Average
                                             Warrants         Exercise Price
                                             --------         --------------
     Outstanding at March 31, 2001           2,250,000             0.32

     Granted                                   567,500             0.20
     Forfeited                              (1,000,000)           (0.43)
                                            ----------           ------
     Outstanding at March 31, 2002           1,817,500             0.23

     Granted                                        --               --
     Forfeited                                (250,000)           (0.40)
                                            ----------           ------
     Outstanding at March 31, 2003           1,567,500           $ 0.20
                                            ==========           ======

                                       37
<PAGE>
               Warrants Outstanding                    Warrants Exercisable
     -----------------------------------------        ------------------------
                                    Weighted
                                    Average
      Exercise                     Remaining
     Price Per      Number        Contractual           Number        Exercise
       Share       of Shares    Life (In Years)      Exercisable       Price
       -----       ---------    ---------------      -----------       -----
      $0.20       1,567,500          2.25             1,567,500        $0.20

STOCK OPTIONS

On November 24, 1997,  an addendum to the agreement  with  Dominion  Capital Pty
Ltd., a related entity,  to provide financing (Note 8) was signed by the Company
which grants the following  options to Dominion  based solely on the gross sales
figures,  for a five year period,  of the Solpower  product SOLTRON in the North
American Market as follows:

     a.   Gross sales for the product equaling  $10,000,000,  option to purchase
          100,000  shares  of  common  stock at  $2.50  per  share,  plus a cash
          performance bonus of $400,000.

     b.   Gross sales for the product equaling  $20,000,000,  option to purchase
          150,000  shares  of  common  stock at  $3.50  per  share,  plus a cash
          performance bonus of $400,000.

     c.   Gross sales for the product equaling  $50,000,000,  option to purchase
          250,000  shares  of  common  stock at  $4.50  per  share,  plus a cash
          performance bonus of $500,000.

     d.   Gross sales for the product equaling $100,000,000,  option to purchase
          250,000  shares  of  common  stock at  $5.00  per  share,  plus a cash
          performance bonus of $1,000,000.

The contract has an anti-dilution provision,  that in the event that the Company
shall at any time  subdivide the  outstanding  shares of common stock,  or shall
issue a stock dividend on its outstanding  stock, the conversion price in effect
immediately  prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in the case the Company shall at any time combine
the  outstanding  shares  of  common  stock,  the  conversion  price  in  effect
immediately  prior  to such  combination  shall  be  proportionately  increased,
effective at the close of business on the date of such subdivision,  dividend or
combination,  as the case may be.  No  options  became  exercisable  under  this
agreement and the option agreement expired on November 24, 2002.

On January 23, 2002,  the Company issued a call option for $1,000 for the option
to purchase  200,000 shares of restricted  common stock at $0.15 per share.  The
option expires on July 23, 2003.  Effective  April 26, 2002, the Company amended
the exercise price of the call option to $0.05 per share and the call option was
exercised on June 4, 2002.

On April 12,  2002 the  Company  issued a call option for the option to purchase
100,000 shares of restricted common stock at $0.05 per share. The option expires
on October 12, 2003. On June 4, 2002 the call option was exercised.

                                       38
<PAGE>
INCENTIVE STOCK OPTION PLAN

The Company has adopted the 1997 Solpower Corporation Stock Option and Incentive
Plan (the  "PLAN").  Pursuant  to the Plan,  options to  purchase  shares of the
Company's  common  stock may be granted to  employees  and  directors.  The Plan
provides  that the option  price shall not be less than the fair market value of
the  shares on the date of grant,  and that the  options  expire up to ten years
after grant.  Options generally vest ratably over 3 to 5 year periods.  At March
31, 2003,  there were 5,000,000  shares reserved for options to be granted under
the Plan.

On January 30,  1998,  the  Company  granted  options to purchase  shares of the
Company's  common stock to certain  individuals  at a purchase price equal to or
greater than the fair market value of such stock as determined under the Plan as
of this date.  Mr. James H. Hirst was granted  300,000,  Mr. Trond  Matteson was
granted  150,000 and Mr. Joshua Ward was granted  150,000  shares.  The terms of
such options  shall  commence as of January 30, 1998,  and expire on January 30,
2003,  or the  termination  of  employment  of Mr.  Hirst or the services of Mr.
Matteson or Mr. Ward.  On May 18,  1998,  Mr. Ward was  terminated  as a service
provider to the Company and the 150,000 options were canceled. On April 1, 2000,
under terms of an  employment  agreement  with Mr.  Hirst,  the 300,000  options
granted on January 30, 1998 were canceled.  On December 31, 2000,  Mr.  Matteson
was terminated as a service provider to the Company and the 150,000 options were
canceled.

On May 28, 1998, the Company granted options under the Plan to certain directors
at  a  purchase   price  for  each  share  that,   with  the  exception  of  the
non-qualifying  options,  is equal to or greater  than the fair market  value of
such stock as determined  under the Plan as of this date.  Mr. Fraser Moffat III
was granted 350,000,  100,000 of which are  non-qualifying,  Mr. Naoya Yoshikawa
was granted  100,000,  Mr.  Jerry  Goddard was granted  100,000 and Mr. James H.
Hirst was granted  100,000.  The options may be exercised in whole or in part at
any time after the vesting  requirements  with respect to any option  shares has
been achieved.  The terms of such options shall commence as of May 28, 1998, and
expire on May 28, 2003, or the termination as directors of the Company. On April
1, 2000, under the terms of an employment  agreement with Mr. Hirst, the 100,000
options granted were canceled.  On November 11, 2001, Mr. Goddard  resigned as a
member of the Board of Directors and the 100,000  options granted to Mr. Goddard
were canceled.  On February 4, 2003, Mr.  Yoshikawa  resigned as a member of the
Board of  Directors  and the  100,000  options  granted  to Mr.  Yoshikawa  were
canceled

On January 4, 1999, R. L. "Beau" Van Deren,  the  corporate  Secretary/Treasurer
and a member of the Board of Directors  was granted  400,000  options  under the
Plan.  The terms of such  options  commenced  on  January  9, 1999 and expire on
January 4, 2004 or the termination of employment of Mr. Van Deren. The terms are
similar to those  options  granted to other members of the board of directors in
1998.   On  February   15,   2000,   Mr.  Van  Deren   resigned   as   corporate
Secretary/Treasurer  and as a member  of the  Board  of  Directors,  however  he
continues to provide consulting services to the Company. Consequently 250,000 of
the options  granted to Mr. Van Deren were  canceled  and 150,000  options  were
retained.

On March 1, 2000, the Company entered into an employment agreement with Mr. Mark
Robinson.  The  agreement  provides  for the  issuance of 500,000  options at an
exercise  price of $1.00 per share,  which expire  April 2006.  The options vest
based on minimum  market  price and reported  gross  revenue  levels.  The stock
options granted to Mr. Robinson terminated effective April 30, 2001.

On April 1, 2000, the Company  entered into an employment  arrangement  with Mr.
James Hirst. The agreement  provides for  cancellation of all previously  issued

                                       39
<PAGE>
options and the  issuance of 500,000  options at an exercise  price of $1.00 per
share,  which expire April 2006.  The options vest based on minimum market price
and reported gross revenue levels.

On August 24, 2000, the Company  granted  options to purchase  250,000 shares of
the Company's common stock to Mr. James Flowers,  President of Protocol Resource
Management  Inc.  The options  vest  provided  the grantee is an employee of the
Corporation,  its  subsidiaries,  and/or  affiliates  as of the date any vesting
requirement is achieved for the Grantee's rights in the applicable option shares
to vest.  Upon the sale of Protocol to PICO Holdings,  Inc., the options granted
to Mr. Flowers were terminated effective March 31, 2002.

On September 5, 2001,  the Company  granted  options to purchase an aggregate of
350,000 shares of the Company's common stock to five employees.  The options may
be exercised in whole or in part at any time after the vesting  requirements are
achieved.  These options vest based on minimum  market price and reported  gross
revenue level. On April 26, 2002,  250,000 of these options were canceled as the
employees  related  to  these  options  left  the  employ  of the  Company.  The
aforementioned  options vest  independently  with respect to each grantee  based
upon two  factors:  (a) the minimum  market  price and (b) the minimum  reported
gross revenues being achieved as illustrated in the table:

<TABLE>
<CAPTION>
                        Percent     Exercise     Market        Reported         Expiration
       Grantee          Amount        Price      Price      Gross Revenues         Date
       -------          -------       -----      -----      --------------         ----
<S>                       <C>        <C>         <C>         <C>               <C>
Hirst and                 20%        $1.00       $1.00       $1 million        April, 2006
Robinson                  20%        $1.00       $2.00       $2 million        April, 2006
                          20%        $1.00       $3.00       $3 million        April, 2006
                          20%        $1.00       $4.00       $4 million        April, 2006
                          20%        $1.00       $5.00       $5 million        April, 2006
Flowers                   20%        $ .55          --               --        August, 2003
                          20%        $ .55          --               --        August, 2004
                          20%        $ .55          --               --        August, 2005
                          20%        $ .55          --               --        August, 2006
                          20%        $ .55          --               --        August, 2007
Cohen, Glass,             100%       $ .25       $1.00       $1 million        September, 2004
Starita, Cesena &
Lambrechtsen
Moffat -  Incentive       40%        $3.00       $3.00       $6 million        May, 2003
                          40%        $5.00       $5.00       $9 million        May, 2003
Options                   20%        $7.00       $7.00       $12 million       May, 2003
Non-Qualifying
  Options                100%        $2.00       $2.00       $4 million        May, 2003
Yoshikawa,                50%        $3.00       $3.00       $6 million        May, 2003
 and Goddard              50%        $7.00       $7.00       $12 million       May, 2003
Van Deren                100%        $1.30       $2.00       $6 million        January, 2004
</TABLE>

The minimum  reported gross revenues shall have been achieved during a reporting
period which is the lesser of (i) the four quarterly reporting periods preceding
any date on which the  minimum  market  price  exists,  or (ii)  that  number of
quarterly  reporting  periods  occurring  subsequent  to the date on which  both
vesting  requirements  last were achieved and any date on which the next minimum
market price  requirement is achieved.  As of March 31, 2003,  100,000  options'
minimum vesting requirements have been met.

                                       40
<PAGE>
A summary of the option activity is as follows:

                                                                     Weighted
                                              Number of              Average
                                               Options            Exercise Price
                                               -------            --------------
     Outstanding at March 31, 1999            2,350,000              $  3.44
     Granted                                     50,000              $  1.30
     Forfeited                                 (300,000)             $ (1.98)
                                             ----------

     Outstanding at March 31, 2000            2,100,000              $  3.52
     Granted                                  1,250,000              $  0.91
     Forfeited                                 (650,000)             $ (2.62)
                                             ----------

     Outstanding at March 31, 2001            2,700,000              $  2.53
     Granted                                    550,000              $  0.21
     Forfeited                                 (750,000)             $ (1.45)
                                             ----------

     Outstanding at March 31, 2002            2,500,000              $  2.35
     Granted                                    100,000              $  0.05
     Exercised                                 (300,000)             $ (0.05)
     Forfeited                               (1,200,000)             $ (3.14)
                                             ----------

     Outstanding at March 31, 2003            1,100,000              $  1.88
                                             ==========

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of March 31, 2003 is as follows:

              Options Outstanding                     Options Exercisable
   -------------------------------------------    ---------------------------
                                   Weighted
                                   Average
   Exercise                       Remaining
   Price Per     Number          Contractual         Number          Exercise
     Share      of Shares      Life (In Years)    Exercisable         Price
     -----      ---------      ---------------    -----------         -----
     $0.25       100,000             1.4                --            $0.25
     $1.00       500,000             3.0                --            $1.00
     $1.30       150,000              .8                --            $1.30
     $2.00       100,000              .2                --            $2.00
     $3.00       100,000              .2                --            $3.00
     $5.00       100,000              .1                --            $5.00

     $7.00        50,000              .2                --            $7.00
               ---------                            ------
               1,100,000             2.6                --               --
               =========                            ======

The stock options  issued to employees  have an exercise price not less than the
fair  market  value of the  Company's  common  stock on the  date of  grant.  In
accordance  with  accounting  for such options  utilizing  the  intrinsic  value

                                       41
<PAGE>
method,  there is no related  compensation  expense  recorded  in the  Company's
financial  statements  for  the  years  ended  March  31,  2003  and  2002.  Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates  consistent with the method of SFAS 123,
the  Company's  net loss for the years  ended March 31, 2003 and 2002 would have
been as  presented  in the pro forma  amounts in Note 1. There were no  employee
incentive stock options granted during the year end March 31, 2003.

--------------------------------------------------------------------------------
                                     NOTE 10
                                 CONCENTRATIONS
--------------------------------------------------------------------------------

Major suppliers for the Company  include the Japanese  company that produces the
SOLTRON(R)  enzyme  concentrate.  Supply of the SOLTRON(R)  concentrate could be
interrupted due to work stoppages,  strikes,  and  governmental or international
regulations.  The  solvent  used as the  suspension  agent  for  SOLTRON(R),  is
currently  supplied  by a major North  American  chemical  company.  If a supply
interruption  should occur, other readily available solvents can be substituted.
The specially  designed,  single measure  bottles for retail sales of SOLTRON(R)
are  currently  supplied  by a major  North  American  manufacturer.  All  other
materials for  production of  SOLTRON(R)  are available  from a variety of local
providers.

All  supplies for the  manufacture  of SP34E(TM)  are readily  available  from a
variety of manufacturers worldwide.

--------------------------------------------------------------------------------
                                     NOTE 11
                                  GOING CONCERN
--------------------------------------------------------------------------------

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company has experienced  significant  losses and negative cash
flows from operations for the year ended March 31, 2003,  which have resulted in
a deficiency in working capital of approximately  $529,000 as of March 31, 2003,
and an accumulated deficit of approximately $11,965,000.

There can be no  assurance  that the Company will be able to continue as a going
concern in view of its financial  condition.  The Company's  continued existence
will depend upon its ability to obtain sufficient additional capital in a timely
manner to fund its  operations  and to further  develop its  long-term  business
plan. Any inability to obtain additional  financing will have a material adverse
effect on the Company, including possibly requiring the Company to significantly
reduce or cease its operations.

These  factors  raise  substantial  doubt  about the  ability of the  Company to
continue  as a going  concern.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

                                       42
<PAGE>
ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

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

(a) Directors and Executive Officers

The directors and executive  officers of Solpower,  their ages and positions are
as follows:

            Name                      Age                Positions Held(1)
            ----                      ---                -----------------
     Fraser M. Moffat III             74             Director, Chairman
     James H.  Hirst                  57             Director, President, CEO

----------
(1)  All current directors serve until the next annual  shareholders  meeting or
     their earlier resignation or removal.

FRASER M. MOFFAT III, joined Solpower as a Director and Chairman of the Board in
May 1998. Since 1995, Mr. Moffat has primarily managed his personal investments.
From January 1985 through  February 1995, Mr. Moffat was First Vice President of
Institutional Sales at Lehman Brothers,  Inc. in Hamburg,  Germany. From October
1971 to December 1984,  Mr. Moffat was a Vice  President at Merrill Lynch,  Inc.
Previously,  Mr. Moffat served in the United States Navy from 1953 to 1956 where
he attained the rank of Lieutenant Commander. Mr. Moffat graduated from Williams
College in 1951 with a BA degree.

JAMES H. HIRST, has served as President and CEO since April,  2001. He served as
Secretary/Treasurer from March 2000 to April 2001, as Chief Executive Officer of
Solpower from  September 1997 to March 2000, as President from May 1998 to March
2000 and as a Director  from May 1998 to present.  Mr.  Hirst from March 1981 to
present has provided  consulting services to early stage companies in connection
with their operations,  financial  information systems and legal compliance.  In
1979,  Mr.  Hirst  received a Bachelor of Commerce  (Accounting  and  Management
Information Systems) degree from the University of British Columbia.

(b) Compliance with Section 16(a) of the Exchange Act

The following information relates to reports under Section 16(a) of the Exchange
Act that were not timely filed by officers,  directors and beneficial  owners of
10% or more of  Solpower's  common  stock during the fiscal year ended March 31,
2003. This  information is based on a review of Section 16(a) reports  furnished
to Solpower.

                                       43
<PAGE>
James H. Hirst  failed to timely  file a report on Form 4 related  to  3,000,000
shares received from Dominion  Capital and a transfer of 500,000 of these shares
to his children on February 20, 2003. A Form 5 to report the  delinquent  filing
was also not timely filed. The required report was filed on April 29, 2005.

Peter Voss failed to timely file reports on Form 4 related to two  transactions.
A Form 5 to report the delinquent filing was also not timely filed. The required
report was filed on May 5, 2005.

ITEM 10. EXECUTIVE COMPENSATION

The  following  table  reflects all forms of  compensation  for the fiscal years
ended March 31, 2003, 2002 and 2001 for the two highest paid officers.  No other
person  received  salary or bonus in excess of $100,000  for any of these fiscal
years.

                           SUMMARY COMPENSATION TABLE

                                                                     Long Term
                                         Annual Compensation       Compensation
                                                       Other           Stock
                               Fiscal                  Annual         Options
Name and Principal Position     Year     Salary     Compensation     (Shares)
---------------------------     ----     ------     ------------     --------
Mark S. Robinson (1)            2003       --             --              --
Chief Executive Officer         2002       --             --              --
                                2001       --       $171,885 (2)     500,000 (3)

James H. Hirst                  2003       --       $130,820              --
Chief Executive Officer         2002       --       $149,248              --
 & President                    2001       --       $197,773 (4)     500,000 (3)
Secretary/Treasurer

----------
(1)  Mr. Robinson resigned as a director and officer effective March 31, 2001.
(2)  Includes  $130,000 cash payments and $47,885 as stock grants for consulting
     services.
(3)  The  options  have not yet vested  and have been  allotted  pursuant  to an
     Option  Plan  with  requisite  vesting  requirements  to be  achieved.  Mr.
     Robinson's options were terminated on April 30, 2001.
(4)  Includes  $126,000 cash payments and $71,773 as stock grants for consulting
     services.

OPTION GRANTS

There were no grants of options to executive officers for the fiscal years ended
March 31, 2003 or 2002.

OPTION EXERCISES AND VALUES

The following table sets forth information  regarding the exercise and values of
options held by executive officers as of March 31, 2003.

                                       44
<PAGE>
                          AGGREGATE OPTION EXERCISES IN
               LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                                          Value of Unexercised
                                                                Number of Unexercised     In-the-Money Options
                                                              Options at March 31, 2003     at March 31, 2003
                       Shares Acquired                              Exercisable/              Exercisable/
    Name                on Exercise         Value Realized         Unexercisable             Unexercisable
    ----                -----------         --------------         -------------             -------------
<S>                            <C>                  <C>               <C>                         <C>
James H. Hirst                 0                    0                 0/500,000                   $0/$0
</TABLE>

EMPLOYMENT AGREEMENTS

Mr.  Robinson  and Mr.  Hirst were both  at-will  employees  in fiscal year 2002
although we have a verbal  understanding with them that their initial employment
terms would be three years each,  beginning in fiscal year 2001.  Base salary of
$126,000  has been set for Mr.  Hirst.  In  addition,  Mr.  Hirst is to  receive
options to purchase 500,000 shares at $1.00 per share,  subject to vesting,  and
stock grants initially of 50,000 shares and 10,000 shares per month  thereafter.
The stock grants to Mr. Hirst  commenced as of April 1, 2000.  The option grants
were  effective  April 7, 2000.  The stock grants to Mr. Hirst ceased  effective
March 31, 2001.

Mr. Hirst continued his employment during the fiscal year ended March 31, 2003.

DIRECTOR COMPENSATION

All  authorized  out-of-pocket  expenses  incurred by our directors on behalf of
Solpower are subject to reimbursement.

STOCK OPTION PLAN

In November  1997,  the Board of Directors  adopted a Stock Option and Incentive
Plan (the "PLAN"),  which the  shareholders  approved on November 22, 1997.  The
purpose  of the Plan is to  provide a means to  attract  employees  and  service
providers and to reward persons  responsible  for the successful  administration
and  management  of  Solpower.  Another  purpose of the Plan is to provide  such
persons with additional incentive and reward  opportunities  designed to enhance
profitable growth. So that the appropriate  incentive can be provided,  the Plan
provides for granting  options,  incentive  stock  options,  stock  appreciation
rights, restricted stock awards, performance shares and dividend equivalents, or
any combination of the foregoing.  In 1999, the Plan was amended by the Board of
Directors to increase the number of shares that can be granted under the Plan to
2,500,000 shares of Solpower common stock. In 2000, the Plan was further amended
by the board of  Directors  and  approved by the  shareholders  to increase  the
number of shares  that can be  granted  under  the Plan to  5,000,000  shares of
Solpower $0.25 to $7.00 per share.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table sets forth,  as of March 31, 2003,  the  ownership of each
person  known by us to be the  beneficial  owner of five  percent or more of our
Common  Stock,  each  officer and  director  individually,  and all officers and

                                       45
<PAGE>
directors as a group.  We have been advised that each person has sole voting and
investment power over the shares listed below unless otherwise indicated.

Name and Address                              Amount and Nature       Percent of
of Beneficial Owner                             of Ownership           Class (1)
-------------------                             ------------           ---------
Fraser M.  Moffat III (2)
18 Lake Avenue
Montrose, Pennsylvania                             35,826                 (3)

James H.  Hirst (2)
7309 East Stetson Drive
Scottsdale, Arizona                             2,630,100 (4)             5.3%

Naoya Yoshikawa (2)
2-16-42 Takanawa
Minato-Ku, Japan                                3,000,100                 6.1%

Power Business Co Ltd. (5)
2-16-42 Takanawa
Minato-Ku, Japan                                3,000,000                 6.1%

PICO Holdings, Inc. (6)
875 Prospect Street, Suite 301
La Jolla, California 92037                      2,500,000                 5.1%

Australian Agricultural and Property
Management Pty Ltd. (7)
c/o 13 Malcolm Court
Mt.  Waverly, Victoria 3189
Australia                                       6,146,910                12.5%

Greg Stewart
307 East 22nd Street
San Pedro, CA 90731                             2,942,000 (8)             6.0%

Peter Voss (9)(10)
39 De Havilland Road
Mordialloc 3195
Victoria, Australia                             9,531,194                19.4%

K. M. Voss (11)
39 De Havilland Road Mordialloc 3195
Victoria, Australia                             3,000,000                 6.1%

                                       46
<PAGE>
Name and Address                              Amount and Nature       Percent of
of Beneficial Owner                             of Ownership           Class (1)
-------------------                             ------------           ---------

Dominion Capital Japan Pty Ltd. (9)(10)
39 De Havilland Road
Mordialloc 3195
Victoria, Australia                             2,627,000                 5.3%

Les Woolridge (11)
Victoria
Australia                                       3,000,000                 6.1%

All Directors and Officers
as a Group (5 persons)                          3,165,926                 6.4%

----------
(1)  Based upon  49,212,127  shares of common stock being issued and outstanding
     on March 31, 2003.
(2)  Mr. Hirst has been granted options to purchase up to an additional  500,000
     shares of common  stock at $1.00 per  share  upon the  market  price of the
     common stock attaining certain levels.  Mr. Moffat has been granted options
     to purchase up to 350,000  shares of common  stock at prices  ranging  from
     $2.00  to $7.00  per  share  upon the  market  price  of the  common  stock
     attaining  certain  levels.  Mr.  Yoshikawa  has been  granted  options  to
     purchase up to 100,000  shares of common stock at prices ranging from $3.00
     to $7.00 per share upon the  market  price of the  common  stock  attaining
     certain level,  these options expired on March 4, 2003.  These options have
     not vested,  are not  exercisable  until vested and are not included in the
     total above.
(3)  Less than 0.1%
(4)  Includes 130,000 shares issuable under a deferred compensation arrangement.
     Also  includes  500,500  shares held by Mr.  Hirst's  wife.  Total does not
     include  500,000  shares held by Mr.  Hirst's  adult  children.  Mr.  Hirst
     disclaims  all  beneficial  ownership  of the  shares  held  by  his  adult
     children.
(5)  Power  Business  Co  Ltd  is  a  Japanese  corporation  controlled  by  Mr.
     Yoshikawa.
(6)  PICO Holdings, Inc. is a diversified holding company listed on NASDAQ under
     trading symbol PICO.
(7)  Australian  Agricultural  Management Pty Ltd. is an Australian  corporation
     controlled by Nick Corcoris.
(8)  Mr. Stewart  controls Purse Seine Soma,  Inc.,  which holds 100,000 shares.
     The total includes  warrants to purchase 250,000 common shares at $0.20 per
     share.
(9)  Mr. Voss controls  Dominion  Capital Japan Pty Ltd.,  which holds 2,627,000
     shares,  A1 Financial  Planners  Pty Ltd.,  which holds  1,140,200  shares,
     Intavest Pty Ltd., which holds 1,550,000  shares,  Bio Engineering Pty Ltd.
     which holds 394,244 shares and Dominion Capital,  Inc., which holds 370,000
     shares.  The total reflected  includes  3,300,000  shares held by Mr. Voss'
     wife and two adult  children and in which Mr. Voss disclaims all beneficial
     interest.
(10) Dominion  Capital Pty Ltd.  has been  granted an option to acquire  750,000
     shares of common stock at prices ranging from $2.50 to $5.00 per share upon
     Soltron(R) sales revenues attaining certain levels.  These options have not
     vested,  are not exercisable until vested and are not included in the total
     above.
(11) Ms. Voss and Mr.  Woolridge were the  shareholders of Virtual  Technologies
     (Australia) Pty Ltd., which was acquired by Solpower in January 2003.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On November 4, 1996,  we entered into an  Acquisition  Agreement  with  Dominion
Capital for the  acquisition  of the  exclusive  North  American  manufacturing,
distribution,  marketing and sales rights  SOLTRON(R).  The original term of the
agreement was for five years and provided that we issue 5,000,000  shares of our
common  stock,  issue  preferred  stock and grant  certain  options to  Dominion
Capital as consideration  for these rights. On November 22, 1997 we renegotiated
the terms of the Acquisition Agreement to extend its term for an additional five
year  period and  eliminate  the  required  option  grants and  preferred  share
issuances.  The amended agreement provided that options and performance  bonuses

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<PAGE>
would be payable to Dominion  Capital as follows:  (i) upon gross  revenues from
sales of SOLTRON(R)  equaling  $10,000,000,  Dominion  Capital has the option to
purchase  100,000 shares at $2.50 per share,  plus a cash  performance  bonus of
$400,000;   (ii)  upon  gross   revenues  from  sales  of  SOLTRON(R)   equaling
$20,000,000, Dominion Capital has the option to purchase 150,000 shares at $3.50
per share,  plus cash performance  bonus of $400,000;  (iii) upon gross revenues
from sales of SOLTRON(R) equaling  $50,000,000,  Dominion Capital has the option
to purchase 250,000 shares at $4.50 per share,  plus cash  performance  bonus of
$500,000;  and (iv)  upon  gross  revenues  from  sales of  SOLTRON(R)  equaling
$100,000,000,  Dominion  Capital  has the option to purchase  250,000  shares at
$5.00 per share, plus a cash performance bonus of $1,000,000.  Effective May 13,
1998 we entered into an addendum to the  Acquisition  Agreement in which we were
granted  a right  of  first  refusal  to  acquire  manufacturing,  distribution,
marketing and sales rights to SOLTRON(R)  in all other  territories  (other than
Japan) where  SOLTRON(R)  and certain other  products and services are currently
being commercialized by Dominion Capital.

On November 4, 1996, we issued  3,520,000 shares of our common stock to Dominion
Capital  at a price of  $0.125  per  share.  On  April 1,  1997,  we  issued  an
additional  4,160,000 shares of our common stock to Dominion Capital in exchange
for  cancellation  of  advances  payable  to  Dominion  Capital in the amount of
$520,000 ($0.125 per share).

On June 17, 1998, we entered into a second  Acquisition  Agreement with Dominion
Capital for the  acquisition  of the  exclusive  North  American  manufacturing,
distribution,  marketing  and  sales  rights  to  SP34E(TM).  We agreed to issue
6,000,000  shares  of our  common  stock  and pay a  royalty  of $2.25  for each
kilogram  of  SP34E(TM)  sold in North  America.  The  term of this  Acquisition
Agreement is for five years,  beginning when we achieve  specified sales volumes
of  SP34E(TM).  We have an option to extend  the term of this  agreement  for an
additional five years. Effective January 1, 1999, we entered into an addendum to
the Acquisition Agreement delaying the commencement of the Acquisition Agreement
until we achieve certain sales volumes of SP34E(TM),  but not later than July 1,
2000.

On July 1, 1998,  we  entered  into a Client  Service  Agreement  with  Dominion
Capital,   Inc.  (formerly  Dominion  Capital  Securities,   Inc.),  an  Arizona
corporation  ("DCI"),  for the  provision  of all of our  required  investor and
corporate communications services. DCI is wholly-owned by Mr. Peter Voss, who is
also one of our directors and the controlling  shareholder of Dominion  Capital,
our  principal  shareholder.  The term of the  agreement is renewable  every six
months. For its services,  DCI initially received $275,000 of which $125,000 was
paid in cash with the balance paid with 50,000  shares of our common  stock.  We
renewed our agreement with DCI in  consideration  of monthly payments of $30,000
per month for six  months,  payable  $90,000 in cash and by  issuance  of 90,000
shares of common stock for services  rendered through December 31, 1999. We have
agreed to make  payments  of $15,000 per month,  payable  $60,000 in cash and by
issuance of 30,000 shares of common stock for services for the period of January
2000 through June 2000. Effective December 31, 2000, we terminated the agreement
with Dominion Capital, Inc., and settled all outstanding amounts by the issuance
of 125,000  shares of common  stock to Trond  Matteson,  an employee of Dominion
Capital,  Inc.;  the  issuance  of 250,000  shares of common  stock to  Dominion
Capital,  Inc., and the issuance of a warrant to Dominion Capital,  Inc., to buy
250,000 shares of common stock at $0.40 per share expiring on December 31, 2002.

On September 30, 1999,  we issued  $680,000 in 6%  Convertible  Notes Payable to
Dominion  Capital and a total of  $265,000 of these notes to two other  entities
controlled  by Peter Voss as  consideration  for prior  advances  and payment of

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<PAGE>
certain of our operating expenses.  These notes were convertible into our common
stock at $0.50 per share and were  converted  to  1,950,000  shares on April 28,
2000.

On December  31,  1999,  we issued a $200,000  6%  Convertible  Note  Payable to
Dominion Capital as  consideration  for prior advances and payment of certain of
our operating expenses. This note was convertible into our common stock at $0.40
per share and was  converted to 500,000  shares of our common stock on April 28,
2000.

On December  29,  2000,  we issued  482,260  shares of common  stock to Dominion
Capital and 814,294 to two other  entities  controlled  by Mr.  Peter Voss.  The
shares were issued at $0.25 per share in  cancellation  of accounts  payable for
cash advances and product purchases.

Effective  January 31, 2003, the Company acquired 100% of the outstanding  stock
of  Virtual   Technologies   (Australia)  Pty  Ltd.  As  consideration  for  the
acquisition,  the Company issued 6,000,000 shares of restricted  common stock to
the  shareholders of Virtual  Technologies.  3,000,000 shares were issued to Les
Woolridge, the manager of Virtual Technologies, and 3,000,000 shares were issued
to K. M. Voss, the wife of Peter Voss, the  controlling  shareholder of Dominion
Capital Pty Ltd.

On February 20, 2003, the Company  acquired the worldwide  rights to the product
SOLTRON(R) by the issuance of 9,000,000 restricted shares of its common stock to
Dominion  Capital Pty Ltd. At Dominion  Capital's  direction  these  shares were
issued as follows:  3,000,000  shares to Greg Stewart (of which 2,000,000 shares
were issued to Greg Stewart and 1,000,000  shares were issued directly to others
at Mr. Stewart's  direction);  3,000,000 shares to James H. Hirst; and 3,000,000
shares to Power Business Co Ltd., an entity controlled by Naoya Yoshikawa.

Our general policy for entering into transactions  with directors,  officers and
affiliates  that have a financial  interest in the  transaction  is to adhere to
Nevada corporate law regarding the approval of such transactions.  In general, a
transaction between a Nevada corporation and a director, officer or affiliate of
the  corporation  in which such person has a  financial  interest is not void or
voidable if the interest is disclosed and approved by disinterested directors or
shareholders or if the transaction is otherwise fair to the corporation.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

     2.1(1)     Articles of Merger,  merging Virtual  Technologies  Inc., a Utah
                corporation,   into   Virtual   Technologies   Inc.,   a  Nevada
                corporation, dated July 26, 1996.

     2.2(1)     Plan of  Merger of the  Company,  merging  Virtual  Technologies
                Inc.,  a Utah  corporation  into  Virtual  Technologies  Inc., a
                Nevada corporation, dated July 19, 1996.

     3.1(1)     Restated Articles of Incorporation of Solpower Corporation dated
                November 24, 1997.

                                       49
<PAGE>
     3.2(1)     Amended  and  Restated  Bylaws  of  Solpower  Corporation  dated
                November 24, 1997.

     10.1(1)    Acquisition  Agreement  dated November 4, 1996 between  Dominion
                Capital  Pty  Ltd.  and  Virtual  Technologies,   Inc.  for  the
                Distribution & Manufacturing Rights of SOLTRON Product.

     10.2(1)    Acquisition   Agreement   amendment   dated  November  24,  1997
                outlining  clarifications and extensions of original Acquisition
                Agreement dated November 4, 1996.

     10.3(1)    Addendum to Acquisition Agreement dated May 13, 1998.

     10.4(1)    Acquisition  Agreement  dated  June 17,  1998  between  Dominion
                Capital Pty Ltd. and Solpower  Corporation for the  Distribution
                and Manufacturing Rights of SP34E Product.

     10.12(1)   Solpower  Corporation  Stock  Option  and  Incentive  Plan dated
                November 22, 1997.

     10.16(1)   Client  Services  Agreement  between  Solpower  Corporation  and
                Dominion Capital Securities, Inc. dated July 1, 1998.

     10.17(2)   Addendum  to  June  17,  1998  Acquisition  Agreement  effective
                January 1, 1999.

     10.29(3)   Amendment to Lease between Arizona  Industrial  Capital,  LP and
                Solpower Corporation dated December 15, 2000.

     10.39(4)   Agreement  for Sale of Formula and Know-How  between  Stephen J.
                Kraynak and Solpower Corporation dated August 28, 2001.

     10.40      Agreement between Virtual Technologies  (Australia) Pty Ltd. and
                A-Gas  (Australia) Pty Ltd., dated August 20, 2002,  relating to
                the Australia and New Zealand  production  and  distribution  of
                SP34E(TM).

     10.41      Acquisition  Agreement between Virtual Technologies  (Australia)
                Pty Ltd. and Dominion  Capital Pty Ltd.,  effective  January 31,
                2003,  relating to the worldwide  rights to  SP34E(TM)and  other
                related refrigerant gases.

     10.42      Acquisition  Agreement between Solpower Corporation and Dominion
                Capital  Pty Ltd.,  dated  February  20,  2003,  relating to the
                acquisition of worldwide rights to SOLTRON(R).

     21.1       Subsidiaries

     31         Certifications  required by Rule 13a-14,  as adopted pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

     32         Certification   of  Chief   Executive   Officer  and   Principal
                Accounting  Officer  pursuant  to 18  U.S.C.ss.1350,  as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

----------
(1)  Incorporated by reference from Solpower's Form 10-SB as filed on August 21,
     1998.
(2)  Incorporated by reference from Solpower's Form 10-KSB as filed on September
     24, 1999.
(3)  Incorporated  by reference from Solpower's Form 10-QSB as filed on February
     20, 2001.
(4)  Incorporated  by  reference  from  Solpower's  Form  10-QSB/A  as  filed on
     December 10, 2001.

(b) Reports on Form 8-K.

None.

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

                                      SOLPOWER CORPORATION


Dated: May 25, 2005                   By /s/ James H.  Hirst
                                         ---------------------------------------
                                         James H. Hirst, Chief Executive Officer

                                      BOARD OF DIRECTORS


Dated: May 25, 2005                      /s/ Fraser M Moffat III
                                         ---------------------------------------
                                         Fraser M.  Moffat III, Chairman


Dated: May 25, 2005                      /s/ James H.  Hirst
                                         ---------------------------------------
                                         James H.  Hirst

                                       51