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, 2000

[ ]  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.)


7309 East Stetson Drive, Suite 102, Scottsdale, Arizona           85251
      (Address of Principal Executive Offices)                  (Zip Code)

                                 (480) 947-6366
                           (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 [X[ No [ ]

     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 its most recent fiscal year were $280,309.

     The  aggregate  market  value of the common  stock  held by  non-affiliates
computed  based on the  closing  price  of such  stock  on  March  31,  2000 was
approximately $17,151,125.

     The  number of shares  outstanding  of the  registrant's  classes of common
stock, as of March 31, 2000 was 27,316,066.

     Documents incorporated by reference: None

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
                                     PART I

     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 (the "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 regarding future events and the
Company's  plans and  expectations.  Wherever  possible,  we have identified the
forward-looking   statements  by  words  such  as   "ANTICIPATES,"   "BELIEVES,"
"CONTEMPLATES,"   ESTIMATES,"   "EXPECTS,"   "INTENDS,"   "PLANS,"   "PROJECTS,"
"FORECASTS" and similar expressions.

     Our forward-looking  statements reflect only our current views with respect
to future events and financial  performance  or operations  and speak only as of
the date the statements are made. Our actual results may differ  materially from
such  statements.  Factors  that may  cause or  contribute  to such  differences
include,  but are not limited to, those  discussed in "DESCRIPTION OF BUSINESS -
FACTORS AFFECTING FUTURE PERFORMANCE" and "MANAGEMENT'S  DISCUSSION AND ANALYSIS
OF FINANCIAL  CONDITION AND RESULTS OF  OPERATIONS,"  as well as those discussed
elsewhere herein and in the exhibits hereto and incorporated by reference.

     Although we believe that the  assumptions  underlying  the  forward-looking
statements herein are reasonable,  any of the assumptions could prove inaccurate
and, therefore,  there can be no assurance that the results contemplated in such
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 such forward-looking information should not be regarded as
a  representation  by the Company or any other  person  that the future  events,
plans or expectations  contemplated by the Company will be achieved. We disclaim
any  obligation to  subsequently  revise  forward-looking  statements to reflect
subsequent events or circumstances or the occurrence of unanticipated events.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

     We  are  in  the  business  of  producing,  marketing  and  distributing  a
proprietary enzyme-based fuel enhancing product,  SOLTRON(TM), and an ozone safe
alternative refrigerant,  SP34E(TM). Our business plan contemplates distribution
of these products throughout the United States, Canada and Mexico. We distribute
SOLTRON(TM)  through  traditional  channels,  including  fuel  wholesalers,  oil
distributors for bulk treatment and marine and automotive  after-market  stores,
and directly to end users.  Manufacturing  of  SP34E(TM)  commenced in Canada in
May, 1999 and we expect  distribution  to be through  wholesale  distributors of
refrigeration  products and  automotive  aftermarket  air  conditioning  service
centers. We also have the right to acquire certain other international  Solpower
operations and marketing territories.

     We were  originally  incorporated  in Utah in 1982  with the name  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. We ceased those  operations in 1988 and
remained dormant until 1995, at which time we acquired the marketing rights to a
virtual  reality  motion  based  simulator  and  changed  our  name  to  Virtual
Technologies,  Inc.  In July  1996,  we merged  into a  newly-formed  subsidiary
incorporated  in Nevada in order to change our  domicile to the State of Nevada.
During the fiscal year ended March 31, 1997, we sold the motion based  simulator
contract and related assets.
<PAGE>
     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(TM) in the United States,
Canada  and  Mexico.  As a result of  entering  into this  licensing  agreement,
Dominion  Capital  and its  affiliates  gained  control of the Company 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.

PRODUCTS

     SOLTRON(TM).  SOLTRON(TM) 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 fossil
fuels,  SOLTRON(TM) 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(TM)
changes the fuel's  molecular  structure and improves its oxygen  absorption and
combustion efficiency.  The enzymes contained in SOLTRON(TM)  essentially "FEED"
on the contaminants that cause fuel degradation. SOLTRON(TM) can be added to all
liquid fossil fuels including  gasoline,  diesel and light and heavy oils either
at the fuel pump or in bulk fuel tanks.  We are  continuing to conduct field and
objective  laboratory testing of SOLTRON(TM) and we are developing a database of
independent  test data  regarding the effects of use of  SOLTRON(TM) as a fossil
fuel additive.

     We are marketing  SOLTRON(TM)  in North America as a natural enzyme product
that will reduce emissions,  improve fuel economy and reduce engine maintenance.
SOLTRON(TM)  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.

     SP34E(TM).   SP34E(TM)  is  a   refrigerant   developed  in  Japan  by  the
Kinoh-Kinzohu   Company  as  a  replacement  for   ozone-depleting   fluorinated
refrigerants  commonly  used  today.  SP34E(TM)  is  currently  sold  in  Japan,
Australia and other Asian rim countries. We currently market SP34E(TM) in Canada
and will commence  marketing in the United States upon  obtaining  Environmental
Protection Agency approvals,  expected by October 2000. See, "REGULATION" below.
Applications  of this  product  include  automotive,  domestic,  commercial  and
transport  refrigeration and air conditioning systems as an alternative to Freon
(R-12) and other fluorinated refrigerants.  SP34E(TM) generally does not require
replacement  of mechanical  components or removal of mineral oils that are found
in older refrigeration  systems and it has a lower discharge pressure and a much
shorter atmospheric life span than other commonly used refrigerants.

     SP34E(TM) is currently  marketed to various  companies  in  Australia,  New
Zealand,  Japan and Canada.  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 R-12 in mineral oil based refrigerant
applications.  In March of 1999,  the Company  entered into a joint venture with
Protocol  Resource  Management,  Inc., a Canadian  company,  to manufacture  and
distribute  SP34E(TM) in Canada.  Sales of SP34E(TM)  did not commence in Canada
until the summer of 2000.

SUPPLIERS

     SOLTRON(TM)  consists of natural  organic  enzymes mixed with low odor base
solvent.  The enzyme  concentrate  used in the  manufacture  of  SOLTRON(TM)  is
produced  exclusively  by Neway  Japan K.K. of Tokyo,  Japan and  supplied to us
through our  licensing  agreement  with Dominion  Capital.  Neway Japan K.K. has

                                       3
<PAGE>
informed us that it currently has sufficient  inventory of enzyme concentrate on
hand to supply  our  anticipated  needs  through  2000 and  2001.  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.

     The  components of SP34E(TM) are not unique and are readily  available from
numerous local and national suppliers.

MARKETING STRATEGIES

     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 distribution and industrial.  We believe
that  SOLTRON(TM)  is able to greatly  benefit  fuel  consumers  in all of these
markets.

     The  United  States   Environmental   Protection  Agency  ("EPA")  recently
quadrupled the 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 propane or natural gas. New regulations such as
restricted  hours of service  are also being  considered.  We believe  that this
increased  regulation  will create  opportunities  for  consumer  acceptance  of
SOLTRON(TM) and we are focusing on all North American markets.  Our objective is
to penetrate  the fuel  treatment  market and increase fuel  treatment  usage of
SOLTRON(TM) over a five year period while establishing  consumer  recognition of
the SOLTRON(TM) brand name. We intend to exploit our SOLTRON(TM)  manufacturing,
marketing, sales and distribution rights in the United States, Canada and Mexico
initially through the appointment of distributors.

     Until  recently,  we  were  party  to  licensing  agreements  with  Masters
Marketing Group,  Inc. for the Great Lakes Territory (Ohio,  Indiana,  Michigan,
Illinois  and  Wisconsin),  Solpower  Southeast  Corporation  for the  Southeast
Territory (Alabama,  Arkansas,  Florida, Georgia, Louisiana and Mississippi) and
with Houston Mercantile Exchange,  Inc. for the South (Oklahoma,  New Mexico and
Texas) and Mexico  Territories.  We terminated  these licensing  arrangements in
May,  September  and November of 1999,  respectively,  and we now manage all our
manufacturing and distribution systems at the company level, with no outsourcing
or licensing to third parties. See "NOTES TO THE FINANCIAL STATEMENTS - Note 2."
We are currently marketing  SOLTRON(TM) using traditional  marketing channels to
develop sales and product awareness.

     We  began  distribution  of  SOLTRON(TM)  in June  1998.  We are  currently
utilizing oil  marketers,  independent  sales  representatives  and direct sales
activities to provide a focused marketing  effort,  which we believe will expose
SOLTRON(TM)  directly to prospective  customers.  We also  anticipate  utilizing
other traditional  distribution  channels including an Internet Web site, resale
distribution  through small retail  chains,  resale  distribution  through large
retail chains, mass merchandising,  multi-level  free-enterprise  systems,  home
network sales,  catalogue and direct  mailing,  and  telemarketing  to develop a
national  marketing effort.  Our goal is to successfully  penetrate and create a
substantial demand for SOLTRON(TM) in each user market segment.

     We employ an area sales  manager for the southern  California  region whose
sales orders are serviced from our Phoenix,  Arizona production facility. We are
developing new and improving  existing  products through direct contact with end
users.  Other activities to promote our products include the  identification and
development of operations, marketing, accounting and administrative systems, all
of which we also hope will  increase  our  efficiency,  the  establishment  of a
corporate  communications  system  supported by an in-house  desktop  publishing
department and redesign and upgrade of our corporate  image with new logos,  web
site,  product brochures,  trade show materials,  product labeling and packaging
and all related marketing materials.

                                       4
<PAGE>
     SP34E(TM) is a near "DROP-IN"  refrigerant that replaces R-12  refrigerants
in mineral oil based refrigerant applications.  SP34E(TM) can, in most cases, be
used  simply  in  place  of   conventional   refrigerants,   without   requiring
modifications to the refrigeration or cooling equipment. Refrigerants are widely
used  in  motor  vehicle   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.  HFCs,
however,  are generally less effective as a refrigerant  than CFCs or HCFCs.  We
intend to market  SP34E(TM)  as an  environmentally  safe  replacement  for R-12
refrigerants with greater efficiency and less environmental impact.

     We have entered into a joint  venture with  Protocol  Resource  Management,
Inc.  ("PROTOCOL")  of Aurora,  Ontario  Canada,  to manufacture  and distribute
SP34E(TM)  in Canada.  Protocol was founded in 1993 and provides a full range of
refrigerant  management  services.  It has expanded to become the largest R-134a
repackaging  operation  in Canada  and has  established  a number of  innovative
refrigerant programs for some of the largest original equipment manufacturers in
the Canadian and U.S. refrigerant industry. We anticipate developing a marketing
strategy for certain  market  segments and that we will also market this product
directly.  The joint venture is a Canadian  corporation  equally owned by us and
Protocol.

PRODUCT RIGHTS ACQUISITION AGREEMENTS

     In 1996, we acquired the exclusive rights to produce, market and distribute
SOLTRON(TM)  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  is for a period of five years and may be renewed at our option for an
additional   five  year  term.  We  also  have  a  right  of  first  refusal  to
commercialize SOLTRON(TM) and other products controlled by Dominion Capital on a
global  basis,  except  Japan,  on  terms to be  negotiated  on a  territory  by
territory and product by product basis.

     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 of SP34E(TM)  that we sell.
The  initial  term of the  agreement  was for five years and was amended in June
1999 to commence on the date we first achieved sales of SP34E(TM)  sufficient to
establish a predictable growth rate or July 1, 2000,  whichever came first. This
agreement may also be renewed for an additional five years at our option.

PROPRIETARY RIGHTS

     We  rely  on  a  combination   of  trade  secret  and  copyright  laws  and
confidentiality  and  non-compete   agreements  to  establish  and  protect  our
proprietary rights in our products.  However, there can be no assurance that any
confidentiality  or  non-compete  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  applied  with  the  United  States  Patent  and  Trademark  Office
("USPTO")  for a  trademark  registration  for  SOLTRON(TM)  and  have  received
acceptance for service mark  registration  for the mark  SOLPOWER.  We have also
registered  SOLTRON(TM) with the EPA for use as an aftermarket  additive and for
bulk fuel treatment.  Dominion  Capital has applied with the USPTO for trademark
registration for SP34E(TM).

                                       5
<PAGE>
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
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(TM)  include  STP Gas  Treatment,  STP  Diesel  Treatment  and STP Smoke
Treatment  (all  produced by First  Brands  Corporation),  Slick 50 (produced by
Slick 50 Products Corporation), Valvtect VT-5000 (produced by Valvtect Petroleum
Products Corp.) and Fuelon (produced by Fuelon International,  Inc.). We believe
that we can  successfully  compete with these  products and  penetrate  the fuel
additive market due to the unique environmentally  friendly  characteristics and
multi-function    applications    of   SOLTRON(TM).    See,    "DESCRIPTION   OF
BUSINESS-PRODUCTS" above.

     With  respect to  SP34E(TM),  we will compete  with  numerous  national and
international  companies  that  produce  refrigerants,   including  DuPont,  Elf
Autochem,  ICI 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.

     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.

PRODUCTION FACILITIES

     Our primary production facility is housed in an approximately 12,000 square
foot  industrial  facility  in Phoenix,  Arizona.  This  facility  serves as our
production,  warehousing and distribution plant for SOLTRON(TM),  as well as our
sales  office.  The facility has capacity to produce up to 1,000,000  gallons of
SOLTRON(TM) per year and is currently being expanded to increase our capacity to
3,000,000  gallons  of  SOLTRON(TM)  per  year.  We expect  that this  increased
capacity will meet our needs for SOLTRON(TM)  into the foreseeable  future.  See
"DESCRIPTION OF PROPERTY" and "NOTES TO THE FINANCIAL STATEMENTS - Note 5."

     Our SP34E(TM)  product is currently  produced in Canada by Protocol through
our joint venture with it AT  Protocol's  facilities.  We  anticipate  that this
production  arrangement will produce  sufficient product for the Canadian market
in the foreseeable future.

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

                                       6
<PAGE>
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.  Since our products  utilize  chemicals  that are  classified  under
applicable  laws as combustible and hazardous  chemicals or substances,  we have
incurred costs of approximately  $300,000 to ensure that the Phoenix facility is
in compliance with state and local  requirements  for the chemicals  utilized in
the production of SOLTRON(TM). In addition, we also 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(TM) 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(TM).

     We have 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).  We anticipate this approval  process will BE completed by October
2000. Once EPA/SNAP approval has been obtained,  we intend to commence marketing
SP34E(TM) IN the United States.

     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.

EMPLOYEES

     At June 1, 2000,  we  employed  six full time  personnel,  including  three
administrative,  one production and two marketing  employees.  Our employees are
not  covered  by  any  collective  bargaining  agreements  and we  consider  our
relationship with our employees to be good.

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(TM)  and we are still in the process of
developing our marketiNG strategies with respect to SP34E(TM).

     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.

                                       7
<PAGE>
     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 in the past, there can be no assurance that Dominion  Capital's
investments in our business 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 such financing is obtained, no assurance can be given that such
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 supply customer demand for SOLTRON(TM) will
be critical to our success.  We  anticipate  developing  this netwoRK  primarily
through traditional marketing channels,  such as distributors,  in the fuel, oil
chemical and automotive aftermarket industries.  We have not yet implemented our
strategies  with  respect to  SP34E(TM).  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(TM) and have
only just recently  commenced  marketing our second  producT,  SP34E(TM).  As is
typical  with new  products,  demand and market  acceptance  for our products is
subject to a high 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
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 only two products,  SOLTRON(TM) 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 and develop  additional
products to meet consumer approval.

     SUPPLY, CAPACITY AND DISTRIBUTION  CONSTRAINTS.  To successfully market our
products,  we must be able to fill orders promptly for our sales. 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  as well as the ability of our sole  supplier to
adequately  produce  the  chemicals  needed to  produce  SOLTRON(TM)  in volumes

                                       8
<PAGE>
sufficient to meet demand. Failure to adequately supply products to distributors
aND  retailers  or of our supplier 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(TM).  This concentrate
will be  subject  to price  fluctuations  based  upon  supply aND demand of such
product. In addition,  because the product is produced in Japan, fluctuations in
currency  values could  adversely  affect our cost.  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  supplier.  Any increase in the costs of our raw
materials or disruption of our supplier 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 executive officers,  Mark S. Robinson
and James H. Hirst. We have employment agreements in place with Messrs. Robinson
and Hirst,  but we do not  maintain  key man life  insurance  on either of them.
There can be no assurance  that we will not lose the benefit of their  services.
The loss of Mr.  Robinson's or 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 rapid growth in the future,  which will
require effective management of all aspects of our business.  If achieved,  this
rapid  growth  will  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 and  refrigerants  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 anyone
else's  proprietary  rights,  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

                                       9
<PAGE>
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 such  agreements  would be enforced by a court or that they would
provide us with any  meaningful  protection.  There can be no assurance  that we
will be able to  adequately  protect our trade  secrets or that other  companies
will not acquire information that we consider proprietary.

     PRODUCT  ACQUISITION  AGREEMENT.  Our rights to manufacture  and distribute
SOLTRON(TM)  and  SP34E(TM),  as  weLL  as  the  process,   formulae  and  other
proprietary   rights  related  to  such  products,   are  contained  in  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. Additionally,
our rights with respect to our products  under these  agreements  are limited to
terms of five years, each of which are extendable.

     NEED FOR ADDITIONAL  PRODUCT  DEVELOPMENT.  We believe that our development
work on  SOLTRON(TM)  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 SOLTRON(TM) and SP34E(TM) will result
in the need for further  refinement  of these  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 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.  Our  principal
shareholder,  Dominion Capital,  and its affiliates own or control a substantial
block of our outstanding common stock. Accordingly,  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. Dominion Capital is domiciled in Australia and
if we or our shareholders were to bring legal action against it, its domicile in
a foreign  country may prevent it from being subject to jurisdiction of a United
States  court.  While  we or our  shareholders  may be able to  proceed  against
Dominion  Capital in an  Australian  court,  such  actions may be  prohibitively
expensive and an Australian  court may not recognize  claims or provide remedies
similar to those available in United States courts.

     INTERNATIONAL  TRADE.  We anticipate  selling  SOLTRON(TM) and SP34E(TM) in
both Canada and Mexico, as weLL as importing SOLTRON(TM) 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 U.S. and foreign import and export laws
and  regulations,  increases in tariffs,  customs,  foreign tax  liabilities and
other  adverse U.S. 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.

                                       10
<PAGE>
     SECURITIES  LAW  COMPLIANCE.  We have  been  involved  in  several  complex
transactions and offerings of our securities.  While we believe we have complied
with all applicable  securities  laws, there can be no assurance that compliance
defects will not be alleged by the Securities and Exchange  Commission or one or
more of our shareholders.  Our current management's involvement with the Company
began in November 1996 or even more recently in some cases.  While management is
not aware of any  failures by the Company to comply with  applicable  securities
laws prior to  November  1996,  they are not aware of  everything  that may have
occurred  prior  to  that  time  and  no  assurance  can  be  given  that  prior
transactions  were in compliance  with applicable  federal and state  securities
laws or that a claim with  respect to  non-compliance  will not be made.  We may
incur costs to defend any such claims which could severely affect our operations
and financial condition.

ITEM 2. DESCRIPTION OF PROPERTY

     We currently lease  approximately  1,400 square feet of office space, which
we  use as our  corporate  offices  at  7309  East  Stetson  Drive,  Suite  102,
Scottsdale, Arizona 85251 on a month-to-month basis. Current rental payments are
approximately $2,000 per month.

     We also lease approximately 12,000 square feet of space at 4247 West Adams,
Suite 2, Phoenix, Arizona 85009, which houses our manufacturing, warehousing and
distribution  plant and serves as our  corporate  sales  office.  Monthly  lease
payments are approximately $4,900 and the lease expires on September 14, 2002.

ITEM 3. LEGAL PROCEEDINGS

     We have been and  currently  are  involved  in  various  legal  proceedings
arising in the normal  course of business.  While the ultimate  outcome of these
various legal proceedings cannot be predicted with certainty,  it is the opinion
of  management  that the  resolution  of these  legal  actions  should  not have
material  effect on our financial  position,  results of operation or liquidity.
There are no legal proceedings pending, or to our knowledge,  threatened,  which
we expect to have any material impact on our business.

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

     None.

                                       11
<PAGE>
                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our  common  stock is traded on the OTC  Bulletin  Board  under the  symbol
"SLPW." The following table sets forth the quarterly high and low bid prices per
share for the common stock, as reported by the OTC Bulletin Board for the fiscal
years  indicated.  On March 31, 2000,  there were  approximately  350 beneficial
holders of our common stock.


FISCAL YEAR         QUARTER ENDED                   HIGH             LOW
-----------         -------------                   ----             ---
1998                June 30, 1997                  $1.50            $1.50

                    September 30, 1997             $0.4062          $0.4062

                    December 31, 1997              $0.625           $0.625

                    March 31, 1998                 $2.75            $2.625

1999                June 30, 1998                  $3.50            $2.25

                    September 30, 1998             $2.687           $1.375

                    December 31, 1998              $2.50            $1.187

                    March 31, 1999                 $2.625           $1.281

2000                June 30, 1999                  $2.125           $1.25

                    September 30, 1999             $1.75            $1.125

                    December 31, 1999              $1.1562          $0.25

                    March 31, 2000                 $1.75            $0.375

     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.

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.

                                       12
<PAGE>
     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

     Although we continue to report  significant  losses,  the current  trend of
increasing  SOLTRON(TM) produCT sales and the introduction of SP34E(TM) provides
an expectation that we will achieve  profitability  during fiscAL year 2001. The
past  year  was a year  of  reorganization.  We  have  diverted  our  focus  for
SOLTRON(TM)  away frOM  globalization  and our licensing  program to identifying
distributors  and  developing  direct  sales  activities.   We  have  also  made
significant progress on obtaining requisite approvals for and expect to commence
marketing of SP34E(TM) in the United States in the fourth quarter of 2000.

     In  September  1999,  we closed  our  SOLTRON(TM)  production  facility  in
Elkhart, Indiana and moved all tHE equipment to our Phoenix facility in order to
expand  production  capacity at that  location.  By mutual consent with Dominion
Capital, we did not proceed with the intended  acquisition of Solpower Australia
and devoted our  resources to  establishing  the North  American  market for our
products.  In January,  2000 we were offered the opportunity to build a plant in
Syracuse, New York, to be financed by privately funded tax exempt bonds.

RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2000 COMPARED TO YEAR ENDED MARCH 31, 1999

     Revenues  for the year ended  March 31,  2000 were  $280,309 as compared to
$82,192 for 1999, a 241%  increase.  All revenues for 2000 resulted from product
sales.  General and administrative  costs for the year ended March 31, 2000 were
$2,188,549 as compared to  $2,077,692  for the same period ended March 31, 1999.
The  5%  increase  resulted  primarily  from  increased  marketing  efforts  and
administrative expenses at our corporate offices in Scottsdale, Arizona.

     Cash flow of $880,000 was provided from shareholder advances in the form of
convertible  notes that were  subsequently  converted to our common stock during
the year ended March 31, 2000. For the year ended March 31, 1999  $1,465,994 was
provided from shareholder advances and placement of our Common Stock.

     As  of  March  31,  2000,  we  had  no  material  commitments  for  capital
expenditures.  For the year ended March 31,  2000,  we incurred a net  operating
loss of $2,139,788  compared to a net operating  loss of $2,239,646 for the year
ended March 31, 1999, which contributed to net cash used in operating activities
of  $1,414,979  and  $1,308,452  for the years  ended  March 31,  2000 and 1999,
respectively.

SEASONALITY

     Sales of our  SP34E(TM)  product  may be subject  to higher  volumes in the
summer  months  resulting  in highER  revenues  in our first and  second  fiscal
quarters. However, no pattern of sales volumes has yet been established.

IMPACT OF INFLATION

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

                                       13
<PAGE>
LIQUIDITY AND CAPITAL RESERVES

     Product  sales  did not  provide  sufficient  working  capital  to fund our
operations  during the period ended March 31, 2000,  and we offered  convertible
notes totaling  $3,500,000 during September,  1999 and December,  1999 to offset
shareholder  and other  advances to fund the balance of our financial  operating
requirements  and future needs. A total of $1,700,000 of these notes were issued
and subsequently converted to 3,500,000 of our common shares.

PLAN OF OPERATIONS FOR FISCAL YEAR 2001

     On completion of a full review of our entire  operations with the objective
to eliminate the current loss situation and accelerate  profitability  in fiscal
year 2001, we intend to conduct a complete reorganization. This review will also
consider product range, distribution channels and corporate structure.

     We are in the final stages of completing the EPA/SNAP requirements in order
to offer SP34E(TM) for sale IN the United States. Early sales of this product in
Canada confirm the demand for a non-ozone  depleting  alternative in R12 mineral
oil based refrigerant  applications.  Sales of SP34E(TM) in fiscal year 2001 are
expectED  to  play  a  significant   role  in  bringing  us  to   profitability.
Acquisitions of related businesses may also play a key role in the expansion and
growth strategy that management has under review.

                                       14
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

                                      INDEX

Independent Auditors'Report.................................................  16

Balance Sheets at March 31, 2000 and 1999...................................  17

Statements of Operations for the Years Ended
March 31, 2000 and 1999.....................................................  18

Statements of Stockholders' Equity for the Years Ended
March 31, 2000 and 1999.....................................................  19

Statements of Cash Flows for the Years Ended
March 31, 2000 and 1999.....................................................  20

Notes to the March 31, 2000 and 1999
Financial Statements........................................................  22

                                       15
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To The Stockholders and Board of Directors of
Solpower Corporation

We have audited the  accompanying  balance sheet of Solpower  Corporation  as of
March 31, 2000 and 1999, and the related  statements of  operations,  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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Solpower  Corporation  as of
March  31,  2000 and 1999,  and the  results  of their  operations,  changes  in
stockholders'  equity,  and  their  cash  flows  for the years  then  ended,  in
conformity with generally accepted accounting principles.


/s/ Semple & Cooper, LLP

Semple & Cooper, LLP
Phoenix, Arizona
July 13, 2000

                                       16
<PAGE>

                              SOLPOWER CORPORATION
                                 BALANCE SHEETS
                             MARCH 31, 2000 AND 1999

                                     ASSETS
                                                       2000            1999
                                                    -----------     -----------
Current Assets:
  Cash and cash equivalents (Note 1)                $    34,299     $     2,228
  Accounts receivable (Note 1)                           79,726          50,145
  Inventory (Note 1)                                     21,624          92,178
                                                    -----------     -----------
      Total Current Assets                              135,649         144,551
                                                    -----------     -----------

Property & Equipment, net (Notes 1 and 3)               377,762         399,262
                                                    -----------     -----------

Other Assets:
   Marketing rights (Notes 1 and 4)                   2,558,333       2,658,333

   Security deposits                                         --          13,922

   License fee receivable (Note 2)                           --       2,400,000
                                                    -----------     -----------
      Total Other Assets                              2,558,333       5,072,255
                                                    -----------     -----------
      Total Assets                                  $ 3,071,744     $ 5,616,068
                                                    ===========     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Obligation under capital lease
    - current portion (Note 6)                      $        --     $     4,060
  Loans payable to related parties
    - current portion (Note 9)                          130,390          98,500
  Accounts payable
      -trade                                            330,093         344,409
      -related parties (Note 9)                         107,118              --
  Accrued expenses (Note 5)                             309,929         213,792
                                                    -----------     -----------
      Total Current Liabilities                         877,530         660,761
                                                    -----------     -----------
Long-Term Liabilities:
  Loans payable to related parties
    - long-term portion (Note 9)                        212,114         407,219

  Accrued expenses                                           --          70,000

  Deferred revenue (Note 1)                                  --       2,400,000
                                                    -----------     -----------
      Total Long-Term Liabilities                       212,114       2,877,219
                                                    -----------     -----------
      Total Liabilities                               1,089,644       3,537,980
                                                    -----------     -----------
Commitments and Contingencies (Note 5)

Stockholders' Equity: (Note 10)
  Preferred stock; $.001 par value, 5,000,000
    shares authorized;                                       --              --
    none issued or outstanding
  Common stock; $.01 par value, 30,000,000
    shares authorized; 27,316,066 and 23,456,560
    issued and outstanding at March 31, 2000
    and 1999, respectively                              273,161         234,566
  Additional paid in capital                          8,741,730       6,736,525
  Accumulated deficit                                (7,032,791)     (4,893,003)
                                                    -----------     -----------
      Total Stockholders' Equity                      1,982,100       2,078,088
                                                    -----------     -----------
      Total Liabilities and Stockholders' Equity    $ 3,071,744     $ 5,616,068
                                                    ===========     ===========

     The Accompanying Notes are an Integral Part of the Financial Statements

                                       17
<PAGE>
                              SOLPOWER CORPORATION
                            STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2000 and 1999

                                                      2000             1999
                                                  ------------     ------------
Product Revenues                                  $    280,309     $     82,192

Cost of Sales                                          231,408          244,874
                                                  ------------     ------------

Gross Profit ( Loss )                                   48,901         (162,682)


General and Administrative Expenses                  2,188,549        2,077,692
                                                  ------------     ------------

Loss from Operations                                (2,139,648)      (2,240,374)
                                                  ------------     ------------
Other Income (Expense)

    Interest income                                         --            2,249
    Interest expense                                      (140)          (1,521)
                                                  ------------     ------------

Net Loss Before Provision for Income Taxes          (2,139,788)      (2,239,646)

Provision for Income Taxes                                  --               --
                                                  ------------     ------------

Net Loss                                          $ (2,139,788)    $ (2,239,646)
                                                  ============     ============

Basic Loss Per Share                              $      (0.09)    $      (0.10)
                                                  ============     ============
Weighted Average Number
     of Shares Outstanding                          23,498,729       22,146,765
                                                  ============     ============

     The Accompanying Notes are an Integral Part of the Financial Statements

                                       18
<PAGE>
                              SOLPOWER CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                             Common Stock       Additional      Stock
                                      -----------------------     Paid In    Subscription  Accumulated
                                         Shares      Amount       Capital     Receivable      Deficit        Total
                                      -----------   ---------   -----------    ---------    -----------   -----------
<S>                                   <C>          <C>         <C>            <C>          <C>           <C>
Balance, March 31, 1998                17,391,560   $ 173,916   $ 4,220,904    $(400,000)   $(2,653,357)  $ 1,341,463

Issuance of common stock
  for SP34E marketing rights            6,000,000      60,000     2,340,000           --             --     2,400,000

Issuance of common stock for
  marketing services                       50,000         500       149,500           --             --       150,000

Receipt of stock subscription
  receivable funds                                                               400,000             --       400,000

Issuance of common stock for
  marketing services                       15,000         150        26,121           --             --        26,271

Loss, Year Ended March 31, 1999                --          --            --           --     (2,239,646)   (2,239,646)
                                      -----------   ---------   -----------    ---------    -----------   -----------
Balance, March 31, 1999                23,456,560     234,566     6,736,525           --     (4,893,003)    2,078,088

Issuance of common stock for lease
  terminations                             35,000         350        39,640           --             --        39,990

Issuance of common stock for license
  terminations                             50,000         500        55,740           --             --        56,240

Issuance of common stock for investor
  relation services                       120,000       1,200       118,800           --             --       120,000

Cancellation of stock certificate         (11,824)       (118)         (236)          --             --          (354)

Conversion of debt to equity              166,330       1,663       126,261           --             --       127,924

Conversion of convertible notes to
  common stock                          3,500,000      35,000     1,665,000           --             --     1,700,000

Loss, Year Ended March 31, 2000                --          --            --           --     (2,139,788)   (2,139,788)
                                      -----------   ---------   -----------    ---------    -----------   -----------
Balance, March 31, 2000                27,316,066   $ 273,161   $ 8,741,730    $      --    $(7,032,791)  $ 1,982,100
                                      ===========   =========   ===========    =========    ===========   ===========
</TABLE>

     The Accompanying Notes are an Integral Part of the Financial Statements

                                       19
<PAGE>
                              SOLPOWER CORPORATION
                            STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

                                                       2000             1999
                                                    -----------     -----------
Cash Flows From Operating Activities:
  Net loss                                          $(2,139,788)    $(2,239,646)

  Adjustments to reconcile net loss to net
    cash used by operating activities:
  Depreciation and amortization                         207,175         166,154
  Non-cash transactions                                 343,800         176,271
  Changes in operating assets and liabilities
    Accounts receivable                                 (29,581)        (50,145)
    Inventory                                            70,554           9,728
    Prepaid expenses                                         --           2,917
    License fee receivable                            2,400,000        (240,000)
    Security deposits                                    13,922             500
    Accounts payable - trade                            (14,316)        341,977
                     - related parties                  107,118              --
    Accrued expenses                                     26,137         283,792
    Deferred revenue                                 (2,400,000)        240,000
                                                    -----------     -----------
       Net Cash Used by Operating Activities         (1,414,979)     (1,308,452)
                                                    -----------     -----------
Cash Flows from Investing Activities:
  Capital expenditures                                  (85,675)       (333,474)
                                                    -----------     -----------
       Net Cash Used by Investing Activities            (85,675)       (333,474)
                                                    -----------     -----------
Cash Flows From Financing Activities:

  Proceeds from issuance of common stock                     --       1,000,000
  Payment on capital lease                               (4,060)         (5,682)
  Proceeds from convertible notes payable               820,000              --
  Proceeds from short-term notes payable                 67,500              --
  Loans from related parties                            969,473         465,994
  Payments on short-term notes payable                  (67,500)             --
  Payments to related parties                          (252,688)             --
                                                    -----------     -----------
       Net Cash Provided by Financing Activities      1,532,725       1,460,312
                                                    -----------     -----------

Net Change in Cash and Cash Equivalents                  32,071        (181,614)
Cash and Cash Equivalents, Beginning of Year              2,228         183,842
                                                    -----------     -----------
Cash and Cash Equivalents, End of Year              $    34,299     $     2,228
                                                    ===========     ===========

     The Accompanying Notes are an Integral Part of the Financial Statements

                                       20
<PAGE>
                              SOLPOWER CORPORATION
                             STATEMENT OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

                                                        2000           1999
                                                      --------      ----------
SUPPLEMENTAL INFORMATION:
Cash Paid for:
  Interest                                            $    140      $    1,521
  Income Taxes                                              --              --

Noncash Investing and Financing:
  Issuance of 6,000,000 shares of
    common stock for marketing rights                               $2,400,000

  Issuance of 50,000 shares of
    common stock for services                                       $  150,000

  Issuance of 15,000  shares of common
    stock for marketing fees                                        $   26,271

  Issuance of 35,000 shares of common
    stock for lease terminations                      $ 39,990

  Issuance of 50,000 shares of common
    stock for license terminations                    $ 56,240

  Issuance of 120,000 shares of common
    stock for investor relations services             $120,000


  Cancellation of 11,824 share common
    stock certificate                                 $    354

  Issuance of 166,330 shares of common stock
    for conversion of debt                            $127,924

     The Accompanying Notes are an Integral Part of the Financial Statements

                                       21
<PAGE>
                          NOTES TO FINANCIAL STATEMENTS

                                     NOTE 1
              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF
                         OPERATIONS AND USE OF ESTIMATES

NATURE OF OPERATIONS:

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.

The Company was in the  development  stage through March 31, 1997. The principal
business  purpose of the  Company is the sales and  distribution  of SOLTRON and
other environmentally friendly products throughout the world.

The Company has the exclusive sales,  distribution,  marketing and manufacturing
rights  for the  United  States,  Mexico  and  Canada to the  Solpower  product,
SOLTRON, a fuel enhancing product and SP34E, a replacement refrigerant.

PERVASIVENESS OF ESTIMATES:

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

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.  Revenues from corporate  license programs are recognized
based on the terms of the license  agreement  with a license fee  receivable and
deferred revenue recorded at the inception of the agreement.

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, 2000 and 1999 no  allowance  has been  provided for  uncollectible  accounts

                                       22
<PAGE>
receivable  as, in the  opinion  of  management,  all  accounts  receivable  are
considered fully collectible.

INVENTORY:

Inventory at March 31, 2000 and 1999  consists,  primarily,  of the SOLTRON 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 method over the estimated useful lives of the assets.  Maintenance
and  repairs  that  neither  materially  add to the  value of the  property  nor
appreciably prolong its life are charges to expense as incurred.  Betterments or
renewals are capitalized when incurred.

Estimated useful lives of the assets are as follows:

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

The Company was the lessee of a vehicle under a capital lease agreement expiring
in September,  1999. The asset and liability  under the capital lease  agreement
were recorded at the lower of the present value of the minimum lease payments or
the fair value of the asset at March 31, 1999. The asset is depreciated over the
life of the lease.  Depreciation  of the asset under the capital lease agreement
is included in depreciation expense, as noted above.

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.

INCOME TAXES:

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  carryforwards,  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.

                                       23
<PAGE>
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,  2000
diluted net loss per common  share is not  included,  as the effect of including
these shares is antidilutive.

ADVERTISING:

Advertising  costs are expensed as incurred.  Advertising  expense for the years
ended March 31, 2000 and 1999 were $27,862 and $14,689, respectively.

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 No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123).

FAIR VALUE OF FINANCIAL INSTRUMENTS:

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

RECLASSIFICATIONS:

Certain prior year amounts in the  accompanying  1999 financial  statements have
been reclassified to conform to the 2000 presentation.

                                     NOTE 2
                             LICENSE FEE RECEIVABLE

On May 14,  1999,  the Company  terminated  its Master  License  Agreement  with
Masters  Marketing Group,  holder of the Great Lakes (Ohio,  Indiana,  Illinois,
Michigan,  and Wisconsin) license. The Company regained the right to operate the
Great  Lakes   territory  as  a  corporate   sales  territory  in  exchange  for
cancellation  of the Promissory  Note in the amount of  $1,080,000,  issuance of
15,000  shares of common stock and  repayment of the license fee down payment of
$120,000. The down payment is to be repaid at $5,000 per month without interest.
This  transaction is reflected in the financial  statements as of March 31, 1999
and the refundable down payment is included in accrued expenses. As of March 31,
2000 the  balance  due in  relation  to the  repayment  of the down  payment  is
$115,000. The Company is currently in default of the agreement.

On September 7, 1999, the Company  terminated its Master License  Agreement with
Solpower  Southeast  Corporation.  The Company regained the right to operate the
Southeast territory (Alabama,  Arkansas,  Florida, Georgia and Mississippi) as a

                                       24
<PAGE>
corporate sales  territory in exchange for  cancellation of a promissory note in
the amount of $1,080,000,  repayment of the license fee down payment of $120,000
and the issuance of 20,000  shares of common  stock.  The down payment was to be
refunded by October 30, 1999 of which only $30,000 has been paid as of March 31,
2000.  The Company is currently in default of this  agreement and payment of the
balance is currently being  renegotiated.  This  transaction is reflected in the
financial  statements  as of March 31, 1999 and the  refundable  down payment is
included in accrued expenses.

On November 7, 1999, the Company  terminated  its Master License  Agreement with
Houston Mercantile Exchange,  Inc., holder of the South (Texas, Oklahoma and New
Mexico) and Mexico  licenses.  The Company  regained the right to operate  these
territories  as  corporate  sales  territories  in exchange  for the issuance of
30,000  shares of common stock and  cancellation  of promissory  notes  totaling
$2,160,000.

                                     NOTE 3
                             PROPERTY AND EQUIPMENT

Property and equipment consists of the following at March 31, 2000 and 1999:

                                                      2000               1999
                                                    ---------         ---------
Furniture and Fixtures                              $  52,359         $  52,359
Computer and Office Equipment                          66,584            66,584

Vehicles                                                   --            15,172
Plant Equipment                                       109,181           106,435
Leasehold Improvements                                337,872           254,943
                                                    ---------         ---------
                                                      565,996           495,493
Less: Accumulated Depreciation                       (188,234)          (96,231)
                                                    ---------         ---------

                                                    $ 377,762         $ 399,262
                                                    =========         =========

Depreciation  expense  charged to operations  for the years ended March 31, 2000
and 1999, was $107,175 and $66,154, respectively.

                                     NOTE 4
                                MARKETING RIGHTS

On November 4, 1996,  the Company  acquired the exclusive  sales,  distribution,
marketing and  manufacturing  rights to the Solpower  product,  SOLTRON,  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 is amortizing
the  marketing  rights over the period of  contract.  Management  will  reassess
annually the estimated  useful life and  impairment,  if any, will be recognized
when expected  future  operating  cash flows from the marketing  rights are less
than their carrying  value.  Amortization  charged to operations for each of the
years ended March 31, 2000 and 1999 was $100,000.

On June 17,  1998,  the Company  acquired  the  exclusive  sales,  distribution,
marketing  and  manufacturing   rights  to  the  Solpower   product,   SP34E  (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

                                       25
<PAGE>
addendum  to the  agreement,  the term of the  agreement  shall  commence on the
Company  achieving  ratable  sales of SP34E and in no event  later  than July 1,
2000. The Company intends to amortize these marketing  rights over the period of
contract.  As of the balance  sheet  date,  March 31,  2000,  no sales have been
recorded,   therefore  no   amortization   was  recorded  in  relation  to  this
transaction.  Management  will reassess  annually the estimated  useful life and
impairment,  if any will be recognized when expected future operating cash flows
from the marketing rights are less than the carrying value.

                                     NOTE 5
                                  COMMITMENTS

CONSULTING AGREEMENT:

In June  1999  the  Company  entered  into an  agreement  with  Covered  Bridges
Resources to provide  financial  consulting  services.  Compensation  to Covered
Bridges Resources is to be paid as a percentage of funding procured. Payment may
be in the form of warrants  for common  stock to be  calculated  by taking three
percent  (3%) of the funding  value and dividing by the closing bid price of the
stock on June 29, 1999,  with the warrants  exercisable at $.01 each at any time
within  three years  hereof.  As of March 31, 2000 no funding has been  provided
under this agreement.

OPERATING LEASES:

The  Company  leases  office  space for its  executive  offices  in  Scottsdale,
Arizona.  The  lease  expires  in June  2000 and has a  minimum  monthly  rental
obligation of approximately  $2,000. On November 8, 1999, the Company negotiated
an early termination of the executive office lease to January 31, 2000 from June
30, 2000 in exchange for the issuance of 15,000 shares of common  stock,  and is
presently renting the offices on a month-to-month basis through August 31, 2000.

The  Company  leases  warehouse  space for its  production  facility  located in
Phoenix,  Arizona. The term of the lease is five years, expiring September 2002.
Base rent is  approximately  $3,900 per month,  plus CAM  charges  and  property
rental  tax.  The  Company  had an  option to  purchase  the real  property  and
improvements.  The option to purchase the property was not completed  during the
specified  time periods and costs of $35,000  incurred for the purchase  efforts
were expensed during the year ended March 31, 1999.

The Company leases office  equipment under a 39-month lease expiring March 2002.
Rental  payments are $566 per month plus rental  taxes.  The lease expires March
2002.

During the year ended March 31,  2000,  the Company  leased two  vehicles  under
thirty-six  month lease  agreements.  The monthly rental  obligation under these
agreements is $965.

On September 1, 1999,  the Company  terminated  its  commercial  lease with D.I.
South, Inc. for commercial premises located in Elkhart,  Indiana in exchange for
20,000 shares of common stock.

                                       26
<PAGE>
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, 2000 are
as follows:

        For the Year Ended
            March 31,
            ---------

               2001                           $ 91,068
               2002                             78,429
               2003                             31,920
                                              --------

                                              $201,417
                                              ========

Lease expense charged to operations for the years ended March 31, 2000 and 1999,
was $194,814 and $112,790, respectively.

JOINT VENTURE INTEREST:

On March 29,  1999,  the Company  entered  into a joint  venture  with  Protocol
Resource Management, Inc. in Aurora, Ontario, Canada to manufacture, distribute,
market and sell SP34E, the Company's refrigerant product and other such products
as are agreed to, in North America.  There has been no significant activity with
the joint venture during the fiscal year ended March 31, 2000.

OTHER COMMITMENTS:

Effective March 1, 2000, the Company  entered into an employment  agreement with
Mark S. Robinson for an initial term of three (3) years. The agreement  provides
for a base salary of $130,000  per annum;  accommodation,  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 grant
of 50,000 common  shares  effective  March 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.

Effective April 1, 2000, the Company  entered into an employment  agreement with
James H. Hirst for an initial term of three (3) years.  The  agreement  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 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.

                                       27
<PAGE>
                                     NOTE 6
                         OBLIGATION UNDER CAPITAL LEASE

The Company  leased a motor  vehicle under a capital  lease  agreement  expiring
September 1999, at a monthly rate of approximately $500. The vehicle is included
in property and equipment at March 31, 1999, and is being  depreciated  over the
life of the lease.  The Company  did not  exercise  its option to  purchase  the
vehicle at the end of the lease term.  The lease was  extended to May 16,  2000,
and the vehicle was returned to the dealer at that time.

                                     NOTE 7
                                 NOTES PAYABLE

CONVERTIBLE NOTES PAYABLE:

During  the year  ended  March 31,  2000 the  Company  issued  $1,500,000  in 6%
Convertible  Notes Payable of which $975,000 were issued to entities  related to
Dominion Capital Pty Ltd., the Company's majority stockholder. The notes were to
mature on September  30, 2000,  and were  convertible  into common shares of the
Company at the issue price of $1.00 per share for each $1.00 of principal  owed.
On December 31, 1999, the Note Agreement was amended to $0.50 per share for each
$1.00 of principal owed. The notes would automatically  convert in the event the
Company's  shares  traded at $1.75 or higher for ten  consecutive  days.  At the
election of the Note Holders,  the  Convertible  Notes Payable were converted to
3,000,000  common shares of the Company during April,  2000. The transaction has
been  reflected in the financial  statements as of March 31, 2000.  (See Notes 9
and 10)

In addition,  during the year ended March 31, 2000 the Company issued a $200,000
6% Convertible Note Payable to Dominion Capital Pty Ltd., the Company's majority
stockholder.  The note was to mature on December 31, 2000,  and was  convertible
into common shares of the Company at the issue price of $0.40 per share for each
$0.40 of principal owed. The note would  automatically  convert in the event the
Company's  shares  traded at $1.75 or higher for ten  consecutive  days.  At the
election of the Note  Holder,  the  Convertible  Note  Payable was  converted to
500,000 common shares of the Company  during April 2000.  This  transaction  has
been  reflected in the financial  statements as of March 31, 2000.  (See Notes 9
and 10)

                                     NOTE 8
                                  INCOME TAXES

Deferred  income taxes will be  determined  using the  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.

                                       28
<PAGE>
At March 31, 2000 and 1999, deferred tax assets consist of the following:

                                                      2000              1999
                                                  -----------         ---------
Net operating loss carryforwards                  $ 1,055,000         $ 734,000
Less: valuation allowance                          (1,055,000)         (734,000)
                                                  -----------         ---------

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

At March 31, 2000 and 1999, the Company had federal and state net operating loss
carryforwards   in  the   approximate   amount  of  $7,000,000  and  $4,900,000,
respectively,  available to offset future taxable income  expiring  through 2020
and 2011, respectively.

In assessing  the  realizability  of 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  carryforwards  to offset  future
taxable  income  within  the  carryforward  periods  is more  likely  than  not.
Accordingly, a 100 percent valuation allowance has been recorded against the net
deferred tax assets.

                                     NOTE 9
                           RELATED PARTY TRANSACTIONS

LOANS PAYABLE TO RELATED PARTIES:

On November 4, 1996,  the Company  entered into an  agreement  with the majority
stockholder of the Company,  Dominion Capital Pty Ltd.,  (Dominion) for a period
of five years.  Dominion  agreed to provide up to  $1,000,000  on an "as needed"
basis  for  operational  costs  and  for the  development  and  construction  of
manufacturing  facilities.  Dominion  was to be  repaid  for the  advances  with
convertible  preferred shares of the Company.  On November 24, 1997, an addendum
was signed by the Company deleting this from the agreement.  The addendum grants
stock options and pay performance bonuses based solely on gross sales figures of
the Solpower  product SOLTRON in the North American  market.  Additionally,  the
Company has the option to extend the term of this  agreement  for an  additional
period of five years,  unless  canceled by notice in writing,  by either  party,
with a thirty day notice of  cancellation.  As of March 31,  2000 and 1999,  the
Company had a balance due to Dominion of $110,718  and  $407,219,  respectively.
(See Note 10)

In July 1998,  the Company  entered into an investor  relations  agreement  with
Dominion Capital  Securities,  Inc., a related entity, for a six month period to
provide investor  relations  activities in exchange for $125,000 in cash, 50,000
shares of common stock,  and 100,000 stock options at an exercise price of $3.00
per share.  The  Company  renewed  the  agreement  in  consideration  of monthly
payments of $30,000 per month for the period July 1, 1999  through  December 31,
1999. The agreement  provided for payment in cash of $90,000 and common stock in
the amount of $90,000 for  services.  In addition,  the  agreement  provides for
payments  for services of $15,000 per month for January 1, 2000 through June 30,
2000, payable in cash of $60,000 and common stock of $30,000. (See Note 10)

                                       29
<PAGE>
As of March 31,  2000 and 1999,  the  Company  had a balance  payable  under the
agreement  of  $130,390  and  $98,500  respectively  which  included  additional
expenses  incurred by  Dominion  Capital  Securities,  Inc during the year ended
March  31,  2000.  For the years  ended  March 31,  2000 and 1999,  the  company
recorded  investor  relations  expenses  in relation  to this  agreement  in the
amounts of $225,000 and $275,000, respectively.

During the year ended March 31, 2000,  Intavest Pty Ltd.  (Intavest),  a related
party  entered into an  investment  banking  services  agreement  with  National
Capital  Merchant  Group,  Inc. for the benefit of the Company.  During May 2000
Intavest  transferred  45,000  shares  of the  Company's  common  stock  held by
Intavest as payment under the agreement. The agreement was cancelled in December
1999 and as of March 31, 2000 the  company  agreed to repay  Intavest  and has a
payable to Intavest in the amount of $90,000.

As of March 31, 2000 the company has a balance due to Peter Voss, a  stockholder
and director, in the amount of $11,396.

ACCOUNTS PAYABLE - RELATED PARTIES:

Accounts payable - related parties consists of the following:


        Solpower Australia                                    $ 48,510
        James Hirst                                             58,608
                                                              --------

                                                              $107,118
                                                              ========

                                     NOTE 10
                                     EQUITY

STOCK ISSUED FOR SERVICES AND DEBT:

On June 17, 1998, the Company agreed to issue  6,000,000  shares of common stock
in  exchange  for  marketing  rights for 5 years to SP34E,  at $.40 per share or
$2,400,000. (See Note 4)

On July 1, 1998,  the Company  agreed to issue 50,000  shares of common stock to
Dominion Capital  Securities,  Inc., a related entity, in exchange for marketing
services for six months, at $3.00 per share or $150,000.

On May 14, 1999,  the Company  agreed to issue 15,000  shares of common stock in
exchange for marketing services, at $1.75 per share, or $26,271.

On September 1, 1999,  the Company agreed to issue 20,000 shares of common stock
in  exchange  for  cancellation  of a  commercial  lease  and  other  settlement
consideration, at $1.50 per share, or $30,000.

On September 7, 1999,  the Company agreed to issue 20,000 shares of common stock
in  exchange  for  cancellation  of a license  agreement  and  other  settlement
consideration, at $1.687 per share, or $33,740.

On November 7, 1999,  the Company  agreed to issue 30,000 shares of common stock
in  exchange  for  cancellation  of a license  agreement  and  other  settlement
consideration, at $.75 per share, or $22,500.

                                       30
<PAGE>
On November 8, 1999,  the Company  agreed to issue 15,000 shares of common stock
in exchange for early  termination  of a commercial  lease  agreement  and other
settlement consideration, at $.67 per share, or $9,990.

On March 13, 2000, the Company agreed to issue 120,000 shares of common stock to
Dominion Capital  Securities,  Inc., a related entity,  in exchange for investor
relations services for eight months, at $1.00 per share or $120,000.

Subsequent  to March 31, 2000,  the Company  agreed to issue  166,330  shares of
common  stock in  settlement  of  various  outstanding  accounts  payable in the
aggregate  amount of $127,924.  This  transaction was reflected in the financial
statements as of March 31, 2000.

On April 19,  2000,  the  Company  issued  3,500,000  shares of common  stock in
relation to the  conversion  of the  $1,700,000  Convertible  Notes Payable This
transaction was reflected in the financial statements at March 31, 2000.

STOCK WARRANTS:

The Company issued warrants in connection with a private  placement  offering in
1998. As of March 31, 1999, there were 4,000,000 warrants outstanding  including
2,000,000  warrants at an exercise  price of $1.50 and 2,000,000  warrants at an
exercise price of $3.00 per share. These warrants expired January 7, 2000.

STOCK OPTIONS:

On November 24, 1997,  an addendum to the agreement  with  Dominion  Capital Pty
Ltd., a related entity,  to provide financing (Note 9) 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.

                                       31
<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 ten years  after
grant.  Options  generally  vest ratably over 3 to 5 year periods.  At March 31,
2000,  there were 2,500,000  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. Joshua Ward was  terminated  as a service  provider to the
Company and the 150,000 options were cancelled.

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 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 9, 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,   R.  L.  (Beau)  Van  Deren   resigned  as  corporate
Secretary/Treasurer and 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  cancelled  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,  2005.  The options vest
based on minimum market price and reported gross revenue levels.

As of the  date of the  employment  agreement,  the Plan  had  2,500,000  shares
reserved for option under the Plan and 2,100,000 options issued.  Therefore, the
stock options referred to in the aforementioned employment agreement are subject
to the amendment and approval  authorizing the Solpower Corporation Stock Option
and Incentive Plan to increase the shares reserved for option under the Plan.

                                       32
<PAGE>
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 following:

Hirst                   33 1/3%   $ 1.00   $ 2.00   $ 6 million    January, 2003
                        33 1/3%   $ 1.75   $ 3.00   $ 9 million    January, 2003
                        33 1/3%   $ 2.50   $ 4.00   $ 12 million   January, 2003
Matteson and            33 1/3%   $ 1.00   $ 2.00   $ 6 million    January, 2003
Ward                    33 1/3%   $ 2.00   $ 3.00   $ 9 million    January, 2003
                        33 1/3%   $ 2.00   $ 3.00   $ 12 million   January, 2003
Moffat - Incentive       40%      $ 3.00   $ 3.00   $ 6 million    May, 2003
 options                 40%      $ 5.00   $ 5.00   $ 9 million    May, 2003
                         20%      $ 7.00   $ 7.00   $ 12 million   May, 2003
Non-qualifying options   100%     $ 2.00   $ 2.00   $ 4 million    May, 2003
Yoshikawa, Hirst         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    May, 2003
Robinson                 20%      $ 1.00   $ 1.00   $ 1 million    April, 2005
                         20%      $ 1.00   $ 2.00   $ 2 million    April, 2005
                         20%      $ 1.00   $ 3.00   $ 3 million    April, 2005
                         20%      $ 1.00   $ 4.00   $ 4 million    April, 2005
                         20%      $ 1.00   $ 5.00   $ 5 million    April, 2005

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,  and (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, 2000 none of the above
options have vested.

A summary of the activity of the Plan is as follows:

                                                                 Weighted
                                               Number of          Average
                                                Options        Exercise Price
                                                -------        --------------
Outstanding at March 31, 1998                   1,350,000          $3.17

Granted                                         1,150,000           3.63

Forfeited                                        (150,000)         (2.00)
                                               ----------

Outstanding at March 31, 1999                   2,350,000           3.47

Granted                                           650,000           1.07

Forfeited                                        (400,000)         (2.56)
                                               ----------

Outstanding at March 31, 2000                   2,600,000          $3.01
                                               ==========          =====

Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of March 31, 2000 is as follows:

                                       33
<PAGE>
                 OUTSTANDING                                 EXERCISABLE
              WEIGHTED AVERAGE                            WEIGHTED AVERAGE
---------------------------------------------        --------------------------
   Exercise                      Remaining
  Price Per        Number       Contractual             Exercise        Number
    Share        of Shares    Life (In Years)            Price        of Shares
    -----        ---------    ---------------            -----        ---------
$1.00 - $2.50     750,000          3.74              $1.00 - $2.50     100,000
$3.00 - $4.50     800,000          2.42              $3.00 - $4.50     500,000
$5.00 - $7.00     550,000          2.59              $5.00 - $7.00     250,000

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
method,  there is no related  compensation  expense  recorded  in the  Company's
financial   statements  for  the  year  ended  March  31,  2000  and  1999.  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, 2000 and 1999 would have
been reduced to the pro forma amounts presented below:

                                               2000                  1999
                                            ------------         ------------
Net Loss:
As reported                                 $ (2,139,788)        $ (2,239,646)
Pro forma                                   $ (2,139,788)        $ (2,321,646)

Loss per common share:
As reported                                 $      (0.09)        $      (0.10)
Pro forma                                   $      (0.09)        $      (0.10)

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  four  (4)  years,
risk-free interest rates of eight percent (8%), 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.

COMMON STOCK GRANTS:

On  October  26,  1998,  a grant of 25,000  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,
2000 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.

                                       34
<PAGE>
On March  1,  2000,  subject  to an  employment  agreement,  a grant  of  50,000
restricted common shares was made to Mark Robinson,  President. In addition, the
employment  agreement provides for a grant of 10,000 shares of restricted common
stock at the first of each month,  commencing April 1, 2000,  during the term of
Mr.  Robinson's  employment.  Such  shares are to be issued  quarterly  provided
agreed performance  requirements are fulfilled.  On June 28, 2000, 80,000 shares
of restricted common stock were issued to Mr. Robinson under this agreement.  As
of the balance sheet date,  March 31, 2000, the company has recorded a liability
for the value of the shares at the date of grant.

                                     NOTE 11
                                 CONCENTRATIONS

Major  suppliers  for Solpower  Corporation  include the  Japanese  company that
produces the SOLTRON enzyme concentrate. Supply of the SOLTRON concentrate could
be interrupted due to work stoppages, strikes, and governmental or international
regulations.  The solvent used as the suspension agent for SOLTRON, 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 are
currently being produced in Australia. These unique bottles are being shipped to
the United States until a more locally  available  supply is established.  Other
United  States  manufacturers  have the  capability  to  produce  the  molds and
bottles.  All other  materials for  production  of SOLTRON are available  from a
variety of local providers.

During the year ended March 31, 2000 the Company had one  customer  representing
approximately  62% of sales.  As of March 31, 2000 the accounts  receivable  for
this customer was $ 73,034.

                                     NOTE 12
                                SUBSEQUENT EVENT

Effective April 1, 2000, the Company  entered into an employment  agreement with
James H. Hirst for an initial term of three (3) years.  The  agreement  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 grant of
50,000  restricted  common  shares  effective  April 1, 2000;  and monthly stock
grants of 10,000 restrictive common shares effective the first day of each month
for the term of the  agreement,  such  shares  to be issued  quarterly  provided
agreed performance  requirements are fulfilled.  On June 28, 2000, 70,000 shares
of common stock were issued to Mr. Hirst under this grant.

The stock options  referred to in the  aforementioned  employment  agreement are
subject the amendment and approval  authorizing the Solpower  Corporation  Stock
Option and Incentive  Plan to increase the shares  reserved for option under the
Plan.

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

     None.

                                       35
<PAGE>
                                    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         70            Director & Chairman
     Peter D. Voss                52            Director & Vice Chairman
     Mark S. Robinson             46            Director, President & CEO
     James H. Hirst               53            Director, Secretary & Treasurer
     Jerry W. Goddard             60            Director
     Naoya Yoshikawa              54            Director

----------
(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.

     PETER D. VOSS joined  Solpower as a Director and Vice Chairman in September
1999. From 1988 to the present, Mr. Voss has been Chairman and Managing Director
of Dominion  Capital Pty Ltd.,  part of the Voss Group of  Companies,  that have
diversified,  international  financial  interests  and have  owned and  operated
companies  involved  in  food,  beverage,  forestry,   viticulture,   livestock,
international trading and real estate. From 1981 to 1987, Mr. Voss held a senior
management  role as general  manager of  Coca-Cola  Amital.  Mr. Voss has been a
consultant  to industry  and  government  bodies in  Australia,  Canada,  China,
Indonesia, Japan, Korea and the United States.

     MARK ROBINSON has served as  President,  Chief  Executive  Officer and as a
Director of Solpower since March 2000. As Chief Executive Officer and President,
Mr. Robinson is responsible for all operations,  product development,  sales and
marketing.  From May 1999 to  present,  Mr.  Robinson  has  been a  Director  of
Dominion Wines Ltd., an entity  affiliated  with Dominion  Capital Pty Ltd. From
November 1994 to July 1996, he served as Managing Director of National Australia
Finance (Asia) Limited, based in Hong Kong. From 1985 to 1987, Mr. Robinson held
executive positions with the National Australia Bank in Australia,  New Zealand,
Hong Kong, China,  Macao, Japan and Singapore.  Mr. Robinson was a member of the
Australian  Institute of Affiliated  Accountants  and has attended the Australia
Graduate School of Management,  Sydney,  Australia and the International Banking
School of Finance, Tokyo, Japan.

     JAMES H. HIRST has served as Secretary/Treasurer since March 2000, 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 has served as President  of Mesquite  Management  Ltd.  from March 1986 to
present where he has provided  consulting  services to early stage  companies in
connection  with  their  operations,  financial  information  systems  and legal

                                       36
<PAGE>
compliance.  In  performing  his  consulting  services,  Mr.  Hirst  served as a
director of Rock Resources Inc. from November 1996 to October, 1998, as director
and President of Consolidated  Bahn Foods Ltd. from April 1998 to present,  as a
vice  president  from  January  1991 to 1996 and  President  to October  1996 of
Parisco Foods Limited,  as the Chief Executive Officer from January 1991 to 1997
and director  from  November  1997 to October 1998 of Global Tree  Technologies,
Inc.,  as a director  of  Consolidated  Shoshoni  Gold Inc.  from August 1996 to
August 1997,  as the president and director of  Consolidated  Newgate  Resources
Ltd.  from  October 1990 to May 1992 and as the  president  and director of Yuma
Gold Mines Ltd. from October 1990 to August 1994.  From 1966 to 1980,  Mr. Hirst
was a member of the Royal Canadian  Mounted  Police - Commercial  Crime Section.
Mr. Hirst attended the Canadian Police College,  Ottawa, Ontario, Canada in 1980
and completed the Computer Crime Investigation  Course and Senior  Investigators
Course.  He achieved the rank of Sergeant  after only 13 years of service and in
1981 resigned to establish his private consulting  business.  In 1979, Mr. Hirst
graduated with a Bachelor of Commerce  (Accounting  and  Management  Information
Systems) from the University of British Columbia.

     JERRY W. GODDARD has served as Director of Solpower  since  November  1996.
Mr.  Goddard has been the  Managing  Director of Prime  Mortgage  Group  Limited
(Australia)   from  1991  to  present  and  is  directly   responsible  for  the
implementation of strategies including fund raising and marketing of the group's
products  to the  financial  community.  Mr.  Goddard  has served as director of
Golden Triangle  Resources Ltd., an Australian  mining company from 1994 through
present.

     NAOYA YOSHIKAWA has served as Director of Solpower since November 1996. Mr.
Yoshikawa  served as  President  of Crest Japan Inc.  from 1987 to present.  Mr.
Yoshikawa  has served as a director  of several  companies  in the past  decade,
including the Japan - America Friendship Association from 1989 to present, Japan
Environmental  Protection  Organization from 1991 to present. Mr. Yoshikawa also
served as Chief  Executive  Officer of Dominion  Capital Japan Ltd. from 1996 to
present.  In his  capacity  as General  Manager and Chief  Executive  Officer of
Dominion Capital Japan Ltd., Mr.  Yoshikawa  represents  Solpower  Australia Pty
Ltd. and SOLTRON  operations in Japan.  Mr.  Yoshikawa  has a Masters  Degree in
Economics  and  Business   Administration  and  is  Honorary  Professor  of  the
University of Mindanao for Environment  and  Protection,  as well as holding the
position of President of the Association of Clean Air Devices.

     (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, 2000.  This  information is based on a review of Section 16(a) reports
furnished to Solpower.

     R.L. "Beau" Van Deren, a former director of Solpower, failed to timely file
a report on Form 4 in connection with the  cancellation  and issuance of certain
options which occurred in February 2000. A Form 5 to report the delinquent  Form
4 also was not timely filed. The required report was filed on August 16, 2000.

     Mark S. Robinson failed to timely file a report on Form 3 upon becoming the
President and a director of Solpower.  A Form 5 to report the delinquent  Form 4
was also not timely filed. The required report was filed on August 16, 2000.

     Dominion  Capital  failed  to  timely  file five  reports  related  to four
transactions.  These reports related to the purchase of a note  convertible into
shares of Solpower common stock in September 1999, the sale of 183,000 shares of
Solpower  common stock in October 1999,  the sale of 500,000  shares of Solpower
common stock in December 1999 and the purchase of an additional convertible note
in December  1999.  Dominion  Capital  failed to timely file a Form 4 related to

                                       37
<PAGE>
these  transactions  and a Form 5 to report the delinquent  Form 4 filings.  The
required report was filed on August 16, 2000.  Dominion  Capital has also agreed
to disgorge  profits,  if any, related to any of these  transactions as required
under Section 16 of the Exchange Act.

     Peter Voss failed to timely file six reports related to five  transactions.
As a control person of Dominion  Capital,  Mr. Voss was required to file reports
related to the Dominion Capital transactions described above. Additionally,  Mr.
Voss failed to timely file a Form 4 related to the issuance of 120,000 shares to
Dominion  Capital,  Inc.  in March  2000 in payment  of  certain  services.  The
required report was filed on August 16, 2000.

ITEM 10. EXECUTIVE COMPENSATION

     The following table reflects all forms of compensation for the fiscal years
ended March 31, 2000,  1999 and 1998 for the Chief Executive  Officer.  No other
person  received  salary or bonus in excess of $100,000  for any of these fiscal
years.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                  LONG TERM
                                               ANNUAL COMPENSATION               COMPENSATION
                                     --------------------------------------      ------------
                                                                  OTHER             STOCK
                                     FISCAL                       ANNUAL           OPTIONS
NAME AND PRINCIPAL POSITION           YEAR        SALARY       COMPENSATION       (SHARES)
---------------------------           ----        ------       ------------       --------
<S>                                   <C>          <C>         <C>                <C>
James H. Hirst                        2000          --          $100,000(1)            --
Chief Executive Officer               1999          --          $100,000(1)       100,000(2)
                                      1998          --          $ 58,333(1)       300,000(2)
</TABLE>

----------
(1)  During  the  fiscal  year  ended  March  31,  2000,  Mr.  Hirst  acted as a
     consultant to the Company for the compensation stated.
(2)  The  options  have not yet vested  and have been  allotted  pursuant  to an
     option plan with requisite vesting requirements to be achieved.

OPTION GRANTS

     The following table sets forth information  regarding the grants of options
to executive officers for the fiscal year ended March 31, 2000.

                                       38
<PAGE>
                        OPTION GRANTS IN FISCAL YEAR 2000

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, 2000.

                          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, 2000    AT MARCH 31, 2000
                SHARES ACQUIRED ON                        EXERCISABLE/             EXERCISABLE/
NAME                 EXERCISE        VALUE REALIZED      UNEXERCISABLE            UNEXERCISABLE
----                 --------        --------------      -------------            -------------
<S>                    <C>                <C>              <C>                        <C>
James H. Hirst         0                  0                0/400,000                  $0/$0
</TABLE>

EMPLOYMENT AGREEMENTS

     Solpower has been authorized to enter into  employment  agreements with Mr.
Robinson and Mr. Hirst.  These agreements are intended to be for an initial term
of three  years.  Base salary of $130,000  has been set for Mr.  Robinson and of
$126,000  for Mr.  Hirst.  In addition,  Mr.  Robinson and Mr. Hirst are each 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. Robinson  commenced as of March 1, 2000 and
to Mr.  Hirst as of April 1, 2000.  The  shares  were  issued in June 2000.  The
option grants were effective April 7, 2000.

DIRECTOR COMPENSATION

     All authorized  out-of-pocket  expenses incurred by a director 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 those persons upon whom the responsibilities 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.  The Plan,  as  amended,  provides  for the
granting of options to acquire up to 2,500,000  shares of Solpower common stock.
As of March 31, 2000,  all stock  options had been granted under the Plan and an
additional  100,000  options had been committed at exercise  prices ranging from
$1.00 to $7.00 per share.  The Board  intends to amend the Plan to increase  the
shares covered by the Plan and to submit the amendment for shareholder approval.

                                       39
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth,  as of July 1, 2000, the ownership of each
person known by the Company to be the  beneficial  owner of five percent or more
of the Company's Common Stock, each officer and director  individually,  and all
officers and directors as a group. The Company has 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
OF BENEFICIAL OWNER                       OF OWNERSHIP       PERCENT OF CLASS(1)
-------------------                       ------------       -------------------
Fraser M. Moffat III(2)                           0                    0%
18 Lake Avenue
Montrose, Pennsylvania

Mark S. Robinson(2)                          80,000                 0.29%
7309 East Stetson Drive
Scottsdale, Arizona

James H. Hirst(2)                            70,100                 0.26%
7309 East Stetson Drive
Scottsdale, Arizona

Jerry W. Goddard                            135,000(3)              0.49%
7309 East Stetson Drive
Scottsdale, Arizona

Naoya Yoshikawa                                 100                   (4)
2-16-42 Takanawa
Minato-Ku, Japan

PICO Holdings, Inc.(5)                    2,500,000                  9.1%
875 Prospect Street, Suite 301
La Jolla, California 92037

Dominion Capital Pty Ltd. (6)(7)          8,291,650                 30.2%
39 De Havilland Road
Mordialloc 3195
Victoria, Australia

Peter Voss                               11,131,550                 40.5%
39 De Havilland Road
Mordialloc 3195
Victoria, Australia

All Directors and Officers               11,416,750                 41.6%
as a Group (6 persons)

                                       40
<PAGE>
----------
(1)  Based upon  27,466,066  shares of common stock being issued and outstanding
     on July 31, 2000.
(2)  Messrs. Robinson and Hirst have each been granted options to purchase up to
     an additional  500,000  shares of common stock at prices ranging from $1.00
     to $5.00 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.
     Messrs. Goddard and Yoshikawa have each 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 levels.
     These options have not vested, are not exercisable until vested and are not
     included in the total above.
(3)  Includes 100,000 shares held by an entity  associated with Mr. Goddard over
     which he has an exercisable control.
(4)  Less than 0.1%.
(5)  Pico holdings, Inc. is a diversified holding company listed on Nasdaq under
     trading symbol PICO.
(6)  Mr. Voss holds 100 shares  directly and controls  Dominion  Capital Pty Ltd
     which holds 8,291,650  shares,  A1 Financial  Planners Pty Ltd. which holds
     1,140,200  shares and Intavest Pty Ltd. which holds 1,130,000  shares.  The
     total  reflected  includes  300,000  shares held by Mr.  Voss' wife and two
     adult children and in which Mr. Voss disclaims all beneficial interest. The
     total also  reflects  120,000  shares held by Dominion  Capital,  Inc.,  an
     entity controlled by Mr. Voss.
(7)  Dominion  capital 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(TM) sales revenues attaining certain levels. These options have not
     vested,  are not exercisable until vested and are not included in the total
     above.

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(TM).  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
would be payable to Dominion  Capital as follows:  (i) upon gross  revenues from
sales of SOLTRON(TM)  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(TM)   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(TM) 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(TM)  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(TM) in all other  territories  (other than
JapaN) where  SOLTRON(TM)  and certain other products and services are currently
being  commercialized by Dominion CapitaL.  The terms and conditions of any such
acquisitions  are to be  negotiated  on a product by product and a territory  by
territory basis.

     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 its  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

                                       41
<PAGE>
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.

     On September 30, 1999, we issued $1,500,000 in 6% Convertible Notes Payable
to Dominion Capital and various other accredited  investors as consideration for
prior  advances and payment of certain of our  operating  expenses.  These notes
were converted to 3,000,000 shares of our common stock 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 converted to 500,000 shares of our common
stock on April 28, 2000.

     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.

          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(TM)
                    Product.

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

                                       42
<PAGE>
          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(TM)Product.

          10.7(1)   Property Lease Agreement between Arizona  Industrial Capital
                    Limited  Partnership  and Virtual  Technologies,  Inc, dated
                    August 25, 1997.

          10.8(1)   Property Lease Agreement and amendments  between  Scottsdale
                    Stetson  Corporation  and Virtual  Technologies,  Inc. dated
                    March 12, 1997.

          10.9(1)   First  Amendment to Property Lease  Agreement and amendments
                    between   Scottsdale   Stetson   Corporation   and   Virtual
                    Technologies, Inc.

          10.10(1)  Second  Amendment to Property Lease Agreement and amendments
                    between   Scottsdale   Stetson   Corporation   and   Virtual
                    Technologies, Inc.

          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.

          10.18(2)  Joint Venture  Agreement  between  Solpower  Corporation and
                    Protocol Resource Management, Inc. dated March 29, 1999.

          10.19(2)  Heads of Agreement between Solpower Corporation and Solpower
                    Australia Pty Ltd. dated June 7, 1999.

          10.20(3)  Note  Agreement  for the Issuance of up to  $1,500,000 of 6%
                    Convertible  Notes,  between Solpower,  Dominion Capital and
                    other signatories thereto, dated September 24,1999.

                                       43
<PAGE>
          10.21(3)  Amendment  to the Note  Agreement  for the Issuance of up to
                    $1,500,000  of  6%  Convertible  Notes,   between  Solpower,
                    Dominion  Capital  and  other  signatories  thereto,   dated
                    December 31,1999.

          10.22(3)  Note  Agreement  for the  Issuance  of up to  $200,000 of 6%
                    Convertible  Notes,  between Solpower and Dominion  Capital,
                    dated December 31,1999.

          21.1(2)   Subsidiaries

          23.1      Auditor's Consent from Semple & Cooper, LLP

          27.1      Financial Data Schedule.

          99.1(2)   Assignment,   Settlement   and  Release   between   Solpower
                    Corporation and Masters  Marketing Group, Inc. dated May 14,
                    1999.

          99.2(2)   Assignment,   Settlement   and  Release   between   Solpower
                    Corporation and D. I. South, Inc. of Indiana dated September
                    1, 1999.

          99.3(2)   Assignment,   Settlement   and  Release   between   Solpower
                    Corporation  and  Solpower   Southeast   Corporation   dated
                    September 7, 1999.

          99.4      Assignment,   Settlement   and  Release   between   Solpower
                    Corporation  and Houston  Mercantile  Exchange,  Inc.  dated
                    November 7, 2000.

----------
(1)  Incorporated  by reference from the Company's Form 10-SB as filed on August
     21, 1998.
(2)  Incorporated  by  reference  from the  Company's  Form  10-KSB  as filed on
     September 24, 1999.
(3)  Incorporated  by  reference  from the  Company's  Form  10-QSB  as filed on
     December 10, 1999.

     (b)  REPORTS ON FORM 8-K.

          None.

                                       44
<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: August 16, 2000                  By /s/ Mark S. Robinson
                                           -------------------------------------
                                           Mark S. Robinson,
                                           Chief Executive Officer


                                        BOARD OF DIRECTORS


Dated: August 16, 2000                     /s/ Fraser M Moffat III
                                           -------------------------------------
                                           Fraser M. Moffat III, Chairman


Dated: August 16, 2000                     /s/ James H. Hirst
                                           -------------------------------------
                                           James H. Hirst


Dated: August 16, 2000                     /s/ Mark S. Robinson
                                           -------------------------------------
                                           Mark S. Robinson


Dated: August 16, 2000                     /s/ Jerry W. Goddard
                                           -------------------------------------
                                           Jerry W. Goddard


Dated: August 16, 2000                     /s/ Naoya Yoshikawa
                                           -------------------------------------
                                           Naoya Yoshikawa


Dated: August 16, 2000                     /s/ Peter D. Voss
                                           -------------------------------------
                                           Peter D. Voss

                                       45