**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, 2007**





[
      ]
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      transition period from _______________ to ________________




Commission
      File Number: **000-29780**




**SOLPOWER
      CORPORATION**


(*Name
      of Small Business Issuer in its Charter*)




**Nevada**
              (*State
                or other jurisdiction of**incorporation
                or organization*)
            **87-0384678**
              (*IRS
                Employer**Identification
                No.*)**307
                East 22nd
                Street**
              **San
                Pedro, CA**
              (*Address
                of principal executive offices*)
            **90731**
              (*Zip
                Code*)


**(310)
      940-6408**


(*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 is not required to file reports pursuant to Section 13 of
      15
      (d) of the Exchange Act  ____





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [ ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
                No  X





Registrant’s
      revenues for the fiscal year ended March 31, 2007, were $410,592.





The
      aggregate market value of the common stock held by non-affiliates computed
      based
      on the closing price of such stock on September 18, 2007, was approximately
      $716,626.





The
      number of shares outstanding of the registrant’s classes of common stock, as of
      September 18, 2007, was 72,259,727 shares.  No shares of the
      registrant’s preferred stock were outstanding.





Documents
      incorporated by reference: None.


Transitional
      Small Business Disclosure Format (check
      one):      Yes    No
X


1


**SOLPOWER
      CORPORATION**


**_________________________________**




**INDEX
      TO THE FORM 10-KSB FOR THE**


**FISCAL
      YEAR ENDED MARCH 31, 2007**








**PART
                  I.**ITEM
                  1.
              DESCRIPTION
                  OF BUSINESS
              3ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY
              10ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              10ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              11**PART
                  II.**ITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
              11ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              11ITEM
                  7.
              FINANCIAL
                  STATEMENTS
              15ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              31ITEM
                  8A.
              CONTROLS
                AND PROCEDURES
              31**PART
                  III**ITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION 16(A)
                OF
                  THE EXCHANGE ACT; AUDIT COMMITTEE FINANCIAL EXPERT; CODE OF
                  ETHICS
              32ITEM
                  10.
              EXECUTIVE
                  COMPENSATION
              33ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              34ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              34ITEM
                  13.
              EXHIBITS
                  AND REPORTS ON FORM 8-K
              35ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              36


2


**PART
      I**





**SPECIAL
      NOTE ON FORWARD-LOOKING STATEMENTS**





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




Forward-looking
      statements involve risks and uncertainties and include, but are not limited
      to,
      statements of future events, our plans and expectations, financial projections
      and performance and acceptance of our product in the marketplace. We may make
      additional written or oral forward-looking statements from time to time in
      filings with the Securities and Exchange Commission (*“SEC”*), through
      press releases or otherwise. Wherever possible, we have identified these
      forward-looking statements by words such as “*believes*,”
*“anticipates,*” “*contemplates*,” “*expects,*”
“*intends,*” “*projects*,” “*plans*,”
“*forecasts,*”
      *“estimates”* and similar expressions. These statements reflect our
      current views about future events and financial performance or operations and
      are applicable only as of the date the statements are made. Our actual results
      may differ materially from these statements. Factors that may cause or
      contribute to differences include, but are not limited to, those discussed
      in
“Description of Business - Factors Affecting Future Performance” and
“Management’s Discussion and Analysis or Plan of Operations,” as well as those
      factors discussed elsewhere in this Form 10-KSB and in any exhibits
      attached.




Although
      we believe that the assumptions underlying our forward-looking statements in
      this Form 10-KSB are reasonable, any of the assumptions could prove inaccurate.
      There can be no assurance that the results contemplated in forward-looking
      statements will be realized. In addition, as disclosed under “Description of
      Business – Factors Affecting Future Performance,” our business and operations
      are subject to substantial risks which increase the uncertainties inherent
      in
      the forward-looking statements included in this Form 10-KSB.




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




**ITEM
      1.                      DESCRIPTION
      OF BUSINESS**





**General
      Development of Business**





We
      are in
      the business of producing, marketing and distributing *Soltron**®*,
      a
      proprietary enzyme-based fuel enhancing product. Our business plan contemplates
      distributing this product on a worldwide basis.




Solpower
      was originally incorporated in Utah in 1982 as Dynafuel Corporation and our
      original business involved research and development of an experimental fuel
      using alcohol and other chemicals in a proprietary combination to produce a
      gasoline-like motor fuel. In July 1996, we merged into a newly-formed subsidiary
      incorporated in Nevada to change our corporate domicile. In November 1996,
      we
      entered into a licensing agreement with Dominion Capital Pty Ltd. (“*Dominion
      Capital*”) to acquire the exclusive manufacturing, distribution, marketing
      and sales rights for *Soltron**®*
      in the
      United States, Canada and Mexico. As a result of entering into this licensing
      agreement, Dominion Capital and its affiliates gained control of Solpower and
      a
      new Board of Directors and new management were installed. A corporate philosophy
      of acquiring and commercializing environmentally friendly products was
      initiated. In June 1998, we entered into a second licensing agreement with
      Dominion Capital and acquired the exclusive manufacturing, distribution,
      marketing and sales rights for the product *SP34ETM* in the United States,
      Canada and Mexico.  In December 2000, we acquired the E*COR enzyme
      division of Perix Industries, Inc., including all the rights to the *KLEAN*product line.  *KLEAN* is a line of enzyme-based cleaners
      and bio-remediation and petroleum deposit control agents.  We
      discontinued the *KLEAN*product line in the fiscal year ended March 31,
      2003.





On
      January 31, 2003, we acquired the outstanding shares of Virtual Technologies
      for
      6,000,000 shares of our unregistered, restricted common stock.  As a
      result of this acquisition, we gained the exclusive, worldwide manufacturing,
      distribution, marketing and sales rights to SP34ETM and the related refrigerant
      gas products, SP22E-A, SP22E-B and SP22E-C.




3






On
      February 20, 2003, we acquired the exclusive worldwide manufacturing,
      distribution, marketing and sales rights to Soltron®pursuant
      to an
      Acquisition Agreement with Dominion Capital, under which we issued 9,000,000
      shares of our restricted common stock.  During the year ended March
      31, 2004, management determined that this asset was impaired for accounting
      purposes and wrote-off the capitalized amounts related to these
      rights.  We still control these marketing rights and continue to
      market our Soltron®
      product.




On
      September 30, 2005, we sold all the outstanding shares of Virtual Technologies
      to Les Woolridge or Assigns in exchange for a royalty equal to four percent
      (4%)
      of gross sales of SP34ETM (excluding taxes and freight) for a period of twenty
      years, payable quarterly.





**Products**





We
      market
      and distribute *Soltron**®*,
      a
      proprietary enzyme-based fuel enhancing and distribution of the enzyme
      concentrate for utilization in private labeling arrangements.  We
      currently distribute this product primarily through sales channels in the United
      States, Central America, American Samoa, Europe and Australia.





***Soltron******®*****.***Soltron**®*
      is an
      enzyme-based liquid fuel-enhancing product that was developed over a period
      of
      18 years by a group of scientists at the Japanese Institute of Bio-Energy.
      Use
      data has shown that when added to liquid fossil fuels *Soltron**®***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**®*
      changes
      the fuel’s molecular structure and improves its oxygen absorption and combustion
      efficiency. *Soltron**®**’s*
      enzymes are naturally powerful surfactants and dispersants. Damaging fuel
      contaminants such as sludge, fungi and mold are broken down and lose their
      ability to stick to tank walls and lines. The resulting microscopic particulate
      is combusted, while larger contaminants are filtered out. The dispersion of
      microbial contamination reduces corrosive attack on fuel tanks, pumps and
      injectors. *Soltron**®***can
      be added to all liquid fossil fuels including gasoline, diesel and light and
      heavy oils at the fuel pump or in bulk fuel tanks and has gained acceptance
      in
      the marine industry where biological fuel contamination is a persistent
      problem.





*Soltron**®*
      is
      marketed as a natural enzyme product that will reduce emissions, improve fuel
      economy and reduce engine maintenance. *Soltron**®*
      has been
      sold commercially in Japan since 1993 and in Australia since 1996.





**Suppliers**





***Soltron******®******.****Soltron**®*
      consists
      of natural organic enzymes mixed with low odor base solvent. The enzyme
      concentrate used in the manufacture of *Soltron**®*
      is
      produced exclusively by IBE Company Ltd.,of Tokyo,
      Japan
      and supplied to us through our licensing agreement with Dominion
      Capital.  IBE Company Ltd.,has indicated
      that it will be able to supply the enzyme concentrate in sufficient quantities
      to meet our anticipated needs.  Low odor base solvent is readily
      available through numerous local suppliers.  We contract on a specific
      order basis with third parties to blend and bottle this product.  We
      do not have any long-term contracts for our blending and bottling, but believe
      these services are readily available.  We have also developed our own
      proprietary bottle design for retail packaging.





**Marketing
      Strategies**





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





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






4





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





We
      are
      currently utilizing distributors, oil marketers, independent sales
      representatives and direct sales activities to provide a focused marketing
      effort, which we believe will expose *Soltron**®*
      directly
      to prospective customers. We employ a national sales manager who develops and
      services distributors and independent sales representatives throughout the
      United States, Canada and Mexico. We also utilize other traditional distribution
      channels including a Web site and resale distribution through retail chains
      such
      as NAPA. In addition, through private labeling arrangements, we also sell
*Soltron**®*through Ocean Bio-Chem, Inc. (dba Starbrite) under the brand
      name “Startron,” and through Xtra Export Trade under the brand name “XBee,”
throughout all of the European Union countries.





**Product
      Rights Agreements**





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





***SP34E******TM*****.**
      In June 1998, we acquired the exclusive rights to produce, market and
      distribute *SP34ETM* in North America through an agreement with Dominion
      Capital in consideration for 6,000,000 shares of our common stock and the
      payment to Dominion Capital of a royalty of $2.25 per kilogram (subsequently
      amended to 2.5% of gross sales) of *SP34ETM* that we sell. The term of the
      agreement commenced on July 1, 2000, continues for five years and was renewable
      for an additional five years at our option. On January 31, 2003, we acquired
      the
      outstanding shares of Virtual Technologies for 6,000,000 shares of our
      restricted common stock. As a result of this acquisition, we gained the
      exclusive, worldwide manufacturing, distribution, marketing and sales rights
      to
*SP34ETM* and the related refrigerant gas products, *SP22E-A, SP22E-B*and *SP22E-C*. This acquisition terminated the aforementioned
      royalty obligation of 2.5% of gross *SP34ETM* sales. Virtual Technologies
      has licensed *SP34ETM* and granted exclusive manufacturing and
      distribution rights in Australia and New Zealand to A-Gas. On September 30,
      2005, we sold all the outstanding shares of Virtual Technologies to Les
      Woolridge in exchange for a royalty equal to four percent (4%) of gross sales
      of
      SP34ETM (excluding taxes and freight) for a period of twenty years payable
      quarterly.





At
      March
      31, 2007,  and in accordance with SFAS No. 144, the Company was
      required to assess the recoverability of the Intangible Royalty Agreement
      relating to the disposal of Virtual Technologies. In performing this assessment,
      the primary factor considered by Management is the fact that no royalties under
      this royalty agreement have been collected since its inception. As such,
      management determined that this royalty agreement was impaired and reduced
      the
      value to zero at March 31, 2007, due to the uncertainty of collecting the
      royalty payments.





**Proprietary
      Rights**





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





We
      have
      registered the trademark “*Soltron**®*”
and
      the
      service mark “*Solpower**®*”
with
      the
      United States Patent and Trademark Office (“*USPTO*”). We have also
      registered *Soltron**®*
      with the
      EPA for use as an aftermarket additive and for bulk fuel treatment.




5





**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**®*
      include
      STP*®*
      Gas Treatment, STP*®*
      Diesel
      Treatment and STP*®*
      Smoke
      Treatment (all produced by First Brands Corporation), Lucas Oil Fuel Treatment
      (produced by Lucas Oil Products, Inc.), Slick 50*®*
      (produced
      by Slick 50 Products Corporation), Valvtect*®*
      Dieselguard (produced by Valvtect Petroleum Products Corp.) and Fuelon*®*
      (produced
      by Fuelon International, Inc.). These fuel additives make similar claims of
      performance benefits but are based upon older conventional chemical
      technologies. We believe *Soltron**®*
      is the
      only enzyme-based fuel technology currently on the market, and we believe it
      offers a greater range of benefits at a lower cost than our competitor’s
      conventional chemical additives.





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 product
      will
      meet with consumer approval, that competitors will not develop and market
      products that are similar or superior to our product or that we will be able
      to
      successfully enhance our product or develop new products meeting with consumer
      approval.





**Regulation**





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





Aftermarket
      fuel additives are required to be registered with the EPA Fuels and Energy
      Division. We have registered *Soltron**®***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**®*.





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
      March
      31, 2007, we employed one full time sales person. Our employee is not covered
      by
      any collective bargaining agreement and we consider our relationship with our
      employee to be good.





**RISK
      FACTORS**





**Risk
      Affecting Our Business**




6






***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**®*
      in the
      United States and elsewhere throughout the world.





***History
      of Losses***





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





***Additional
      Capital Requirements***





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





***Need
      to Develop Sales and Product Awareness***





Establishment
      of a distribution network sufficient to create and supply customer demand for
      *Soltron**®*
      will be
      critical to our future success. We anticipate developing this network primarily
      through distributors with established distribution channels in the fuel, oil
      chemical and automotive aftermarket industries. Numerous factors, including
      lack
      of sufficient inventory or capital, or failure of our product 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 product. While we intend to engage qualified
      personnel to assist in establishing our distribution network, no assurance
      can
      be given that our product 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 Market Acceptance of Our Product, Limited Marketing
      Experience***





We
      are
      still in the early stages of marketing *Soltron**®*.
      As is
      typical with new products, demand and market acceptance for our product is
      subject to a high degree of uncertainty. Achieving widespread market acceptance
      for our product 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 product. 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 product. 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 product will achieve
      widespread market acceptance or that our marketing efforts will result in future
      profitable operations.





***Variability
      of Operating Results and Volatility of Common Stock
      Prices***





Our
      quarterly operating results have in the past been, and are anticipated in the
      future to be, highly volatile. While we anticipate that increased sales of
      our
      product 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.





7




***Limited
      Product Line***





We
      currently hold the marketing and distribution rights to *Soltron**®*.
      Our
      future success and profitability will, to a very high degree, depend upon the
      market acceptance of this product and our ability to improve this
      product.





***Supply,
      Capacity and Distribution Constraints***





To
      successfully market our product, we must be able to fill orders promptly for
      our
      shipment. Our ability to meet our supply requirements promptly will depend
      on
      numerous factors including our ability to establish successfully an effective
      distribution network and to maintain adequate inventories. The ability of our
      sole supplier of the *Soltron**®***enzyme
      to adequately produce the enzymes needed to produce *Soltron**®***in
      volumes sufficient to meet demand will also affect our ability to produce this
      product. Failure to adequately supply product to distributors and retailers
      or
      of any of our suppliers 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**®*
      and on
      other suppliers of chemicals. Chemicals are subject to price fluctuations based
      upon supply and demand. In addition, because the *Soltron**®*
      enzyme is
      produced in Japan, fluctuations in currency values could adversely affect our
      cost of this product. Interruption of our product supply could result from
      several factors, such as disruption of supply of raw product, work stoppages,
      strikes or other labor difficulties, changes in governmental or international
      regulations or natural or man caused disasters occurring with respect to our
      suppliers. Any increase in the costs of our raw materials or disruption of
      our
      suppliers could severely and adversely affect our business
      operations.





***Reliance
      on Management; Limited Personnel***





Attracting
      and retaining qualified personnel is critical to our business plan. In
      particular, our success is highly dependent on the services of our current
      Chief
      Executive Officer, James H. Hirst, who took office on May 1, 2006. Mr. Hirst
      is
      an at-will employee and we do not maintain key man life insurance. There can
      be
      no assurance that we will not lose the benefit of his services. The loss of
      Mr.
      Hirst’s services or our inability to attract or retain alternative or additional
      qualified personnel would have a materially adverse affect on our business.
      No
      assurances can be given that we would be able to retain or attract such
      qualified personnel or agents, or to successfully implement our business
      plan.





***Management
      of Growth***





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





***Seasonal
      Fluctuations***





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 are highly competitive. We believe that our product
      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 product is 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.





8





***Limited
      Patent and Proprietary Information Protection***





We
      do not
      believe that our product or our proprietary production processes infringe on
      proprietary rights of others, but we cannot give any assurance that infringement
      claims will not be made against us. If it is determined that our product or
      processes do infringe someone else’s proprietary rights, we could be required to
      modify our product 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 our product or processes were held to infringe patents or
      proprietary rights of others, we could, under certain circumstances, be held
      liable for damages, which could be significant in amount and which could
      materially and adversely effect our operations. We rely on confidentiality
      agreements, trade secret protection and other methods to protect our processes,
      concepts, ideas, documentation and other information related to our product
      and
      proprietary processes. However, these methods may not afford complete protection
      and there can be no assurance that others will not independently develop similar
      products and processes. All of our employees are required to sign
      non-disclosure, non-competition and inventions agreements, but there can be
      no
      assurance that a court would enforce such agreements or that they would provide
      us with any meaningful protection. There can be no assurance that we will be
      able to adequately protect our trade secrets or that other companies will not
      acquire information that we consider proprietary.





***Product
      Acquisition Agreement***





We
      own
      the worldwide rights to manufacture and distribute *Soltron**®*,
      as well
      as the process, formulae and other proprietary rights related to this product,
      pursuant to product acquisition agreements with Dominion Capital.  Any
      termination or impairment of the rights of Dominion Capital to such proprietary
      rights or to our rights under these agreements would materially adversely affect
      our operations.





***Need
      for Additional Product Development***





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





***Adequacy
      of Product Liability Insurance***





The
      use
      of our product 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 Stockholders/Foreign Stockholders***





Our
      principal stockholders, Australian Native Estates Pty Ltd., Marino Investment
      Services Ltd., Pastoral Heights Pty Ltd.,and their affiliates own or control
      a
      substantial block of our outstanding common stock. Accordingly, these
      stockholders, acting together, would be able to effectively control matters
      requiring approval by our stockholders, including the election of our board
      of
      directors and approval of certain significant transactions. Australian Native
      Estates Pty Ltd., Marino Investment Services Ltd., and Pastoral Heights Pty
      Ltd., are domiciled in Australia and if we, or our stockholders, were to bring
      legal action against them, their domicile in a foreign country may prevent
      them
      from being subject to jurisdiction of a United States court. While we or our
      shareholders may be able to proceed against these entities 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.




9




***International
      Trade***





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








**Risks
      Relating to Our Common Stock**





***The
      limited trading of our Common Stock may make it difficult to sell shares of
      our
      Common Stock***




Trading
      of our common stock is conducted on the Bulletin BoardPink Sheets. This has
      an
      adverse effect on the liquidity of our common stock, not only in terms of the
      number of shares that can be bought and sold at a given price, but also through
      delays in the timing of transactions and reduction in security analysts’ and the
      media’s coverage of us. This may result in lower prices for our common stock
      than might otherwise be obtained and could also result in a larger spread
      between the bid and asked prices for our common stock.





***Because
      our Common Stock is a “penny stock,” it may be difficult to sell shares of our
      Common Stock at times and prices that are acceptable***




Our
      common stock is a “penny stock.” Broker-dealers who sell penny stocks must
      provide purchasers of these stocks with a standardized risk disclosure document
      prepared by the SEC. This document provides information about penny stocks
      and
      the nature and level of risks involved in investing in the penny stock market.
      A
      broker must also give a purchaser, orally or in writing, bid and offer
      quotations and information regarding broker and salesperson compensation, make
      a
      written determination that the penny stock is a suitable investment for the
      purchaser, and obtain the purchaser’s written agreement to the purchase. The
      penny stock rules may make it difficult for you to sell your shares of our
      stock. Because of the rules, there is less trading in penny stocks. Also, many
      brokers choose not to participate in penny stock transactions. Accordingly,
      you
      may not always be able to resell our shares of common stock publicly at times
      and prices that you feel are appropriate.




**Risks
      Relating to Our Financial Condition**





***Our
      independent auditors have reported that conditions exists that raise substantial
      doubt about our ability to continue as a going
      concern***





We
      have
      had net losses for each of the years ended March 31, 2007, and March 31, 2006,
      and we have an accumulated (deficit) as of March 31, 2007, of $(14,008,897).
      Since the financial statements for each of these periods were prepared assuming
      that we would continue as a going concern, in the view of our independent
      auditors, these conditions raise substantial doubt about our ability to continue
      as a going concern. Furthermore, since we may not generate significant revenues
      in the foreseeable future, our ability to continue as a going concern may
      depend, in large part, on our ability to raise additional capital through equity
      or debt financing transactions. If we are unable to raise additional capital,
      we
      may be forced to discontinue our business.




**ITEM
      2.                      DESCRIPTION
      OF PROPERTY**





Until
      May
      31, 2006, we leased our corporate offices in Coral Springs, Florida and
      warehouse space in San Pedro, California pursuant to a month-to-month lease,
      for
      which we paid rent of $1,145 per month. Beginning in June 2006 we moved the
      corporate offices back to San Pedro, California.





**ITEM
      3.                      LEGAL
      PROCEEDINGS**





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




10







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





None.








**PART
      II**





**ITEM
      5.                      MARKET
      FOR COMMON STOCK AND SHAREHOLDER INFORMATION**





**Market
      Information**





Our
      common stock is traded on the Pink Sheets under the symbol “*SLPW.PK*.”
The following table sets forth the quarterly high and low bid prices
      per share
      for the common stock, as reported by the Bulletin Board Pink Sheets for the
      fiscal years indicated. On March 31, 2007, there were approximately 400
      beneficial holders of our common stock.  The following table sets
      forth the high and low sales price per share of our common stock for the past
      two fiscal years.




Fiscal
                  Year
              
              Quarter
                Ended
              
              High
              
              Low2006
              
              June
                  30, 2005
              
              $0.15
              
              $0.10September
                  30, 2005
              
              $0.12
              
              $0.10December
                  31, 2005
              
              $0.10
              
              $0.06March
                  31, 2006
              
              $0.12
              
              $0.052007
              
              June
                  30, 2006
              
              $0.20
              
              $0.04September
                  30, 2006
              
              $0.20
              
              $0.05December
                  31, 2006
              
              $0.15
              
              $0.03March
                  31, 2007
              
              $0.10
              
              $0.01
  The
      prices set forth in this table represent quotes between dealers and do not
      include commissions, markups or markdowns, and may not represent actual
      transactions.





**Dividend
      Policy**





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





**Recent
      Unregistered Stock Issuances**





On
      January 18, 2007, the Company issued 600,000 shares of restricted common stock
      at $0.05 per share for aggregate of cash proceeds of $30,000, pursuant to the
      sale of common stock in a private placement.





On
      February 23, 2007, the Company issued 1,100,000 restricted common shares at
      $0.05 for the settlement of and accounts payable debt aggregating
      $55,000.








**ITEM
      6.                      MANAGEMENT
      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 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.




11




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





**INTRODUCTION**





We
      continue to report significant losses. We are pursuing different marketing
      avenues in an attempt of increasing *Soltron**®*
      product
      sales under our brand name and private labeling, together with the elimination
      of the costs and consolidation of income (losses) from our formerly wholly-owned
      subsidiary, Virtual Technologies Pty Ltd., gives us an expectation that we
      will
      continue to reduce our operating losses.. Because of limited operating capital,
      we were not able to finalize the deployment strategy during the fiscal year
      ended March 31, 2007. Based upon the annual net revenue of $410,592 for the
      current fiscal year as compared to the prior fiscal year of $569,008, we are
      deploying our concentrated efforts on distributor suppliers under private
      labeling in order that we may be able to change the trend in revenues and
      increase sales without incurring additional distribution costs as we implement
      new marketing strategies for our product lines in fiscal year 2008. During
      the
      year ended March 31, 2007, management continued to maintain operational
      efficiency with a minimum of administrative overhead. We currently are
      concentrating our focus on the *Soltron**®*
      product
      line by increasing sales of the enzyme concentrate to private labeling
      distributors while identifying additional distributors and developing direct
      sales activities in new markets such as international sales, bulk users, small
      generation power plants and commercial uses in metropolitan city
      fleets.





During
      our fiscal years ended March 31, 2007 and 2006, we have continued to be in
      the
      middle stages of being a development company, seeking to ascertain the
      appropriate mix of products for future marketing and distribution.  We
      continue to explore distribution and marketing of our products through
      established distributors, both wholesale and retail.  Through this
      methodology we attempt to cut costs, increase revenue and increase profits.
      As a
      result of utilizing established distributors, we believe we may penetrate our
      product channels in a more cost effective manner that will result in increased
      revenues, profits and cash flow as this methodology of distributors penetrate
      the markets and sell to end users of our products.





We
      intend
      to seek listing on the OTC Bulletin Board, which may provide a better ability
      to
      attract investors.  We are in process of completing our Securities Act
      filings to enable our listing for trading on the OTC Bulletin
      Board.  We intend to raise capital to provide working capital and to
      expand our present business segments.  We also have outstanding
      warrants and stock options that, if converted, will provide cash flow for
      working capital.





**RESULTS
      OF OPERATIONS**





**Year
      Ended March 31, 2007 Compared to Year Ended March 31, 2006**





Revenues
      for the year ended March 31, 2007, were $410,592 as compared to $569,008 for
      the
      year ended March 31, 2006. The decrease in revenues of $158,416 was mainly
      attributable to decreased barrels *Soltron**®***product**sold
      to a major distributor in the United States, aggregating $329,700 and was offset
      by increased revenues from the sale of the *Soltron**®***concentrate
      for private labeling aggregating $180,000.





Gross
      profit increased from 51.5% for the year ended March 31, 2006, to 58.2% for
      the
      year ended March 31, 2007. The increase in gross profit margin of 6.7% resulted
      primarily from higher margins on sales of bulk enzyme product as compared to
      sales of bulk *Soltron**®*
      product.
      Our sales in the current year period are comprised mainly of enzyme products
      as
      compared to the prior period in which our sales were *Soltron**®*
      product.
      Gross profit for the current year ended December 31, 2007, decreased $54,403
      from the comparable prior year as a result of decreased bulk
*Soltron**®*
      product
      sales in the current year.





Operating
      expenses for the year ended March 31, 2007 were $496,064 as compared to $634,375
      for the year ended  March 31, 2005, or a decrease of $138,311 This
      decrease is mainly attributable to decreased costs incurred in administration
      compensation and consulting of $131,696, accounting and legal aggregating
      $76,888, bad debt write-offs of $5,819, telephone and internet of $6,657,
      executive expenses aggregating $27,003, travel and entertainment of $21,991
      and
      office operating costs aggregating $7,564. The decreases in the current year
      are
      the result of an upper management change and decreased professional fees
      incurred as the Company becomes current in it’s financial reporting. These
      decreases were offset by an impairment charge of $111,000 to operations in
      the
      year ended March 31, 2007, on the intangible royalty contract.




12




Other
      income (expense) increased to $20,371 during the current year ended March 31,
      2007, as compared to the prior year ended March 31, 2006 of $11,103, an increase
      of $9,268. This increase is mainly comprised of increased royalty income
      recognized in the current year of $2,466, recognition of forgiveness of debt
      of
      $4,986 and an increase in the exchange rate differential from the prior year
      of
      $2,411.





For
      the
      year ended March 31, 2007, we incurred a net (loss) of $(236,956) or $0.00
      per
      share, as compared to a net (loss) of $(285,174) or $(0.00) per share for the
      year ended March 31, 2006. The decreased (loss) of $(48,218) for the current
      year ended is mainly attributable to the decrease in operating expenses of
      $138,311.





**Impact
      of Inflation**





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





**Plan
      of Operation**





We
      continue to historically report significant losses. Nevertheless, we believe
      that we may be able to continue to reduce our operating losses based on the
      current trend of increasing *Soltron**®*
      product
      sales, together with licensing fees from Virtual Technologies Pty
      Ltd.  Because of discussions with distributors we anticipate increased
      sales of the S*oltron**®*
      during our
      fiscal year 2008, mainly in the area of sales *Soltron**®*concentrate for private labeling..





During
      our fiscal years ended March 31, 2007 and 2006, and continuing into fiscal
      year
      2008, the Company has been in the middle stages as a development company seeking
      to find the complementary mix of products and projects for future development,
      marketing and distribution. The Company continues to explore the total
      distribution and marketing for its products through established distributors,
      both wholesale and retail. The Company anticipates that this methodology will
      continue to enable it to cut costs, increase the revenue stream and increase
      profits over the long range. Although gross profits may decrease initially
      with
      certain revenues going to the benefit of the distributors, we believe that
      the
      Company’s revenues, profits and cash flow will increase in the long term as a
      result of this methodology as more distributors penetrate and sell through
      to
      the end users of these products. Distribution of the enzyme technology utilizing
      a private labeling arrangement has proven effective by increasing revenue in
      that sector, gross profit and eliminating distribution costs in our current
      year
      ended March 31, 2007.





Part
      of
      our business plan is to arrange adequate financing to assist the Company to
      implement our business strategies. The Company anticipates continuing to explore
      the expansion of additional product lines or business segments with
      environmentally friendly products with established marketplaces and to
      accomplish these through mergers and acquisitions. A plan to move the Company
      into other potentially profitable businesses in environmentally friendly
      segments and to enhance the performance of the current product mix is currently
      being pursued.





We
      continue to progress getting our financial reporting current in order that
      we
      may have our securities quoted on the OTC Bulletin Board, which may provide
      a
      better ability to attract investors.  We are in process of completing
      our Securities Act filings to facilitate this process. We intend to raise
      capital to provide working capital and to expand our present operations and
      pursue the other segments of our business plan. We also have outstanding stock
      options that, if converted, will provide additional cash flow for working
      capital.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern, which contemplates the realization of assets
      and the satisfaction of liabilities in the normal course of business. The
      Company historically has experienced significant losses and negative cash flows
      from operations. As of March 31, 2007, the Company has a deficiency in working
      capital of $762,675, accumulated (deficit) of $(14,008,897) and a net (loss)
      for
      the year ended March 31, 2007, of $(236,956).




13





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





**Liquidity
      and Capital Reserves**





Product
      sales did provide sufficient working capital to fund our operations during
      the
      year ended March 31, 2007. Operations provided $18,339 of cash during the year.
      Additional liquidity was provided by the sale of common stock in private
      placement aggregating $30,000. During this same period for the previous fiscal
      year, $(346,010) was utilized by operations and was offset by proceeds from
      sales of common stock and from granted call options aggregating $175,000, and
      net advances from a major customer aggregating $60,710.





The
      sale
      of our subsidiary, Virtual Technologies Pty. Ltd., will have no material effect
      on our future liquidity.


As
      of
      March 31, 2007, we had no commitments for capital expenditures.





**Off-Balance
      Sheet Arrangements**




During
      the quarter ended March 31, 2007, we did not engage in any off balance sheet
      arrangements as defined in item 303(c) of the SEC’s Regulation S-B.




**Critical
      Accounting Policies**




Our
      financial statements have been prepared in accordance with accounting principles
      generally accepted in the United States of America, which require us to make
      estimates and judgments that significantly affect the reported amounts of
      assets, liabilities, revenues and expenses, and related disclosure of contingent
      assets and liabilities at the date of the consolidated financial statements.
      Note 2, “Significant Accounting Policies” in the Notes to the Financial
      Statements in our Form 10-KSB describes our significant accounting policies
      which are reviewed by management on a regular basis.




An
      accounting policy is deemed by us as critical if it requires an accounting
      estimate to be made based on assumptions about matters that are uncertain at
      the
      time the estimate is made, and if different estimates that reasonably could
      have
      been used, or changes in the accounting estimates that are reasonable likely
      to
      occur periodically, could materially impact the financial statements. The
      policies and estimates that we believe are most critical to the preparation
      of
      our consolidated financial statements and that require a higher degree of
      judgment are:




Stock-based
      compensation; and




Valuation
      of warrants and options under the Black-Scholes option pricing
      model.




Warrants
      and options are accounted for fair value using the Black-Scholes option pricing
      model. That model requires assumptions related to the remaining term of the
      instruments and risk-free rates of return, the Company’s current common stock
      price and expected dividend yield, and the expected volatility of the common
      stock price over the life of the warrants or options. The identification of,
      and
      accounting for the assumptions used to value them can significantly affect
      the
      financial statements.




**New
      Accounting
      Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities*(“SFAS 159”).  SFAS 159 allows entities to measure at
      fair value many financial instruments and certain other assets and liabilities
      that are not otherwise required to be measured at fair value. SFAS 159 is
      effective for fiscal years beginning after November 15, 2007. We have not
      determined what impact, if any, that adoption will have on our results of
      operations, cash flows or financial position.





In
      June
      2007, the FASB ratified a consensus opinion reached by the EITF on EITF 07-3,
      Accounting for Nonrefundable Advance Payments for Goods and Services Received
      for use in Future Research and Development Activities (“EITF Issue
      07-3”).  The consensus in EITF Issue 07-03 is effective for fiscal
      years and interim periods within those fiscal years, beginning after December
      15, 2007. The Company has had no transactions in this area and future adoption
      of EITF Issue 07-3 should have no effect on our results of operations, cash
      flows or financial position.





14


**ITEM
      7.                      FINANCIAL
      STATEMENTS**




**INDEX**Report
                  of Independent Registered Public Accounting Firm
              16Balance
                  Sheet at March 31, 2007
              17Statements
                  of Operations for the Years EndedMarch
                  31, 2007 and 2006
              18Statements
                  of Stockholders’ Deficit for the Years EndedMarch
                  31, 2007 and 2006
              19Statements
                  of Cash Flows for the Years EndedMarch
                  31, 2007 and 2006
              20Notes
                  to the March 31, 2007 and 2006 Financial Statements
              22
  15
  MEYLER
      & COMPANY, LLC


CERTIFIED
      PUBLIC ACCOUNTANTS


ONE
      ARIN
      PARK


1715
      HIGHWAY 35


MIDDLETOWN,
      NJ 07748





Report
      of
      Independent Registered Public Accounting Firm




To
      the
      Board of Directors and


Stockholders
      of Solpower Corporation




We
      have
      audited the accompanying balance sheet of Solpower Corporation as of March
      31,
      2007 and the related statement of operations, stockholders’ deficit and cash
      flows for the two years then ended. These financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audit.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, 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, 2007, and the results of its operations and its cash flows for the two
      years
      then ended in conformity with accounting principles generally accepted in the
      United States of America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern.  As discussed in Note 1 to the
      financial statements, the Company’s significant operating losses and negative
      working capital raise substantial doubt about its ability to continue as a
      going
      concern.  The financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.






/s/ Meyler
              & Company, LLCMiddletown,
              NJSeptember
              5, 2007


16


**SOLPOWER
          CORPORATION**
 **BALANCE
          SHEET**
 **March
          31, 2007**
 **ASSETS**CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              
              $
              19,891Prepaid
                  expenses
              
              
              
              11,803Inventory
              
              
              
              52,274Total
                  Current Assets
              
              
              
              83,968TOTAL
                  ASSETS
              
              
              $
              83,968**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIES:Customer
                  advances
              
              
              $
              320,102Accounts
                  payable - trade
              
              
              
              181,325-
                  related parties
              
              
              
              208,963Accrued
                  expenses
              
              
              
              136,253Total
                  Current Liabilities
              
              
              
              846,643Commitments
                  and ContingenciesSTOCKHOLDERS'
                  (DEFICIT):Preferred
                  stock, $0.001 par value - 5,000,000 sharesauthorized;
                  issued and outstanding, none
              
              
              -Common
                  stock, $.001 par value - 100,000,000 sharesauthorized;
                  72,259,727  shares issued and outstanding
              
              
              722,597Additional
                  paid in capital
              
              
              
              12,523,625Accumulated
                  (deficit)
              
              
              
              (14,008,897
              )Total
                  Stockholder's (Deficit)
              
              
              
              (762,675
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' (DEFICIT)
              
              $
              83,968
  The
        accompanying notes are an integral part of these
        financial statements.
  17
  **SOLPOWER
          CORPORATION**
 STATEMENTS
        OF OPERATIONS AND COMPREHENSIVE
        INCOME (LOSS)  For the Years Ended March
        31, 2007 and 2006
  2007
              
              
              2006NET
                  REVENUES
              
              $
              410,592
              
              
              $
              569,008COST
                  OF REVENUES
              
              
              171,855
              
              
              
              275,868GROSS
                  PROFIT
              
              
              238,737
              
              
              
              293,140OPERATING
                  EXPENSES:Administration
                  compensation and consulting
              
              
              70,100
              
              
              
              201,796Accounting
                  and legal
              
              
              80,825
              
              
              
              157,713Sales
                  and marketing
              
              
              124,123
              
              
              
              133,240Impairment
                  of intangible royalty contract
              
              
              111,000
              
              
              
              -Other
                  general and administrative
              
              
              110,016
              
              
              
              141,626496,064
              
              
              
              634,375(LOSS)
                  FROM OPERATIONS
              
              
              (257,327
              )
              
              
              (341,235
              )OTHER
                  INCOME (EXPENSE):Exchange
                  rate differential
              
              
              2,251
              
              
              
              (160
              )Forgiveness
                  of debt
              
              
              4,986
              
              
              
              -Interest
                  income
              
              
              -
              
              
              
              992Royalty
                  income
              
              
              14,023
              
              
              
              11,557Interest
                  expense
              
              
              (889
              )
              
              
              (1,286
              )20,371
              
              
              
              11,103(LOSS)
                  BEFORE PROVISION FOR INCOMETAXES
                  AND DISCONTINUED OPERATIONS
              
              
              (236,956
              )
              
              
              (330,132
              )PROVISION
                  FOR INCOME TAXES
              
              
              -
              
              
              
              -(LOSS)
                  FROM CONTINUING OPERATIONS
              
              
              (236,956
              )
              
              
              (330,132
              )DISCONTINUED
                  OPERATIONS:Operating
                  (loss) from discontinued operations
              
              
              -
              
              
              
              (48,282
              )Gain
                  from disposition of discontinued operations
              
              
              -
              
              
              
              93,240Gain
                  from Discontinued Operatiions
              
              
              -
              
              
              
              44,958NET
                  (LOSS)
              
              $
              (236,956
              )
              
              $
              (285,174
              )Basic
                  and Diluted Profit (Loss) Per Common ShareContinuing
                  operations
              
              $
              0.00
              
              
              $
              0.00Discontinued
                  operations
              
              
              0.00
              
              
              
              0.00Total
              
              $
              0.00
              
              
              $
              0.00Weighted
                  Average Number of Common Shares OutstandingBasic
                  and Diluted
              
              
              70,791,234
              
              
              
              70,061,097A
                  summary of comprehensive (loss) for the years ended March 31, 2007
                  and
                  2006 are:
                Net
                  (Loss)
              
              $
              (236,956
              )
              
              $
              (285,174
              )Foreign
                  Currency Translation (Loss)
              
              
              -
              
              
              
              (2,423
              )Comprehensive
                  Income (Loss)
              
              $
              (236,956
              )
              
              $
              (287,597
              )
  The
        accompanying notes are an integral part of these financial
        statements.
  18
  **SOLPOWER
        CORPORATION**
 **STATEMENT
        OF STOCKHOLDER'S DEFICIT**
 **For
        the Years Ended March 31, 2007 and 2006**
  AccumulatedOtherCommon Stock
              
              
              Paid-in
              
              
              Accumulated
              
              
              ComprehensiveShares
              
              
              Amount
              
              
              Capital
              
              
              (Deficit)
              
              
              Income
                  (Loss)
              
              
              TotalBalance,
                  March 31, 2005
              
              
              69,309,727
              
              
              $
              693,097
              
              
              $
              12,293,125
              
              
              $
              (13,486,767
              )
              
              $
              2,423
              
              
              $
              (498,122
              )Exercise
                  of warrants at $0.20 per share for common stock
              
              
              750,000
              
              
              
              7,500
              
              
              
              142,500
              
              
              
              -
              
              
              
              -
              
              
              
              150,000Issuance
                  of common stock at $0.05 per share
              
              
              500,000
              
              
              
              5,000
              
              
              
              20,000
              
              
              
              -
              
              
              
              -
              
              
              
              25,000Foreign
                  Currency Translation Adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,423
              )
              
              
              (2,423
              )Net
                  (loss) for the year ended March 31, 2006
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (285,174
              )
              
              
              -
              
              
              
              (285,174
              )Balance,
                  March 31, 2006
              
              
              70,559,727
              
              
              
              705,597
              
              
              
              12,455,625
              
              
              
              (13,771,941
              )
              
              
              -
              
              
              
              (610,719
              )Sale
                  of common stock at $0.05 per share
              
              
              600,000
              
              
              
              6,000
              
              
              
              24,000
              
              
              
              -
              
              
              
              -
              
              
              
              30,000Settlement
                    of accounts payable for common
                  stock
                    at $0.05 per share
              
              
              1,100,000
              
              
              
              11,000
              
              
              
              44,000
              
              
              
              -
              
              
              
              -
              
              
              
              55,000Net
                  loss for the year ended March 31, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (236,956
              )
              
              
              -
              
              
              
              (236,956
              )Balance,
                  March 31, 2007
              
              
              72,259,727
              
              
              $
              722,597
              
              
              $
              12,523,625
              
              
              $
              (14,008,897
              )
              
              $
              -
              
              
              $
              (762,675
              )
  The
        accompanying notes are an integral part of these financial
        statements.
  19
  STATEMENTS
        OF CASH FLOWS
 For
        the Years Ended March 31, 2007 and
        2006
 
 2007
              
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  (loss)
              
              $
              (236,956
              )
              
              $
              (285,174
              )Gain
                  from discontinued operations
              
              
              -
              
              
              
              44,958Net
                  (loss) attributable to continuing operations
              
              
              (236,956
              )
              
              
              (330,132
              )Adjustments
                  to reconcile net earnings (loss)  tonet
                  cash provided by (Used in) operating activities:Depreciation
                  and amortization
              
              
              6,000
              
              
              
              4,230Gain
                  on sale of assets
              
              
              -
              
              
              
              (93,240
              )Impairment
                  of intangible royalty contract
              
              
              111,000
              
              
              
              -Net
                  change in current assets and liabilities:Accounts
                  receivable
              
              
              32,994
              
              
              
              58,854Royalties
                  receivable
              
              
              11,397
              
              
              
              (11,397
              )Prepaid
                  expense
              
              
              257
              
              
              
              51,626Inventory
              
              
              125,870
              
              
              
              (80,884
              )Deposits
              
              
              350
              
              
              
              400Accounts
                  payable - trade
              
              
              (36,494
              )
              
              
              103,902- related parties
              
              
              (48,647
              )
              
              
              30,054Accrued
                  expenses
              
              
              52,568
              
              
              
              (124,381
              )Net
                  Cash Provided by (Used in) Continuing Operating Activities
              
              
              18,339
              
              
              
              (390,968
              )Net
                  gain from discontinued operations
              
              
              -
              
              
              
              44,958Net
                  Cash Provided by (Used in) Operating Activities
              
              
              18,339
              
              
              
              (346,010
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Net
                  change in investment of discontinued operations
              
              
              -
              
              
              
              48,282Disposition
                  of equipment
              
              
              -
              
              
              
              2,864Purchase
                  of  equipment
              
              
              -
              
              
              
              (3,829
              )Net
                  Cash Provided by Investing Activities
              
              
              -
              
              
              
              47,317CASH
                  FLOWS FROM FINANCING ACTIVITIES:Bank
                  overdraft
              
              
              (587
              )
              
              
              587Proceeds
                  from the exercise of warrants
              
              
              -
              
              
              
              150,000Proceeds
                  from sale of common stock and call options
              
              
              30,000
              
              
              
              25,000Net
                  customer advances
              
              
              (27,861
              )
              
              
              60,710Net
                  cash Provided by Financing Activities
              
              
              1,552
              
              
              
              236,297INCREASE
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              19,891
              
              
              
              (62,396
              )CASH
                  AND CASH EQUIVALENTS, BEGINNING OF YEAR
              
              
              -
              
              
              
              62,396CASH
                  AND CASH EQUIVALENTS, END OF YEAR
              
              $
              19,891
              
              
              $
              -
 The
          accompanying notes are an integral part of these financial
          statements.
 20
  SOLPOWER
        CORPORATION
 STATEMENTS
        OF CASH FLOWS
 For
        the Years Ended March 31, 2007 and
        2006
  2007
              
              
              2006SUPPLEMENTAL
                  CASH FLOW INFORMATION:Cash
                  paid for interest
              
              $
              889
              
              
              $
              -Cash
                  paid for income taxes
              
              $
              -
              
              
              $
              -SUPPLEMENTAL
                  DISCLOSURE OF NON-CASHFINANCING
                  ACTIVITIES:Stock
                  issued for  conversion of accounts payable and accrued
                  liability
              
              $
              55,000
              
              
              $
              -Intangible
                  asset acquired as part of discontinued operations
              
              $
              -
              
              
              $
              120,000
  The
        accompanying notes are an integral part of these financial
        statements.
  21


**SOLPOWER
      CORPORATION**





**NOTES
      TO THE FINANCIAL STATEMENTS**


**For
      The Years Ended March 31, 2007 And 2006**





**NOTE
      1 - BUSINESS, OPERATIONS, ORGANIZATION, LIQUIDITY AND BASIS OF
      PRESENTATION**





**Business
      Organization**





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





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





**Nature
      of Operations**





The
      principal business purpose of the Company is the sales and distribution of
      *Soltron**®**,*a fuel-enhancing product and until September 30, 2005, *SP34E*TM,
      a replacement
      refrigerant, throughout the world.





The
      Company has the exclusive worldwide sales, distribution, marketing and
      manufacturing rights to the product, *Soltron**®*,
      a
      fuel-enhancing product and to SP34ETM, SP22E-A,
      SP22E-B
      and SP22E-C, refrigerant gas products, which were sold in
      September  2005**.**





**Acquisitions**





During
      the year ended March 31, 2003, the Company acquired 100% of the outstanding
      stock of Virtual Technologies (Australia) Pty Ltd. The subsidiary was acquired
      by the issuance of 6,000,000 shares of restricted common stock by the Company.
      This acquisition delivers the exclusive worldwide sales, distribution, marketing
      and manufacturing rights to the products, SP34ETM, SP22E-A,
      SP22E-B
      and SP22E-C, refrigerant gas products.





During
      the year ended March 31, 2003, the Company acquired the worldwide rights to
      the
      product *Soltron**®***by
      the issuance
      of 9,000,000 restricted shares of its common stock. These rights include the
      exclusiveworldwide
      sales, distribution, marketing and manufacturing rights to the product,
*Soltron**®*,
      a
      fuel-enhancing product**.**In the year ended March 31,
      2004, the value of these rights was deemed impaired and the costs associated
      with these rights were written off.





**Discontinued
      Operations - Sale of Virtual Technologies Pty. Ltd.
      (Australia)**





On
      September 30, 2005, the Company signed an agreement for the sale of 100% of
      the
      outstanding common stock of Virtual Technologies Pty Ltd (VT) for assumption
      of
      all the assets and liabilities of VT and a royalty payment. The royalty payment
      is for a period of twenty (20) years and is equal to four percent (4%) of gross
      sales excluding taxes and freight. The royalty is due and payable within
      forty-five (45) days at the end of each calendar quarter, beginning with the
      quarter ending December 31, 2005. As part of the sale, the Company agreed that
      it would not enter into any sales, distribution, licensing, manufacturing or
      any
      other commercial application of the products (SP34E, SP22E-A, SP22E-B and
      SB22E-C) for a period of five (5) years and to maintain all information
      concerning the products as confidential.





This
      sale
      has been accounted for as a discontinued operation in accordance with Statement
      of Financial Accounting Standards (“SFAS”) No. 144, *Accounting for the
      Impairment or Disposal of Long-lived Assets.*  The Company has
      determined that the fair value of the royalty agreement is
      $120,000.  A gain on the disposal of $93,240 has been recognized on
      the sale and represents the excess of the fair value of the royalty agreement
      less the book value of VT.  The results of operations of VT for the
      current and prior periods have therefore been reported as discontinued
      operations. Operating results for VT are summarized as follows:






22


Year
                Ended March 31,2007
            
            
            2006Revenues
            
            $
            --
            
            
            $
            96,470Cost
                of Revenues
            
            
            --
            
            
            
            43,143Gross
                Profit
            
            
            --
            
            
            
            53,327Expenses:Selling,
                general and administrative
            
            
            --
            
            
            
            100,908Operating
                Income (Loss) from Continuing Operations
            
            
            --
            
            
            
            (47,581
            )Other
                Income (Expense):Interest
                income
            
            
            --
            
            
            
            174Miscellaneous
                income
            
            
            --
            
            
            
            --Interest
                expense
            
            
            --
            
            
            
            (875
            )Total
                Other Income (Expense)
            
            
            --
            
            
            
            (701
            )Income
                (Loss) Before Provision for Income Taxes
            
            
            --
            
            
            
            (48,282
            )Provision
                for Income Taxes
            
            
            --
            
            
            
            --Net
                Loss from Discontinued Operations
            
            $
            --
            
            
            $
            (48,282
            )





The
      Company determined that any cash
      flows do not result from a migration or continuance of activities and the
      Company has no significant continued involvement in the operations of
      VT.  The royalty agreement represents a passive royalty interest and
      the Company does not exert any control over the operations of VT. In accordance
      with EITF 03-13, *Applying the Conditions in Paragraph 42 of FASB Statement
      No. 144 in Determining Whether to Report Discontinued Operations*, the
      Company therefore concluded that the disposal of VT is classified as
      discontinued operations.





**Basis
      of Presentation, Going Concern,**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern, which contemplates the realization of assets
      and the satisfaction of liabilities in the normal course of business. The
      Company historically has experienced significant losses and negative cash flows
      from operations. As of March 31, 2007, the Company has a deficiency in working
      capital of $762,675, accumulated (deficit) of $(14,008,897) and a net (loss)
      for
      the year ended March 31, 2007, of $(236,956).





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





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





**Management
      Plans**





During
      our fiscal years ended March 31, 2007 and 2006, and continuing during the
      current fiscal year, the Company continues to be in the middle stages as a
      development company, seeking to find the complementary mix of products and
      projects for future development, marketing and distribution. The Company
      continues to explore the total distribution and marketing for its products
      through established distributors, both wholesale and retail. The Company
      anticipates that this methodology will enable it to continue to cut costs,
      increase the revenue stream and increase profits over the long range. Although
      profits may decrease initially with certain revenues going to the benefit of
      the
      distributors, we continue to believe that the Company’s revenues, profits and
      cash flow will increase in the long term as a result of this methodology as
      more
      distributors penetrate and sell through the end users of the products**.**Distribution of the enzyme technology utilizing a private
      labeling
      arrangement has proven effective by increasing revenue in that sector, gross
      profit and eliminating distribution costs.




23





In
      mid-January 2005, the Company contracted the services of Mr. Robert Kohn to
      review and formalize the short-term and long-range plans of the Company.
      Beginning in April 2005, Mr. Kohn became Interim CEO for the Company, and
      continued to develop the Company’s business environment and develop a business
      plan to move the Company into potential other profitable business segments
      and
      enhance the performance of the current product mix. In October 2005, Mr. Kohn
      became the full time CEO for the Company. On May 1, 2006, the Board of Directors
      of the Company accepted the resignation of Mr. Kohn and appointed Mr. James
      Hirst as President, Chief Executive and Principal Accounting
      Officer.





The
      Company anticipates continuing to explore the expansion of additional product
      lines with environmentally friendly products with established marketplaces
      and
      to accomplish these through mergers and acquisitions. A plan to move the Company
      into other potentially profitable businesses in environmentally friendly
      segments and to enhance the performance of the current product mix is currently
      being pursued.





The
      Company continues to seek to list its stock for trading on the OTC Bulletin
      Board, which may give the Company a better ability to attract
      investors.  The Company intends to raise capital to provide working
      capital and to expand its present business segment.  Also, the Company
      has outstanding warrants and stock options that, if converted, will provide
      cash
      flow for working capital.





**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES**





**Pervasiveness
      of Estimates**





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





**Fair
      Value of Financial Instruments**





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





**Reclassifications**





Certain
      balances as of March 31, 2006, have been reclassified in the accompanying
      financial statements to conform to the current year presentation.





**Revenue
      Recognition**





Revenues
      from sales to distributors and resellers are recognized when title to the
      product, ownership and risk of loss transfer to the customer, which is when
      related products are shipped. Revenues from consignment sales are recognized
      when payments are received. The Company had no consignment sales for the years
      presented.





**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
      and Royalties Receivable**





The
      Company follows the allowance method of recognizing uncollectible accounts
      and
      royalties 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 receivables. The
      Company does not have a formal policy to charge interest on late payments of
      receivable amounts.




24




**Concentration
      of Credit Risk**





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





During
      the current and prior fiscal year, one customer accounted for 67% and 81% and
      two customers accounted for 99% and 92% of the Company *Soltron**®***revenues,
      respectively. The customers referred to are major distributors of
*Soltron**®***product
      or
      private label product.





**Inventory**





Inventory
      at March 31, 2007 and 2006, consists 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 and declining balance methods over the estimated useful lives
      of
      the assets. Ordinary maintenance and repairs that neither materially add to
      the
      value of the property nor appreciably prolong its life are charged to expense
      as
      incurred. Betterments or renewals are capitalized when incurred. When assets
      are
      retired or disposed, the cost and accumulated depreciation are eliminated from
      the account and any gain or loss is reflected in the statement of
      operations.





Estimated
      useful lives of the assets are as follows:




Computer
                and Office Equipment
            5
              yearsFurniture
            5-7
              years




**Intangible
      Asset – Royalty Contract**





The
      royalty contract is a provision in the sale of Virtual Technologies Pty. Ltd.
      (Australia) at September 30, 2005. The sales contract provides for royalty
      payments for a period of twenty (20) years and is equal to four percent (4%)
      of
      gross sales, excluding taxes and freight. The royalty is due and payable within
      forty-five (45) days at the end of each calendar quarter, beginning with the
      quarter ending December 31, 2005. As part of the sale, the Company agreed that
      it would not enter into any sales, distribution, licensing, manufacturing or
      any
      other commercial application of the products (SP34E, SP22E-A, SP22E-B and
      SB22E-C) for a period of five (5) years and to maintain all information
      concerning the products as confidential.





The
      intangible asset is being amortized on a straight-line basis over the life
      of
      the agreement. On an ongoing basis, management will review the valuation and
      amortization of the contract, taking into consideration any events or
      circumstances which may have impairment on its fair value. At March 31, 2007,
      management determined that this intangible asset was impaired. (See NOTE
      4)





**Research
      and Development Costs**





All
      research and development costs are expensed in the period incurred. Capital
      expenditures incurred for research and development activities are included
      in
      fixed assets. The Company had no research and development expense for the years
      ended March 31, 2007 and 2006.





**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. At March 31, 2007,management determined that this intangible royalty contrct was impaired
      and recorded $111,000 to impairment expense. (See NOTE 4)


.


25





**Income
      Taxes and Investment Tax Credits**





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





Scientific
      research and development investment tax credits are recorded on a project by
      project basis in the period when the Company has determined the related research
      and development expenditures qualify for the tax incentives. The Company had
      no
      such expenditures for the years ended March 31, 2007 and 2006.





**Comprehensive
      Income (Loss)**





Statement
      of Financial Accounting Standards (“SFAS”) No. 130, *Reporting Comprehensive
      Income*, establishes requirements for disclosure of comprehensive income and
      its components, which include, among other items, unrealized gains or losses
      from marketable securities and foreign currency translation adjustments that
      previously were only reported as a component of stockholders’
equity.  The Company had no components of comprehensive income (loss)
      during the year ended March 31, 2007 and had a component for the year ended
      March 31, 2006.





**Foreign
      Currency Translation**





In
      accordance
      with****Statement of Financial Accounting Standards No. 52,
“*Foreign Currency Translation”,*foreign denominated monetary assets and
      liabilities are translated into their U.S. dollar equivalents using foreign
      exchange rates which prevail at the balance sheet date. Revenues and expenses
      are translated at average rates of exchange during the year. Gains and losses
      resulting from foreign currency transactions are included in results of
      operations.





**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 year. 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, 2007 and 2006, diluted
      net loss per common share is not included, as the effect of including these
      shares is anti-dilutive.





At
      March
      31, 2007, stock options representing 1,000,000 common shares were outstanding
      with an exercise price of $0.15.





**Stock-Based
      Compensation**





Prior
      to
      April 1, 2006, Company 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
      optionsequals or
      exceeds themarket
      price of the underlying stock on the date of grant, no compensation expense
      is
      recorded. If the exercise price of employee stock options is under the market
      price of the underlying stock on the date of grant, compensation expense is
      recorded for the price differential times the quantity of options granted.
      The
      Company has adopted the disclosure-only provisions of Statement of Financial
      Accounting Standards (“*SFAS*”) No. 123, “Accounting for Stock Based
      Compensation,” as amended by SFAS No. 148, “Accounting For Stock-Based
      Compensation - Transition & Disclosure.”





In
      December 2004, the FASB issued SFAS No. 123 (Revised 2004) “*Share Based
      Payment*” (“SFAS No. 123R”), which is a revision to SFAS No. 123 and
      supersedes APB No. 25 and SFAS No.148.  This statement requires that
      the cost resulting from all share-based payment transactions be recognized
      in
      the financial statements. This statement establishes fair value as the
      measurement objective in accounting for share-based payment arrangements and
      requires all entities to apply a fair-value based measurement method in
      accounting for share-based payment transactions with employees except for equity
      instruments held by employee share ownership plans.




26




SFAS
      No.
      123R applies to all awards granted after the required amended effective date
      and
      to awards modified, repurchased, or cancelled after that date.  As of
      the required effective date, all public entities that used the fair-value-based
      method for either recognition or disclosure under SFAS No. 123 will apply to
      SFAS No. 123R using a modified version of prospective
      application.  Under that transition method, compensation cost is
      recognized on or after the required effective date for the portion of
      outstanding awards, for which the requisite service has not yet been rendered,
      based on the grant-date fair value of those awards calculated under SFAS No.
      123
      for either recognition or pro forma disclosures.  For periods before
      the required effective date, those entities may elect to apply a modified
      version of the retrospective application under which financial statements for
      prior periods adjusted on a basis consistent with the pro forma disclosures
      required for those periods by SFAS No. 123.  The Company adopted SFAS
      No. 123R effective April 1, 2006, and will begin reflecting the stock option
      expense determined under fair value based methods in our income statement rather
      than a pro forma disclosure in the notes to the financial
      statements.  The Company had no stock-based compensation for the
      periods presented.




Transactions
      in equity instruments with non-employees for goods and services are accounted
      for by the fair value method. There are no differences between net loss and
      los  per share as reported and as if the provisions of SFAS 148 were
      applied for the years ended.





**Recent
      Accounting Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities*(“SFAS 159”).  SFAS 159 allows entities to measure at
      fair value many financial instruments and certain other assets and liabilities
      that are not otherwise required to be measured at fair value. SFAS 159 is
      effective for fiscal years beginning after November 15, 2007. We have not
      determined what impact, if any, that adoption will have on our results of
      operations, cash flows or financial position.





In
      June
      2007, the FASB ratified a consensus opinion reached by the EITF on EITF 07-3,
      Accounting for Nonrefundable Advance Payments for Goods and Services Received
      for use in Future Research and Development Activities (“EITF Issue
      07-3”).  The consensus in EITF Issue 07-03 is effective for fiscal
      years and interim periods within those fiscal years, beginning after December
      15, 2007. The Company has had no transactions in this area and future adoption
      of EITF Issue 07-3 should have no effect on our results of operations, cash
      flows or financial position.





**NOTE
      3 - PROPERTY AND EQUIPMENT**




Property
      and equipment consists of the following at March 31, 2007:




Furniture
                and Fixtures
            
            $
            3,181Computer
                and Office Equipment
            
            
            22,35025,531Less:
                Accumulated Depreciation
            
            
            (25,531
            )$
            --




Depreciation
      expense charged to operations for the years ended March 31, 2007 and 2006,
      was
      $-0- and $1,230, respectively.





**NOTE
      4 - INTANGIBLE ROYALTY AGREEMENT**





In
      accordance with SFAS No. 144, the
      Company was required to assess the recoverability of the Intangible Royalty
      Agreement relating to the disposal of Virtual Technologies. In performing this
      assessment, the primary factor considered by Management is the fact that no
      royalties under this royalty agreement have been collected since its inception.
      As such, management determined that this royalty agreement was impaired and
      reduced the value to zero at March 31, 2007, due to the uncertainty of
      collecting the royalty payments.





Amortization
      expense charged to operations for the years ended March 31, 2007 and 2006 was
      $6,000 and $3,000, respectively.




27


**NOTE
      5 - COMMITMENTS**





**Operating
      Leases**




The
        Company currently has no minimum future rental payments for non-cancelable
        operating leases.


Lease
      expense charged to operations for the years ended March 31, 2007 and 2006,
      was
      $5,643 and $11,024, respectively.




**Other
      Commitments**





On
      January 15, 2005, the Board of Directors by unanimous consent, approved
      Employment Agreements with Mr. Robert D. Kohn and Mr. Dale S. Shepherd for
      a
      period of twelve (12) months at an annual salary of $100,000 and $75,000,
      respectively, expense reimbursement and a grant of stock options representing
      two (2) percent of the issued and outstanding stock of the Company to each
      party. The Employment Agreements were not to be effective until the audit and
      related filing of the Company’s Annual Report on Form10-KSB for the year ended
      March 31, 2005, were completed and filed with the Securities and Exchange
      Commission. Mr. Kohn and Mr. Shepherd were to be retained as consultants on
      an
      as needed basis until these requirements were met. The requirements were not
      met
      and the Employment Agreements never became effective and were
      terminated.





Beginning
      in April 2005, Mr. Kohn
      became Interim CEO for the Company, and continued to develop the Company’s
      current business environment and develop a business plan to move the Company
      into potential other profitable business segments and enhance the performance
      of
      the current product mix. In October 2005, Mr. Kohn became the full time CEO
      for
      the Company and occupied this position until his resignation effective May
      1,
      2006.





**NOTE
      6 - INCOME TAXES**





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





At
      March
      31, 2007 and 2006, deferred tax assets on United States reported losses consist
      of the following:






2007
            
            
            2006Net
                operating loss carry-forwards
            
            $
            5,073,000
            
            
            $
            4,909,000Less:
                valuation allowance
            
            
            (5,073,000
            )
            
            
            (4,909,000
            )$
            -
            
            
            $
            -




At
      March
      31, 2007 and 2006, the Company had United States federal net operating loss
      carry-forwards in the approximate amounts of $14,049,000 and $13,812,000
      respectively, available to offset future taxable income expiring through 2027
      and 2026, respectively. A federal tax rate of 34% was utilized to calculate
      the
      deferred tax assets. At March 31, 2007 and 2006, the Company had Arizona state
      net operating loss carry-forwards in the approximate amount of $6,504,000 and
      $4,630,000 respectively, available to offset future taxable income expiring
      through 2011 and 2010, respectively. A state tax rate of 6.9% was utilized
      to
      calculate the deferred tax assets





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




28




**NOTE
      7 - RELATED PARTY TRANSACTIONS**





**Purchase
      of Virtual Technologies (Australia) Pty Ltd.**





Effective
      January 31, 2003, the Company issued 6,000,000 shares of its unregistered,
      restricted Common Stock pursuant to the terms of the Share Purchase and Sale
      Agreement with Virtual Technologies (Australia) Pty Ltd. This acquisition
      delivered the exclusive worldwide sales, distribution, marketing and
      manufacturing rights to the products, SP34E, SP22E-A, SP22E-B and SP22E-C,
      refrigerant gas products**.**





**Purchase
      of*****Soltron****®*********Worldwide
      Rights**





On
      February 20, 2003, the Company acquired the worldwide rights to the product
      *Soltron**®***under
      the terms of the Acquisition Agreement, by the issuance of 9,000,000 restricted
      shares of its common stock to Dominion Capital Pty Ltd. This acquisition
      delivered the exclusive worldwide sales, distribution, marketing and
      manufacturing rights for the enzyme technologies for the product,
*Soltron**®*,
      a
      fuel-enhancing product**.**The costs associated with
      these marketing rights were written off as of March 31, 2004 due to a
      determination that the value of these assets was impaired.





**NOTE
      8 – STOCKHOLDERS’ (DEFICIT)**





**Stock
      Issued for Services and Debt**





On
      February 23, 2007, the Company
      issued 1,100,000 restricted common shares at $0.05 for the settlement of an
      accounts payable debt aggregating $55,000.





**Common
      Stock Sold**





On
      July
      29, 2005, the Company issued 750,000 of restricted common shares for the
      exercise of stock warrants with an exercise price of $0.20 per share, for total
      cash proceeds aggregating $150,000.





On
      October 2, 2005, the Company issued 500,000 shares of restricted common stock
      at
      $0.05 per share for  aggregate of cash proceeds of $25,000, pursuant
      to the sale of common stock in a private placement.





On
      January 18, 2007, the Company issued 600,000 shares of restricted common stock
      at $0.05 per share for aggregate of cash proceeds of $30,000, pursuant to the
      sale of common stock in a private placement.





**Stock
      Warrants**





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





On
      January 21, 2004, the Board of Directors of the Company extended the exercise
      period of 1,567,000 warrants from January 31, 2004 to January 31, 2005. On
      January 11, 2005, the Board of Directors approved an additional extension to
      July 30, 2005.The warrants had an exercise price of $0.20 per unit. The Company
      applied variable accounting in relation to the extended warrants at March 31,
      2005, utilizing the Black-Scholes option pricing model. The revaluation of
      the
      extended warrants resulted in a $250,720 charge to operations for the year
      ended
      March 31, 2005. On July 29, 2005, 750,000 of the 1,567,500 outstanding warrants
      were exercised and the remaining warrants expired on July 30, 2005,
      unexercised.





A
      summary
      of stock warrants activity is as follows:






WeightedNumber
                of
            
            
            AverageWarrants
            
            
            Exercise
                PriceOutstanding
              at March 31, 2005
            
            
            1,567,500
            
            
            $
            0.20Exercised
            
            
            (750,000
            )
            
            $
            0.20Expired
            
            
            (817,500
            )
            
            $
            0.20Outstanding
              at March 31, 2006
            
            
            --
            
            
            
            -Granted
            
            
            --
            
            
            
            -Expired
            
            
            --
            
            
            
            -Outstanding
                at March 31, 2007
            
            
            --
            
            
            
            -




**Stock
      Options**





On
      June
      1, 2004, the Company issued a call options to five individuals for the option
      to
      purchase 1,000,000 shares of restricted common stock at $0.15 per
      share.  The options expire on May 31, 2007.





On
      January 15, 2005, the Board of Directors by unanimous consent, approved
      Employment Agreements with Mr. Robert D. Kohn and Mr. Dale S. Shepherd for
      a
      period of twelve (12) months. The Agreements grant of stock options representing
      two (2) percent of the issued and outstanding stock of the Company to each
      party. The Employment Agreements were not to be effective until the audit and
      related filing of the Company’s Annual Report on Form10-KSB for the year ended
      March 31, 2005, are completed and filed with the Securities and Exchange
      Commission. Mr. Kohn and Mr. Shepherd were retained as consultants on an as
      needed basis until these requirements are met. Upon becoming employees under
      the
      Agreement terms, the options will be granted. The two referred to parties
      remained as outside consultants and the Employment Agreements never became
      effective.





**Incentive
      Stock Option Plan**





The
      Company has adopted the 1997 Solpower Corporation Stock Option and Incentive
      Plan (the “Plan”). Pursuant to the Plan, options to purchase shares of the
      Company’s common stock may be granted to employees and directors. The Plan
      provides that the option price shall not be less than the fair market value
      of
      the shares on the date of grant, and that the options expire up to ten years
      after grant. Options generally vest ratably over 3 to 5 year periods. At March
      31, 2007, there were 5,000,000 shares reserved for options to be granted under
      the Plan.





On
      April
      1, 2000, the Company entered into an employment agreement with Mr. James Hirst.
      The agreement provides for cancellation of all previously issued options and
      the
      issuance of 500,000 options at an exercise price of $1.00 per share, which
      expired unvested on April 7, 2006.





On
      September 5, 2001, the Company granted options to purchase an aggregate of
      350,000 shares of the Company’s common stock to five employees. The options may
      be exercised in whole or in part at any time after the vesting requirements
      are
      achieved. These options vest based on minimum market price and reported gross
      revenue level. On April 26, 2002, 250,000 of these options were canceled as
      the
      employees related to these options left the employ of the Company. The remaining
      100,000 options expired on September 5, 2004 unexercised.





A
      summary
      of the option activity is as follows:




29




WeightedNumber
                of Options
            
            
            Average
              Exercise
                PriceOutstanding
                at March 31, 2005
            
            
            1,500,000
            
            
            $
            1.88Granted
            
            
            --
            
            
            
            -Forfeited
            
            
            (500,000
            )
            
            $
            (1.00
            )Outstanding
                at March 31, 2006
            
            
            1,000,000
            
            
            $
            0.15Granted
            
            
            --
            
            
            
            -Forfeited
            
            
            --
            
            
            
            -Outstanding
                at March 31, 2007
            
            
            1,000,000
            
            
            $
            0.15





Additional
      information about outstanding options to purchase the Company’s common stock as
      of March 31, 2007, is as follows:




Options
                Outstanding
            
            Options
                ExercisableWeighted
              Average
            
            
            
            WeightedExercise
            
            
            
            Remaining
            
            
            
            AveragePrice
                Per
            
            Number
            
            Contractual
            
            Number
            
            ExerciseShare
            
            of
                Shares
            
            Life
                (In Years)
            
            Exercisable
            
            Price$0.15
            
            1,000,000
            
            .2
            
            1,000,000
            
            $0.15





Stock
      options issued to employees with an exercise price not less than the fair market
      value of the Company’s common stock on the date of grant result in no
      compensation expense charged to operations. If the exercise price of employee
      stock options is under the market price of the underlying stock on the date
      of
      grant, compensation expense is recorded for the price differential times the
      quantity of options granted. No options were granted to employees for the year
      ended March 31, 2007.





**NOTE
      9 - CONCENTRATIONS**





Major
      suppliers for the Company 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 supplied by a major North American manufacturer. All other materials
      for production of *Soltron**®***are
      available from a variety of local providers.




**NOTE
      10 – SUBSEQUENT EVENTS**





On
      June 8, 2007, the Board of Directors
      of  Solpower Corporation appointed Mr. Gary Raymond Stewart to the
      Board of Directors.


30




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


On
      November 30, 2005, Solpower Corporation notified Semple & Cooper, LLP
      ("Semple & Cooper") that it was dismissing Semple & Cooper as its
      independent registered public accounting firm. The decision was recommended
      and
      approved by our Board of Directors. During the two fiscal years ended March
      31,
      2005 and 2004, and any subsequent period through November 30, 2005, there were
      no disagreements with Semple & Cooper on any matter of accounting principles
      or practices, financial statement disclosure or auditing scope or procedure
      which, if not resolved to the satisfaction of Semple & Cooper would have
      caused Semple & Cooper to make reference to the matter in its reports on
      Registrant's financial statements.  Semple & Cooper's report on
      Registrant's financial statements for the years ended March 31, 2005 and 2004
      which included an explanatory paragraph wherein they expressed substantial
      doubt
      about Registrant's ability to continue as a going concern, Semple & Cooper's
      reports on Registrant's financial statements did not contain an adverse opinion
      or disclaimer of opinion, and was not modified as to uncertainty, audit scope
      or
      accounting principles. During the two fiscal years ended March 31, 2005 and
      2004
      and through November 30, 2005, there were no reportable events.




On
      November 30, 2005, Solpower Corporation engaged the firm of Meyler &
Company, LLC to serve as its independent registered public accountants for
      the
      fiscal year ending March 31, 2006. During the two fiscal years ended March
      31,
      2005 and 2004, and through November 30, 2005, the Company has not consulted
      with
      Meyler & Company, LLC regarding either:




1.
            The
                application of accounting principles to any specific transaction,
                either
                completed or proposed, or the type of audit opinion that might be
                rendered
                on Registrants' financial statements, and neither a written report
                was
                provided to Meyler & Company, LLC nor oral advice was provided that
                Meyler & Company, LLC concluded was an important factor considered by
                Registrant in reaching a decision as to the accounting, auditing
                or
                financial reporting issue; or




2.
            Any
                matter that was either subject of disagreement or event, as defined
                in
                Item 304(a)(1)(iv) of Regulation S-B and the related instruction
                to Item
                304 of Regulation S-B, or a reportable event, as that term is explained
                in
                Item 304(a)(1)(iv) of Regulation
                S-B.







**ITEM
                8A.**
            **CONTROLS
                AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**




Management
      of the Company is responsible for establishing and maintaining adequate internal
      control over financial reporting and for the assessment of the effectiveness
      of
      internal controls over financial reporting.  The Company’s internal
      control system over financial reporting is a process designed under the
      supervision of the Company’s chief executive officer and principal accounting
      officer to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements in accordance with U.S.
      generally accepted accounting principles.




All
      internal control systems, no matter how well designed, have inherent
      limitations.  Therefore, even those systems determined to be effective
      can provide only reasonable assurance with respect to financial statement
      preparation and presentation.  Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions..




As
      of
      March 31, 2007, we carried out an evaluation, under the supervision and with
      the
      participation of our Chief Executive Officer and Principal Accounting Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures.  Based on this evaluation, our Chief Executive Officer and
      Principal Accounting Officer concluded that our disclosure controls and
      procedures were effective in ensuring that information required to be disclosed
      by us in our periodic reports is recorded, processed, summarized and reported,
      within the time periods specified for each report and that such information
      is
      accumulated and communicated to our management, including our principal
      executive and principal financial officers, or persons performing similar
      functions, as appropriate to allow timely decisions regarding required
      disclosure.




**Changes
      in Internal Controls**




During
      the quarter ended March 31, 2007, there had been no significant changes in
      our
      internal controls that could significantly affect those controls subsequent
      to
      the date of their last valuation.




31





**PART
        III**




**ITEM
                9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(A) OF THE EXCHANGE ACT; AUDIT COMMITTEE FINANCIAL EXPERT; CODE
                OF
                ETHICS**





***(a)           Directors
      and Executive Officers***





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




**Name**
              
              **Age**
              
              **Positions
                  Held**(1)Robert
                  D. Kohn
              
              59
              
              President,
                  CEO and Chief Accounting OfficerFraser
                  M. Moffat III
              
              78
              
              Director,
                  ChairmanJames
                  H. Hirst
              
              61
              
              Director
                  & Secretary




*(1)
      All current directors serve until the next annual shareholders meeting or their
      earlier*


*resignation
      or removal.*





***Robert
      D. Kohn***, joined Solpower as Interim President & CEO in April
      2005. From April 2004 to January 2005 Mr. Kohn was a financial specialist with
      Wachovia Bank in Coral Springs, Florida. From May 2001 to April 2004 he was
      CFO
      with Global Trade Group, Sharon, Massachusetts. From November 1999 to March
      2001
      he was CEO and Chairman with Assetrade, Prussia, Pennsylvania. From February
      1996 to March 2000 he was Chairman and CEO of Entrade.com owned by Peco Energy
      in Philadelphia and Chicago, Illinois.  Mr. Kohn is a CPA and
      graduated in 1972 with a Bachelor of Arts from Temple University. Philadelphia,
      Pennsylvania. Mr. Kohn resigned effective May 1, 2006.





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





***James
      H. Hirst,*****has served as President and CEO since
      April, 2001. He served as Secretary/Treasurer from March 2000 to April 2001,
      as
      Chief Executive Officer of Solpower from September 1997 to March 2000, as
      President from May 1998 to March 2000 and as a Director from May 1998 to
      present. Mr. Hirst from March 1981 to present has provided consulting services
      to early stage companies in connection with their operations, financial
      information systems and legal compliance. In 1979, Mr. Hirst received a Bachelor
      of Commerce (Accounting and Management Information Systems) degree from the
      University of British Columbia. Effective May 1, 2006. Mr. Hirst was appointed
      to the position of Chief Executive Officer, President and Chief Accounting
      Officer.





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





Section
      16(a) of the Exchange Act
      requires the Company’s executive officers and directors and persons who own more
      than 10% of a registered class of the Company’s equity securities to file
      reports of their ownership thereof and changes in that ownership with the
      Securities and Exchange Commission (“SEC”).  Executive officers,
      directors and greater than 10% stockholders are required by SEC regulations
      to
      furnish the Company with copies of all such reports they file.





Based
      solely on a review of Forms 3, 4
      and 5 and amendments thereto, furnished to the Company during the current fiscal
      year, the Company is not aware of any director, officer or beneficial owner
      of
      more than 10% of the Company’s common stock that, during the current fiscal
      year, failed to file on a timely basis reports required by Section 16(a) of
      the
      Exchange Act.




**AUDIT
      COMMITTEE FINANCIAL EXPERT**




We
      have
      not appointed an audit committee and, accordingly, do not have an audit
      committee financial expert. Due to the small size of our Board of Directors,
      the
      audit committee function is performed by the full board.  We have
      determined to defer creation of an audit committee and engagement of an audit
      committee financial expert until such time as our business operations have
      grown
      and an increase to the size of the board of directors is warranted.




32




**CODE
      OF ETHICS**






In
      February of 2005, the Board of Directors adopted a Code of Ethics meeting the
      requirements of Section 406 of the Sarbanes-Oxley Act of 2002. Our Code of
      Ethics is publicly available on our web site at www.solpower.com. If we
      make substantive amendments to the Code of Ethics or grant any waiver, including
      any implicit waiver, we will disclose the nature of such amendments or waiver
      on
      our web site or in a report on Form 8-K. We will provide to any person without
      charge, upon request, a copy of such Code of Ethics. Persons wishing to make
      such a request should contact James H. Hirst, President and CEO, 307 East
      22nd Street,
      San Pedro, California, 90731 or contact by telephone at (310)
      940-6408.







**ITEM
      10.                                EXECUTIVE
      COMPENSATION**





The
      following table reflects all forms of compensation for the fiscal years ended
      March 31, 2007, 2006 and 2005 for the Company’s sole executive officer in each
      of the last three fiscal years.  No other person received salary or
      bonus in excess of $100,000 for any of these fiscal years.








**SUMMARY
                COMPENSATION TABLE**Name
                and Principal Position
              (a)
            Year
              (b)
            Salary
                ($)
              (c)
            Bonus
                ($)
              (d)
            Stock
                Awards ($)
              (e)
            Option
                Awards ($)
              (f)
            Non-Equity
                Incentive Plan Compensation ($)
              (g)
            Nonqualified
                Deferred Compensation Earnings ($)
              (h)
            All
                Other Compensation ($)
              (i)
            Total
                ($)
              (j)James
                H. Hirst
              President
                & CEO
            2007
              2005
            --
              --
            --
              --
            --
              $30,000
            --
              --
            --
              --
            --
              --
            $68,500
              $72,000
            $68,500
              $102,000Robert
                D. Kohn
              President
                & CEO
            2006
            --
            --
            --
            --
            --
            --
            $100,000
            $100,000








**OUTSTANDING
                EQUITY AWARDS AT FISCAL YEAR-END**OPTION
                AWARDS
            STOCK
                AWARDSName
              (a)
            Number
                of Securities Underlying Unexercised Options
              (#)
              Exercisable
              (b)
            Number
                of Securities Underlying Unexercised Options
              (#)
              Unexercisable
              (c)
            Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options
              (#)
              (d)
            Option
                Exercise Price
              ($)
              (e)
            Option
                Expiration Date
              (f)
            Number
                of Shares or Units of Stock That Have Not Vested
              (#)
              (g)
            Market
                Value of Shares or Units of Stock That Have Not Vested
              ($)
              (h)
            Equity
                Incentive Plan Awards: Number of Unearned Shares, Units or Other
                Rights
                That Have Not Vested
              (#)
              (i)
            Equity
                Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                Units or
                Other Rights That Have Not Vested
              (#)
              (j)James
                H . Hirst
            200,000
            --
            --
            $0.15
            5/31/07
            --
            --
            --
            --








**Employment
      Agreements**





Mr.
      Hirst
      was an at-will employee during the years ended March 31, 2007, 2005 and
      2004.




33




On
      January 15, 2005, the Board of Directors by unanimous consent, approved
      Employment Agreements with Mr. Robert D. Kohn and Mr. Dale S. Shepherd for
      a
      period of twelve (12) months at an annual salary of $100,000 and $75,000,
      respectively, expense reimbursement and a grant of stock options representing
      two (2) percent of the issued and outstanding stock of the Company to each
      party. The Employment Agreements were not to be effective until the audit and
      related filing of the Company’s Annual Report on Form10-KSB for the year ended
      March 31, 2005, were completed and filed with the Securities and Exchange
      Commission. Mr. Kohn and Mr. Shepherd were to be retained as consultants on
      an
      as needed basis until these requirements were met.  During the fiscal
      year ending March 31, 2006, Mr. Kohn was an at-will employee and remained as
      such until he resigned on May 1, 2006. Mr. Shepherd was not employed by the
      Company. The aforementioned Employment Agreements never became
      effective.




**Director
      Compensation**





All
      authorized out-of-pocket expenses
      incurred by our directors on behalf of Solpower are subject to
      reimbursement.  Mr. Moffat was granted 500,000 shares in September
      2003 for past services.  These shares were valued at approximately
      $20,500 at the date of issuance.





Name
              (a)
            Fees
                Earned or Paid in Cash
              ($)
              (b)
            Stock
                Awards ($)
              (c)
            Option
                Awards ($)
              (d)
            Non-Equity
                Incentive
              Plan
                Compensation
              ($)
              (e)
            Non-Qualified
                Deferred Compensation Earnings
              ($)
              (f)
            All
              Other
                Compensation ($)
              (g)
            Total
                ($)
              (j)Fraser
                Moffat
            --
            --
            --
            --
            --
            --
            --








**Stock
      Option Plan**





In
      November 1997, the Board of
      Directors adopted a Stock Option and Incentive Plan (the “*Plan*”), which
      the shareholders approved on November 22, 1997. The purpose of the Plan is
      to
      provide a means to attract employees and service providers and to reward persons
      responsible for the successful administration and management of Solpower.
      Another purpose of the Plan is to provide such persons with additional incentive
      and reward opportunities designed to enhance profitable growth. So that the
      appropriate incentive can be provided, the Plan provides for granting options,
      incentive stock options, stock appreciation rights, restricted stock awards,
      performance shares and dividend equivalents, or any combination of the
      foregoing. In 1999, the Plan was amended by the Board of Directors to increase
      the number of shares that can be granted under the Plan to 2,500,000 shares
      of
      Solpower common stock. In 2000, the Plan was further amended by the board of
      Directors and approved by the shareholders to increase the number of shares
      that
      can be granted under the Plan to 5,000,000 shares of common stock. As of March
      31, 2007, no options were outstanding under the Plan.





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





The
      following table sets forth, as of March 31, 2007, the ownership of each person
      known by us to be the beneficial owner of five percent or more of our Common
      Stock, each officer and director individually, and all officers and directors
      as
      a group. We have been advised that each person has sole voting and investment
      power over the shares listed below unless otherwise indicated.





**Name
                and Address**
              **of
                Beneficial Owner**
            **Amount
                and Nature**
              **of
                Ownership**
            **Percent
                of Class**
              **(1)**Fraser
                M. Moffat III (2)
              18
                Lake Avenue
              Montrose,
                Pennsylvania
            535,826
            0.76%James
                H. Hirst
              307
                East 22nd
                Street
              San
                Pedro, CA 90731
            3,905,600(2)
            5.4%Australian
                Native Estates Pty Ltd.  (5)
              c/o
                13 Malcolm Court
              Mt.
                Waverly, Victoria 3189
              Australia
            4,000,000(3)
            5.5%Marino
                Investment Services Ltd.
              c/o
                13 Malcolm Court
              Mt.
                Waverly, Victoria 3189
              Australia
            4,143,600(3)
            5.7%Greg
                Stewart
              307
                East 22nd
                Street
              San
                Pedro, CA 90731
            7,497,082(4)
            10.4%Peter
                Voss
              39
                De Havilland Road
              Mordialloc
                3195
              Victoria,
                Australia
            16,346,335(5)
            22.6%All
                Directors and Officers
              as
                a Group (5 persons)
            4,441,426
            6.1%


*________________________________*


(1)
            Based
                upon 72,259,727shares of common stock being issued and outstanding
                on
                March 31, 2007.


(2)
            Includes
                130,000 shares issuable under a deferred compensation arrangement
                and
                775,500 shares held by Mr. Hirst’s wife in which  Mr. Hirst
                disclaims all beneficial ownership.


(3)
            Australian
                Native Estates Pty Ltd., and Marino Investment Services Ltd., are
                Australian corporations controlled by Peter
                Voss.


(4)
            Mr.
                Stewart controls Purse Seine Soma, Inc., which holds 300,000 shares
                and
                Purse Seine, Inc., which holds 200,000
                shares.


(5)
            Mr.
                Voss controls Pastoral Heights Pty Ltd., which holds 3,000,000 shares;
                Dominion Capital Pty Ltd., which holds 70,000 share;, A1 Financial
                Planners Pty Ltd., which holds 666,666 share;, Intavest Pty Ltd.,
                which
                holds 681,775 share;, Bio Engineering Pty Ltd., which holds 114,294
                shares
                and Dominion Capital, Inc., which holds 370,000 shares. The total
                reflected includes 3,300,000 shares held by Mr. Voss’ wife and two adult
                children and in which Mr. Voss disclaims all beneficial
                interest.




**ITEM
      12.                       CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





Effective
      January 31, 2003, the Company acquired 100% of the outstanding stock of Virtual
      Technologies (Australia) Pty Ltd. The subsidiary was acquired by the issuance
      of
      6,000,000 shares of restricted common stock by the Company. This entity is
      controlled by Mr. Peter Voss.





On
      February 20, 2003, the Company acquired the worldwide rights to the product
      *Soltron**®*
      by the
      issuance of 9,000,000 restricted shares of its common stock to Dominion Capital
      Pty Ltd. This entity is controlled by Mr. Peter Voss.





On
      September 22, 2003, the Company issued 1,000,000 restricted shares of common
      stock to Matthew Cohen, the Company’s General Manager of Marketing and Technical
      Services,****as compensation for services. The shares were
      issued in reliance on exemption from registration provided by Section 4(2)
      of
      the Securities Act.





On
      September 22, 2003, the Company issued 500,000 restricted shares of common
      shares to Fraser Moffat, a director of the Company, as compensation for
      services. The shares were issued in reliance on exemption from registration
      provided by Section 4(2) of the Securities Act.





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 ifthe
      interest is disclosed and approved by disinterested directors or shareholders
      or
      if the transaction is otherwise fair to the corporation.




34




**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 Product.10.2(1)
              
              Acquisition
                  Agreement amendment dated November 24, 1997 outlining clarifications
                  and
                  extensions of original Acquisition Agreement dated November 4,
                  1996.10.3(1)
              
              Addendum
                  to Acquisition Agreement dated May 13, 1998.10.4(1)
              
              Acquisition
                  Agreement dated June 17, 1998 between Dominion Capital Pty Ltd.
                  and
                  Solpower Corporation for the Distribution and Manufacturing Rights
                  of
                  SP34E Product.10.12(1)
              
              Solpower
                  Corporation Stock Option and Incentive Plan dated November 22,
                  1997.10.16(1)
              
              Client
                  Services Agreement between Solpower Corporation and Dominion Capital
                  Securities, Inc. dated July 1, 1998.10.17(2)
              
              Addendum
                  to June 17, 1998 Acquisition Agreement effective January 1,
                  1999.10.29(3)
              
              Amendment
                  to Lease between Arizona Industrial Capital, LP and Solpower Corporation
                  dated December 15, 2000.10.30(4)
              
              Agreement
                  between Virtual Technologies (Australia) Pty Ltd. and A-Gas (Australia)
                  Pty Ltd., dated August 20, 2002, relating to the Australia and
                  New Zealand
                  production and distribution of SP34ETM.10.31(4)
              
              Acquisition
                  Agreement between Virtual Technologies (Australia) Pty Ltd. and
                  Dominion
                  Capital Pty Ltd., effective January 31, 2003, relating to the worldwide
                  rights to SP34ETM and other related refrigerant gases.10.32(4)
              
              Acquisition
                  Agreement between Solpower Corporation and Dominion Capital Pty
                  Ltd.,
                  dated February 20, 2003, relating to the acquisition of worldwide
                  rights
                  to Soltron®.10.33(5)
              
              Agreement
                  between Solpower Corporation and Les Woodridge, dated September
                  30, 2005,
                  relating to the sale of Virtual Technologies Pty Ltd.31.1
              
              Certifications
                  required by Rule 13a-14, as adopted pursuant to Section 302 of
                  the
                  Sarbanes-Oxley Act of 2002.32.1
              
              Certification
                  of Chief Executive Officer and Principal Accounting Officer pursuant
                  to 18
                  U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act
                  of 2002.
  35


(1)Incorporated
      by
      reference from Solpower’s Form 10-SB as filed on August 21, 1998.


(2)Incorporated
      by
      reference from Solpower’s Form 10-KSB as filed on September 24,
      1999.


(3)Incorporated
      by
      reference from Solpower’s Form 10-QSB as filed on February 20,
      2001.


(4)Incorporated
      by
      reference from Solpower’s Form 10-KSB as filed on May 26, 2005.


(5)Incorporated
      by
      reference from Solpower’s Form 10-KSB as filed on June 4, 2007.




(b)           ***Reports
      on Form
      8-K***





None.





**ITEM
      14.                      PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





The
      following table summarizes the
      aggregate fees billed and accrued by Meyler & Company for the fiscal years
      ended March 31, 2007:





Year
                Ended March 31,2007
            
            
            2006Audit
                Fees (1)
            
            $
            22,000
            
            
            $
            39,000Audit-Related
                Fees (2)
            
            
            18,000
            
            
            
            52,683Tax
                Fees
            
            
            -
            
            
            
            -Total
            
            $
            40,000
            
            
            $
            91,683





(1) Fees
      for
      audit services billed or accrued in fiscal years 2007 and 2006 consisted of
      audit of Solpower  Corporation’s annual financial
      statements.





(2)  Fees
      for review services for quarterly security filings billed or accrued for fiscal
      year 2007, 2006.





36







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:
                September
                25, 2007
            By:
            /s/ James
              H. HirstJames
              H. HirstChief
              Executive Officer,
              President




**BOARD
              OF DIRECTORS**Dated:
                September 25,
                2007
            By:
            /s/ Fraser
              M Moffat IIIFraser
              M. Moffat IIIChairman




**Company
              Name**Dated:
                September 25, 2007
            By:
            /s/ James
              H. HirstJames
              H. HirstDirector









37