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, 2002

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

    For the transition period from _______________ to ________________

                         Commission File Number: 0-29780


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

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

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

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

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

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

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

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

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

Registrant's revenues for the fiscal year ended March 31, 2002 were $511,491.

The aggregate market value of the common stock held by  non-affiliates  computed
based on the  closing  price of such stock on March 31,  2002 was  approximately
$3,423,424.

The number of shares outstanding of the registrant's  classes of common stock as
of March 31, 2002 was 33,231,919 shares. No shares of the registrant's preferred
stock were outstanding.

Documents incorporated by reference: None.

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

                                   ----------

                        INDEX TO THE FORM 10-KSB FOR THE
                        FISCAL YEAR ENDED MARCH 31, 2002



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

PART II.......................................................................13
   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..........13
   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.........14
   ITEM 7.  FINANCIAL STATEMENTS..............................................16
   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE..........................................44

PART III......................................................................44
   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.................44
   ITEM 10. EXECUTIVE COMPENSATION............................................46
   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....48
   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................50
   ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..................................51

SIGNATURES....................................................................54
<PAGE>
                                     PART I

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

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

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

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

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

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

We are in the business of producing,  marketing and distributing  SOLTRON(R),  a
proprietary  enzyme-based  fuel  enhancing  product,  SP34E(TM),  an ozone  safe
alternative  refrigerant,  and  KLEAN,  a  line  of  enzyme-based  cleaners  and
bio-remediation  and  petroleum  deposit  control  agents.  These  products  are
distributed  primarily  through sales  channels in Central  America and American
Samoa,  although our business plan  contemplates  distribution of the SOLTRON(R)
products  throughout  the United States,  Canada and Mexico as well.  During the
fiscal year ended March 31, 2002,  SOLTRON(R) was manufactured at our production

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<PAGE>
facility  in Phoenix,  Arizona and  distributed  through  traditional  channels,
including fuel  wholesalers,  oil  distributors  for bulk treatment,  marine and
automotive   after-market  stores,   appointed   distributors  and  directly  to
end-users.  During  the fiscal  year  ended  March 31,  2002,  manufacturing  of
SP34E(TM) was conducted at our  50%-owned  subsidiary in Canada and  distributed
through  wholesale   distributors  of  refrigeration   products  and  automotive
aftermarket  air  conditioning  service centers in Canada and the United States.
During  the  quarter  ended  March 31,  2002,  we sold our 50%  interest  in the
Canadian  subsidiary.  Since that sale, we have not been  producing or marketing
SP34E(TM).

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

PRODUCTS

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

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

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

KLEAN. The KLEAN line of products  includes  EZKLEAN,  SOILKLEAN and PETROKLEAN.
KLEAN products are user-friendly,  non-irritating,  non-hazardous and contain no
known allergens.  The proprietary  formulae include multiple  enzymatic  agents,
surfactants,    nutrients   and   preservatives.    All   KLEAN   products   are
custom-manufactured in a rigorous process,  providing product quality to meet or
exceed  customer  requirements.  EZKLEAN is a degreaser,  cleaner and deodorizer
that is designed  to promote  cleaning  of oils,  fats and grease  from  various
surfaces  and is also  effective  in removing  petroleum-based  products  from a
variety of substrates  including  metals.  It also controls and eliminates odors
from organic sources.  EZKLEAN is an acceptable "Clean Air Solvent" in the State
of California and has been used for several years in food processing  wastewater
to lower oxygen depleting compounds and solid.  SOILKLEAN is an accelerator used
in  bio-remediation   and  is  effective  on  petroleum  releases  to  soil  and
groundwater. SOILKLEAN has also been effective in reducing methyl tertiary butyl
ether,  chlorinated  hydrocarbons,  polynuclear aromatic  hydrocarbons and other
recalcitrant  compounds found in contaminated soils. In 2002 SOILKLEAN was being
used by the State of Florida as part of its underground  storage tank program to
clean up hydrocarbon in soil and groundwater.  PETROKLEAN is a petroleum deposit
control agent that has shown  effectiveness in removal of heavy  petroleum-based
deposits.  Applications  range from fabric stain removal to  rejuvenation of oil
wells. In 2002 PETROKLEAN was also undergoing field testing in Kansas and in the
Caltex oil field in Indonesia.

SUPPLIERS

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

SP34E(TM). The components of SP34E(TM) are readily available from numerous local
and national suppliers in the United States and Canada.

KLEAN.  The enzymes used in the KLEAN  products are purchased  from Advanced Bio
Catalytics Corporation in Newport Beach, California. Other materials used in the
manufacture  of  the  KLEAN  products  are  generally  available  from  numerous
suppliers.

                                       3
<PAGE>
MARKETING STRATEGIES

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

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

The United States Environmental Protection Agency ("EPA") designated a number of
"NON-ATTAINMENT  ZONES" in areas with severe  emission  problems,  resulting  in
certain fleet operators being forced to test or to start using alternative fuels
such as  propane or  natural  gas.  New  regulations  continue  to be imposed to
regulate  fuel  specifications  and  exhaust  emissions.  We  believe  that this
increased  regulation  will create  opportunities  for  consumer  acceptance  of
SOLTRON(R) and we are currently focusing on all North American markets.

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

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

In August 2000 we acquired a 50% interest in Protocol Resource Management,  Inc.
("PROTOCOL") of Aurora,  Ontario Canada.  We were previously  engaged in a joint
venture for the manufacture and  distribution of SP34E(TM) wiTH Protocol through
Solpower  Canada Inc.,  an Ontario  corporation,  owned  equally by Protocol and
Solpower.  We discontinued the joint venture and began accounting for Protocol's

                                       4
<PAGE>
activities  as a  subsidiary.  The  assets of  Protocol  consisted  of plant and
equipment used by Protocol in its business of refrigerant  blending,  recycling,
repackaging,  conversion and distribution  services.  In January 2001 we entered
into an arrangement with  Environmental  Technologies,  Inc. for distribution of
SP34E(TM) in the United States. Subsequently, under nEW management Environmental
Technologies  changed their business plan and the  arrangement  was  terminated.
During the  quarter  ended March 31,  2002,  we  negotiated  the sale of our 50%
ownership  of Protocol  to PICO  Holdings,  Inc.,  the owner of the other 50% of
Protocol.  The consolidated  operations of Protocol for the year ended March 31,
2002 are presented as discontinued operations in the financial statements. While
we continue to believe that SP34E(TM) is A commercially  viable  product,  since
selling our interest in Protocol, we have concentrated our efforts on SOLTRON(R)
and have not actively marketed or maintained inventory of SP34E(TM).

KLEAN.  In December  2000 we acquired  certain  assets of the E*COR  division of
Perix Industries,  Inc.,  including the KLEAN brand names of EZKLEAN,  SOILKLEAN
and PETROKLEAN.  Applications for these products include  cleaning,  degreasing,
odor  control,  soil  and  groundwater  remediation,  wastewater  treatment  and
petroleum deposit removal.  All the KLEAN products are environmentally  safe. We
are in the process of  developing  a marketing  plan for the KLEAN  products and
have not yet begun marketing or selling them.

PRODUCT RIGHTS AGREEMENTS

SOLTRON(R).  In 1996,  we acquired the exclusive  rights to produce,  market and
distribute  SOLTRON(R)  in North  AmerIca  through an  agreement  with  Dominion
Capital in consideration  for 5,000,000 shares of our common stock and the grant
of certain options and payment of cash  consideration upon meeting certain sales
levels.  The agreement was amended in 1997 and has a five-year  term that may be
renewed at our option for an  additional  five-year  term. We intend to exercise
this  option to renew.  We also have a right of first  refusal to  commercialize
SOLTRON(R) anD other products  controlled by Dominion Capital on a global basis,
except Japan,  on terms to be negotiated on a territory by territory and product
by product basis.

SP34E(TM). In June 1998, we acquired the exclusive rights to produce, market and
distribute SP34E(TM) in North AmErica through an agreement with Dominion Capital
in  consideration  for  6,000,000  shares of our common stock and the payment to
Dominion  Capital of a royalty of $2.25 per  kilogram  (subsequently  amended to
2.5% of  gross  sales)  of  SP34E(TM)  that we  sell.  The  initial  term of the
agreement  was for five years and was  amended in June 1999 To  commence  on the
date we first achieved sales of SP34E(TM)  sufficient to establish a predictable
growth  rate  or JuLy 1,  2000,  whichever  came  first.  As we did not  acquire
Protocol  until  August 2000,  this  agreement  commenced on July 1, 2000.  This
agreement may also be renewed for an additional five years at our option.

KLEAN.  We  acquired  various  assets  comprising  the E*COR  division  of Perix
Industries,  Inc. in  consideration  for 100,000 shares of our common stock. The
assets  included  the  rights  to the  E*COR  name and Web  site,  the  EZKLEAN,
SOILKLEAN  and  PETROKLEAN  trademarks,  the EZKLEAN and  SOILKLEAN  proprietary
formula,  inventory,  customer  lists  and  contracts.  We  later  acquired  the
PETROKLEAN proprietary formula for 40,000 shares of our common stock.

                                       5
<PAGE>
PROPRIETARY RIGHTS

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

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

COMPETITION

We compete with numerous  well-established  fuel additive and chemical  products
companies  that  possess   substantially   greater   experience  and  financial,
marketing,  personnel and other  resources  than we do. Many of our  competitors
have  achieved  significant  national,  retail and local  brand name and product
recognition and engage in extensive advertising and promotional  programs,  both
generally  and in response  to efforts by  additional  competitors  to enter new
markets and to introduce new products.

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

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

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The KLEAN  products  compete with other organic based  solvents,  degreasers and
bioremediation  products  including  Soygold(R).  We have not yet begun actively
marketing these products.

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

PRODUCTION FACILITIES

During the fiscal year ended March 31, 2002, our primary production facility was
in Phoenix,  Arizona.  This facility served as our  production,  warehousing and
distribution plant for SOLTRON(R) and the KLEAN enzyme products,  as well as our
administrative  offices.  See  "DESCRIPTION  OF  PROPERTY"  and  "NOTES  TO  THE
FINANCIAL  STATEMENTS - Note 5." In August, 2002, we closed the Phoenix facility
and relocated our corporate headquarters to San Pedro, California and outsourced
the  production,   warehousing   and   distribution  of  SOLTRON(R)  to  various
batch-procesS blending and bottling companies.

During the quarter ended March 31, 2002,  we sold our 50% ownership  interest in
Protocol,  which produced SP34E(TM) AT its facilities in Canada. The interest in
Protocol was sold to PICO  Holdings,  Inc., the holder of the other 50% interest
in Protocol, for debt cancellation of approximately $500,000.

REGULATION

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

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

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

                                       7
<PAGE>
We  filed  an  Information  Notice  with  the  EPA  under  the  Significant  New
Alternatives  Policy ("SNAP") program in order to categorize the acceptable uses
of SP34E(TM) and in December  2000,  SP34E(TM) was added to the EPA/SNAP liST oF
acceptable  alternatives.  In March of 2001, marketing of SP34E(TM) commenced in
the United States and no significaNT  penetration  has occurred at this time due
to a change of business by our appointed distributor Environmental  Technologies
and the subsequent  sale of Protocol,  which produced  SP34E(TM) for the Company
under  license.  Since tHE sale of  Protocol,  we have not  produced or marketed
SP34E(TM).

EZKLEAN meets all requirements of the Air Quality  Management  District ("AQMD")
of Los Angeles and is certified by the Southern  California  AQMD as a clean air
solvent. EZKLEAN is acceptable in food grade applications under FDA regulations,
21 CFR ss.  178.3400.  SOILKLEAN  has  environmental  approval from the State of
Florida.  None of the KLEAN products contain hazardous material,  and all of the
products are biodegradable.

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,  2002,  we  employed  four  full  time  personnel,  including  one
administrative,  two production and one sales  personnel.  Our employees are not
covered by any collective bargaining agreements and we consider our relationship
with our employees to be good.

FACTORS AFFECTING FUTURE PERFORMANCE

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

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

ADDITIONAL CAPITAL REQUIREMENT.  We will require significant  additional capital
to meet our growth  objectives  and to fully  implement  our  business  plan and
expand our operations.  While we have received  capital  infusions from Dominion
Capital and other  investors in the past,  there can be no assurance  that these
investments will continue.  We may also seek additional debt or equity financing
through banks, other financial  institutions,  companies or individuals,  but no

                                       8
<PAGE>
assurance can be given that we will be able to obtain any such additional equity
or debt financing on satisfactory terms or at all. Further, even if financing is
obtained,  no assurance  can be given that such  financing  would be adequate to
meet our needs for the foreseeable  future.  If we are unsuccessful in obtaining
sufficient  additional  capital,  our ability to  continue as a viable  business
enterprise will be substantially impaired.

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

UNCERTAINTY  OF  WIDESPREAD  MARKET  ACCEPTANCE OF PRODUCTS,  LIMITED  MARKETING
EXPERIENCE.  We are  still in the  early  stages  of  marketing  SOLTRON(R)  and
SP34E(TM). As is typical with new products, demand and market acceptance for oUr
products is subject to a high degree of uncertainty. Achieving widespread market
acceptance for our products will require  substantial  marketing efforts and the
expenditure of sufficient funds to create brand  recognition and customer demand
and to cause  potential  customers  to consider  the  potential  benefits of our
products.  The prospects for our product line will be largely dependent upon our
ability to achieve market penetration, which will require significant efforts on
our part to create  awareness  of and demand for our  products.  Our  ability to
build our customer base will depend in large part on our ability to locate, hire
and  retain  sufficient  qualified  marketing  personnel  and to fund  marketing
efforts, including advertising. There can be no assurance that our products will
achieve  widespread  market acceptance or that our marketing efforts will result
in future profitable operations.

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

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

SUPPLY,  CAPACITY  AND  DISTRIBUTION  CONSTRAINTS.  To  successfully  market our
products, we must be able to fill orders promptly for our shipment.  Our ability

                                       9
<PAGE>
to meet our  supply  requirements  promptly  will  depend  on  numerous  factors
including  our  ability to  establish  successfully  an  effective  distribution
network and to maintain adequate  inventories.  The ability of our sole supplier
of the SOLTRON(R)  enzyme to adequately  produce the chemicalS needed to produce
SOLTRON(R) in volumes  sufficient to meet demand will also affect our ability to
produce thiS product.  Failure to adequately supply products 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(R)  and on other
suppliers of chemicals.  Chemicals are subject to price  fluctuations baseD upon
supply and demand.  In addition,  because the  SOLTRON(R)  enzyme is produced in
Japan,  fluctuations in currencY values could adversely  affect our cost of this
product.  Interruption of our product supply could result from several  factors,
such as disruption of supply of raw product,  work  stoppages,  strikes or other
labor  difficulties,  changes in  governmental or  international  regulations or
natural or man caused  disasters  occurring with respect to our  suppliers.  Any
increase in the costs of our raw materials or disruption of our suppliers  could
severely and adversely affect our business operations.

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

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

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

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

                                       10
<PAGE>
LIMITED PATENT AND PROPRIETARY  INFORMATION  PROTECTION.  We do not believe that
our products or our  proprietary  production  processes  infringe on proprietary
rights of others, but we cannot give any assurance that infringement claims will
not be made  against us. If it is  determined  that our products or processes do
infringe someone else's  proprietary  rights, we could be required to modify our
products or processes or obtain a license to continue our use of them. There can
be no  assurance  that we  would  be able to do this in a  timely  manner,  upon
acceptable  terms and  conditions  or at all.  Our failure to do so would have a
material adverse effect on our business. In addition,  there can be no assurance
that we would have the  financial or other  resources  necessary to prosecute or
defend a patent  infringement or other proprietary rights action.  Moreover,  if
any of our products or processes  were held to infringe  patents or  proprietary
rights of others,  we could,  under  certain  circumstances,  be held liable for
damages,  which could be  significant  in amount and which could  materially and
adversely effect our operations.  We rely on confidentiality  agreements,  trade
secret protection and other methods to protect our processes,  concepts,  ideas,
documentation  and other  information  related to our products  and  proprietary
processes.  However,  these methods may not afford complete protection and there
can be no assurance that others will not independently  develop similar products
and  processes.  All of our  employees  are  required  to  sign  non-disclosure,
non-competition and inventions agreements,  but there can be no assurance that a
court  would  enforce  such  agreements  or that they would  provide us with any
meaningful  protection.  There  can be no  assurance  that  we  will  be able to
adequately  protect our trade secrets or that other  companies  will not acquire
information that we consider proprietary.

PRODUCT  ACQUISITION  AGREEMENT.   Our  rights  to  manufacture  and  distribute
SOLTRON(R) and SP34E(TM), as well as The process, formulae and other proprietary
rights related to such products, are contained in product acquisition agreements
with Dominion  Capital.  Any termination or impairment of the rights of Dominion
Capital to such proprietary rights or to our rights under these agreements would
materially  adversely  affect our  operations.  Additionally,  our  rights  with
respect to our  products  under  these  agreements  are limited to terms of five
years, each of which are extendable.

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

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

                                       11
<PAGE>
CONTROL   BY   EXISTING   SHAREHOLDERS/FOREIGN   SHAREHOLDERS.   Our   principal
shareholder,  Dominion Capital,  and its affiliates own or control a substantial
block of our outstanding common stock. Accordingly,  these shareholders,  acting
together, would be able to effectively control matters requiring approval by our
shareholders,  including  the election of our board of directors and approval of
certain significant transactions. Dominion Capital is domiciled in Australia and
if we, or our shareholders,  were to bring legal action against it, its domicile
in a foreign  country may  prevent it from being  subject to  jurisdiction  of a
United States court. While we or our shareholders may be able to proceed against
Dominion  Capital in an  Australian  court,  such  actions may be  prohibitively
expensive and an Australian  court may not recognize  claims or provide remedies
similar to those available in United States courts.

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

ITEM 2. DESCRIPTION OF PROPERTY

As of March 31, 2002,  we leased  approximately  14,000  square feet of space at
4247 West Adams,  Phoenix,  Arizona 85009, which housed our SOLTRON(R) and KLEAN
manufacturing,   warehousing   and   distribution   plant  and   serves  as  ouR
administration   and  corporate   sales  office.   Monthly  lease  payments  are
approximately $7,300 and the lease expires on September 14, 2002.

ITEM 3. LEGAL PROCEEDINGS

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

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

None.

                                       12
<PAGE>
                                     PART II

ITEM 5.MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET AND SHAREHOLDER INFORMATION

Our common  stock was traded on the OTC Bulletin  Board under the symbol  "SLPW"
throughout the fiscal year ended March 31, 2002. The following  table sets forth
the  quarterly  high and low bid  prices  per share  for the  common  stock,  as
reported by the OTC Bulletin Board for the fiscal years indicated.  On March 31,
2002, there were  approximately 360 registered  beneficial holders of our common
stock.


  Fiscal Year            Quarter Ended             High              Low
  -----------            -------------             ----              ---
     2001...........June 30, 2000..................$1.44............$0.41
                    September 30, 2000.............$0.88............$0.31
                    December 31, 2000..............$0.61............$0.24
                    March 31, 2001.................$0.41............$0.16

     2002...........June 30, 2001..................$0.60............$0.17
                    September 30, 2001.............$0.20............$0.16
                    December 31, 2001..............$0.32............$0.12
                    March 31, 2002.................$0.23............$0.07

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 31, 2001,  we commenced  an offering of up to 2,500,000  units,  each
consisting of one share of restricted common stock and a warrant to purchase one
share of common stock.  The units were offered in reliance on the exemption from
registration  provided under  Regulation D as  promulgated  under the Securities
Act. The units were offered at $0.20 per unit and warrants were  exercisable for
three  years at $0.20 per share.  As of March 31,  2001,  we had sold  1,000,000
units.  At June 30, 2001, we had sold a total of 1,350,000  units and closed the
offering.  On September 24, 2001, the Board of Directors  voted to accept a late
subscription for an additional 217,500 units under the offering.

                                       13
<PAGE>
On April 1, 2001, the Company issued 19,355 restricted shares of common stock in
settlement of an outstanding accounts payable amounting to $4,839.

On August 28, 2001, the Company issued 40,000  restricted shares of common stock
for the purchase of the formula and know-how for the enzyme product PETROKLEAN.

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

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

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

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

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

INTRODUCTION

We continue to report significant  losses. The past year was a year of increased
financial  and   operational   efficiency  and  decreased   overhead.   We  have
concentrated our focus for SOLTRON(R) on identifying distributors anD developing
direct sales  activities in new markets such as bulk users and small  generation
power plants.  After obtaining the requisite approvals for the sale of SP34E(TM)
in the United States, we appointed a nationAL  distributor for the product,  who
subsequently  changed management and business direction and whom we subsequently
terminated.  This,  combined with poor sales of the KLEAN products,  resulted in
less than expected sales revenues.

During the quarter  ended March 31,  2002,  the Company sold its 50% interest in
Protocol.

                                       14
<PAGE>
RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2002 COMPARED TO YEAR ENDED MARCH 31, 2001

Revenues from fuel  additives for the year ended March 31, 2002 were $488,324 as
compared to $314,180 for the year ended March 31, 2001. The increase in revenues
was due to an expanded  customer base on SOLTRON(R)  sales. The yeaR ended March
31, 2001 has been restated to exclude the  operations  of Protocol.  Our cost of
sales for  SOLTRON(R)  decreased  as a  percentage  of revenues due to increased
revenues that were spread over the fixed plant overhead and the  amortization of
plant leasehold improvements over the balance of the life of the lease.

General and administrative costs for the year ended March 31, 2002 were $891,219
as compared to $1,793,224  for the same period ended March 31, 2001. The general
and  administrative   amounts  included  amortization  of  marketing  rights  of
$2,098,330 and $460,000 respectively.  The increase of amortization expense is a
result of  management  determining  to  write-off  the balance of the  SP34E(TM)
licenses due to the sale of the interest in Protocol in MarCh 2002.  General and
administrative  costs  excluding the marking rights  amortization  for the years
ended March 31, 2002 and 2001 was  $832,889  and  $1,333,224,  or a reduction of
$500,335.  The 38% decrease  resulted  primarily from  decreased  administrative
overhead in the areas of  compensation  and  consulting  professional  fees. The
consolidation of operations and  administration  to our plant office in Phoenix,
Arizona also contributed reductions in overhead operating costs.

For the  year  ended  March  31,  2002,  we  incurred  a net  operating  loss of
$2,670,455 or $0.08 per share  compared to a net loss of $2,149,849 or $0.08 per
share for the year ended March 31, 2001.  These losses  contributed  to net cash
used in  operating  activities  of $261,009 and  $1,274,150  for the years ended
March 31, 2002 and 2001, respectively.

IMPACT OF INFLATION

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

LIQUIDITY AND CAPITAL RESERVES

The  $261,009  of cash we utilized  during  this  period was mainly  provided by
proceeds  from notes payable and the sale of common stock.  The  acquisition  of
Protocol  and plant  expansion in Phoenix  utilized  $467,848 for the year ended
March 31, 2001. During this same period, $1,652,917 was mainly provided by loans
from   related   parties,   proceeds   from  notes   payable  and  common  stock
subscriptions.  As of March 31, 2002, we had no further  commitments for capital
expenditures.

PLAN OF OPERATIONS FOR FISCAL YEAR 2003

Future marketing  activities will be directed towards expanding existing markets
for our products and penetrating new markets.  On completion of a full review of
our  operations  with the  objective to curtail the current loss  situation,  we
intend to conduct further reorganization. This review will also consider product
range,  distribution channels,  corporate structure and the economics of closure
of the  Phoenix  production  facility  and  outsourcing  the  production  of our
products.

Divesture  of  Protocol  and  failure  of the  appointed  U.S.  distributor  for
SP34E(TM) has limited our expectations fOr any significant  sales in fiscal year
2003 for this  product.  The KLEAN  products  have  shown  extremely  slow sales
interest and therefore our revenue projections are minimal.

                                       15
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

                                      INDEX

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

Consolidated Balance Sheets at March 31, 2002 and 2001......................18

Consolidated Statements of Operations for the Years Ended
March 31, 2002 and 2001.....................................................19

Consolidated Statements of Comprehensive Loss
For the Years Ended March 31, 2002 and 2001.................................20

Consolidated Statements of Stockholders' (Deficit) Equity for the
Years Ended March 31, 2002 and 2001.........................................21

Consolidated Statements of Cash Flows for the Years Ended
March 31, 2002 and 2001.....................................................22

Notes to the March 31, 2002 and 2001
Financial Statements........................................................24

                                       16
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Solpower Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Solpower
Corporation  and  Subsidiaries  as of March  31,  2002 and 2001 and the  related
consolidated   statements  of  operations,   comprehensive   loss,   changes  in
stockholders'  equity,  and cash flows for the years then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Solpower Corporation
and  Subsidiaries at March 31, 2002 and 2001, and the results of its operations,
changes in  stockholders'  equity and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

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


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

                                       17
<PAGE>
                              SOLPOWER CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                               2002                   2001
                                                                           ------------           ------------
<S>                                                                        <C>                    <C>
                                     ASSETS
Current Assets:
  Cash and cash equivalents                                                $      3,543           $     14,259
  Accounts receivable                                                            26,417                 30,535
  Inventory                                                                      24,395                135,777
  Prepaid expenses                                                                7,779                     --
  Assets of discontinued operations                                                  --              1,075,549
                                                                           ------------           ------------
      Total Current Assets                                                       62,134              1,256,120

Property & Equipment, net                                                       107,844                342,857

Other Assets:
  Marketing licenses, net                                                            --              2,098,333
  Goodwill, net                                                                      --                320,593
  Receivables from related parties                                               24,959                     --
  Other                                                                          11,094                 10,833
                                                                           ------------           ------------
                                                                           $    206,031           $  4,028,736
                                                                           ============           ============
                 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
  Accounts payable - trade                                                 $    253,464           $    217,823
                   - related parties                                            149,665                 95,461
  Customer deposits                                                              50,160                     --
  Accrued interest - related parties                                             45,883                 13,876
  Accrued interest                                                                   --                 26,220
  Accrued expenses                                                              105,945                139,450
  Liabilities of discontinued operations                                             --              1,001,543
                                                                           ------------           ------------
      Total Current Liabilities                                                 605,117              1,494,373

Long-Term Liabilities:
  Notes payable, less current portion                                           110,000                631,051
  Loans payable to related parties, less current portion                        400,000                403,379
                                                                           ------------           ------------
      Total Liabilities                                                       1,115,117              2,528,803
                                                                           ------------           ------------

Commitments and Contingencies                                                        --                     --

Stockholders' (Deficit) Equity:
  Preferred stock; $0.001 par value, 5,000,000 shares authorized;
   issued and outstanding, none                                                      --                     --
  Common stock; $0.01 par value, 100,000,000 shares authorized;
   issued and outstanding 33,231,919 and 31,255,064, respectively               332,320                312,551
  Common stock subscribed                                                            --                256,000
  Additional paid-in capital                                                 10,611,689             10,120,179
  Accumulated deficit                                                       (11,853,095)            (9,182,640)
  Foreign currency translation adjustment                                            --                 (6,157)
                                                                           ------------           ------------
      Total Stockholders' (Deficit) Equity                                     (909,086)             1,499,933
                                                                           ------------           ------------
                                                                           $    206,031           $  4,028,736
                                                                           ============           ============
</TABLE>
               The Accompanying Notes are an Integral Part of the
                       Consolidated Financial Statements

                                       18
<PAGE>
                              SOLPOWER CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                              2002                   2001
                                                          ------------           ------------
<S>                                                       <C>                    <C>
Revenues:
  Fuel additive                                           $    488,324           $    314,180
  Miscellaneous                                                 23,167                     --
                                                          ------------           ------------
                                                               511,491                314,180
                                                          ------------           ------------
Cost of Sales:
  Fuel additive                                                511,826                409,556
  Miscellaneous                                                    276                     --
                                                          ------------           ------------
                                                               512,102                409,556
                                                          ------------           ------------
Gross Profit (Loss)                                               (611)               (95,376)

Expenses:
  General and administrative                                   891,219              1,793,224
  Impairment of intangible asset                             2,040,000                     --
                                                          ------------           ------------
Operating Loss                                              (2,931,830)            (1,888,600)
                                                          ------------           ------------
Other Income (Expense):
  Interest income                                                   21                    502
  Foreign exchange rate                                             --                 23,143
  Settlement costs                                                  --                (86,000)
  Interest expense                                            (182,725)              (303,540)
  Relief of debt                                               126,708                131,095
                                                          ------------           ------------
      Total Other Income (Expense)                             (55,996)              (234,800)
                                                          ------------           ------------
Net Loss Before Provision for Income Taxes
 and Discontinued Operations                                (2,987,826)            (2,123,400)
                                                          ------------           ------------

Provision for Income Taxes                                          --                     --

Loss From Continuing Operations                             (2,987,826)            (2,123,400)
                                                          ------------           ------------
Discontinued Operations:
  Operating loss from discontinued operations                  (18,725)               (26,449)
  Gain on sale of discontinued operations                      336,096                     --
                                                          ------------           ------------
Income (Loss) From Discontinued Operations                     317,371                (26,449)
                                                          ------------           ------------
Net Loss                                                  $ (2,670,455)          $ (2,149,849)
                                                          ============           ============
Basic Loss Per Share:
  Loss from Operations available to stockholders
    Continuing operation                                  $      (0.09)          $      (0.08)
    Discontinued operations                                       0.01                     --
                                                          ------------           ------------

Net Loss Per Share                                        $      (0.08)          $      (0.08)
                                                          ============           ============
Weighted Average Number
 of Common Shares Outstanding                               32,387,974             28,414,286
                                                          ============           ============
</TABLE>
               The Accompanying Notes are an Integral Part of the
                       Consolidated Financial Statements

                                       19
<PAGE>
                              SOLPOWER CORPORATION
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                   FOR THE YEARS ENDED MARCH 31, 2002 AND 2001


                                                      2002              2001
                                                  -----------       -----------

Net Loss                                          $(2,670,455)      $(2,149,849)

Other Comprehensive Income (Loss), Net of Tax:

    Foreign currency translation adjustment             6,157            (6,157)
                                                  -----------       -----------
Comprehensive Loss                                $(2,664,298)      $(2,156,006)
                                                  ===========       ===========

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

                                       20
<PAGE>
                              SOLPOWER CORPORATION
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                      Additional         Common
                                                               Common Stock            Paid In           Stock
                                                         Shares          Amount        Capital         Subscribed
                                                         ------          ------        -------         ----------
<S>                                                    <C>              <C>          <C>                <C>
Balance, March 31, 2000                               27,316,066       $ 273,161    $  8,741,730       $      --

Issuance of common stock pursuant to
 employment agreements                                   270,000           2,700         153,106              --
Issuance of warrants for financing costs                      --              --         182,000              --
Issuance of common stock in settlement of
 marketing agreements                                    784,625           7,846         306,004              --
Conversion of debt and liabilities to equity           2,784,373          27,844         764,294              --
Issuance of common stock for purchase of assets          100,000           1,000          18,818              --
Issuance of common stock for settlement of
 investor relation services agreement                    130,000           1,300          24,700              --
Common stock subscriptions received                           --              --              --         256,000
Repurchase and cancellation of common stock             (130,000)         (1,300)        (70,473)             --
Increase in cumulative translation account                    --              --              --              --
Loss, year ended March 31, 2001                               --              --              --              --
                                                     -----------       ---------    ------------       ---------

Balance, March 31, 2001                               31,255,064         312,551      10,120,179         256,000

Unit subscriptions received                                   --              --              --         197,750
Common stock and warrants issued for subscriptions     1,567,500          15,675         438,075        (453,750)
Conversion of liabilities to equity                       19,355             194           4,645              --
Issuance of common stock for purchase of
 Formula                                                  40,000             400           4,640              --
Common stock issued for services                          50,000             500           6,150              --
Conversion of note payable to common stock               300,000           3,000          27,000              --
Call option issued                                            --              --          11,000              --
Decrease in cumulative translation account                    --              --              --              --
Loss, year ended March 31, 2002                               --              --              --              --
                                                     -----------       ---------    ------------       ---------

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

                                                                       Cumulative
                                                      Accumulated      Translation
                                                        Deficit          Account          Total
                                                        -------          -------          -----
Balance, March 31, 2000                              $ (7,032,791)       $    --       $ 1,982,100

Issuance of common stock pursuant to
 employment agreements                                         --             --           155,806
Issuance of warrants for financing costs                       --             --           182,000
Issuance of common stock in settlement of
 marketing agreements                                          --             --           313,850
Conversion of debt and liabilities to equity                   --             --           792,138
Issuance of common stock for purchase of assets                --             --            19,818
Issuance of common stock for settlement of
 investor relation services agreement                          --             --            26,000
Common stock subscriptions received                            --             --           256,000
Repurchase and cancellation of common stock                    --             --           (71,773)
Increase in cumulative translation account                     --         (6,157)           (6,157)
Loss, year ended March 31, 2001                        (2,149,849)            --        (2,149,849)
                                                     ------------        -------       -----------

Balance, March 31, 2001                                (9,182,640)        (6,157)        1,499,933

Unit subscriptions received                                    --             --           197,750
Common stock and warrants issued for subscriptions             --             --                --
Conversion of liabilities to equity                            --             --             4,839
Issuance of common stock for purchase of
 Formula                                                       --             --             5,040
Common stock issued for services                               --             --             6,650
Conversion of note payable to common stock                     --             --            30,000
Call option issued                                             --             --            11,000
Decrease in cumulative translation account                     --          6,157             6,157
Loss, year ended March 31, 2002                        (2,670,455)            --        (2,670,455)
                                                     ------------        -------       -----------

Balance, March 31, 2002                              $(11,853,095)       $    --       $  (909,086)
                                                     ============        =======       ===========
</TABLE>
               The Accompanying Notes are an Integral Part of the
                       Consolidated Financial Statements

                                       21
<PAGE>
                              SOLPOWER CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                      2002                2001
                                                                  -----------         -----------
<S>                                                               <C>                 <C>
Cash Flows From Operating Activities:
  Net loss                                                        $(2,670,455)        $(2,149,849)
  Income (loss) from discontinued operations                          317,371             (26,449)
                                                                  -----------         -----------
  Net loss attributable to continuing operations                   (2,987,826)         (2,123,400)
  Adjustments to reconcile net loss to net cash used
   by operating activities:
     Impairment of intangible asset                                 2,040,000                  --
     Depreciation and amortization                                    353,032             656,299
     Non-cash transactions                                             10,690             321,950
     Net gain on sale of assets                                      (336,096)                 --
     Changes in operating assets and liabilities:
       Accounts receivable                                              4,118              14,191
       Prepaid expenses                                                (7,779)                 --
       Inventory                                                      111,382            (114,153)
       Receivable from related parties                                (24,959)                 --
       Accounts payable - trade                                       162,349              49,008
                        - related parties                              54,204             (11,657)
       Customer deposits                                               50,160                  --
       Accrued expenses                                               (33,505)             39,521
       Accrued interest - related parties                              32,007              13,876
       Accrued interest                                                (6,157)             26,220
                                                                  -----------         -----------
          Net Cash Used by Continuing Operating Activities           (578,380)         (1,128,170)
          Income (Loss) from Discontinued Operations                  317,371             (26,449)
                                                                  -----------         -----------
          Net Cash Used by Operating Activities                      (261,009)         (1,154,619)
                                                                  -----------         -----------
Cash Flows from Investing Activities:
  Investment in discontinued operations                                    --            (271,393)
  Capital expenditures                                                 (5,128)           (117,354)
  Proceeds from sale of equipment                                       4,300                  --
                                                                  -----------         -----------
          Net Cash Used by Investing Activities                          (828)           (388,747)
                                                                  -----------         -----------
Cash Flows From Financing Activities:
  Proceeds from notes payable                                         140,000             507,845
  Proceeds from sale of common stock, warrants and options            114,500             200,000
  Loans from related parties                                               --             863,370
  Payments to related parties                                          (3,379)            (47,889)
                                                                  -----------         -----------
          Net Cash Provided by Financing Activities                   251,121           1,523,326
                                                                  -----------         -----------

Increase (Decrease) in Cash and Cash Equivalents                      (10,716)            (20,040)
Cash and Cash Equivalents, Beginning of Year                           14,259              34,299
                                                                  -----------         -----------
Cash and Cash Equivalents, End of Year                            $     3,543         $    14,259
                                                                  ===========         ===========
</TABLE>
               The Accompanying Notes are an Integral Part of the
                       Consolidated Financial Statements

                                       22
<PAGE>
                              SOLPOWER CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                              2002              2001
                                                                           ---------         ---------
<S>                                                                        <C>               <C>
SUPPLEMENTAL INFORMATION:
Cash Paid for:
  Interest                                                                 $  40,214         $  10,817
  Income taxes                                                             $      --         $      --

Non-cash Investing and Financing:
  Cost associated with issue of warrants                                   $  94,250         $      --
  Loss on discontinued operations                                          $  18,725         $      --
  Repurchase and cancellation of common stock for accrued liability        $      --         $ (71,773)
  Issuance of common stock for conversion of debt                          $  34,839         $ 805,843
  Issuance of common stock and warrants for settlement costs and
   related interest                                                        $      --         $ 319,199
  Issuance of common stock for compensation and services                   $   6,650         $ 155,806
  Extinguishments of debt                                                  $(126,708)        $(131,095)
  Amortization of loan discount                                            $  12,934         $      --
  Fixed assets received as payment of accounts receivable                  $      --         $ (35,000)
  Common stock subscribed for financing costs                              $      --         $  56,000
  Issuance of common stock for purchase of formula                         $   5,040         $      --
  Foreign Currency Translation                                             $      --         $  (6,157)
  Issuance of common stock for purchase of assets                          $      --         $  19,818
</TABLE>
               The Accompanying Notes are an Integral Part of the
                       Consolidated Financial Statements

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

                                    BUSINESS

ORGANIZATION

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

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

NATURE OF OPERATIONS

The principal  business  purpose of the Company is the sales and distribution of
SOLTRON(R),  a fuel enhancing product and SP34E(TM), a replacement  refrigerant,
and other environmentally  friendly products throughout the world although it is
not currently marketing SP34E(TM).

The Company has the exclusive sales,  distribution,  marketing and manufacturing
rights  for the  United  States,  Mexico  and  Canada to the  Solpower  product,
SOLTRON(R), and SP34E(TM).

ACQUISITIONS

During  the  year  ended  March  31,  2001,  the  Company  acquired  50%  of the
outstanding  stock of Protocol  Resource  Management  Inc.  and entered into and
purchased the E*COR enzyme division assets of Perix Industries, Inc. (Note 4)

SALE OF SUBSIDIARY

During the quarter ended March 31, 2002, the Company  negotiated the sale of its
50% ownership of its Canadian  subsidiary to PICO Holdings,  Inc. ("PICO"),  the
owner  of the  other  50% of the  Canadian  company.  As  consideration  for the
Company's  50%  ownership,  PICO  cancelled a $500,000  note payable and accrued
interest  due them from the Company on a  Non-negotiable  Promissory  Note dated
August 24, 2000, and cancelled and  extinguished  a contingent  liability in the
original amount on a  Non-negotiable  Promissory Note dated August 28, 2000. The
referred to Notes were stamped "Cancelled" by PICO and returned to the Company.

GOING CONCERN AND MANAGEMENT PLANS

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company has experienced  significant  losses and negative cash

                                       24
<PAGE>
flows from operations for the year ended March 31, 2002,  which have resulted in
a deficiency  in working  capital of  approximately  $543,00 and an  accumulated
deficit of approximately $11,900,000 as of March 31, 2002. (See Note 11)

Management is planning to continue to downsize the operation and reduce  current
operating overhead. Management is considering not renewing its Phoenix operating
lease  at  its  production  facility  and to  outsource  the  production  of the
Company's  product  line.  Management  is currently  reviewing the economics and
logistics of these potential changes.

                         SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

During the year ended  March 31,  2002,  the  Company  sold its 50%  interest in
Protocol Resource Management Inc.  ("Protocol"),  its Canadian  subsidiary.  The
consolidated  balance  sheet of the  Company  at March  31,  2001  includes  the
accounts of Solpower  Corporation  and of Protocol,  reflected  as  discontinued
operations.  The consolidated  statement of operations for the years ended March
31, 2002 and 2001 include the activity of Protocol as  discontinued  operations.
All significant inter-company  transactions and accounts have been eliminated in
consolidation.

PERVASIVENESS OF ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

REVENUE RECOGNITION

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

CASH AND CASH EQUIVALENTS

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

                                       25
<PAGE>
ACCOUNTS RECEIVABLE

The Company follows the allowance method of recognizing  uncollectible  accounts
receivable.  The allowance method recognizes bad debt expense as a percentage of
accounts receivable based on a review of the individual accounts outstanding and
the Company's prior history of uncollectible  accounts receivable.  At March 31,
2002  and  2001 an  allowance  has  been  provided  for  uncollectible  accounts
receivable in the amounts of $-0- and $4,438, respectively. The Company does not
have a formal policy to charge interest on late payments of receivable amounts.

CONCENTRATION OF CREDIT RISK

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

During the current and prior fiscal years,  one customer  accounted for 35 % and
45 % of the Company revenues, respectively.

INVENTORY

Inventory at March 31, 2002 consists, primarily, of the SOLTRON(R) fuel additive
concentrate  and at March 31, 2001,  consists  primarily of the SOLTRON(R)  fuel
additive  concentrate and replacement  refrigerant gases and related  canisters,
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 fro
the account and any gain or loss is reflected in the statement of operations.

Estimated useful lives of the assets are as follows:

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

RESEARCH AND DEVELOPMENT COSTS

All research and development costs, with the exception of capital  expenditures,
are expensed in the period incurred.  Capital expenditures incurred for research
and  development  activities  are included in fixed  assets.  The Company had no
research and development for the years ended March 31, 2002 and 2001.

                                       26
<PAGE>
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.

IMPAIRMENT OF LONG-LIVED ASSETS

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

During the current year ended,  management  determined that the costs associated
with the marketing  licenses for SP34E(TM) became impaired when the Company sold
its 50% interest in its  subsidiary,  which  manufactured  the SP34E(TM) for the
Company.  Accordingly,  the Company  wrote-off the balance  associated with this
license at March 31, 2002. Amortization of this license amounted to $360,000 for
the year ended March 31, 2001,  and the balance of $2,040,000 was written off as
an impairment of an intangible asset for the year ended March 31, 2002.

GOODWILL

Goodwill represents the excess of the purchase price over the fair values of the
net assets acquired and is being  amortized on a  straight-line  basis over five
years. On an ongoing basis, management reviews the valuation and amortization of
goodwill,  taking into  consideration any events and  circumstances  which might
have impaired the fair value. Goodwill is written down to the recoverable amount
when  declines in value are  considered  to be other than  temporary  based upon
expected future cash flows.  The subsidiary with which this asset was associated
with at March 31,  2001,  was sold in March  2002 and the  remaining  balance of
goodwill that was not  amortized  was written off as a component of  determining
the net gain on the sale of the subsidiary.

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, 2002 and
2001.

                                       27
<PAGE>
BASIC LOSS PER COMMON SHARE

Basic  loss per  common  share is  computed  based on  weighted  average  shares
outstanding and excludes any potential dilution from stock options, warrants and
other  common  stock  equivalents.  Basic loss per share is computed by dividing
loss available to common  shareholders by the weighted  average number of common
shares  outstanding  for the period.  Diluted net loss per common share reflects
potential  dilution from the exercise or  conversion  of securities  into common
stock or from other  contracts to issue common  stock.  As of March 31, 2002 and
2001  diluted  net loss per  common  share is not  included,  as the  effect  of
including these shares is anti-dilutive.

At March 31, 2002,  stock  options  representing  2,500,000  common  shares were
outstanding  with exercise prices ranging between $0.15 and $2.00.  The weighted
average exercise price for all outstanding  options was $2.35. At year-end stock
warrants  representing  1,817,500  common shares were  outstanding with exercise
prices ranging between $0.20 and $0.40.  The weighted average exercise price for
all outstanding warrants was $0.23.

FOREIGN CURRENCY TRANSLATION

Account  balances and  transactions  denominated  in foreign  currencies and the
accounts of the Company's  foreign  operations  have been translated into United
States funds, as follows:  (i) assets and  liabilities,  if any, at the rates of
exchange  prevailing  at the balance  sheet date;  (ii)  revenue and expenses at
average exchange rates for the period in which the transaction  occurred;  (iii)
exchange  gains and  losses  arising  from  foreign  currency  transactions  are
included in the determination of net earnings for the period;  and (iv) exchange
gains  and  losses  arising  from  the  translation  of  the  Company's  foreign
operations  are deferred and included as a separate  component of  stockholders'
equity, as reflected at March 31, 2001

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

STOCK-BASED COMPENSATION

Employee Stock Options:

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

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

                                       28
<PAGE>
<TABLE>
<CAPTION>
                                                                             Year Ended March 31,
                                                                            2002                2001
                                                                        -----------         -----------
                                                                        (Unaudited)         (Unaudited)
<S>                                                                     <C>                 <C>
Net loss from continuing operations, as reported                        $(2,987,826)        $(2,123,400)
Deduct: Total stock-based employee compensation expense
        determined under fair value based method for all awards,
        net of related tax effects                                          (21,000)                 --
                                                                        -----------         -----------
Pro forma net loss from continuing operations                            (3,008,826)         (2,123,400)
Income (loss) from discontinued operations                                  317,371             (26,449)
                                                                        -----------         -----------
Pro forma net loss                                                      $(2,691,455)        $ 2,149,849)
                                                                        ===========         ===========
Loss per share:
  Basic, continuing operations, as reported                             $     (0.09)        $     (0.08)
                                                                        ===========         ===========
  Basic, continuing operations, pro forma                               $     (0.09)        $     (0.08)
                                                                        ===========         ===========
  Discontinued operations, as reported                                  $      0.01         $        --
                                                                        ===========         ===========
  Discontinued operations, pro forma $                                         0.01         $        --
                                                                        ===========         ===========
  Net loss per share, as reported                                       $     (0.08)        $     (0.08)
                                                                        ===========         ===========
  Net loss per share, pro forma                                         $     (0.08)        $     (0.08)
                                                                        ===========         ===========
</TABLE>

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

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

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

RECENT ACCOUNTING PRONOUNCEMENT

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

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 153 (SFAS 153),  "Exchanges of
Nonmonetary Assets." SFAS 153 amends the guidance in SPB No. 29, "Accounting for
Nonmonetary  Assets." APB No. 29 was based on the  principle  that  exchanges of
nonmonetary assets should be measured on the fair value of the assets exchanged.
SFAS 153 amends APB No. 29 to eliminate the exception for nonmonetary  exchanges

                                       29
<PAGE>
of  similar  productive  assets and  replaces  it with a general  exception  for
exchanges of  nonmonetary  assets that do not have  commercial  substance if the
future cash flow of the entity are expected to change  significantly as a result
of the  exchange.  SFAS 151 is effective  for  financial  statements  issued for
fiscal  years  beginning  after June 15,  2005.  The adoption of SFAS 153 is not
expected  to have a  material  effect on the  Company's  financial  position  or
results of operations.

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

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

Property and equipment consists of the following at March 31, 2002 and 2001:

                                                     2002                2001
                                                  ---------           ---------
Furniture and Fixtures                            $  52,359           $  52,359
Computer and Office Equipment                        75,711              74,359
Plant Equipment                                     170,705             174,110
Leasehold Improvements                              425,298             425,298
                                                  ---------           ---------
                                                    724,073             726,350
Less: Accumulated Depreciation                     (616,229)           (383,493)
                                                  ---------           ---------

                                                  $ 107,844           $ 342,857
                                                  =========           =========

Depreciation  expense  charged to operations  for the years ended March 31, 2002
and 2001, was $235,479 and $113,259, respectively.

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

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

                                       30
<PAGE>
On June 17,  1998,  the Company  acquired  the  exclusive  sales,  distribution,
marketing  and  manufacturing  rights  to the  Solpower  product,  SP34E(TM)  (a
refrigerant)  encompassing the North American Market (United States,  Mexico aND
Canada), in exchange for the issuance of 6,000,000 shares of common stock valued
at  $2,400,000.  The contract is for a period of five years,  and pursuant to an
addendum to the agreement,  the term of the agreement commenced on July 1, 2000.
The Company is amortizing these marketing rights over the period of contract.

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

Amortization  charged to  operations  for each of the years ended March 31, 2002
and 2001 was $58,333 and $460,000, respectively.

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

ACQUISITION OF PROTOCOL RESOURCE MANAGEMENT INC.

On August  30,  2000,  the  Company  acquired  50% of the  outstanding  stock of
Protocol Resource Management Inc., a private Ontario corporation with offices in
Aurora,  Ontario,  Canada.  PICO  Holdings,  Inc.,  a NASDAQ  listed  California
corporation,  acquired the  remaining  50%  interest in Protocol  under the same
agreement.  Protocol and the Company were previously  engaged in a joint venture
for the manufacture and distribution of SP34E(TM)  throuGH Solpower Canada Inc.,
an Ontario Corporation, owned equally by Protocol and the Company.

The amount paid for the acquisition was $1,500,000  (CAN),  $1,016,700  (US), in
the form of $1,000,000 (CAN),  $677,800 (US), cash at closing, of which half was
paid by the Company and half by PICO Holdings, Inc., and promissory notes due on
the second and third  anniversaries  of the closing date. The promissory note in
the amount of $500,000 (US) was issued by PICO. The Company issued a note in the
amount of $250,000 (CAN),  $123,206(US),  to PICO, which represented one-half of
the amount of the note issued by PICO in the Protocol acquisition.  In the event
that the annual average EBITDA (Earnings Before  Interest,  Taxes,  Depreciation
and  Amortization)  of Protocol for first two years following  closing is not at
least  $250,000  (CAN),  $123,206  (US),  the amount of the  second  anniversary
payment will be reduced based on a formula.  In the event that the annual EBITDA
of Protocol for third year  following  closing is not at least  $250,000  (CAN),
$123,206 (US), the amount of the third anniversary  payment will also be subject
to reduction based on a formula.

The funds used by the  Company to  complete  its  portion  of  acquisition  were
provided in the form of two loans from PICO in the aggregate  amount of $623,206
(US). The shares of Protocol held by the Company as a result of the  acquisition
were  utilized to secure  these  loans.  The Company  granted  PICO a warrant to
purchase 1,000,000 shares of its common stock at $0.43 (110% of the market price
on the date funds were advanced). The terms of the $500,000 (US) promissory note
is for three years, with interest at LIBOR plus 2%, payable semi-annually. (Note
7)

During the quarter ended March 31, 2002 the Company negotiated the sale of their
50% interest in this subsidiary to PICO Holdings, Inc. (Note 1)

                                       31
<PAGE>
ACQUISITION OF E*COR ASSETS

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

On August 28,  2002,  the Company  purchased  the formula and  know-how  for the
PETROKLEAN  enzyme  product from Steve  Kraynak for 40,000  shares of restricted
common stock.

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

OPERATING LEASES

The Company  terminated  its lease for  executive  office  space in  Scottsdale,
Arizona, effective March 31, 2001.

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

During the year ended March 31,  2001,  the Company  leased two  vehicles  under
thirty-six  month lease  agreements.  The monthly rental  obligation under these
agreements is $965.

The  Company  leases  warehouse  space for its  production  facility  located in
Phoenix,  Arizona. The term of the lease is five years, expiring September 2002.
On December 15, 2000,  the Company  entered into an Amendment to Lease for 2,739
sq. ft of additional office space at this production facility,  commencing March
1, 2001.  The  Amendment to Lease also grants the Company an option to renew the
lease  for an  additional  5 years at the  expiration  of the  current  lease in
September  2002,  for both the  production  facility and the  additional  office
space.  The base  monthly  rental for both the  production  and office  space is
approximately $7,040, plus CAM charges and property rental tax.

Protocol Resource Management leases various equipment, vehicles and office space
in Canada. Monthly lease payments total $5,313. The leases expire through 2004.

Minimum future rental payments for all  non-cancelable  operating  leases having
original or remaining lease terms in excess of one year as of March 31, 2002 are
as follows:

               Year Ending
                March 31,
                ---------
                 2003          $53,820
                 2004           10,460
                               -------
                               $94,280
                               =======

Lease expense charged to operations for the years ended March 31, 2002 and 2001,
was $83,172 and $142,051, respectively.

                                       32
<PAGE>
CONVERTIBLE PROMISSORY NOTE

On September 18, 2000, the Company issued a $400,000 Convertible Promissory Note
to Dominion  Capital Pty Ltd.  The note matured on  September  18, 2001,  and is
convertible  into common shares of the Company at the lesser of the market price
on the date conversion notice is given to the Company or $0.40 per share for the
amount of principal  outstanding  at  conversion.  The note bears interest at 8%
percent per annum,  payable  quarterly in arrears.  The note was unpaid at March
31,  2002 and  under the  terms of the  addendum,  the  agreement  was  verbally
extended and subsequent to year end was converted into common stock. (Note 7)

OTHER COMMITMENTS

Effective March 1, 2000, the Company  entered into an employment  agreement with
Mark S. Robinson for an initial term of three (3) years. The agreement  provides
for a base salary of $130,000  per annum;  accommodation,  automobile,  medical,
social security  allowances and such other terms and conditions as may be agreed
upon  from  time to time;  500,000  stock  options  pursuant  to the  terms  and
conditions of the Solpower  Corporation Stock Option and Incentive Plan and such
vesting requirements as established by the compensation committee; a stock grant
of 50,000 common  shares  effective  March 1, 2000;  and monthly stock grants of
10,000  shares  effective  the  first  day of each  month  for  the  term of the
agreement,  such shares to be issued quarterly  provided agreed upon performance
requirements are fulfilled.  A total of 150,000 common shares were issued to Mr.
Robinson as of March 31, 2001. Mr. Robinson  ceased  employment with the Company
effective March 31, 2001, and ceased to be a director and officer of the Company
effective March 31, 2001. The stock options  granted to Mr. Robinson  terminated
effective April 30, 2001, and the stock grants to Mr. Robinson ceased  effective
March 31, 2001. (Note 9)

Effective April 1, 2000, the Company  entered into an employment  agreement with
James H. Hirst for an initial term of three (3) years.  The  agreement  provides
for a base salary of $126,000 per annum;  automobile,  medical,  social security
allowances  and such other terms and  conditions as may be agreed upon from time
to time;  500,000  stock  options  pursuant to the terms and  conditions  of the
Solpower   Corporation   Stock  Option  and  Incentive  Plan  and  such  vesting
requirements  as established  by the  compensation  committee;  a stock grant of
50,000 common shares effective April 1, 2000; and monthly stock grants of 10,000
shares effective the first day of each month for the term of the agreement, such
shares to be issued quarterly provided agreed upon performance  requirements are
fulfilled.  A total of 130,000 common shares were issued to Mr. Hirst during the
year. On March 27, 2001, the Company agreed to Mr. Hirst returning the shares to
the Company and to carry the associated  liability  until such time as Mr. Hirst
requested the shares be re-issued.  Effective March 31, 2001 the stock grants to
Mr. Hirst ceased. (Note 9)

--------------------------------------------------------------------------------
                                     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.

                                       33
<PAGE>
At March 31, 2002 and 2001, deferred tax assets on United States reported losses
consist of the following:

                                                  2002                2001
                                              -----------         -----------
     Net operating loss carry-forwards        $ 1,632,000         $ 1,232,000
     Less: valuation allowance                 (1,632,000)         (1,232,000)
                                              -----------         -----------

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

At March 31, 2002 and 2001,  the Company had United States federal net operating
loss  carry-forwards  in the  approximate  amount of $11,372,000 and $8,701,500,
respectively,  available to offset future taxable income  expiring  through 2022
and 2021,  respectively.  At March 31, 2002,  and 2001,  the Company had Arizona
state  net  operating  loss  carry-forwards  in  the  approximately   amount  of
$10,023,000  and  $8,701,500,  respectively,  available to offset future taxable
income expiring through 2007 and 2006, respectively.

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

Protocol Resource Management Inc., the previously 50% owned Canadian subsidiary,
reports  its  income  under  Canadian  taxation  regulations.  The  company  has
operating  losses  approximating  $172,000  (US) at March  31,  2001 and  expire
through 2008.

At March 31, 2001,  deferred  tax assets in US dollars on the Canadian  reported
losses consist of the following:

     Net operating loss carry-forwards        $  54,838
     Less: valuation allowance                       --
                                              ---------

                                              $  54,838
                                              =========

With the sale of the Canadian  subsidiary,  this deferred tax asset is no longer
available to the Company at March 31, 2002.

--------------------------------------------------------------------------------
                                     NOTE 7
                           RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

LOANS PAYABLE TO RELATED PARTIES

On November 4, 1996,  the Company  entered into an  agreement  with the majority
stockholder of the Company, Dominion Capital Pty Ltd., ("DOMINION") for a period
of five years.  Dominion  agreed to provide up to  $1,000,000  on an "as needed"
basis  for  operational  costs  and  for the  development  and  construction  of
manufacturing  facilities.  Dominion  was to be  repaid  for the  advances  with
convertible  preferred shares of the Company.  On November 24, 1997, an addendum
was signed by the  Company  deleting  this  provision  from the  agreement.  The
addendum grants stock options and pay performance  bonuses based solely on gross
sales figures of the Solpower  product  SOLTRON(R) in thE North American market.
Details  of the  terms  of the  options  can be  found  in  Note  8,  under  the
subheading, "Stock Options." Additionally,  the Company has the option to extend

                                       34
<PAGE>
the term of this  agreement  for an  additional  period  of five  years,  unless
canceled  by notice in  writing,  by either  party,  with a thirty day notice of
cancellation. At March 31, 2002 the term of this agreement was verbally extended
through  November  4, 2006.  As of March 31,  2002 and 2001,  the  Company had a
balance due to Dominion of $400,000 and accrued interest of $45,883 and $13,876,
respectively.

During the year ended March 31, 2000, Intavest Pty Ltd. ("INTAVEST"),  a related
party  entered into an  investment  banking  services  agreement  with  National
Capital Merchant Group,  Inc. for the benefit of the Company.  During May, 2000,
Intavest  transferred  45,000  shares  of the  Company's  common  stock  held by
Intavest as payment under the agreement.  The agreement was canceled in December
1999 and as of March 31, 2000 the  Company  agreed to repay  Intavest  and had a
payable to Intavest  in the amount of  $90,000.  During the year ended March 31,
2001 the $90,000 was converted to common stock.

As of March 31, 2001 the Company has a balance due to Peter Voss, a  stockholder
and director, in the amount of $3,379.  Management believes that the balance due
is long-term in nature.

In July 1998,  the Company  entered into an investor  relations  agreement  with
Dominion Capital  Securities,  Inc., a related entity, for a six month period to
provide investor  relations  activities in exchange for $125,000 in cash, 50,000
shares of common stock and 100,000 stock  options at an exercise  price of $3.00
per share.  The  Company  renewed  the  agreement  in  consideration  of monthly
payments of $30,000 per month for the period July 1, 1999  through  December 31,
1999. The agreement  provided for payment in cash of $90,000 and common stock in
the amount of $90,000 for  services.  In addition,  the  agreement  provided for
payments for services of $15,000 per month from January 1, 2000 through June 30,
2000,  payable in cash of $60,000 and common  stock of $30,000.  As of March 31,
2000, the Company had a balance  payable under the agreement of $130,390,  which
included  additional  expenses  incurred by Dominion  Capital  Securities,  Inc.
during the year ended March 31, 2000.  During the year ended March 31, 2001, the
$130,390 was converted to common stock.  For the year ended March 31, 2001,  the
Company recorded  investor  relations  expenses in relation to this agreement in
the amount of $148,266.

On September 18, 2000, the Company issued a $400,000 Convertible Promissory Note
to Dominion  Capital Pty Ltd.  The note matured on  September  18, 2001,  and is
convertible  into common shares of the Company at the lesser of the market price
on the date conversion notice is given to the Company or $0.40 per share for the
amount of principal  outstanding  at  conversion.  The note bears interest at 8%
percent per annum, payable quarterly in arrears. The note was unpaid at December
11, 2002, with accrued interest on the note amounting to $71,365.

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

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

STOCK ISSUED FOR SERVICES AND DEBT

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

                                       35
<PAGE>
On June 28, 2000, the Company issued 166,330  restricted  shares of common stock
in settlement of various outstanding accounts payable in the aggregate amount of
$127,924.  This  transaction was reflected in the financial  statements at March
31, 2000.

On June 28, 2000, the Company issued 80,000 restricted shares of common stock to
Mr. Robinson and 70,000 to Mr. Hirst as part of their  compensation  under their
employment agreements.

On August 18, 2000, the Company issued 500,000 restricted shares of common stock
to Solpower Southeast  Corporation in discharge of debt,  accrued interest,  for
repayment  of certain  expenses  related to the Elkhart,  Indiana  plant and for
purchase  of  equipment.   The  shares  were  issued  at  $0.40  per  shares  in
cancellation of the $200,000 obligation.

On August 18, 2000, the Company issued 284,625 restricted shares of common stock
to Masters  Marketing Group,  Inc. The shares were issued at $0.40 per shares in
cancellation of $113,850 of debt and interest.

On November 16, 2000,  the Company  issued  30,000  restricted  shares of common
stock to each of Mr. Robinson and Mr. Hirst pursuant to stock grants under their
employment agreements.

On January 26, 2001,  the Company  issued  375,000  restricted  shares of common
stock at the  issue  price of $0.40 per  share,  and  granted  a share  purchase
warrant for 250,000  restricted  shares of common stock at the exercise price of
$0.40 per share,  expiring  December 31, 2002, in settlement of $189,795 owed to
Dominion Capital, Inc., for the provision of investors relations services.  This
transaction  resulted in the Company  receiving  relief of debt in the amount of
$81,595.

On January 26, 2001, the Company issued  2,409,373  restricted  shares of common
stock at the issue price of $0.25 per share to settle  various  advances,  loans
and accounts payable for a total of $602,343.

On January 26, 2001, the Company issued 30,000 restricted shares of common stock
to each of Mr.  Robinson  and Mr.  Hirst  pursuant to stock  grants  under their
employment arrangements.

On March 15, 2001,  the Company  agreed to issue  130,000  restricted  shares of
common stock in settlement of an investor  relations  service  agreement at $.20
per share.

A total of 130,000  common shares were issued to Mr. Hirst during the year ended
March 31, 2001. On March 27, 2001, the Company agreed to Mr. Hirst returning the
shares to the Company and to carry the associated  liability  until such time as
Mr. Hirst requested the shares be re-issued.

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

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

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

COMMON STOCK GRANTS

On October 26, 1998, a grant of 25,000 restricted shares under the Plan was made
to a former employee. The former employee was employed by the Company on each of
the vesting dates and is therefore vested in all shares granted. As of March 31,

                                       36
<PAGE>
2001 no shares have been issued as the result of this grant and a liability  has
been recorded for the value of the shares at the vesting dates.  During the year
ended March 31, 2002,  the Company  wrote off the liability for this stock grant
based upon  subsequent  management  conclusions  as to improper  actions by this
former employee.

On March 1, 2000, subject to an employment  agreement,  a grant of 50,000 common
shares  was  made to Mark  Robinson,  President.  In  addition,  the  employment
agreement  provides for a grant of 10,000  restricted  shares of common stock at
the  first of each  month,  commencing  April 1,  2000,  during  the term of Mr.
Robinson's  employment.  Such shares are to be issued quarterly  provided agreed
upon performance requirements are fulfilled. On June 28, 2000, 80,000 restricted
shares of common stock were issued to Mr. Robinson under this agreement. On each
of November 16, 2000, and January 26, 2001,  30,000  restricted shares of common
stock were issued to Mr.  Robinson  under this  agreement.  Effective  March 31,
2001, the stock grant to Mr. Robinson under this agreement ceased.

On  April  1,  2000,  in  connection  with his  employment,  a grant  of  50,000
restricted  common  shares  was made to  James  Hirst,  Secretary/Treasurer.  In
addition,  the arrangement  provides for a grant of 10,000  restricted shares of
common stock at the first of each month, commencing May 1, 2000, during the term
of Mr.  Hirst's  employment.  Such  shares are to be issued  quarterly  provided
agreed upon  performance  requirements are fulfilled.  On June 28, 2000,  70,000
restricted   shares  of  common  stock  were  issued  to  Mr.  Hirst  under  the
arrangement.  On each of  November  16,  2000,  and  January  26,  2001,  30,000
restricted   shares  of  common  stock  were  issued  to  Mr.  Hirst  under  the
arrangement.  On March 27, 2001, the Company  agreed to Mr. Hirst  returning the
130,000 shares to the Company and to carry the associated  liability  until such
time as Mr. Hirst  requested the shares be re-issued.  Effective  March 31, 2001
the stock grants to Mr. Hirst ceased.  As of the balance  sheet date,  March 31,
2002 and 2001,  the Company has recorded a liability for the value of the shares
due Mr. Hirst that were returned.

On August 24, 2000, subject to employment by the Company's  subsidiary,  a grant
of 250,000  restricted  common  shares was made to James  Flowers,  President of
Protocol.  Such shares are to be issued annually  commencing August 24, 2001, in
equal amounts of 50,000  shares.  Upon the sale of the subsidiary in the quarter
ending March 31, 2002, the related stock grant was terminated.

On September 1, 2000,  subject to  employment  by the Company,  a grant of up to
100,000  restricted  shares was made to Matthew  Cohen,  National Sales Manager.
Such shares are to be issued subject to certain minimum annual gross revenues of
SOLTRON(R)  being  achieved by December 31, 2001.  No shares were required to be
issued under this stocK grant for the year ended March 31, 2002.

PRIVATE OFFERING

On January 31, 2001 the Company  commenced a private  unit  offering  under Rule
501(a) of Regulation D under the Securities Act of 1933. The offering was for up
to  2,500,000  units of the  Company  at a price of $0.20  per  unit.  Each unit
consists of one restricted  common share in the capital stock of the Company and
one (1)  non-transferable  share  purchase  warrant.  Each warrant  entitles the
purchaser to purchase a further one (1)  restricted  common share in the capital
stock of the  Company  on or  before  thirty-six  (36)  months  from date of the
offering at a price of $0.20 per share, after which time the warrant expires. As
of March 31, 2001, the Company had received  subscriptions  for 1,000,000  units
and closed the offering on June 30, 2001, when it had received subscriptions for
a total of 1,350,000  units. On September 24, 2001, the Board of Directors voted
to  accept  a late  subscription  for an  additional  217,500  units  under  the
Offering.  The  purchasers  therefore  collectively  have the  right to  receive
1,567,500  restricted  common  shares in the  capital  stock of the  Company and
warrants for the right to purchase an  additional  1,567,500  restricted  common
shares in the capital stock of the Company.

                                       37
<PAGE>
As of March 31, 2001, the Company had sold 1,000,000 restricted shares of common
stock in the aforementioned offering. These shares have been reflected as common
stock subscribed in the accompanying financial statements at that date.

STOCK WARRANTS

On August 23,  2000,  the  Company  issued a warrant to PICO  Holdings,  Inc. to
purchase  1,000,000  shares  of  restricted  common  stock at $0.43  per  share.
Pursuant  to the  terms  in The  Share  Purchase  Agreement  on the  sale of the
Company's 50% interest in Protocol to PICO, this warrant was cancelled effective
March 31, 2002. (Note 4)

On January 26, 2001, the Company issued a warrant to Dominion  Capital,  Inc., a
related party, to purchase  250,000  restricted  shares of common stock at $0.40
per share. (Note 7)

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

A summary of total stock warrants outstanding is as follows:

                                                                Weighted
                                             Number of           Average
                                             Warrants         Exercise Price
                                             --------         --------------
     Outstanding at March 31, 2000                  --              --
     Granted                                 2,250,000           $  0.32


     Forfeited                                      --                --
                                            ----------           -------
     Outstanding at March 31, 2001           2,250,000              0.32

     Granted                                   567,500              0.20
     Forfeited                              (1.000,000)            (0.43)
                                            ----------           -------
     Outstanding at March 31, 2002           1,817,500           $  0.23
                                            ==========           =======


               Warrants Outstanding                    Warrants Exercisable
     -----------------------------------------        ------------------------
                                    Weighted
                                    Average
      Exercise                     Remaining
     Price Per      Number        Contractual           Number        Exercise
       Share       of Shares    Life (In Years)      Exercisable       Price


                  1,567,500                           1,567,500
      $0.20         250,000          3.25                    -         $0.20
                  ---------                           ----------
      $0.40       1,817.500          0.8              1,567,500        $0.40
                  =========                           =========

                                       38
<PAGE>
STOCK OPTIONS

On November 24, 1997,  an addendum to the agreement  with  Dominion  Capital Pty
Ltd., a related entity, to provide financing (Note 7) was signed by the Company,
which grants the following  options to Dominion  based solely on the gross sales
figures, for a five year period, of the Solpower product SOLTRON(R) in the North
American Market aS follows:

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

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

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

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

The contract has an anti-dilution provision,  that in the event that the Company
shall at any time  subdivide the  outstanding  shares of common stock,  or shall
issue a stock dividend on its outstanding  stock, the conversion price in effect
immediately  prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in the case the Company shall at any time combine
the  outstanding  shares  of  common  stock,  the  conversion  price  in  effect
immediately  prior  to such  combination  shall  be  proportionately  increased,
effective at the close of business on the date of such subdivision,  dividend or
combination, as the case may be. The options expired on November 24, 2002.

On January 23, 2002,  the Company issued a call option for $1,000 for the option
to purchase  200,000 shares of restricted  common stock at $0.15 per share.  The
option was exercised on June 4, 2002.

INCENTIVE STOCK OPTION PLAN

The Company has adopted the 1997 Solpower Corporation Stock Option and Incentive
Plan (the  "PLAN").  Pursuant  to the Plan,  options to  purchase  shares of the
Company's  common  stock may be granted to  employees  and  directors.  The Plan
provides  that the option  price shall not be less than the fair market value of
the shares on the date of grant,  and that the  options  expire ten years  after
grant.  Options  generally  vest ratably over 3 to 5 year periods.  At March 31,
2002,  there were 5,000,000  shares reserved for options to be granted under the
Plan.

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

                                       39
<PAGE>
On May 28, 1998, the Company granted options under the Plan to certain directors
at  a  purchase   price  for  each  share  that,   with  the  exception  of  the
non-qualifying  options,  is equal to or greater  than the fair market  value of
such stock as determined  under the Plan as of this date.  Mr. Fraser Moffat III
was granted 350,000,  100,000 of which are  non-qualifying,  Mr. Naoya Yoshikawa
was granted  100,000,  Mr.  Jerry  Goddard was granted  100,000 and Mr. James H.
Hirst was granted  100,000.  The options may be exercised in whole or in part at
any time after the vesting  requirements  with respect to any option  shares has
been achieved.  The terms of such options shall commence as of May 28, 1998, and
expire on May 28, 2003,  or the  termination  as  directors of the Company.  Mr.
Hirst's  100,000  options were  canceled  during the fiscal year ended March 31,
2001, by agreement with Mr. Hirst. On November 11, 2001, Mr. Goddard resigned as
a member  of the Board of  Directors  and the  100,000  options  granted  to Mr.
Goddard were cancelled.

On January 4, 1999, R. L. "Beau" Van Deren,  the  corporate  Secretary/Treasurer
and a member of the Board of Directors  was granted  400,000  options  under the
Plan.  The terms of such  options  commenced  on  January  9, 1999 and expire on
January 9, 2004 or the termination of employment of Mr. Van Deren. The terms are
similar to those  options  granted to other members of the board of directors in
1998.

On  February   15,  2000,   R.  L.  "Beau"  Van  Deren   resigned  as  corporate
Secretary/Treasurer and a member of the Board of Directors, however he continues
to provide  consulting  services  to the  Company.  Consequently  250,000 of the
options  granted  to Mr.  Van Deren  were  canceled  and  150,000  options  were
retained.

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

On April 1, 2000,  the Company  entered into an  employment  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 expire April 2006.  The options vest based on minimum market price
and reported gross revenue levels.

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

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

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

The aforementioned options vest independently with respect to each grantee based
upon two  factors:  (a) the minimum  market  price and (b) the minimum  reported
gross revenues being achieved as illustrated in the table:

                                       40
<PAGE>
<TABLE>
<CAPTION>
                        Percent     Exercise    Market         Reported         Expiration
       Grantee          Amount        Price      Price      Gross Revenues         Date
       -------          -------       -----      -----      --------------         ----
<S>                       <C>        <C>         <C>         <C>               <C>
Hirst and                 20%        $1.00       $1.00       $1 million        April, 2006
Robinson                  20%        $1.00       $2.00       $2 million        April, 2006
                          20%        $1.00       $3.00       $3 million        April, 2006
                          20%        $1.00       $4.00       $4 million        April, 2006
                          20%        $1.00       $5.00       $5 million        April, 2006
Flowers                   20%        $ .55          --               --        August, 2003
                          20%        $ .55          --               --        August, 2004
                          20%        $ .55          --               --        August, 2005
                          20%        $ .55          --               --        August, 2006
                          20%        $ .55          --               --        August, 2007
Matteson              33 1/3%        $1.00       $2.00       $6 million        January, 2003
                      33 1/3%        $2.00       $3.00       $9 million        January, 2003
                      33 1/3%        $3.00       $3.00       $12 million       January, 2003
Cohen, Glass,             100%       $ .25       $1.00       $1 million        September, 2004
Starita, Cesena &
Lambrechtsen
Moffat -  Incentive       40%        $3.00       $3.00       $6 million        May, 2003
                          40%        $5.00       $5.00       $9 million        May, 2003
Options                   20%        $7.00       $7.00       $12 million       May, 2003
Dominion                 100%        $3.00       $3.00       $6 million        July 1, 2003
Non-Qualifying
  Options                100%        $2.00       $2.00       $4 million        May, 2003
Yoshikawa,                50%        $3.00       $3.00       $6 million        May, 2003
 and Goddard              50%        $7.00       $7.00       $12 million       May, 2003
Van Deren                100%        $1.30       $2.00       $6 million        May, 2003
</TABLE>

The minimum  reported gross revenues shall have been achieved during a reporting
period which is the lesser of (i) the four quarterly reporting periods preceding
any date on which the  minimum  market  price  exists,  and (ii) that  number of
quarterly  reporting  periods  occurring  subsequent  to the date on which  both
vesting  requirements  last were achieved and any date on which the next minimum
market price  requirement  is achieved.  As of March 31, 2002,  50,000  options'
minimum vesting requirements have been met.

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

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

     Outstanding at March 31, 2000            2,100,000              $  3.52
     Granted                                  1,250,000              $  0.91

     Forfeited                                 (650,000)             $ (2.62)
                                                                     -------
     Outstanding at March 31, 2001            2,700,000              $  2.53
     Granted                                    550,000              $  0.21
     Forfeited                                 (750,000)             $ (1.45)
                                                                     -------

     Outstanding at March 31, 2002            2,500,000              $  2.35
                                                                     =======

                                       41
<PAGE>
Additional  information  about  outstanding  options to purchase  the  Company's
common stock as of March 31, 2002 is as follows:


              Options Outstanding                     Options Exercisable
   -------------------------------------------    ---------------------------
                                   Weighted
                                   Average
   Exercise                       Remaining
   Price Per     Number          Contractual         Number          Exercise
     Share      of Shares      Life (In Years)    Exercisable         Price
     -----      ---------      ---------------    -----------         -----
     $0.15       200,000             .3              200,000          $0.15
     $0.25       350,000            3.4                   --          $0.25
     $0.55       100,000            1.8              100,000          $0.55
     $1.00       500,000            4.0                   --          $1.00
     $1.30       150,000            1.8                   --          $1.30
     $2.00       100,000            1.2                   --          $2.00
     $2.50       100,000             .7                   --          $2.50
     $3.00       150,000            1.2                   --          $3.00
     $3.50       150,000             .7                   --          $3.50
     $4.50       250,000             .7                   --          $4.50
     $5.00       350,000             .8                   --          $5.00
     $7.00       100,000            1.2                   --          $7.00
                                                     -------          --

               2,500,000            2.0              300,000
               =========                             =======

The stock options  issued to employees  have an exercise price not less than the
fair  market  value of the  Company's  common  stock on the  date of  grant.  In
accordance  with  accounting  for such options  utilizing  the  intrinsic  value
method,  there is no related  compensation  expense  recorded  in the  Company's
financial  statements  for  the  years  ended  March  31,  2002  and  2001.  Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates  consistent with the method of SFAS 123,
the  Company's  net loss for the years  ended March 31, 2002 and 2001 would have
been as disclosed in the pro-forma in Note 1.

--------------------------------------------------------------------------------
                                     NOTE 9
                                 CONCENTRATIONS
--------------------------------------------------------------------------------

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

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

                                       42
<PAGE>
--------------------------------------------------------------------------------
                                     NOTE 10
                                  GOING CONCERN
--------------------------------------------------------------------------------

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company has experienced  significant  losses and negative cash
flows from operations for the year ended March 31, 2002,  which have resulted in
a deficiency in working capital of approximately  $543,000 as of March 31, 2002,
and an accumulated deficit of approximately $11,900,000.

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

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

--------------------------------------------------------------------------------
                                     NOTE 11
                                SUBSEQUENT EVENTS
--------------------------------------------------------------------------------

During the quarter ended  September 30, 2002,  our lease expired on the facility
that housed our SOLTRON(R) and KLEAN manufacturing, warehousing and distribution
plant and served as our  administration  and corporate  sales office in Phoenix,
Arizona.  Prior to expiration  of the lease,  we sold our equipment at this site
and relocated our corporate offices to San Pedro, California.  Since closing our
production facility,  we have outsourced the blending and bottling of SOLTRON(R)
in California.

On 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
acquisition delivers the exclusive worldwide sales, distribution,  marketing and
manufacturing rights to the SP34E(TM), SP22A, SP22B, SP22C and SP22E refrigerant
gas products.

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

                                       43
<PAGE>
ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

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

(a) Directors and Executive Officers

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

          Name                          Age               Positions Held(1)
          ----                          ---               -----------------
     Fraser M. Moffat III               73              Director, Chairman
     Peter D. Voss(2)                   55              Director, Vice Chairman
     James H. Hirst                     56              Director, President, CEO
     Naoya Yoshikawa(3)                 57              Director

----------
(1)  All current directors serve until the next annual  shareholders  meeting or
     their earlier resignation or removal.
(2)  Mr. Voss resigned from the Board on April 3, 2002.
(3)  Mr. Yoshikawa resigned from the Board on February 4, 2003.

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

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

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

                                       44
<PAGE>
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.

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

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

The following information relates to reports under Section 16(a) of the Exchange
Act that were not timely filed by officers,  directors and beneficial  owners of
10% or more of  Solpower's  common  stock during the fiscal year ended March 31,
2002. This  information is based on a review of Section 16(a) reports  furnished
to Solpower.

Mark S. Robinson  failed to timely file three reports on Form 4 related to stock
grants received.  A Form 5 to report the delinquent  filings was also not timely
filed. The required report was filed in August 2001.

James H.  Hirst  failed to timely  file four  reports on Form 4 related to stock
grants  and  a  deferred  compensatory  arrangement.  A  Form  5 to  report  the
delinquent  filings was also not timely filed.  The required report was filed in
August 2001.

Dominion   Capital   failed  to  timely  file  two  reports   related  to  three
transactions.  These reports  related to the conversion of two notes into shares
of  Solpower  common  stock on April 28,  2000 and the  conversion  of debt into
shares of Solpower common stock on December 29, 2000. Dominion Capital failed to
timely file a Form 4 related to these  transactions  and to timely file a Form 5
to report the delinquent Form 4 filings. The required report was filed in August
2001.

Peter Voss failed to timely file two reports related to eight transactions. As a
control  person of  Dominion  Capital,  Mr. Voss was  required  to file  reports
related to the Dominion Capital transactions described above. Additionally,  Mr.
Voss failed to timely file Form 4s related to the issuance of 250,000  shares to
Dominion  Capital,  Inc. in  cancellation  of debt on  December  24,  2000,  the
issuance of 430,000  shares on April 28, 2000 and 420,000 shares on December 29,
2000 in  cancellation  of debt to  Intavest  Pty Ltd.,  the  issuance of 100,000
shares in  cancellation  of debt on April 28, 2000 to A1 Financial  Planners Pty
Ltd., and the issuance of 394,294 shares in cancellation of debt on December 29,

                                       45
<PAGE>
2000 to Bio Engineering Pty Ltd. As a control person of these entities, Mr. Voss
was required to report  these  transactions.  A Form 5 to report the  delinquent
filings was also not timely filed. The required report was filed in August 2001.

Fraser M.  Moffat III failed to timely  file one report on Form 4 related to the
issuance of 35,826 shares in cancellation of debt on December 29, 2001. A Form 5
to report the delinquent  filings was also not timely filed. The required report
was filed in August 2001.

ITEM 10. EXECUTIVE COMPENSATION

The  following  table  reflects all forms of  compensation  for the fiscal years
ended March 31, 2002, 2001 and 2000 for the two highest paid officers.  No other
person  received  salary or bonus in excess of $100,000  for any of these fiscal
years.

                           SUMMARY COMPENSATION TABLE

                                                                     Long Term
                                         Annual Compensation       Compensation
                                                       Other           Stock
                               Fiscal                  Annual         Options
Name and Principal Position     Year     Salary     Compensation     (Shares)
---------------------------     ----     ------     ------------     --------
Mark S. Robinson(2)             2002       --             --              --
Chief Executive Officer         2001       --       $171,885 (2)     500,000 (3)
                                2000       --             --              --

James H. Hirst                  2002       --       $149,248              --
Secretary/Treasurer             2001       --       $197,773 (4)     500,000 (5)
                                2000       --       $100,000         100,000

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

                                       46
<PAGE>
OPTION GRANTS

The following  table sets forth  information  regarding the grants of options to
executive  officers  for the fiscal  year ended  March 31,  2001.  There were no
grants of options to  executive  officers  for the fiscal  year ended  March 31,
2002.

                        OPTION GRANTS IN FISCAL YEAR 2001

<TABLE>
<CAPTION>
                                                 % of Total
                       Number of Shares         Compensation
                      Underlying Options     Options Granted in    Exercise      Expiration
     Name                  Granted              Fiscal Year         Price           Date
     ----                  -------              -----------         -----           ----
<S>                      <C>                     <C>               <C>         <C>
Mark S. Robinson (1)       500,000                 40%               $1.00      April 30, 2001

James H. Hirst             500,000                 40%               $1.00      April 1, 2005
</TABLE>

----------
(1)  Mr. Robinson resigned as a director and officer effective March 31, 2001.

OPTION EXERCISES AND VALUES

         The following table sets forth  information  regarding the exercise and
values of options held by executive officers as of March 31, 2002.

                          AGGREGATE OPTION EXERCISES IN
               LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>

                                                                                          Value of Unexercised
                                                                Number of Unexercised     In-the-Money Options
                                                              Options at March 31, 2002     at March 31, 2002
                       Shares Acquired                              Exercisable/              Exercisable/
    Name                on Exercise         Value Realized         Unexercisable             Unexercisable
    ----                -----------         --------------         -------------             -------------
<S>                            <C>                  <C>               <C>                         <C>
James H. Hirst                 0                    0                 0/500,000                   $0/$0
</TABLE>

EMPLOYMENT AGREEMENTS

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

Mr. Hirst continued his employment during the fiscal year ended March 31, 2002.

                                       47
<PAGE>
DIRECTOR COMPENSATION

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

STOCK OPTION PLAN

In November  1997,  the Board of Directors  adopted a Stock Option and Incentive
Plan (the "PLAN"),  which the  shareholders  approved on November 22, 1997.  The
purpose  of the Plan is to  provide a means to  attract  employees  and  service
providers and to reward persons  responsible  for the successful  administration
and  management  of  Solpower.  Another  purpose of the Plan is to provide  such
persons with additional incentive and reward  opportunities  designed to enhance
profitable growth. So that the appropriate  incentive can be provided,  the Plan
provides for granting  options,  incentive  stock  options,  stock  appreciation
rights, restricted stock awards, performance shares and dividend equivalents, or
any combination of the foregoing.  In 1999, the Plan was amended by the Board of
Directors to increase the number of shares that can be granted under the Plan to
2,500,000 shares of Solpower common stock. In 2000, the Plan was further amended
by the board of  Directors  and  approved by the  shareholders  to increase  the
number of shares  that can be  granted  under  the Plan to  5,000,000  shares of
Solpower  common  stock.  As of  March  31,  2002,  2,950,000  options  had been
committed at exercise prices ranging from $1.00 to $7.00 per share.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table sets forth,  as of March 31, 2002,  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                     Amount and Nature
of Beneficial Owner                      of Ownership       Percent of Class (1)
-------------------                      ------------       --------------------
Fraser M. Moffat III (2)                    35,826                  0.1%
18 Lake Avenue
Montrose, Pennsylvania

James H. Hirst (2)                         130,600 (3)              0.4%
7309 East Stetson Drive
Scottsdale, Arizona

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

                                       48
<PAGE>
  Name and Address                     Amount and Nature
of Beneficial Owner                      of Ownership       Percent of Class (1)
-------------------                      ------------       --------------------
PICO Holdings, Inc. (5)                    2,500,000                7.5%
875 Prospect Street, Suite 301
LaJolla, California 92037

Peter Voss (6)(7)                       1  2,928,104               38.9%
39 De Havilland Road
Mordialloc 3195
Victoria, Australia

Dominion Capital Pty Ltd. (6)(7)           6,146,910               18.5%
39 De Havilland Road
Mordialloc 3195
Victoria, Australia

Dominion Capital Japan Pty Ltd. (6)(7)     2,627,000                7.9%
39 De Havilland Road
Mordialloc 3195
Victoria, Australia

All Directors and Officers              1  3,094,130               39.4%
as a Group (5 persons)

----------
(1)  Based upon  33,231,919  shares of common stock being issued and outstanding
     on March 31, 2002.
(2)  Mr. Hirst has been granted options to purchase up to an additional  500,000
     shares of common  stock at $1.00 per  share  upon the  market  price of the
     common stock attaining certain levels.  Mr. Moffat has been granted options
     to purchase up to 350,000  shares of common  stock at prices  ranging  from
     $2.00  to $7.00  per  share  upon the  market  price  of the  common  stock
     attaining certain levels. Mr Yoshikawa has been granted options to purchase
     up to 100,000  shares of common stock at prices ranging from $3.00 to $7.00
     per share  upon the  market  price of the common  stock  obtaining  certain
     levels. These options have not vested, are not exercisable until vested and
     are not included in the total above.
(3)  Includes 130,000 shares issuable under a deferred compensation  arrangement
     and 500 shares held by Mr. Hirst's wife.
(4)  Less than 0.1%.
(5)  PICO Holdings, Inc. is a diversified holding company listed on NASDAQ under
     the symbol PICO.
(6)  Mr. Voss controls  Dominion Capital Pty Ltd., which holds 6,146,910 shares,
     Dominion Capital Japan Pty Ltd., which holds 2,627,000 shares, A1 Financial
     Planners Pty Ltd., which holds 1,140,200  shares,  Intavest Pty Ltd., which
     holds  1,550,000  shares,  Bio  Engineering  Pty Ltd.,  which holds 394,294
     shares and Dominion Capital,  Inc., which holds 370,000 shares and warrants
     to purchase an additional  250,000  shares.  The total  reflected  includes
     300,000  shares held by Mr. Voss' wife and two adult  children and in which
     Mr. Voss disclaims all beneficial interest.
(7)  Dominion  Capital Pty Ltd.  has been  granted an option to acquire  750,000
     shares of common stock at prices ranging from $2.50 to $5.00 per share upon
     Soltron(R) sales revenues attaining certain levels.  These options have not
     vested,  are not exercisable until vested and are not included in the total
     above.

                                       49
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On November 4, 1996,  we entered into an  Acquisition  Agreement  with  Dominion
Capital for the  acquisition  of the  exclusive  North  American  manufacturing,
distribution,  marketing and sales rights  SOLTRON(R).  The original term of the
agreement was for five years and provided that we issue 5,000,000  shares of our
common  stock,  issue  preferred  stock and grant  certain  options to  Dominion
Capital as consideration  for these rights. On November 22, 1997 we renegotiated
the terms of the Acquisition Agreement to extend its term for an additional five
year  period and  eliminate  the  required  option  grants and  preferred  share
issuances.  The amended agreement provided that options and performance  bonuses
would be payable to Dominion  Capital as follows:  (i) upon gross  revenues from
sales of SOLTRON(R)  equaling  $10,000,000,  Dominion  Capital has the option to
purchase  100,000 shares at $2.50 per share,  plus a cash  performance  bonus of
$400,000;   (ii)  upon  gross   revenues  from  sales  of  SOLTRON(R)   equaling
$20,000,000, Dominion Capital has the option to purchase 150,000 shares at $3.50
per share,  plus cash performance  bonus of $400,000;  (iii) upon gross revenues
from sales of SOLTRON(R) equaling  $50,000,000,  Dominion Capital has the option
to purchase 250,000 shares at $4.50 per share,  plus cash  performance  bonus of
$500,000;  and (iv)  upon  gross  revenues  from  sales of  SOLTRON(R)  equaling
$100,000,000,  Dominion  Capital  has the option to purchase  250,000  shares at
$5.00 per share, plus a cash performance bonus of $1,000,000.  Effective May 13,
1998 we entered into an addendum to the  Acquisition  Agreement in which we were
granted  a right  of  first  refusal  to  acquire  manufacturing,  distribution,
marketing and sales rights to SOLTRON(R)  in all other  territories  (other than
Japan) where  SOLTRON(R)  and certain other  products and services are currently
being  commercialized by Dominion Capital.  The terms and conditions of any such
acquisitions  are to be  negotiated  on a product by product and a territory  by
territory basis.

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

On June 17, 1998, we entered into a second  Acquisition  Agreement with Dominion
Capital for the  acquisition  of the  exclusive  North  American  manufacturing,
distribution,  marketing  and  sales  rights  to  SP34E(TM).  We agreed to issUE
6,000,000  shares of our common  stock and pay a royalty of $2.25  (subsequently
amended to 2.5% of gross  sales) for each  kilogram of  SP34E(TM)  sold in North
America.  The term of this  Acquisition  Agreement is for five yearS,  beginning
when we  achieve  specified  sales  volumes of  SP34E(TM).  We have an option to
extend  the term of thIS  agreement  for an  additional  five  years.  Effective
January 1, 1999,  we  entered  into an  addendum  to the  Acquisition  Agreement
delaying the commencement of the Acquisition  Agreement until we achieve certain
sales volumes of SP34E(TM),  but not later than July 1, 2000. Because we did not
acquire Protocol until August, 2000, this AgreemeNT commenced on July 1, 2000.

On July 1, 1998,  we  entered  into a Client  Service  Agreement  with  Dominion
Capital,   Inc.  (formerly  Dominion  Capital  Securities,   Inc.),  an  Arizona
corporation  ("DCI"),  for the  provision  of all of our  required  investor and
corporate communications services. DCI is wholly-owned by Mr. Peter Voss, who is
also one of our directors and the controlling  shareholder of Dominion  Capital,
our  principal  shareholder.  The term of the  agreement is renewable  every six
months. For its services,  DCI initially received $275,000 of which $125,000 was
paid in cash with the balance paid with 50,000  shares of our common  stock.  We
renewed our agreement with DCI in  consideration  of monthly payments of $30,000

                                       50
<PAGE>
per month for six  months,  payable  $90,000 in cash and by  issuance  of 90,000
shares of common stock for services  rendered through December 31, 1999. We have
agreed to make  payments  of $15,000 per month,  payable  $60,000 in cash and by
issuance of 30,000 shares of common stock for services for the period of January
2000 through June 2000. Effective December 31, 2000, we terminated the agreement
with Dominion Capital, Inc., and settled all outstanding amounts by the issuance
of 125,000  shares of common  stock to Trond  Matteson,  an employee of Dominion
Capital,  Inc.;  the  issuance  of 250,000  shares of common  stock to  Dominion
Capital,  Inc., and the issuance of a warrant to Dominion Capital,  Inc., to buy
250,000 shares of common stock at $0.40 per share expiring on December 31, 2002.

On September 30, 1999,  we issued  $680,000 in 6%  Convertible  Notes Payable to
Dominion  Capital and a total of  $265,000 of these notes to two other  entities
controlled  by Peter Voss as  consideration  for prior  advances  and payment of
certain of our operating expenses.  These notes were convertible into our common
stock at $0.50 per share and were  converted  to  1,950,000  shares on April 28,
2000.

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

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

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

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

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

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

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

                                       51
<PAGE>
  3.2(1)     Amended and Restated Bylaws of Solpower  Corporation dated November
             24, 1997.

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

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

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

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

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

  10.23(3)   Share Purchase  Agreement  dated August 21, 2000 among Solpower and
             PICO  Holdings,  Inc.  ("PICO") and James W.  Flowers,  Patricia G.
             Flowers and Florcor, Inc.

  10.24(3)   Shareholders   Agreement  dated  August  28,  2000  among  Protocol
             Resource Management, Inc., PICO and Solpower.

  10.25(3)   Nonnegotiable  Secured  Promissory Note in the principal  amount of
             $500,000 dated August 28, 2000 issued by Solpower to PICO.

  10.26(3)   Nonnegotiable  Secured  Promissory Note in the principal  amount of
             $250,000 dated August 28, 2000 issued by Solpower to PICO.

  10.27(3)   Warrant dated August 28, 2000 issued by Solpower to PICO.

  10.28(4)   Nonnegotiable Secured Convertible  Promissory Note in the principal
             amount of  $500,000  dated  September  18,  2000 issued by Solpower
             Corporation to Dominion Capital Pty Ltd.

                                       52
<PAGE>
  10.29(4)   Amendment  to Lease  between  Arizona  Industrial  Capital,  LP and
             Solpower Corporation dated December 15, 2000.

  10.30(5)   Agreement for the Sale of Assets between Perix Industries, Inc. and
             Solpower Corporation dated December 19, 2000.

  10.31(5)   Letter Re:  Settlement of Client Services Account Agreement between
             Dominion  Securities,  Inc. and Solpower Corporation dated December
             20, 2000.

  10.32(5)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Bell Capital  Corporation and Solpower  Corporation  dated December
             29, 2000.

  10.33(5)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Dominion Capital Pty Ltd. and Solpower  Corporation  dated December
             29, 2000.

  10.34(5)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Intavest Pty Ltd. and Solpower Corporation dated December 29, 2000.

  10.35(5)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Kurt Kramarenko and Solpower Corporation dated December 29, 2000.

  10.36(5)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Fraser Moffat and Solpower Corporation dated December 29, 2000.

  10.37(5)   Letter Re: Agreement for Conversion of Debt into Shares between Bio
             Engineering  Pty Ltd. and Solpower  Corporation  dated December 29,
             2000.

  10.38(6)   Letter Re:  Agreement for  Conversion  of Debt into Shares  between
             Renshaw Travel Ltd. and Solpower Corporation dated March 31, 2001.

  10.39(7)   Agreement  for Sale of  Formula  and  Know-How  between  Stephen J.
             Kraynak and Solpower Corporation dated August 28, 2001.

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

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

----------
(1)  Incorporated by reference from Solpower's Form 10-SB as filed on August 21,
     1998.
(2)  Incorporated by reference from Solpower's Form 10-KSB as filed on September
     24, 1999.
(3)  Incorporated  by reference from Solpower's Form 10-QSB as filed on November
     20, 2000.
(4)  Incorporated  by reference from Solpower's Form 10-QSB as filed on February
     20, 2001.
(5)  Incorporated  by reference from Solpower's Form 10-QSB as filed on February
     20, 2001.
(6)  Incorporated  by reference from  Solpower's  Form 10-QSB as filed on August
     22, 2001.
(7)  Incorporated  by  reference  from  Solpower's  Form  10-QSB/A  as  filed on
     December 10, 2001.

(b) Reports on Form 8-K.

None.

                                       53
<PAGE>
                                   SIGNATURES

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

                                    SOLPOWER CORPORATION


Dated: May 19, 2005                 By  /s/ James H. Hirst
                                        ---------------------------------------
                                        James H. Hirst, Chief Executive Officer


                                        BOARD OF DIRECTORS


Dated: May 19, 2005                     /s/ Fraser M. Moffat III
                                        ---------------------------------------
                                        Fraser M. Moffat III, Chairman



Dated: May 19, 2005                     /s/ James H. Hirst
                                        ---------------------------------------
                                        James H. Hirst

                                       54