10QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2005

¨  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from [ ] to [ ]

Commission file number 000-49664

Ikona Gear International, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada	88-0474903
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)

1850 Hartley Avenue, Unit#1
Coquitlam, BC, Canada
V3K 7A1
(Address of principal executive offices)

(604) 523-5500
(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

25,149,292 common shares outstanding as of July 12, 2005

Transitional Small Business Disclosure Format (Check one): Yes ¨   No x  

INDEX

		Page
	PART I
ITEM 1	FINANCIAL INFORMATION	3
	CONSOLIDATED BALANCE SHEETS (Unaudited)	5
	CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)	6
	CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	7
	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	8-16
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATION	19
ITEM 3	CONTROLS AND PROCEDURES	26
	PART II – OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	26
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	26
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	26
ITEM 5	OTHER INFORMATION	26
ITEM 6	EXHIBITS	27
	SIGNATURE	28

2

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with generally accepted accounting principles in the United States of America.

3

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)

Consolidated Financial Statements
(Expressed in United States Dollars)

May 31, 2005
(Unaudited)

4

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Balance Sheet
(Unaudited)

		May 31,
		2005
ASSETS
Current assets:
Cash	$	750,905
Refundable tax credits		11,374
Prepaid expenses		18,591
Deferred taxes, net of valuation allowance of $1,039,523		-
Total current assets		780,870
Property and equipment (Note 5)		161,574
Total assets	$	942,444
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	95,543
Due to related parties (Note 6)		14,885
Total current liabilities		110,428
Commitments and contingencies (Notes 2 and 11)
Stockholders' equity
Common stock (Note 7)
Authorized
100,000,000 common shares, each with par value of $0.00001
Issued and outstanding
25,149,292 common shares		251
Additional paid-in capital		3,851,785
Accumulated deficit during the development stage		(3,020,020	)
Total stockholders' equity		832,016
Total liabilities and stockholders' equity	$	942,444

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

5

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)

		Cumulative
		Amounts
		From Inception
		(August 16,			Three Months			Three Months			Nine Months			Nine Months
		2001)			Ended			Ended			Ended			Ended
		to May 31,			May 31,			May 31,			May 31,			May 31,
		2005			2005			2004			2005			2004
REVENUES
Engineering services	$	211,755		$	11,567		$	33,645		$	14,666		$	114,106
EXPENSES
Amortization and depreciation		121,244			21,090			8,017			60,587			16,767
Business development		547,671			67,844			55,288			204,411			163,980
Corporate finance		233,496			32,255			22,324			81,055			50,338
Foreign exchange (gain) loss		(7,705	)		1,600			-			(7,705	)		-
General and administrative		188,947			20,041			19,757			83,036			46,271
Investor relations (Note 8)		358,064			85,402			9,135			251,879			61,143
Listing and filing fees		16,546			1,227			6,435			5,066			10,393
Professional fees		199,629			21,733			19,124			53,520			87,907
Rent		90,949			16,969			10,151			53,844			24,683
Research and development		1,122,520			173,192			65,228			447,843			204,122
Travel and related		184,333			30,329			38,954			60,193			67,268
Total expenses		(3,055,694	)		(471,682	)		(254,413	)		(1,293,729	)		(732,872	)
OTHER INCOME/(EXPENSE)
Interest income		7,682			2,610			1,256			6,426			1,256
Impairment of patents and trademark		(183,763	)		-			-			-			-
Total other income (expense)		(176,081	)		2,610			1,256			6,426			1,256
Loss before income taxes		(3,020,020	)		(457,505	)		(219,512	)		(1,272,637	)		(617,510	)
Income taxes		-			-			-			-			-
Net loss for the period	$	(3,020,020	)	$	(457,505	)	$	(219,512	)	$	(1,272,637	)	$	(617,510	)
Basic and diluted net loss
per share				$	(0.02	)	$	(0.01	)	$	(0.05	)	$	(0.03	)
Weighted average number of common
shares outstanding					24,792,332			23,743,684			24,326,899			22,814,079

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

6

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)

		Cumulative
		Amounts
		From Inception
		(August 16, 2001)			Nine Months Ended
		to May 31,			May 31,
		2005			2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,020,020	)	$	(1,272,637	)	$	(617,510	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization and depreciation		121,244			60,587			16,767
Investor relations fees paid by stock options		65,964			27,206			24,602
Research and development fees paid by stock options		124,192			124,192			-
Corporate finance fees paid by issuance of common stock (Note 7)		43,880			7,995			-
Gain on disposal of assets		(114	)		-			-
Impairment of patents and trademark		183,763			-			-
Change in operating assets and liabilities:
Refundable tax credits		(11,374	)		2,898			(18,257	)
Prepaid expenses		(18,591	)		(1,769	)		(11,974	)
Advances to related party		-			-			35,805
Accounts payable and accrued liabilities		95,543			(2,683	)		41,785
Due to related party		14,885			14,724			-
Cash used in operating activities		(2,400,628	)		(1,039,487	)		(528,782	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances received from the Company prior to recapitalization		155,000			-			155,000
Due to related parties		(121,100	)		-			(83,710	)
Issuance of common stock, net of issuance costs		3,353,000			730,050			1,873,398
Cash provided by financing activities		3,386,900			730,050			1,944,688
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment acquired for cash		(237,302	)		(65,457	)		(47,356	)
Proceeds on disposal of assets		1,935			-			-
Cash used in investing activities		(235,367	)		(65,457	)		(47,356	)
NET INCREASE (DECREASE) IN CASH		750,905			(374,894	)		1,368,550
CASH AT BEGINNING OF PERIOD		-			1,125,799			2,226
CASH AT END OF PERIOD	$	750,905		$	750,905		$	1,370,776
CASH PAID FOR:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

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

7

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 1 – The Company and Nature of Operations

Ikona Gear International, Inc. (the “Company”) was incorporated in the State of Nevada on September 20, 2000. The Company is in business to develop and commercialize a unique, patented gearing technology. The Company is commercializing its patented technology in applications it establishes through developing joint development alliances and entering into licensing agreements with strategic partners in vertical industrial markets. The Company is considered to be a development stage company as it has not generated significant revenues from operations.

Effective October 30, 2003, the Company consummated an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which it acquired 100% of the issued and outstanding shares of common stock of Ikona Gear USA, Inc. (“Ikona USA”). Under the terms of the Agreement, the shareholders of Ikona USA received, pro rata, an aggregate of 15,041,633 shares of common stock of the Company in exchange for 100% of the outstanding shares of Ikona USA. A principal shareholder of the Company surrendered for cancellation 14,500,000 shares of common stock, which resulted in the Ikona USA shareholders acquiring shares representing approximately 70% of the total issued and outstanding shares of the Company. As a result, the transaction was accounted for as a recapitalization of Ikona USA.

The consolidated statements of operations, stockholders' equity (deficiency) and cash flows of the Company prior to October 30, 2003, are those of Ikona USA. The Company’s consolidated date of incorporation is considered to be August 16, 2001, the date of inception of Ikona USA.

On October 31, 2003, the Company incorporated a wholly-owned subsidiary, Ikona Gear Corp., a British Columbia Corporation.

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial information. The accompanying consolidated financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at May 31, 2005, and for all periods presented, have been included. Interim results for the nine-month period ended May 31, 2005 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.

Note 2 – Going Concern

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. However, certain conditions noted below currently exist which raise substantial doubt about the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The operations of the Company have primarily been funded by the issuance of capital stock and advances from related parties. Continued operations of the Company are dependent on the Company's ability to complete additional equity financings or generate profitable operations in the future. Management's plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on terms reasonable to the Company.

		May 31,
		2005
Accumulated deficit during the development stage	$	(3,020,020	)
Working capital	$	670,442

8

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 3 - Significant Accounting Policies Stock-Based Compensation

Statements of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based employee compensation using Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount employees are required to pay for the stock.

The Company accounts for stock-based compensation issued to non-employees in accordance with the provisions of SFAS 123 and the consensus in Emerging Issues Task Force No. 96-18, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services” (“EITF 96-18”).

The Company generally grants stock options with exercise prices equal to, or in excess of, the quoted market price at the date of the stock option grant. The Company calculates non-employee stock-based compensation expense using the Black-Scholes model to estimate the fair value of options granted to non-employees. The Company classifies non-employee expense according to the nature of services provided.

The following table illustrates the effect on loss and loss per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.

		Cumulative
		Amounts
		From
		Inception
		(August 16,			Nine Months			Nine Months
		2001) to			Ended			Ended
		May 31,			May 31,			May 31,
		2005			2005			2004
Net loss, as reported	$	(3,020,020	)	$	(1,272,637	)	$	(617,510	)
Deduct:
Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax effects		(1,055,570	)		(287,989	)		(120,563	)
Pro-forma net loss	$	(4,075,590	)	$	(1,560,626	)	$	(738,073	)
Basic and diluted net loss per share, as reported				$	(0.05	)	$	(0.03	)
Basic and diluted net loss per share, pro-forma				$	(0.06	)	$	(0.03	)

9

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 3 - Significant Accounting Policies (continued)

Stock-Based Compensation (continued)

A summary of stock-based compensation expenses related to non-employee stock-based compensation consultants recorded as at May 31, 2005, is as follows:

		Cumulative
		Amounts
		From
		Inception
		(August 16,			Three Months			Three Months			Nine Months			Nine Months
		2001) to			Ended			Ended			Ended			Ended
		May 31,			May 31,			May 31,			May 31,			May 31,
		2005			2005			2004			2005			2004
Net loss before non-cash
compensation expenses	$	(2,821,869	)	$	(391,069	)	$	(194,910	)	$	(1,113,244	)	$	(592,908	)
Less:
Non-Cash Compensation
Expenses recorded as:
Corporate finance	$	7,995		$	7,995		$	-		$	7,995		$	-
Research and development		124,192			52,605			-			124,192			-
Investor relations		65,964			5,836			-			27,206			24,602
Total non-cash
compensation expenses	$	198,151		$	66,436		$	24,602		$	159,393		$	24,602
Net loss for the period	$	(3,020,020	)	$	(457,505	)	$	(219,512	)	$	(1,272,637	)	$	(617,510	)

Recent accounting pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets – an amendment of APB Opinion No. 29” (“SFAS 153”) which amends Accounting Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions” to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.

In December 2004, FASB issued Statement of Financial Accounting Standards No. 123R, “Share Based Payment” (“SFAS 123R”). SFAS 123R supersedes APB 25 and its related implementation guidance by requiring entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (with limited exceptions) and revises SFAS 123 as follows:

i)           Public entities are required to measure liabilities incurred to employees in share-based payment transactions at fair value and nonpublic entities may elect to measure their liabilities to employees incurred in share-based payment transactions at their intrinsic value whereas under SFAS 123, all share-based payment liabilities were measured at their intrinsic value.

ii)          Nonpublic entities are required to calculate fair value using an appropriate industry sector index for the expected volatility of its share price if it is not practicable to estimate the expected volatility of the entity’s share price.

10

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 3 - Significant Accounting Policies (continued)

Recent accounting pronouncements (continued)

iii)         Entities are required to estimate the number of instruments for which the requisite service is expected to be rendered as opposed to accounting for forfeitures as they occur.

iv)           Incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair value of the modified award with the fair value of the award immediately before the modification whereas SFAS 123 required that the effects of a modification be measured as the difference between the fair value of the modified award at the date it is granted and the award’s value immediately before the modification determined based on the shorter of (1) its remaining initially estimated expected life or (2) the expected life of the modified award.

SFAS 123R also clarifies and expands guidance in several areas, including measuring fair value, classifying an award as equity or as a liability and attributing compensation cost to reporting periods. SFAS 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in SFAS 123 as originally issued and EITF 96-18. SFAS 123R also does not address the accounting for employee share ownership plans which are subject to Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans”. Public entities (other than those filing as small business issuers) will be required to apply SFAS 123R as of the first annual reporting period that begins after June 15, 2005. Public entities that file as small business issuers will be required to apply SFAS 123R in the first annual reporting period that begins after December 15, 2005. For nonpublic entities, SFAS 123R must be applied as of the beginning of the first annual reporting period beginning after December 15, 2005.

The adoption of these new pronouncements are not expected to have a material effect on the Company's consolidated financial position or results of operations.

Comparative figures

Certain of the prior periods figures were reclassified to conform with the presentation adopted in the current period.

Note 4 – Patents and Trademark Rights

In September 2001, the Company acquired patent and trademark rights (the “Acquired Technology”) from Diversified Sciences Limited (“Diversified”) and Ikona Technologies Inc. (“Technologies”), companies related by virtue of a common director, officer and significant shareholder. The patent rights relate to planetary gearing technology and consist of a United States patent, a Canadian patent and a European patent applicable in France, Germany, Italy, Great Britain and Sweden. The US patent has a term of 17 years from the issue date and expires on November 11, 2015. The Canadian patent has a term of 20 years from the filing date and expires on July 29, 2014. The remaining patents have terms of 20 years from the date of filing the European patent and expire on July 26, 2015. The trademark acquired by the Company provides for the exclusive assignment of rights, title and interest in the “IKONA Gear TM” Canadian Trademark.

The patent acquisition agreement with Diversified required the Company to issue 2,180,000 shares of common stock at a value of $109,000 to Diversified and pay $63,000 (C$100,000) less Diversified’s tax credit recoveries of $18,900 (C$30,000) relating to the patents.

The trademark acquisition agreement with Technologies required the Company to issue 20,000 shares of common stock at a value of $1,000 to Technologies, pay $62,000 to Technologies and repay amounts owing of $15,000 on behalf of Technologies.

The Acquired Technology was recorded by the Company at a cost of $231,100.

There is significant uncertainty regarding future revenue to be generated from intangible assets due to the fact that this is a new business with a developing technology and there are currently no comparable businesses in the intended market segments for which any reliable predictions for future revenue generation can be based.

Due to the uncertainties related to expected future undiscounted cash flows, management concluded that the carrying value of intangible assets had been materially impaired and has changed the entire value of intangible assets resulting in a charge of $183,763 to operations in August 2004.

11

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 5 – Property and Equipment

		May 31, 2005
				Accumulated		Net
		Cost		Depreciation		Book Value
Computers and Software	$	60,745	$	34,352	$	26,393
Furniture		29,542		5,391		24,151
Research and Development Equipment		70,830		13,774		57,056
Leasehold Improvements		74,182		20,208		53,974
	$	235,299	$	73,725	$	161,574

Note 6 - Related Party Transactions

As of May 31, 2005, amounts due to (from) related parties consisted of $14,885 to Directors.

The Company entered into the following transactions with related parties during the nine months period ending May 31, 2005:

a)	Paid or accrued business development fees of $54,795 (2004 - $38,999) to a company controlled by a relative of a director of the Company.
b)	Paid or accrued business development fees of $82,798 (2004 - $42,216) to a company controlled by a director of the Company.
c)	Paid or accrued corporate finance fees of $73,060 (2004 - $42,838) to a company related to a director of the Company.

These transactions are in the normal course of operations and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

12

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 7 – Capital Stock

In September 2001, the Company issued 2,725,000 common shares at a value of $0.04 per share for $109,000 as partial consideration on acquisition of patent rights (Note 4).

In September 2001, the Company issued 25,000 common shares at a value of $0.04 per share for $1,000 as partial consideration on acquisition of a trademark (Note 4).

In October 2001, the Company issued 8,713,416 shares to the founders of the Company at a price of $0.00001 per share for cash proceeds of $70.

In November 2001, the Company issued 263,665 common shares at a price of $0.20 per share for cash proceeds of $52,733.

In February 2002, the Company issued 1,286,335 common shares at a price of $0.20 per share for cash proceeds of $257,266.

13

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 7 – Capital Stock (continued)

In May 2002, the Company issued 393,750 common shares at a price of $0.20 per share for cash proceeds of $78,750.

In November 2002, the Company issued 336,250 common shares at a price of $0.20 per share for cash proceeds of $67,250.

In November 2002, the Company issued 85,800 common shares at a price of $0.20 per share for corporate finance fees of $17,160.

In January 2003, the Company issued 175,000 common shares at a price of $0.20 per share for cash proceeds of $35,000.

In May 2003, the Company issued 175,000 common shares at a price of $0.20 per share for cash proceeds of $35,000.

In May 2003, the Company issued 67,625 common shares at a price of $0.20 per share for corporate finance fees of $13,525.

In July 2003, the Company issued 526,792 common shares at a price of $0.20 per share for cash proceeds of $105,358.

In July 2003, the Company issued 7,500 common shares at a price of $0.20 per share for corporate finance fees of $1,500.

In August 2003, the Company issued 251,250 common shares at a price of $0.40 per share for cash proceeds of $100,500.

In August 2003, the Company issued 9,250 common shares at a price of $0.40 per share for corporate finance fees of $3,700.

In October, 2003, the Company acquired all the issued and outstanding capital stock of Ikona USA, which was accounted for as a recapitalization of the Company (Note 1). The issued number of shares of common stock is that of the Company with adjustments made for differences in par value between the Company and Ikona USA.

In January 2004, the Company cancelled 500,000 common shares at a par value of $0.00001 per share.

In January 2004, the Company issued 290,000 common shares at a price of $0.50 per share for cash proceeds of $145,000.

In February 2004, the Company issued 620,666 units at a price of $0.75 per unit for cash proceeds of $436,275 (gross proceeds of $465,500 net of finders’ fees of $29,225). Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant whereby each whole warrant entitles the holder to acquire one additional share of common stock at a price of $3.00 per share for a period of one year.

14

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

In March 2004, the Company issued 1,354,933 units at a price of $0.75 per unit for cash proceeds of $964,926 (gross proceeds of $1,016,201 net of finders’ fees of $51,275). Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant whereby each whole warrant entitles the holder to acquire one additional share of common stock at a price of $3.00 per share for a period of one year.

In April 2004, the Company issued 462,427 units at a price of $0.75 per unit for cash proceeds of $334,197 (gross proceeds of $346,822 net of finders’ fees of $7,000). Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant whereby each whole warrant entitles the holder to acquire one additional share of common stock at a price of $3.00 per share for a period of one year.

In July 2004, the Company issued 3,333 units at a price of $0.75 per unit for cash proceeds of $5,000. Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant whereby each whole warrant entitles the holder to acquire one additional share of common stock at a price of $3.00 per share for a period of one year.

In March 2005, the Company issued 1,046,667 units at a price of $0.75 per unit for cash proceeds of $730,050 (gross proceeds of $785,000 net of finders’ fees of $54,950). Each unit consists of one share of common stock and one- non-transferable share purchase warrant whereby each whole warrant entitles the holder to acquire one additional share of common stock at a price of $1.00 per share for a period of one year.

In Apri1 2005, the Company issued 12,300 shares of common stock for services at a price of $0.65 per share in payment of corporate finance consulting fees of $7,995.

In March 2005, the Company issued 50,000 warrants at a price of $0.75 per warrant in payment of investor relations consulting fees.

15

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 8 – Stock Options

Stock Options

On October 28, 2003, the Company adopted a stock incentive plan (the "2003 Stock Plan") to provide incentives to employees, directors and consultants. On October 28, 2003, the Company's stockholders approved the 2003 Stock Plan which provides for the issuance of up to 4,400,000 options with a maximum term of ten years. The board of directors has the exclusive power over the granting of options and their vesting provisions.

	May 31, 2005
				Weighted
	Number of			Average
	Options			Exercise Price
Options outstanding, beginning of the year	1,974,000		$	1.01
Issued	270,250			0.79
Exercised	-			-
Expired	(125,000	)		(1.16	)
Options outstanding, end of the period	2,119,250		$	0.97
Options exercisable, end of the period	1,531,437		$	0.96
Weighted average fair value of options granted in the year			$	0.36

A summary of stock options outstanding at May 31, 2005, is as follows:

	Outstanding Options			Exercisable Options
		Weighted
		Average	Weighted		Weighted
		Remaining	Average		Average
		Contractual	Exercise		Exercise
Exercise Price	Number	Life	Price	Number	Price
$ 0.50	65,250	2.63 years	$  0.50	18,124	$  0.50
$ 0.52	55,000	1.63 years	$  0.52	55,000	$  0.52
$ 0.60	341,000	5.50 years	$  0.60	280,750	$  0.60
$ 0.66	50,000	1.84 years	$  0.66	50,000	$  0.66
$ 1.00	50,000	0.51 years	$  1.00	37,500	$  1.00
$ 1.10	1,558,000	5.08 years	$  1.10	1,090,063	$  1.10

The Company uses the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:

Risk-free interest rate	4.25%
Dividend yield rate	0.00%
Price volatility	148.2%
Weighted average expected life of options	4.80 years

16

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 9 – Warrants Warrants

On February 28, 2005, the board of directors approved an extension and re-pricing of the outstanding warrants. The revised summary of warrants outstanding is as follows:

			2006	2006
			Exercise	Exercise	Expiry
Issuances	Issued	Outstanding	Price	Price	Date
February 29, 2004	310,332	310,332	$  1.00	$  1.40	February 29, 2007
March 29, 2004	677,469	677,469	$  1.00	$  1.40	March 29, 2007
April 30, 2004	231,215	231,215	$  1.00	$  1.40	April 30, 2007
July 31, 2004	3,333	3,333	$  1.00	$  1.40	July 31, 2007
March 31, 2005	1,046,667	1,046,667	$  1.00	$  1.40	March 31, 2008
March 31, 2005	50,000	50,000	$  0.75	$  0.75	March 31, 2010
Total outstanding	2,319,016	2,319,016

Note 10 - Segment Information

The Company’s operations were conducted in one reportable segments, being the development and commercialization of a unique patented gearing technology, primarily in Canada and USA. Total revenue includes Other income.

		Nine Months			Nine Months			Nine Months
		Ended			Ended			Ended
		May 31, 2005			May 31, 2005			May 31, 2005
		U.S.A.			Canada			Total
REVENUES	$	12,398		$	8,694		$	21,092
EXPENSES		(6,701	)		(1,287,028	)		(1,293,729	)
NET INCOME (LOSS)	$	5,697		$	(1,294,121	)	$	(1,272,637	)
NET ASSETS	$	-		$	832,016		$	832,016

17

IKONA GEAR INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
May 31, 2005
(Unaudited)

Note 11– Commitments

The Company amended a consulting agreement with a director, officer and significant shareholder of the Company effective April 1, 2004, to pay monthly management fees totalling approximately $9,225 (C$11,333) (2003 $5,370 (C$7,500)). This agreement can be terminated with six months advance notice.

On June 9, 2004, the Company entered into a premises lease for office and workshop facilities for a period of 36 months commencing August 1, 2004. The premises lease commits the Company to a net annual rental expense of $40,393 (C$49,623) and additional operating costs estimated at $15,350 (C$18,857) for a period of three years with an option to extend the period to a further three years. The Company provided a deposit of three months of rent equalling $10,098 (C$12,406) of which two of the three months will be applied to rent in the final two months of the three-year lease term.

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Item2 Management’s Discussion and Analysis or Plan of Operations

Special note regarding forward-looking statements

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" included in our Report on Form 10-KSB filed with the SEC (www.sec.gov)"., that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Overview

We are commercializing our patented gearing technology (the “Ikona Gearing System”). The Ikona Gearing System utilizes a newly designed, patented tooth shape which enables gears to be much smaller, lighter, stronger and more energy efficient while allowing the highest single stage reduction ratio, lower backlash than any other gear currently available on the market. In high-ratio applications the Ikona Gearing System can replace multiple stage gearing systems with a single stage reduction ratio and is thus more cost effective to manufacture.

Our business strategy is based on building strategic alliances on the strength of our technology. We are not gear manufacturers, we are gear designers who will manufacture a prototype and then allow our clients to manufacture their own gears based on our design, therefore we have no dependency on any principal suppliers of manufacturing materials or labor. Our business model thus, is to develop joint development alliances and licensing agreements with leading industry partners. These partnerships will allow us to develop royalty and licensing revenue streams and to participate in revenues generated from the sale of products stemming from the joint development alliances.

Our goal is to capture 5% of the multi-billion dollar gear design market within seven to ten years (worldwide gear manufacturing sales are in the order of $87 billion annually). Our goal in the current operating year is to enter licensing agreements in three distinctly different vertical markets (for example: automotive, shipping, alternative energy, or robotics) with distinctly different business partners, where we will prove the virtues of our patented gearing technology in applications that generate revenues for us. We have only one revenue-producing licensing agreement; as a result we have insufficient information to predict how differences in these markets could have a significant effect on our revenues.

We were incorporated in the State of Nevada on September 20, 2000, as "Oban Mining, Inc.". On October 30, 2003, we acquired Ikona Gear International, Inc. ("IKONA"). As a result of the transaction, we changed our name to Ikona Gear International, Inc. and we changed the name of IKONA to Ikona Gear USA, Inc., a wholly-owned subsidiary of Ikona Gear International, Inc., (“the Company”). In connection with the name change, we were assigned a new ticker symbol by the NASD, and our common stock now trades on the Over-the-Counter market under the symbol "IKGI."

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Plan of Operations

In the next 12 months, we will attempt to execute a License Agreement for royalties from Magna Advanced Technologies ("the Magna Agreement"), as more fully described in this prospectus under the heading "Business," for the use of our technology in products in the automotive industry.

We also plan to complete the manufacturing and testing of industrial gearing prototypes for an industrial application in the forestry products industry. We will be expanding the engineering team with gear industry designers, mechanical engineers, and draftsmen, and developing marketing plans for vertical, industry-specific applications of the proprietary Ikona Gearing System for applications which capitalize on the high torque and low weight attributes of the Ikona Gearing System, including but not limited to:

*        High torque industrial machinery;
*        Aircraft and military equipment;
*        Alternate energy sources such as windmills;
*        Robotics and high precision machinery;

To achieve these goals we will be developing a sales and marketing team to manage and execute the marketing plans in other vertical markets. The projected budget for the next twelve months for sales and marketing activities is $350,000.

We will be promoting Ikona Gear technology to European and North American industry leaders through: securing public relations representatives in North America and Europe; participating in gear industry trade shows such as Gear Expo; developing and refining joint venture and licensing agreements for existing and potential customers; developing alliances with gear manufacturers capable of manufacturing Ikona related products; and developing portable demonstration units.

We will be continuing our engineering development activities while trying to secure joint development arrangements with gearing application providers who wish to incorporate the Ikona Gear design into their applications. We will also be trying to secure partnering relationships with gear manufacturers who can manufacture gears under license from Ikona Gear based on our design specifications. Our objective is to maintain our focus as a gear design specialist of patented gearing technology, and delegating non-core functions such as manufacture and distribution to third parties who can leverage our new gear designs. We are presently in an alliance with Magna Advanced Technologies (a division of Magna International Inc.) to develop prototypes for applications in production automobiles. The estimated cost of our internal development program for the next 12 months is $600,000.

We expect to continue to purchase engineering equipment in the next 12 months as we recruit new specialized engineers with requirements for specialized software, hardware and tools. We anticipate that we will need to invest approximately $50,000 in new capital equipment for our research and development laboratory.

We anticipate that staffing levels will continue at their current levels until we have successfully completed significant royalty agreements. We presently have ten employees and we expect to remain at ten employees for the next 12 months.

If we are successful in our marketing activities, we will likely spend additional funds on travel in order to meet prospective customers and joint development partners. We anticipate our annual sales and marketing operating costs may increase from $350,000 to about $500,000 over the next twelve months.

Our present cash reserves will satisfy approximately six months of the above plan of operations. For further discussions see Liquidity and Capital Resources below.

Results of Operations

The following discussion and analysis covers material changes in our results of operations for the nine months ended May 31, 2005, and material changes in our results of operations for the three months ended May 31, 2005, as compared to the same periods in 2004. This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis" included in the Company's Annual Report on Form 10-KSB for the year ended August 31, 2004, including audited financial statements contained therein, as filed with the Securities and Exchange Commission on November 26, 2004.

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Nine month Period Ended May 31, 2005 compared to Nine month Period Ended May 31, 2004

Operating Results

REVENUES. Revenues are generated from the provision of engineering services and from licensing royalties. In the nine months ended May 31, 2005, we generated revenues of $14,666. In the nine months ended May 31, 2004, we generated revenues of $114,106. The reduction in revenues is due to one client, Magna Advanced Technologies. Although we continue to work with Magna in an effort to reach a licensing agreement, as outlined in the section "Marketing Plan and Engineering Progress" they have discontinued their monthly engineering fee payments of $12,150 ($CAD 15,000), effective September 1, 2004.

AMORTIZATION AND DEPRECIATION. We record depreciation expense on our property and equipment and amortization expense on our capitalized patents and trademark costs. In the nine months ended May 31, 2005, we recorded depreciation of $60,587. In the nine months ended May 31, 2004, we recorded depreciation of $16,767. The increase in depreciation expense reflects depreciation associated with purchases of depreciable equipment, including leasehold improvements at our new premises, leased as of August 1, 2004. At May 31, 2005, we had depreciable property and equipment recorded with an historical cost of $235,299 (May 31, 2004 - $47,356).

BUSINESS DEVELOPMENT. Business development expense reflects internal and external costs to market our business opportunity to existing clients and potential new clients. Business development expense includes: the salaries and benefits of our President and CEO and our Executive Vice President; and fees paid to external consultants. Business development expense was $204,411 for the nine months ended May 31, 2005. Business development expense was $163,980 for the nine months ended May 31, 2004. The increase in business development expense pertains to an April 1, 2004, increase in the management fee to our President and CEO, as well as the addition of one salaried marketing and communications employee effective June 1, 2004.

CORPORATE FINANCE. Corporate finance expense reflects costs associated with fees paid to maintain the corporate finance function of our company. These fees are paid to our CFO and consultants who oversee accounting, auditing, fund-raising and regulatory reporting functions for our company. Corporate finance expense was $81,055 for the nine months ended May 31, 2005. Corporate finance expense was $50,338 for the nine months ended May 31, 2004. The increase in corporate finance expense pertains to the addition of a full time CFO effective December 1, 2003, and a corporate finance fee of $7,995 paid to a consultant in stock during the month of April, 2005.

GENERAL AND ADMINISTRATIVE. Our general and administrative expenses consist primarily of clerical and administrative salaries and benefits, office rents, office supplies, telephone and telecommunications expenses, courier and other general costs not attributable directly to other Income Statement line items. Our general and administrative expenses were $83,036 for the nine months ended May 31, 2005. Our general and administrative expenses were $46,271 for the nine months ended May 31, 2004. The increase in general and administrative expense pertains to the recruitment of a full-time salaried accountant in late February 2004, as well as an increased level of office related expenses for office supplies, heat, electricity, and telecommunications associated with our new larger office premises, leased effective August 1, 2004.

INVESTOR RELATIONS. Our investor relations expense consists primarily of external consulting fees and associated communications costs to increase investors’ awareness of our Company. Investor relations expenses were $251,879 for the nine months ended May 31, 2005. In the comparative period, investor relations expenses were $61,143 for the nine months ended May 31, 2004. The increase in investor relations expense is associated with a heightened investor awareness campaign through the use of external consulting firms since our company becoming publicly traded as of October 2003. Also, included in the expense for the nine months ended May 31, 2005, is an amount of $27,206 of non-cash compensation attributed under the Black-Scholes option pricing model to stock options issued to investor relations consultants (May 31, 2004 - $ 0 ).

PROFESSIONAL FEES. Our professional fees expense consists primarily of external consulting fees associated with our auditors and our US corporate and securities counsel. Professional fees expense was $53,520 for the nine months ended May 31, 2005. In the comparative period, professional fees expense was $87,907 for the nine months ended May 31, 2004. The higher expense in the prior year is associated with additional professional legal fees, audit fees, and external financial consulting expenses related to our company getting publicly listed as of October 2003.

21

RENT. Rent expense was $53,844 for the nine months ended May 31, 2005. In the comparative period, we recorded rent expense of $24,683 for the nine months ended May 31, 2004. The increase in rent expense pertains to expansion of our Company over the prior year and rent associated with our new 7,089 sq. ft. warehouse facility which we occupied on September 1, 2004. In the prior year the Company was occupying two separate facilities with 1,400 sq. ft. in downtown Vancouver, BC and 2,914 sq. ft. in Surrey, BC, a suburb of the metropolitan Vancouver area. The prior year’s comparative rent expenses of $24,683 were reclassified from general and administrative expenses ($13,916) and from research and development expenses ($10,767).

RESEARCH AND DEVELOPMENT. Research and development expense reflects internal and external costs to develop our technology including the salaries of our engineers, fees paid to external consultants, and materials and supplies consumed by our research and development department in advancing our core intellectual property. Research and development expense was $447,843 for the nine months ended May 31,2005. In the comparative period, we recorded research and development expense of $204,122 for the nine months ended May 31, 2004. The increase in research and development expense pertains to the addition of two new engineers to our engineering team over the prior year plus a non-cash compensation expense of $124,192 (May 31, 2004 - $24,602) associated with stock options granted to recruit an external research and development consultant.

Three Month Period Ended May 31, 2005 compared to Three Month Period Ended May 31, 2004

Operating Results

REVENUES. Revenues are generated from the provision of engineering services and from licensing royalties. In the three months ended May 31, 2005, we generated revenues of $11,567. In the comparative period, in the three months ended May 31, 2004, we generated revenues of $33,645. The reduction in revenues is due to one client, Magna Advanced Technologies, discontinuing its monthly engineering fee payments of $12,150 ($CAD 15,000), effective September 1, 2004.

AMORTIZATION AND DEPRECIATION. We record depreciation expense on our property and equipment and amortization expense on our capitalized patents and trademark costs. In the three months ended May 31, 2005, we recorded depreciation of $21,090. In the comparative period, in the three months ended May 31, 2004, we recorded amortization and depreciation expense of $8,017. The increase in depreciation expense reflects depreciation associated with purchases of depreciable equipment. At May 31, 2005 we had depreciable Property and Equipment recorded with an historical cost of $235,299 (May 31, 2004 - $47,356).

BUSINESS DEVELOPMENT. Business development expense reflects internal and external costs to market our business opportunity to existing clients and potential new clients. Business development expense includes: the salaries and benefits of our President and CEO and our Executive Vice President; and fees paid to external consultants. Business development expense was $67,844 for the three months ended May 31, 2005. Business development expense was $55,288 for the three months ended May 31, 2004. The increase in business development expense pertains to an April 1, 2004 increase in the management fee to our President and CEO.

CORPORATE FINANCE. Corporate finance expense reflects costs associated with fees paid to maintain the corporate finance function of our company. These fees are paid to our internal CFO and external consultants who oversee accounting, auditing, fund-raising and regulatory reporting functions for our company. Corporate finance expense was $32,255 for the three months ended May 31, 2005. In the comparative period, we recorded corporate finance expense of $22,324 for the three months ended May 31, 2004. The increase in corporate finance expense pertains to a corporate finance fee paid in stock to a consultant during the month of April, 2005.

GENERAL AND ADMINISTRATIVE. Our general and administrative expenses consist primarily of clerical and administrative salaries and benefits, office rents, office supplies, telephone and telecommunications expenses, courier and other general costs not attributable directly to other Income Statement line items. Our general and administrative expenses were $20,041 for the three months ended May 31, 2005. Our general and administrative expenses were $19,757 for the three months ended May 31, 2004.

22

INVESTOR RELATIONS. Our investor relations expense consists primarily of external consulting fees and associated communications costs to increase investors’ awareness of our Company. Investor relations expenses were $85,402 for the three months ended May 31, 2005. In the comparative period, investor relations expenses were $9,135 for the three months ended May 31, 2004. The increase in investor relations expense is associated with a heightened investor awareness campaign involving the use of external consulting firms. Also, included in the expense for the three months ended May 31, 2005, is an amount of $5,836 of non-cash compensation attributed under the Black-Scholes option pricing model to stock options issued to investor relations consultants (May 31, 2004 - $ 0 ).

LISTING AND FILING FEES. Our listing and filing fees expense consists primarily of external consulting fees and associated communications costs to convert our regulatory filings into Edgar filing format. Listing and filing fees expenses were $1,227 for the three months ended May 31, 2005. In the comparative period, for the three months ended February 29, 2004 listing and filing fees expenses were $6,435. The decrease in expense is associated with additional filings related to our company becoming publicly listed in the prior year.

PROFESSIONAL FEES. Our professional fees expense consists primarily of external consulting fees associated with our auditors and our US corporate and securities counsel. Professional fees expense was $21,733 for the three months ended May 31, 2005. In the comparative period, we recorded professional fees expense of $19,124 for the three months ended May 31, 2004. The higher expense in the current year is associated with additional audit costs.

RENT. Rent expense was $16,969 for the three months ended May 31, 2005. In the comparative period, we recorded rent expense of $10,151 for the three months ended May 31, 2004. The increase in rent expense pertains to expansion of our company over the prior year and rent associated with our new 7,089 sq. ft. warehouse facility which we occupied on September 1, 2004. In the prior year the Company was occupying two separate facilities with 1,400 sq. ft. in downtown Vancouver, BC and 2,914 sq. ft. in Surrey, BC, a suburb of the metropolitan Vancouver area. The prior year’s comparative rent expenses of $10,151 were reclassified from general and administrative expenses ($5,923) and from research and development expenses ($4,228).

RESEARCH AND DEVELOPMENT. Research and development expense reflects internal and external costs to develop our technology including the salaries of our engineers, fees paid to external consultants, and materials and supplies consumed by our research and development department in advancing our core intellectual property. Research and development expense was $173,192 for the three months ended May 31, 2005. . In the comparative period, we recorded research and development expense of $65,228 for the three months ended May 31, 2004. The increase in research and development expense pertains to the addition of two new engineers to our engineering team over the prior year plus a non-cash compensation expense of $52,605 (May 31, 2004 - $0) associated with stock options granted to recruit an external research and development consultant.

TRAVEL AND RELATED. Travel and related expense includes all of our travel costs associated with business development, research and development, and Corporate Finance. Included in travel are the costs of flights, trains, automotive rentals, accommodations, meals and other associated travel costs. Travel and related expense was $30,329 for the three months ended May 31, 2005. In the comparative period, for the three months ended May 31, 2004, we recorded travel and related expense of $38,954. The decrease in expense is associated with reduced travel in North America and in Europe.

Liquidity and Capital Resources

At May 31, 2005, our total cash was $750,905, our working capital was $670,442, and our stockholders’ equity was $832,016. Since inception, we have incurred cumulative losses of $3,020,020. Between February, 2005 and April 11, 2005, we received subscriptions totaling $785,000 ($730,050 net of issuance costs) and issued 1,046,667 Units at $0.75 per unit. Each Unit consists of one common share and one full warrant per share of common stock, entitling the holder to purchase one additional share of common stock for $1.00 per share for one year, and $1.40 for the second year.

23

At May 31, 2005, our current working capital, is expected to be sufficient to satisfy our operating requirements for approximately six months. Our ability to satisfy projected working capital requirements is dependent upon our ability to secure additional funding through public or private sales of securities, including equity securities. There is no assurance that we will secure the necessary capital on terms acceptable to us. If we are unable to raise additional capital when needed, this could have a material adverse affect on us, including possibly requiring us to curtail or cease our operations.

Our Company is in the development stage and we expect to remain in the development stage for the current operating year. We do not expect to generate significant net cash flows from operations in the present year.

In the nine months ended May 31, 2005, our operations consumed $1,039,487. Our net loss of $1,272,637 was partially offset by amortization and depreciation of $60,587, and by $159,393 of non-cash stock-based compensation.

In the nine months ended May 31, 2005, we spent $65,457 on property and equipment.

Our net cash consumed in the nine months ended May 31, 2005, was $374,894, leaving us with $750,905 of cash balances at May 31, 2005.

Trends and Uncertainties

US Patent re-investigation

We were advised by a client in March 2004, that a European Patent Office patent search report on November 23, 1995, disclosed an existing relevant patent (GB, A, 1 101 522 issued on 31 January 1966) (“the Rolls Royce Patent”) as prior art, and that management had a responsibility to disclose this to the US Patent Office. Since we had subsequently convinced the European Patent Office that the Rolls Royce Patent did not conflict with our European Patent, we had neglected to notify the US Patent office of the European Patent Office’s search report findings.

Regardless of the fact that the correspondence with the European Patent Office occurred and did not impair our ability to file a European Patent, it was suggested to us that we had a responsibility to disclose the European Patent Office findings, subsequent communications, and eventual conclusion to the US Patent Office.

Based upon the advice of legal counsel, we have concluded that a re-examination will be required and that the additional European disclosures should be brought to the attention of the US Patent Office in an attempt to remedy and mitigate any real or perceived weakness with our US Patent No. 5,505,668. We are presently working with our patent attorneys to prepare the additional filings necessary in the re-examination application for our US Patent. In our opinion, our US Patent will not be significantly weakened through the re-examination process, however we can not provide assurances of any material impairments.

Marketing Plan and Engineering Progress

We have developed a marketing plan for vertical, industry-specific applications of the proprietary Ikona Gearing System for applications which capitalize on the unique high torque and low weight attributes of the Ikona Gearing System, including but not limited to:

Vertical Market	Client	Progress Update
Automotive	Magna Advanced Technologies	In progress – designed, tested and
		negotiating License Agreement
High torque industrial machinery:	Riverside Forest Products	In progress – designed, modified
- Forestry		and in testing

24

- Winches	Paccar Winch Division	In progress - Engineering
		feasibility study
- Marine	SKF	In progress - Engineering
		feasibility study
- Marine	TM4	Declined – Retained existing
		involute application
Aircraft and military equipment	Pratt & Whitney	In progress - Engineering
		feasibility study
Alternate energy sources	StarRotor Corporation	In progress – designed, being
		machined and tested
Robotics and high precision	Andrew Corp.	In progress – designed, and
Machinery		pending engineering feasibility study

Magna Advanced Technologies Progress

In September 2004, we initiated phase two of our agreement with Magna Advanced Technologies (“Magna”). We are aware of at least two automotive applications developed within Magna between September 2004 and May 31, 2005. We have been approached by Magna, in March 2005, with a request to formalize our commercial arrangements with them and we have responded with a request to complete our Licensing Agreement and minimum royalty arrangements with Magna, as required in our original agreement with them. We have engaged in formal negotiations over the past two to three months toward finalizing our Licensing Agreement and we are expecting a third draft of the agreement to be returned to us shortly. We are hopeful that a final version of the Licensing Agreement can be approved by both parties in the next month or two, however we are unable to provide assurances that we can conclude a licensing agreement.

Other Engineering Progress and Implications for our Business Model

Aside from the table above, we previously entered into a Licensing Agreement for royalties in the medical device market for a gear in the Mayo Clinic arm-brace. Though this application is generating revenues on a quarterly basis for us, it is a niche application, of which we would need many if we were to break even at our present expense levels.

Our marketing and engineering efforts thus far have supported our marketing plan in concluding that there are very many, as well as many varied, applications where the Ikona Gear is of interest to engineering product applications. Thus far we are maintaining our assertion that engineering product developers will pay royalties for the rights to license our patented gearing technology in their applications.

We are presently attempting to leverage a large reseller arrangement in the automotive sector, as well as dealing directly with several smaller niche applications of our gearing technology. Based on our marketing research, we are aware that the automotive market is roughly half of the global gearing market in terms of annual revenues. Therefore, once we have concluded our negotiations with Magna in the automotive sector, and at least one application in the industrial gearing sector, we believe we will have quantifiable information upon which to base our revenue expectations. Upon the conclusion of a Licensing Agreement we will better be able to establish our potential to generation profits from our patented technology, marketed in a business model that proposes to sell the patent rights via a royalty determined under a licensing arrangement.

25

Item 3 Controls and Procedures

Laith Nosh, President and Chief Executive Officer and Raymond L. Polman, Chief Financial Officer of the Company have established and are currently maintaining disclosure controls and procedures for the Company. The disclosure controls and procedures have been designed to ensure that material information relating to the Company is made known to them as soon as it is known by others within the Company.

Our Chief Executive Officer and Chief Financial Officer conducted an update and a review and evaluation of the effectiveness of the Company's disclosure controls and procedures and have concluded, based on their evaluation at May 31, 2005, that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the previously mentioned evaluation.

Part II - OTHER INFORMATION

Item 1 Legal Proceedings:

None.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds:

As of April 14, 2005, we completed private placements totalling $785,000 ($730,039 net of issuance costs of $54,951) through the issuance of 1,046,667 Units at a price of $0.75 per unit. Each Unit consists of one share of common stock and one full warrant per share of common stock, entitling the holder to purchase one additional share of common stock for $1.00 per share for one year, and $1.40 for the second year. We have undertaken to register these securities on a best efforts basis within nine months of issuance. The units were sold exclusively in off-shore transactions to persons who qualified as non-US Persons within the meaning of Regulation S under the Securities Act of 1933, as amended. The sale of the Units was undertaken without registration under the Securities Act in reliance upon Regulation S thereunder. The proceeds from the offering will be used for general working capital.

Item 3 Defaults upon Senior Securities:

None.

Item 4 Submission of Matters to a Vote of Security Holders:

On June 30, 2005, we held our annual meeting of shareholders at our office premises at 1850 Hartley Avenue, Suite #1, Coquitlam, BC, Canada. At the meeting we put two matters to vote, those being the appointment of our auditors Dohan and Company, P.A., CPA's, for the next year, and the election of our directors (Simon Anderson, Barrie Freeke, Laith Nosh, Raymond Polman, and Nicola Simon) for the coming year. A total of 13,214,260 shares, or 52.5% of the outstanding stock of our company, were voted either in person or by proxy. The results of the proposals were as follows:

	For	Against	Abstain
Proposal 1 – Election of Directors	13,213,760 (52.5%)	0	500 (0.0%)
Proposal 2 – Appoint auditors	13,184,260 (52.4%)	0	30,000 (0.1%)

Item 5 Other Information:

None.

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Item 6 Exhibits and Reports on Form 8-K

(a)

Exhibit No.	Description
31.1	Certification of Principal Executive Officer
31.2	Certification of Principal Financial Officer
32.1	Certificate pursuant to 18 USC Section 1350

(b) None

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

IKONA GEAR INTERNATIONAL, INC.
By:	/s/ Laith Nosh	By:	/s/ Raymond L. Polman
Laith Nosh, President & CEO		Raymond L. Polman, CA, CFO
Date: July 15, 2005		(Principal Financial and Accounting Officer)
		Date: July 15, 2005

28

EX-31.1

CERTIFICATION

I, Laith I. Nosh, certify that:

1.	I have reviewed this Quarterly Report on Form 10-QSB of Ikona Gear International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4.	The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5.	The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:	July 15, 2005	/s/ Laith I. Nosh
		Laith I. Nosh, President

EX-31.2

CERTIFICATION

I, Raymond L. Polman, certify that:

1.	I have reviewed this Quarterly Report on Form 10-QSB of Ikona Gear International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4.	The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5.	The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:	July 15, 2005	/s/ Raymond L. Polman
		Raymond L. Polman, Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ikona Gear International, Inc. (the "Company") on Form 10-QSB for the quarter ended May 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report'), we, Laith I. Nosh, President of the Company, and Raymond L. Polman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Laith I. Nosh

Laith I. Nosh, President

July 15, 2005

/s/ Raymond L. Polman

Raymond L. Polman, Chief Financial Officer

July 15, 2005