Ikona Gear International, Inc.

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

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

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

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

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

Check whether the issuer (1) h filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 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 ¨

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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

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.

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

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

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

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

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

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 unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial information. The accompanying unaudited 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 November 30, 2005, and for all periods presented, have been included. Interim results for the three-month period ended November 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.

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.


		November 30,
		2005

Accumulated deficit during the development stage	$	(3,709,275	)
Working capital	$	290,339

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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 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.

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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.

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.

In May 2005, FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections –A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”) which is effective for fiscal years ending after December 15, 2005. SFAS 154 requires that changes in accounting policy be accounted for on a retroactive basis.

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, with the exception of SFAS 123R which will have a material impact on compensation expense if stock options are issued in subsequent years.

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

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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.

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 has concluded that the carrying value of intangible assets had been materially impaired and has written-down the entire value of intangible assets resulting in a charge of $183,763 to operations in August 2004.

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

As of November 30, 2005, amounts due to related parties consisted of the following:

The Company entered into the following transactions with related parties during the three month period ending November 30, 2005:

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.

The Company settled an arms-length corporate finance fee by issuing 10,000 shares at $0.50 per share, and realized a gain on settlement of $5,000. The corporate finance expense stated in the operating statement consists of the related party corporate finance fee net of the gain on settlement of $5,000.

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.

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.

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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.

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 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 from the date of issuance, or $1.40 per share for an additional one year period from the date of issuance.

In March 2005, the Company issued 50,000 warrants at a price of $0.75 per warrant in payment of investor relations consulting fees. These warrants were valued at $16,408 and will be recognized over twelve months, being the period of the service contract.

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 October 2005, the Company issued 400,000 units at a price of $0.75 per share for cash proceeds of $276,000 (gross proceeds of $300,000 net of finders’ fees of $24,000). ). Each unit consists of one share of common stock and one- non-transferable share purchase warrant for a two year period from date of the issuance. 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 from the date of issuance, or $1.40 per share for an additional one year period from the date of issuance.

In October 2005, the Company issued 10,000 common shares for services at a price of $0.50 per share in payment of corporate finance fees.

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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.

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.


	Outstanding Options			Exercisable Options
		Weighted
		Average	Weighted		Weighted
		Remaining	Average		Average
		Contractual	Exercise		Exercise
Exercise Price	Number	Life	Price	Number	Price
$0.45	450,000	5.93 years	$ 0.45	6,249	$ 0.45
$0.50	40,000	2.13 years	$ 0.50	24,445	$ 0.50
$0.52	55,000	1.13 years	$ 0.52	55,000	$ 0.52
$0.56	205,000	5.62 years	$ 0.56	205,000	$ 0.56
$0.58	50,000	1.71 years	$ 0.58	50,000	$ 0.58
$0.60	341,000	5.00 years	$ 0.60	341,000	$ 0.60
$0.66	50,000	1.33 years	$ 0.66	50,000	$ 0.66
$0.75	100,000	5.50 years	$ 0.75	100,000	$ 0.75
$1.00	50,000	0.01 years	$ 1.00	50,000	$ 1.00
$1.10	1,338,000	4.58 years	$ 1.10	1,086,439	$ 1.10

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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

A summary of stock-based compensation expenses related to non-employee consultants recorded as at November 30, 2005, is as follows:

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

On February 28, 2005, the board of directors approved an extension and re-pricing of the then outstanding warrants. The effect of the re-pricing and the general practice of the company is to have a two year warrant with the price in the first year $1.00 per share of common stock, followed by a price of $1.40 in the second year since issuance.


			2006	2007
			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, 2007
March 31, 2005	50,000	50,000	$0.75	$0.75	March 31, 2010
October 25, 2005	400,000	400,000	$1.00	$1.40	October 25, 2007

Total outstanding	2,719,016	2,719,016

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

IKONA GEAR INTERNATIONAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

November 30, 2005

(Unaudited)

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 $8,500 (C$11,333) ( 2004 - $8,600 (C$11,333)). 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 $40,368 (C$49,623) and additional operating costs estimated at $19,951 (C$24,525) 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 $9,242 (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.

On December 15, 2005, the Company entered in to Licensing Agreement with MAGNA Drivetrain AG & Co (Magna), an Austrian Corporation. Under the terms of the Agreement, Magna will license the patented Ikona Gear technology platform for incorporation into specified automotive applications throughout North America and Europe. Magna has a right to designate its applications as exclusive on a per application basis, by paying an associated up-front exclusivity fee per designated Magna automotive applications. The Company is also to receive royalties on a per application basis, for exclusive, as well as non-exclusive, Magna automotive applications.

The following discussion and analysis covers material changes in the financial condition of Ikona Gear International, Inc., (the "Company") since August 31, 2005, and material changes in our results of operations for the three months ended November 30, 2005, as compared to the same period 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, 2005, including audited financial statements contained therein, as filed with the Securities and Exchange Commission.

This report contains forward-looking statements within the meaning of federal securities laws. These statements plan for or anticipate the future. Forward-looking statements include statements about our future business plans and strategies, statements about our need for working capital, future revenues, results of operations and most other statements that are not historical in nature. In this Report, forward-looking statements are generally identified by the words "intend", "plan", "believe", "expect", "estimate", and the like. Investors are cautioned not to put undue reliance on forward-looking statements. Except as otherwise required by applicable securities statues or regulations, the Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. Because forward-looking statements involve future risks and uncertainties, these are factors that could cause actual results to differ materially from those expressed or implied.

We are commercializing our proprietary patented gearing technology (the "Ikona Gearing System"). The Ikona Gearing System utilizes a proprietary, newly designed, patented tooth shape which enables gears to be smaller, lighter, stronger and more energy efficient than conventional planetary gears. The Ikona Gearing Systems allows what we believe to be the highest single stage reduction ratio, zero backlash 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 twofold: engineering and manufacturing our own solutions for industrial applications (our own products) which integrate our patented intellectual property; and to license our core intellectual property into our clients products under their manufacturing capacities. Our business model involves developing and manufacturing prototypes on a fee for services basis, then licensing commercial production for a licensing fee which is either paid directly to us as a royalty for client manufactured products, or incorporated into the profit margin on our own manufactured products. Our plan is to develop revenues from two sources: engineered and manufactured solutions revenue, which carries associated direct costs of production (material and labor); and royalty/licensing revenue which is pure profit with no associated direct costs of production.

Our goals in the current operating year are: (1) to introduce two new products, in addition to the Satellite Base Station Pedestal and Continuous Velocity Transmission currently under development; and (2) in our licensing division, to enter into licensing agreements in three different vertical markets (for illustration: automotive, shipping, alternative energy, or robotics).

We maintain our principal executive offices at 1850 Hartley Avenue, Unit #1, Coquitlam, British Columbia, Canada, V3K 7A1. Our telephone number is (604) 523-5500. Our internet website is located at www.ikonagear.com.

The following discussion of our financial condition, changes in financial condition and results of operations for the three months ended November 30, 2005, and November 30, 2004, should be read in conjunction with our most recent IKONA audited annual financial statements as of August 31, 2005, filed under Form 10-KSB on November 10, 2005, and the related notes that appear elsewhere in this quarterly report.

Three Month Period Ended November 30, 2005 (“First Quarter 2006”) compared to Three Month Period Ended November 30, 2004 (“First Quarter 2005”).

REVENUES. Revenues are generated from the provision of engineering services and from licensing royalties. In the three months ended November 30, 2005, we generated revenues of $28,725 ($27,000 from Andrew Corporation and $1,725 from Aircast Inc. In the three months ended November 30, 2004, we generated revenues of $1,604 from Aircast Inc. The increase in revenue reflects product manufacturing revenues from Andrew Corporation.

COST OF ENGINEERING SERVICES. Our cost of engineering services consists of engineering fees and salaries attributable directly to project revenues. Our cost of engineering services in the three months period ended November 30, 2005 was $27,000. In the comparative period, we recorded no cost of engineering services as we were not in the business of manufacturing in the prior year.

AMORTIZATION AND DEPRECIATION. We record depreciation expense on our property, plant and equipment and amortization expense on our capitalized patents and trademark costs. In the three months ended November 30, 2005, we recorded depreciation of $22,339. In the comparative period, we recorded no depreciation expense and amortization expense of $18,734 for the three months ended November 30, 2004. The increase in depreciation expense reflects depreciation associated with purchases of depreciable equipment in the past twelve months.

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 & CEO and our Executive Vice President; and fees paid to external consultants. Business development expense was $62,064 for the three months ended November 30, 2005. In the three months ended November 30, 2004, we recorded business development expense of $70,750.

CORPORATE FINANCE. Corporate finance expense reflects costs associated with fees paid to maintain the corporate finance function within our company. These fees are paid to our CFO and external consultants who oversee accounting, auditing, fund-raising and regulatory reporting functions for our company. Corporate finance expense was $20,484 for the three months ended November 30, 2005. In the comparative period, we recorded corporate finance expense of $24,300 for the three months ended November 30, 2004. The decrease in corporate finance expense is due a gain realized in the settlement of an accrued liability through issuance of common stock in October 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 selling, general and administrative expenses were $26,066 for the three months ended November 30, 2005. In the comparative period, we recorded general and administrative expenses of $35,928 for the three months ended November 30, 2004. The decrease in general and administrative expense is due to reduced administrative costs during the period.

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 $15,688 for the three months ended November 30, 2005. In the comparative period, there were recorded investor relations expenses of $112,950 for the three months ended November 30, 2004. The decrease in expense is associated with a reduced number of investor relations consultants and associated programs in the current quarter, relative to the prior year.

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 $2,829 for the three months ended November 30, 2005. In the comparative period, listing and filing fees were $2,920 for the three months ended November 30, 2004.

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 $14,018 for the three months ended November 30, 2005. In the comparative period, we recorded professional fees expense of $17,461 for the three months ended November 30, 2004.

RENT. Our rent expense consists primarily of an office premises lease and associated variable costs such as property taxes, maintenance, and costs passed on to us regarding our lease agreement. Rent expense was $18,175 for the three months ended November 30, 2005. In the comparative period, we recorded rent expense of $17,461 for the three months ended November 30, 2004.

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 $92,310 for the three months ended November 30, 2005. In the comparative period, we recorded research and development expense of $133,042 for the three months ended November 30, 2004. The decrease in research and development expense is due primarily to a reduction in stock based compensation and the allocation of $15,984 of research and development salaries to the cost of engineering services.

TRAVEL AND RELATED. Travel and related expense includes all of our travel costs associated with travel including travel for 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 $18,634 for the three months ended November 30, 2005. In the comparative period, we recorded travel and related expense of $22,097. The decrease in expense is associated with reduced travel arrangements during the period ended November 30, 2005.

As at November 30, 2005, our total cash was $287,455, our working capital was $290,339, and our stockholders’ equity was $456,499. Since inception, we have incurred cumulative losses of $3,709,275. Our current working capital is expected to be sufficient to satisfy our operating requirements for approximately three months. Our ability to satisfy projected working capital requirements is dependent upon our ability to generate revenue and 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. In the three months ended November 30, 2005, our operations consumed $320,699. Our net loss of $270,688 was partially offset by depreciation of $22,339, and by $5,986 of non-cash stock-based compensation and a $5,000 gain on the settlement of a corporate finance fee. Our operating assets and liabilities consumed an additional $85,478 for a net cash loss from operations of $341,387 for the three months ended November 30, 2005.

In the three months ended November 30, 2004, we spent $37,318 on furniture, machinery and equipment, and we had a gain of $18,546 on the insured replacement of stolen office equipment, resulting in a net use of cash of $18,772 in investing activities.

We received a private placement of $300,000 ($276,000 net of associated fees) in October 2005 related to the investment of one non-US investor for investment purposes.

Net cash consumed in the three months ended November 30, 2005 was $84,159, leaving a balance of cash on hand at November 30, 2005 of $287,455.

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 conduct 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 within 90 days of the end of the period covered by this Report, 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.

In October 2005, we sold an aggregate of 400,000 units at a price of $0.75 per unit for gross proceeds of $300,000. Proceeds of the sale were used for general working capital purposes. Each unit consisted of one share of common stock and one whole warrant, each whole warrant exercisable to purchase one share of common stock at a price of $1.00 per share, for a period of one year, after which each whole warrant is exercisable to purchase one share of common stock at a price of $1.40 per share, for a further period of one year. The issuance was to one investor that qualified as a non US Person within the meaning of Rule 902, who acquired the securities in an offshore transaction. The securities, which were taken for investment purposes, were subject to appropriate transfer restrictions and restrictive legend, and were issued without registration under the Securities Act in reliance upon the exemptions set forth in Regulation S thereunder.

* Portions of this exhibit have been omitted and filed separately with the SEC. Confidential treatment has been requested with respect to the omitted portions.

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

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

ITEM 1	FINANCIAL STATEMENTS	Page

	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)	18-17

ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	18-20
ITEM 2		18-20

ITEM 3	CONTROLS AND PROCEDURES	21

	PART II – OTHER INFORMATION

ITEM 1	LEGAL PROCEEDINGS	21

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	21
ITEM 2		21

ITEM 3	DEFAULTS UPON SENIOR SECURITIES	21

ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	21

ITEM 5	OTHER INFORMATION	21

ITEM 6	EXHIBITS AND REPORTS ON FROM 8 K	22

	SIGNATURES	23

		November 30,
		2005

ASSETS

Current:
Cash	$	287,455
Accounts receivable, net of allowance of $-		39,873
Work in process		18,900
Prepaid expenses		19,688
Deferred taxes, net of valuation allowance of $1,261,154		-

Total current assets		365,916

Property and equipment (Note 5)		166,160

Total assets	$	532,076

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$	66,418
Due to related parties (Note 6)		9,159

Total current liabilities		75,577

Commitments (Note 11)

Stockholders' equity
Common stock (Note 7)
Authorized
100,000,000 common shares, each with par value of $0.00001
Issued and outstanding
25,559,292 common shares		255
Additional paid-in capital		4,165,519
Accumulated deficit during the development stage		(3,709,275	)

Total stockholders' equity		456,499

Total liabilities and stockholders' equity	$	532,076

		Cumulative
		Amounts
		From Inception
		(August 16, 2001)
		to			Three Months Ended November 30,
		November 30, 2005			2005			2004

REVENUES
Engineering services	$	241,700		$	28,725		$	1,604
Cost of engineering services		(27,000	)		(27,000	)		-

Gross margin		214,700			1,725			1,604

EXPENSES
Amortization and depreciation		166,063			22,339			18,734
Business development		683,800			62,064			70,750
Corporate finance		288,540			20,484			24,300
Foreign exchange (gain) loss		3,177			1,092			(3,608	)
General and administrative		230,278			26,066			30,802
Investor relations		405,967			15,688			112,950
Listing and filing fees		27,103			2,829			2,920
Professional fees		275,041			14,018			16,912
Rent		125,850			18,175			17,461
Research and development		1,348,527			92,310			133,042
Travel and related		216,942			18,634			22,097

TOTAL EXPENSES		(3,771,288	)		(293,699	)		(446,360	)

OTHER INCOME/(EXPENSES)
Interest income		16,461			2,740			2,486
Impairment of patents and trademark (Note 4)		(183,763	)		-			-
Gain on disposal of assets		14,615			18,546			-

TOTAL OTHER INCOME/(EXPENSES)		(152,687	)		21,286			2,486

Loss before income taxes		(3,709,275	)		(270,688	)		(442,270	)
Income taxes		-			-			-

Net loss for the period	$	(3,709,275	)	$	(270,688	)	$	(442,270	)

Basic and diluted net loss per share				$	(0.01	)	$	(0.02	)

Weighted average number of common shares outstanding -
basic and diluted					25,312,699			24,090,325

		Cumulative
		Amounts
		From Inception
		(August 16, 2001)			Three Months Ended
		to November 30,			November 30,
		2005			2005			2004

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,709,275	)	$	(270,688	)	$	(442,270	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization and depreciation		166,063			22,339			18,734
Investor relations fees paid by stock options		71,800			-			15,534
Research and development fees paid by stock options		151,094			5,986			45,652
Corporate finance fees paid by common stock (Note 7)		48,880			5,000			-
Gain on disposal of assets		(14,729	)		(18,546	)		-
Impairment of patents and trademark		183,763			-			-
Change in operating assets and liabilities:
Accounts receivable		(39,873	)		(25,261	)		(2,998	)
Work in process inventory		(18,900	)		(18,900	)		-
Prepaid expenses		(19,688	)		(2,550	)		1,952
Accounts payable and accrued liabilities		66,418			(41,210	)		(50,458	)
Due to related party		9,159			2,443			(161	)

Cash used in operating activities		(3,105,288	)		(341,387	)		(414,015	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advances received from the Company
prior to recapitalization		155,000			-			-
Due to related parties		(121,100	)		-			-
Issuance of common stock, net of issuance costs		3,629,000			276,000			-

Cash provided by financing activities		3,662,900			276,000			-

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(290,638	)		(37,318	)		(46,233	)
Proceeds on disposal of assets		20,481			18,546			-

Cash used in investing activities		(270,157	)		(18,772	)		(46,233	)

NET INCREASE (DECREASE) IN CASH		287,455			(84,159	)		(460,248	)
CASH AT BEGINNING OF PERIOD		-			371,614			1,125,799

CASH AT END OF PERIOD	$	287,455		$	287,455		$	665,551

CASH PAID FOR:

Interest	$	-		$	-		$	-

Income taxes	$	-		$	-		$	-


		Cumulative
		Amounts
		From
		Inception
		(August 16,			Three Months			Three Months
		2001) to			Ended			Ended
		November 30,			November 30,			November 30,
		2005			2005			2004

Net loss, as reported	$	(3,709,725	)	$	(270,688	)	$	(442,270	)

Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects		(1,284,669	)		(5,986	)		(93,795	)

Pro-forma net loss	$	(4,994,394	)	$	(276,674	)	$	(536,065	)

Basic and diluted net loss per share, as reported				$	(0.01	)	$	(0.02	)

Basic and diluted net loss per share, pro-forma				$	(0.01	)	$	(0.02	)

Weighted average number of common shares outstanding					25,312,699			24,090,325


	November 30, 2005

				Accumulated		Net
		Cost		Depreciation		Book Value

Computers and Software	$	73,215	$	42,388	$	30,827
Furniture		34,495		8,517		25,978
Research and Development Equipment		93,597		26,357		67,240
Leasehold Improvements		75,298		33,183		42,115

	$	276,605	$	110,445	$	166,160

a)	Paid or accrued business development fees of $19,559 (2004 - $18,225) to a company controlled by a relative of a director of the Company.

b)	Paid or accrued business development fees of $28,881 (2004 - $27,539) to a company controlled by a director of the Company.

c)	Paid or accrued corporate finance fees of $25,484 (2004 - $24,300) to a company related to a director of the Company.


	November 30, 2005

	Number of			Weighted Average
	Options			Exercise Price
Options outstanding, beginning of the period	2,474,000		$	0.93
Issued	450,000			0.45
Exercised	-			-
Expired	(245,000	)		(1.04	)
Options outstanding, end of the period	2,679,000		$	0.83
Options exercisable, end of the period	1,968,133		$	0.89
Weighted average fair value of options granted in the period			$	0.38

	Risk-free interest rate	4.25 %
	Dividend yield rate	0.00 %
	Price volatility	114.6 %
	Weighted average expected life of options	4.52 years

Exhibit No.	Description
10.1*	License Agreement with MAGNA Drivetrain AG & Co (Magna), an Austrian Corporation dated December 15, 2005.

10.2*	Development Agreement with * dated October 24, 2005
31.1	Certification of Principal Executive Officer
31.2	Certification of Principal Financial Officer
32.0	Certificate pursuant to 18 USC Section 1350

By: /s/ Laith Nosh			By: /s/ Raymond Polman
Laith Nosh, President & CEO			Raymond L. Polman, CA, CFO
Date: January 20, 2006			(Principal Financial and Accounting Officer)
			Date: January 20, 2006