U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

[X]   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934

For the fiscal year ended September 30, 2004

                                       OR

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

For the transition period from _________ to _________

Commission file number 0-4846-3


                                 MEMS USA, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


           Nevada                                              82-0288840
------------------------------                           -----------------------
(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NO.)


    5701 Lindero Canyon Road, Suite 2
    110 Westlake Village, California                            91362
----------------------------------------                 -----------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)


          ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 735-4750
                                                         --------------

SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE ACT:

         TITLE OF EACH CLASS                    NAME OF EACH EXCHANGE ON WHICH
         TO BE SO REGISTERED                    CLASS IS TO BE REGISTERED

               None                             N/A
         -------------------                    -------------------------


SECURITIES TO BE REGISTERED UNDER SECTION 12(G) OF THE ACT:

                          Common Stock, $.001 par value
--------------------------------------------------------------------------------
                                (TITLE OF CLASS)

<PAGE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Exchange  Act of 1934 during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [_] No X

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-K contained in this form, and will not be contained, to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The registrant's revenues for its most recent fiscal year were: $83,825

The  aggregate  market  value  of  the  voting  and  non-voting  stock  held  by
non-affiliates  of the  registrant  as of  January  11,  2005 was  approximately
$21,860,500.

The number of shares of the common stock  outstanding as of January 11, 2005 was
16,431,077.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.


<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

Unless  otherwise   indicated,   all  references  to  our  company  include  our
wholly-owned  subsidiaries,  MEMS  USA,  Inc.  a  California  corporation,  Bott
Equipment Company,  Inc., a Texas corporation,  and Gulfgate Equipment,  Inc., a
Texas corporation.  In addition,  unless otherwise  indicated,  all common share
amounts  give effect to a one for 200 reverse  split of our  outstanding  common
shares conducted in December 2003.

General

We  are  engaged  in the  business  of  developing  and  manufacturing  advanced
engineered products,  systems and plants, mostly for the energy, oil and natural
gas  industries.  Our  business  is  divided  into  three  operating  divisions,
including (i) the design, development and operation of ethanol facilities,  (ii)
the  provision of systems and  components  to the energy  sector,  and (iii) the
design,  development  and sale of micro electro  mechanical  systems  (MEMS) for
major scientific and engineering companies.

Prior  to the  reverse  acquisition  described  below,  our  corporate  name was
Lumalite Holdings,  Inc. and we had not generated  significant revenues and were
considered  a  development  stage  company as defined in  Statement of Financial
Accounting  Standards  No.  7.  Pursuant  to a  Merger  Agreement  and  Plan  of
Reorganization  dated  January  28,  2004  between  us and  MEMS  USA,  Inc.,  a
California corporation  ("MEMS-CA"),  we acquired all of the outstanding capital
shares of MEMS-CA in exchange for 10 million  shares of our common stock.  Since
the  stockholders  of  MEMS-CA  acquired  approximately  75% of our  issued  and
outstanding shares and the MEMS-CA management team and board of directors became
our management team and board of directors,  according to FASB Statement No. 141
-   "Business   Combinations,"   this   acquisition   has  been   treated  as  a
recapitalization  for  accounting  purposes,  in a  manner  similar  to  reverse
acquisition accounting. In accounting for this transaction:

      o     MEMS-CA is deemed to be the  purchaser  and  surviving  company  for
            accounting purposes. Accordingly, its net assets are included in our
            consolidated  balance sheet at their  historical book values and the
            results of operations  of MEMS-CA have been  presented for all prior
            periods; and

      o     Control of the net assets and business of our company were  acquired
            effective February 18, 2004. This transaction has been accounted for
            as a  purchase  of  our  assets  and  liabilities  by  MEMS-CA.  The
            historical cost of the net liabilities assumed was $-0-.

Pursuant to the transaction  described  above, we changed our name from Lumalite
Holdings, Inc to MEMS USA, Inc.

In  October  2004,  we  acquired  all of the  capital  shares of Bott  Equipment
Company,  Inc., a Texas corporation,  ("Bott") and Gulfgate  Equipment,  Inc., a
Texas corporation ("Gulfgate"), in exchange for our issuance of 1,309,677 shares
of common  stock  and our  payment  of  $50,000.  Bott  Equipment  and  Gulfgate
Equipment  were  owned by the same  shareholder  group and were  engaged  in the
businesses of providing  systems and components to the energy sector.  We agreed
that the sellers of Bott and Gulfgate  shall have the right to put up to 752,688
common shares back to us during the ten (10) business days commencing on October
26,  2005.  Under the terms of the put, the sellers may require that we buy from
them up to  752,688  shares at a purchase  price of $1.86 per share.  Should the
sellers  exercise  their  put,  we will  have  sixty  (60) days from the date of
exercise to deliver the purchase price.  Our performance  obligations  under the
put are secured by second deeds of trust with vendors' liens on certain  parcels
of our real estate.  Under the terms of the stock  purchase  agreement  with the
sellers,  we have made certain covenants in favor of the sellers and secured our
satisfaction  of those  covenants  with  our  promise  to  issue  up to  618,295
additional  shares of our  common  stock to the  sellers in the event we fail to
satisfy those covenants.


                                      -1-
<PAGE>

Between  February  and June 2004,  we  conducted  a private  placement  of units
consisting of common shares and  warrants.  Each unit  consisted of one share of
common stock and one warrant to purchase an  additional  share of common  stock.
The unit purchase price was seventy  percent (70%) of the last sale price of our
common stock,  as quoted on the OTC Bulletin  Board,  on the day we received the
subscription  agreement  from the investor.  The warrant  entitles the holder to
purchase one share of our common stock at an exercise  price of 150% of the unit
purchase price for a period ending  January 27, 2005. In the private  placement,
we sold a total of  1,335,781  units to 64  accredited  investors  for the gross
proceeds  of  $1,882,880.  We applied  the  proceeds  from the sale of the units
towards working  capital.  As of the date of this report,  210,294 unit warrants
have been  exercised,  pursuant  to which we have issued  210,294  shares of our
common stock in return for the payment of an aggregate of $263,133.

Business of the Issuer

Our business and  operations  have changed  substantially  since our last annual
report. On February 18, 2004, the Company acquired all of the outstanding shares
of MEMS USA,  Inc.,  a California  corporation  ("MEMS  CA").  In May 2004,  the
Company  acquired  from  PTI  Technologies  certain  technologies   relating  to
Intelligent  Filtration Systems ("IFS"). These systems are used in refineries to
filter  chemicals  used to  process  oil and  chemicals.  IFS  systems  are also
utilized in nuclear power  plants.  In October  2004,  the Company  acquired two
Texas  corporations,   Bott  Equipment  Company,   Inc.  ("Bott")  and  Gulfgate
Equipment,  Inc.  ("Gulfgate").  In November  2004,  the Company  formed a joint
venture,  Can Am Ethanol One, Inc.  ("Can Am"). We believe that these  strategic
acquisitions and alliances will allow us to grow our businesses.

MEMS CA was  incorporated in November 2000. MEMS CA is an engineering and design
firm. MEMS CA has been engaged in the  development and sale of  instrumentation,
blending  skids and  Intelligent  Filtration  Systems.  During  2004,  MEMS CA's
engineers  designed and  constructed  an acoustic  viscometer.  This  instrument
utilizes sound waves  traveling  through a fluid stream to determine the fluid's
viscosity.  To date,  the  Company has  determined  that the  instrument  may be
utilized to measure  the  viscosity  of a range of aqueous  and organic  fluids,
including,  refined and crude oils.  The Company has filed a provisional  patent
application  respecting this device and  anticipates  filing one or more utility
patents  respecting  this  device  in the  near  future.  MEMS  CA is  presently
developing  a  multi-variant  pressure,   temperature  and  flow  meter  use  in
industrial applications.


                                      -2-
<PAGE>


During 2004, MEMS CA's engineers also developed  blending skid  technology.  One
skid we produced could mix three organic fluids,  in differing  percentages with
extreme accuracy.  One of the Company's long term goals is to be able to utilize
its blending skid technology to mix ethanol with motor  gasoline.  When properly
mixed,  ethanol and gasoline  provide a higher octane,  cleaner burning fuel for
automobiles.

MEMS CA's  engineers  have also been  charged  by the  Company  to  oversee  the
Company's IFS business.  These systems are utilized to filter wastes from oil or
water streams.  Unlike a typical canister  system,  such as the oil filter in an
automobile, which needs to be periodically replaced and disposed of, the filters
utilized in intelligent  filtration  systems can last for decades.  Furthermore,
the filter system is self cleaning.  Once the system  recognizes that its filter
is becoming  clogged by debris  filtered from the fluid flow, it turns the fluid
flow  through the filter off and "back  flushes"  the debris caked on the filter
into a  collection  decanter.  The system then turns the fluid flow  through the
system back on through the freshly cleaned filter.  The filter cleaning  process
takes only  seconds to  complete  and  repeats as  necessary  to assure  optimum
filtration.  A facility utilizing IFS technology needn't dispose of contaminated
filters,  but  only  need  dispose  of the  contaminate  itself.  Thus,  while a
filtration system based upon IFS technology typically requires a greater capital
investment on the part of the purchaser,  these costs are offset in the long run
by savings in filter  replacement  and disposal costs.  The Company  anticipates
that it may be able to utilize its intelligent filtration systems as an integral
part of any  ethanol  production  facility  that it may  design.  The Company is
presently aware of three competitors  offering similar  technologies to MEMS IFS
technology.

Presently,  MEMS CA's  utilizes  a  combination  direct  sales  force as well as
commissioned sales  representatives to market and distribute its products.  MEMS
CA targets niche  business  segments and is not dependent  upon any one or a few
major customers.  A typical  contract  requires MEMS CA to create a product that
previously  did not exist or  improve  upon an  existing  technology  using MEMS
(Micro  Electro  Mechanical  Systems)  devices.  The vast majority of the monies
raised since the  Company's  acquisition  of MEMS CA have been  utilized to fund
MEMS CA's acquisition and development of new technologies.

Gulfgate produces particulate filtration equipment utilized in the oil and power
industries.  Gulfgate also produces vacuum  dehydration  and coalescing  systems
that are utilized to remove water from ground based  turbine  engine oil.  These
same systems are used by electric  power  generation  facilities to remove water
from  transformer  oils. To help meet its  customer's  diverse  needs,  Gulfgate
maintains and operates a fleet of filtration and dehydration systems. Presently,
Gulfgate utilizes a combination direct sales force as well as commissioned sales
representatives to market and distribute its products.

Bott is a stocking distributor for various lines of industrial pumps, valves and
instrumentation  such as  those  utilized  in MEMS  CA's IFS and  blending  skid
systems. Bott specializes in the construction of aviation and refueling systems,
including,  but  not  limited  to  helicopter  refueling  systems  on  oil  rigs
throughout  the world.  Bott also  constructs  refueling  systems for commercial
marine vessels.  Bott's customers  include chemical  plants,  refineries,  power
plants and other  industrial  applications.  Bott utilizes a combination  direct
sales  force  as  well as  commissioned  sales  representatives  to  market  and
distribute its products.


                                      -3-
<PAGE>


Can  Am  was  created  to  manufacture,   own  and  operate  ethanol  production
facilities.  The joint  venture  will  utilize a  synthetic  biomass  conversion
process  to  convert  waste  materials  into  ethanol.  We are aware of  several
commercially  available  conversion  processes  which we  believe  will meet our
requirements  and are  presently  evaluating  the processes in relation to their
required  capital  investment,  operating  costs,  conversion  yield and product
quality as a prerequisite to licensing or acquiring the process  technology.  It
is anticipated  that the ethanol  manufactured by the joint venture will be sold
to companies  which blend ethanol with motor fuel.  The blending of ethanol with
motor fuel reduces  emissions  and will help  countries  such as Canada meet the
Kyoto accords for reduced greenhouse gas emissions. We intend to develop several
ethanol plants in Canada that will use a synthetic biomass  conversion  process,
subject to receipt of required funding. We estimate that each ethanol plant will
require  approximately  $150 million in capital.  MEMS USA's engineering  group,
headquartered  in Westlake  Village,  CA, will develop the engineering  data and
direct the plant engineering and construction  projects.  It is anticipated that
the Company's Texas  subsidiaries will be called upon to supply  instrumentation
for the project and assist in its modular construction.

We are  presently  in the  process of  integrating  our  subsidiaries,  which we
believe will promote  efficiency and lower  operating  costs.  While each of our
subsidiaries will remain a separate  operating entity, we intend to optimize the
resources  of each.  MEMS CA's  primary  responsibility  will be to  design  and
engineer new products and systems for the energy sector.  It is anticipated that
Bott will supply  component parts for these systems,  which will be assembled in
Texas under MEMS CA's supervision. We have already transferred our IFS and other
technology to Texas in order to establish lines of  communication  and a working
relationship.  We also anticipate that once we obtain the necessary funding, the
symbiotic  relationship  between  our  subsidiaries  will allow us to  engineer,
design, and partially construct ethanol plants for our Canadian joint venture.

ITEM  1  A.  CAUTIONARY  STATEMENT  REGARDING  FUTURE  RESULTS,  FORWARD-LOOKING
INFORMATION AND CERTAIN IMPORTANT FACTORS

We make written and oral statements from time to time regarding our business and
prospects, such as projections of future performance, statements of management's
plans and  objectives,  forecasts of market  trends,  and other matters that are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities  Exchange Act of 1934.  Statements
containing  the words or phrases "will likely  result," "are expected to," "will
continue," "is anticipated,"  "estimates,"  "projects,"  "believes,"  "expects,"
"anticipates,"  "intends," "target," "goal," "plans,"  "objective,"  "should" or
similar expressions  identify  forward-looking  statements,  which may appear in
documents,  reports,  filings with the Securities and Exchange Commission,  news
releases,   written   or  oral   presentations   made  by   officers   or  other
representatives  made  by  us  to  analysts,   stockholders,   investors,   news
organizations   and  others,   and   discussions   with   management  and  other
representatives of us.

Our future results,  including  results related to  forward-looking  statements,
involve a number of risks and uncertainties.  No assurance can be given that the
results  reflected  in any  forward-looking  statements  will be  achieved.  Any
forward-looking  statement made by or on behalf of us speaks only as of the date
on which such statement is made. Our  forward-looking  statements are based upon
assumptions that are sometimes based upon estimates,  data,  communications  and
other information from suppliers, government agencies and other sources that may
be subject to  revision.  Except as  required by law,  we do not  undertake  any
obligation to update or keep current either (i) any forward-looking statement to
reflect events or  circumstances  arising after the date of such  statement,  or
(ii) the  important  factors  that  could  cause our  future  results  to differ
materially from historical results or trends,  results anticipated or planned by
us, or which are reflected  from time to time in any  forward-looking  statement
which may be made by or on behalf of us.


                                      -4-
<PAGE>


In addition to other matters  identified or described by us from time to time in
filings with the SEC, there are several  important  factors that could cause our
future results to differ materially from historical  results or trends,  results
anticipated or planned by us, or results that are reflected from time to time in
any  forward-looking  statement  that may be made by or on behalf of us. Some of
these important factors, but not necessarily all important factors,  include the
following:

WE ARE AN EMERGING GROWTH COMPANY WITH LIMITED  OPERATING  HISTORY,  ACCORDINGLY
THERE IS LIMITED HISTORICAL  INFORMATION  AVAILABLE UPON WHICH YOU CAN JUDGE THE
MERITS  OF AN  INVESTMENT  IN OUR  COMPANY.  We  commenced  operations  as a new
business  engaged in designing  and selling  micro  electro  mechanical  systems
(MEMS) for major scientific and engineering companies in February 2004. To date,
we have generated only $83,825 in revenue from our MEMS CA operations.  While we
intend to remain involved in the MEMS industry,  our board of directors recently
approved a redirection  of our focus towards  designing,  building and operating
ethanol production facilities.  We have not commenced meaningful activity in the
area of ethanol  production and only one member of our  management  team has any
meaningful prior experience in the ethanol industry. In October 2004 we acquired
Bott  Equipment   Company,   Inc.   ("Bott")  and  Gulfgate   Equipment,   Inc.,
("Gulfgate").  These  companies  were  and  are  engaged  in the  businesses  of
providing  systems  and  equipment  to various  industries,  including,  but not
limited to, petrochemical plants, refineries, pulp and paper mills, steel mills,
and electrical utilities. Although Bott and Gulfgate are operating companies and
together  generated  a net loss of $85,974 on  $7,504,409  of revenue for the 12
months ended September 30, 2004, we only recently  acquired  control of Bott and
Gulfgate, and have limited experience in running the two companies.

WE HAVE  GENERATED  NET  LOSSES  SINCE  INCEPTION,  WHICH MAY  CONTINUE  FOR THE
FORESEEABLE  FUTURE AS WE TRY TO GROW OUR BUSINESS,  WHICH MEANS THAT YOU MAY BE
UNABLE TO  REALIZE A RETURN ON YOUR  INVESTMENT  FOR A LONG  PERIOD OF TIME,  IF
EVER. Our present business operations commenced in February 2004. From inception
through  September  30, 2004,  we  generated  revenues of $83,825 and incurred a
cumulative net loss of  $3,120,655.  We expect to continue  incurring  operating
losses  until we are  able to  derive  meaningful  revenues  from  our  proposed
business relating to ethanol production, energy generation and supply or MEMS.

WE HAVE LIMITED  AVAILABLE  WORKING CAPITAL AND REQUIRE  SIGNIFICANT  ADDITIONAL
CAPITAL IN ORDER TO SUSTAIN OUR OPERATIONS,  AND IF WE CANNOT OBTAIN  ADDITIONAL
FINANCING WE MIGHT CEASE TO CONTINUE.  As of  September  30, 2004,  we had total
current assets of $148,600 and a working capital deficit of $211,800. We believe
that we require a minimum of $1,800,000 in order to fund our planned  operations
over  the  next  12  months,  in  addition  to  the  capital  required  for  the
establishment  of any  ethanol  production  facilities.  We plan to  obtain  the
additional  working  capital  through  private  placement  sales  of our  equity
securities.  However,  as of the date of this report, we have no commitments for
the sale of our  securities  nor can there be any assurance that such funds will
be available on commercially reasonable terms, if at all. Should we be unable to
raise the required funds,  our ability to finance our continued  operations will
be materially adversely affected.


                                      -5-
<PAGE>


OUR INDEPENDENT  AUDITORS' REPORT RAISES  SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN. Our independent auditors have prepared their report
on our 2004  financial  statements  assuming  that we will  continue  as a going
concern.  Their report has an explanatory  paragraph  stating that our recurring
losses from operations since inception,  limited  operating  revenue and limited
capital  resources  raise  substantial  doubt about our ability to continue as a
going concern.

BECAUSE WE HAVE FEW PROPRIETARY RIGHTS, OTHERS CAN PROVIDE PRODUCTS AND SERVICES
SUBSTANTIALLY  EQUIVALENT  TO ours.  We hold a  provisional  patent  application
relating  to our  MEMS  operations,  however  we  hold  no  patents  or  patents
applications  relating  to our  energy  generation  and supply  business  or our
proposed  ethanol  production  business.  We believe that most of the technology
used in the design and building of ethanol production facilities and in the area
of the energy generation and supply business is generally known and available to
others. Consequently,  others will be able to compete with us in these areas. We
rely on a  combination  of  confidentiality  agreements  and trade secret law to
protect  our  confidential  information.  In  addition,  we  restrict  access to
confidential  information  on a "need to know" basis.  However,  there can be no
assurance  that  we  will  be  able  to  maintain  the  confidentiality  of  our
proprietary  information.  If our proprietary rights are violated, or if a third
party claims that we violate their trademark or other proprietary rights, we may
be required to engage in litigation.  Proprietary  rights litigation tends to be
costly  and  time  consuming.  Bringing  or  defending  claims  related  to  our
proprietary  rights may require us to redirect our human and monetary  resources
to address those claims.

WE MAY NOT BE ABLE TO COMPETE  EFFECTIVELY OR COMPETITIVE  PRESSURES FACED BY US
MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS,  FINANCIAL CONDITION,  AND RESULTS
OF  OPERATIONS.  We  expect  to  face  significant  competition  in our  ethanol
production,  energy generation and supply and MEMS operations.  Virtually all of
our  competitors  have greater  marketing and financial  resources  than us and,
accordingly,  there  can be no  assurance  that  we  will  be  able  to  compete
effectively  or that  competitive  pressures  faced  by us will  not  materially
adversely affect our business, financial condition, and results of operations.

WE ARE  DEPENDENT  UPON OUR KEY  PERSONNEL.  Our  performance  is  substantially
dependent  on  the  continued  services  and on the  performance  of our  senior
management  and  other  key  personnel.  We plan to  obtain  "key  person"  life
insurance for our key personnel,  however, at this time, no such policies are in
effect. Our performance will also depend upon our ability to retain and motivate
other  officers  and  key  employees.  The  loss of the  services  of any of our
executive  officers or other key employees could have a material  adverse effect
on our business,  prospects,  financial condition and results of operations. Our
future success also depends on our ability to identify,  attract,  hire,  train,
retain and motivate  other highly skilled  technical and  managerial  personnel.
Competition for such personnel is intense, and there can be no assurance that we
will  be  able  to  successfully  attract,  assimilate  or  retain  sufficiently
qualified personnel.  The failure to retain and attract the necessary technical,
and managerial  personnel could have a material  adverse effect on our business,
prospects, financial condition and results of operations


                                      -6-
<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY

Our executive offices are located in Westlake Village, California and consist of
approximately  9,100  square  feet.  The lease has an initial term of five years
ending on December 31, 2008, subject to one five year renewal option.

We also maintain two separate facilities in Houston, Texas from which we conduct
the operations of our subsidiaries, Bott and Gulfgate. We own both facilities in
fee simple.  The Bott facility  consists of approximately  91,000 square feet of
real estate and 61,000 square feet of buildings.  The Gulfgate facility consists
of  approximately  67,500  square feet of real estate and 34,000  square feet of
buildings.

ITEM 3. LEGAL PROCEEDINGS.

Neither  our  company  nor  our  property  are  subject  to  any  pending  legal
proceedings.

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

There  were no  matters  submitted  to our  security  holders  during the fourth
quarter of the fiscal year ended September 30, 2004.


                                      -7-
<PAGE>


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Market Information

Our common  stock is listed on the OTC Bulletin  Board under the symbol  "MEMS."
Set forth  below are high and low closing  prices for our common  stock for each
quarter  during the two fiscal years ended  September  30, 2004. We consider our
common  stock to be thinly  traded and that any  reported bid or sale prices may
not be a true market-based valuation of the common stock. In reviewing the table
below,  please  note that in  December  2003 we  conducted a one for 200 reverse
split of our common stock and in February 2004  consummated  our  acquisition of
MEMS-California.


         QUARTER ENDED                           HIGH      LOW
         -------------                           ----      ---

         December 31, 2002                       $0.11    $0.05
         March 31, 2003                          $0.11    $0.02
         June 30, 2003                           $0.03    $0.01
         September 30, 2003                      $0.03    $0.01

         December 31, 2003                       $1.75    $0.01
         March 31, 2004                          $2.75    $1.45
         June 30, 2004                           $2.50    $1.09
         September 30, 2004                      $2.29    $1.74


Holders

As of January 11, 2005, there were 3,366 record holders of our common stock.

Dividends

We have not  declared or paid any cash  dividends  on our common stock since our
inception and do not contemplate paying dividends in the foreseeable  future. It
is anticipated that earnings,  if any, will be retained for the operation of our
business.

Sales of Unregistered Securities

During the fiscal year ended September 30, 2004, we sold unregistered  shares of
our securities in the following transactions:

In December  2003,  we issued  3,230,000  shares of our common  stock to six (6)
parties,  upon conversion of indebtedness in the aggregate  principal  amount of
$358,530.  The shares were issued pursuant to Section 4(2) of the Securities Act
of  1933  (the  "Securities  Act")  and  Rule  506  there  under.  There  was no
underwriter involved in this issuance.


                                      -8-
<PAGE>


In February  2004,  we issued an  aggregate of  10,000,000  shares of our common
stock to 65 parties in  consideration  of our acquisition of MEMS CA. The shares
were issued  pursuant to Section 4(2) of the  Securities  Act and Rule 506 there
under. There was no underwriter involved in this issuance.

Between  January  and June  2004,  we  conducted  a private  placement  of units
consisting  of common  shares  and  warrants  pursuant  to  Section  4(2) of the
Securities  Act and Rule 506 there  under.  Each unit  consisted of one share of
common stock and one warrant to purchase an  additional  share of common  stock.
The unit purchase price was seventy  percent (70%) of the last sale price of our
common stock,  as quoted on the OTC Bulletin  Board,  on the day we received the
subscription  agreement  from the investor.  The warrant  entitles the holder to
purchase one share of our common stock at an exercise  price of 150% of the unit
purchase price for a period ending  January 27, 2005. In the private  placement,
we sold a total of  1,335,781  units to 64  accredited  investors  for the gross
proceeds of  $1,882,880.  As of the date of this report,  210,294 unit  warrants
have been  exercised,  pursuant  to which we have issued  210,294  shares of our
common  stock in return for the payment of an  aggregate  of  $263,133.  Westcap
Securities, Inc. acted as placement agent for the unit offering. We paid Westcap
Securities sales commissions of ten percent (10%) of the gross proceeds,  plus a
non-accountable  expense  allowance and due diligence fees of three percent (3%)
and two percent  (2%),  respectively,  of the gross  proceeds.  We also  granted
Westcap  Securities  106,465  common  shares,  equal to ten percent (10%) of the
common shares made part off the units sold in the offering.


                                      -9-
<PAGE>


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

OVERVIEW

We  are  engaged  in the  business  of  developing  and  manufacturing  advanced
engineered products,  systems and plants, mostly for the energy, oil and natural
gas  industries.  Our  business  is  divided  into  three  operating  divisions,
including (i) the design, development and operation of ethanol facilities,  (ii)
the  provision of systems and  components  to the energy  sector,  and (iii) the
design,  development  and sale of micro electro  mechanical  systems  (MEMS) for
major scientific and engineering companies.

To date,  our  historical  revenues have been derived from our MEMS  operations.
However,  in  October  2004,  we  acquired  all of the  capital  shares  of Bott
Equipment Company,  Inc., a Texas corporation ("Bott"),  and Gulfgate Equipment,
Inc.,  a  Texas  Corporation  ("Gulfgate"),  in  exchange  for our  issuance  of
1,309,677  shares of common stock and our payment of $50,000.  Bott and Gulfgate
were owned by the same  shareholder  group and were engaged in the businesses of
providing  systems and  components to the energy  sector.  Bott and Gulfgate are
operating  companies and together  generated a net loss of $85,974 on $7,504,409
(unaudited)  of revenue for the 12 months ended  September 30, 2004. We have not
commenced revenue producing operations in connection with our ethanol production
operations.

CORPORATE REORGANIZATION

Prior  to the  reverse  acquisition  described  below,  our  corporate  name was
Lumalite Holdings,  Inc. and we had not generated  significant revenues and were
considered  a  development  stage  company as defined in  Statement of Financial
Accounting  Standards  No.  7.  Pursuant  to a  Merger  Agreement  and  Plan  of
Reorganization  dated  January  28,  2004  between  us and  MEMS  USA,  Inc.,  a
California corporation  ("MEMS-CA"),  we acquired all of the outstanding capital
shares of MEMS-CA in exchange for 10 million  shares of our common stock.  Since
the  stockholders  of  MEMS-CA  acquired  approximately  75% of our  issued  and
outstanding shares and the MEMS-CA management team and board of directors became
our management team and board of directors,  according to FASB Statement No. 141
-   "Business   Combinations,"   this   acquisition   has  been   treated  as  a
recapitalization  for  accounting  purposes,  in a  manner  similar  to  reverse
acquisition accounting. In accounting for this transaction:

      o     MEMS CA is deemed to be the  purchaser  and  surviving  company  for
            accounting purposes. Accordingly, its net assets are included in our
            consolidated  balance sheet at their  historical book values and the
            results of operations  of MEMS CA have been  presented for all prior
            periods; and

      o     Control of the net assets and business of our company were  acquired
            effective February 18, 2004. This transaction has been accounted for
            as a  purchase  of  our  assets  and  liabilities  by  MEMS-CA.  The
            historical cost of the net liabilities assumed was $-0-.

As a result  of the  transaction  described  above,  we  changed  our name  from
Lumalite Holdings, Inc to MEMS USA, Inc.


                                      -10-
<PAGE>


BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements, included elsewhere
in this Annual  Report on Form 10-KSB,  have been  prepared in  conformity  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation as a going concern.  From inception  through September
30, 2004, we generated revenues of $83,825 and incurred a cumulative net loss of
$3,120,655.  We expect to continue incurring  operating losses until we are able
to derive  meaningful  revenues from our proposed  business  relating to ethanol
production,  energy  generation  and  supply  or MEMS.  These  conditions  raise
substantial  doubt  as to our  ability  to  continue  as a  going  concern.  The
condensed  consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

PLAN OF OPERATIONS

Our  plan of  operations  over the  next  fiscal  year is to  design  and  begin
procurement of the major components of a synthetic ethanol plant. Can Am Ethanol
One, Inc. ("Can Am") is actively scouting sites in Canada. Once a site is found,
Can Am intends to raise  capital to  procure  the land  through  the sale of its
equity securities. As of the date of this report, Can Am has no firm commitments
for the purchase of its securities;  however, a United States  broker-dealer has
entered  into a  "best-efforts"  agreement  with Can Am to  attempt  to fund the
purchase of the property.  Of course,  there is no guarantee that Can Am will be
successful in its attempts to raise the money or procure the property.

If Can Am is able to locate and procure a suitable  site,  the Company,  and its
engineering staff, will begin to design the ethanol production  facility.  It is
presently  anticipated  that  approximately  $150,000,000  in  funding  will  be
required to complete  construction  of the plant. As of the date of this report,
Can Am has no firm commitments from any entity to raise this money, and there is
no guarantee  that Can Am will be  successful in its attempts to raise the money
or finance the project.

If Can Am obtains funding  commitments to provide all of the capital required to
build the ethanol  plant,  the Company,  through its  California  affiliate,  is
expected to be charged with the primary design and  construction of the project.
MEMS CA anticipates that it will have to hire between five and seven experienced
engineers to assist with the design and  engineering of the ethanol plant.  Even
with the extra manpower,  the Company may subcontract  some or all of its design
and construction  responsibilities to third parties,  including, but not limited
to, the Company's Texas subsidiaries. In the event that the Company subcontracts
some or all of its design and construction responsibilities to third persons, it
is  anticipated  that the Company would  provide  oversight of these third party
entities.

It is anticipated that the design and construction of an ethanol plant will take
at least 30 months to complete.  Since the Company lacks substantial  experience
in the area of designing and construction of synthetic ethanol plants, there are
no guarantees when, or if, construction of the plant would be completed.


                                      -11-
<PAGE>


If the plant is completed,  it is anticipated that it will produce approximately
60,000,000 gallons of ethanol per annum utilizing bio-mass.  Can Am is presently
negotiating bio-mass procurement contracts in an attempt to assure future access
to raw materials. As of the date of this report, Can Am has not entered into any
bio-mass procurement  contracts.  If Can Am is unable to assure future access to
raw materials, it would be unable to produce ethanol.

The Company  anticipates that the majority of its efforts respecting the ethanol
plant within the next twelve  months will  involve  only design and  procurement
activities.  In light of this fact, the Company also intends to utilize the next
twelve  months to  develop  new or  improve  existing  products,  integrate  its
subsidiaries and expand their sales.

MEMS CA is presently  working toward optimizing its acoustic  viscometer.  It is
anticipated that additional  patent  applications  will be filed respecting that
device within the next fiscal year.  MEMS CA has also  transferred the Company's
Intelligent  Filtration  System  ("IFS") and blending skid  technologies  to the
Company's Texas  subsidiaries so that the Companies may jointly  manufacture and
market the technologies.  As of the date of this report, the Company has no firm
commitments for the purchase of its IFS systems.

LIQUIDITY AND CASH RESOURCES

As of September 30, 2004, we had total current  assets of $148,600 and a working
capital deficit of $211,800.  We believe that we require a minimum of $1,800,000
in order to fund our planned  operations over the next 12 months, in addition to
the capital required for the establishment of any ethanol production facilities.
We plan to obtain the additional working capital through private placement sales
of our equity  securities.  However,  as of the date of this report,  we have no
commitments  for the sale of our  securities nor can there be any assurance that
such funds will be available on commercially reasonable terms, if at all. Should
we be unable to raise the required  funds,  our ability to finance our continued
operations will be materially adversely affected.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet financing arrangements.


                                      -12-
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>                                                                                           <C>
Report of Independent Certified Public Accountants.............................................F-1

Consolidated Balance Sheet at September 30, 2004...............................................F-2

Consolidated Statements of Operations for the years ended September 30, 2004 and 2003
  and cumulative from inception (November 17, 2000) to September 30, 2004......................F-3

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended
  September 30, 2004 and 2003 and cumulative from inception (November 17, 2000)
  to September 30, 2004........................................................................F-4

Consolidated Statements of Cash Flows for the years ended September 30, 2004 and 2003
  and cumulative from inception (November 17, 2000) to September 30, 2004......................F-6

Notes to Consolidated Financial Statements.....................................................F-7
</TABLE>


                                      -13-
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
MEMS USA, Inc.
Westlake Village, California

We have audited the accompanying  consolidated  balance sheets of MEMS USA, Inc.
and  Subsidiary as of September  30, 2004 and 2003 and the related  consolidated
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  September 30, 2004 and 2003,  and from November 17, 2000  (inception)  to
September  30,  2004.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of MEMS USA, Inc. as of September
30,  2004 and 2003 and the  results of their  operations  and cash flows for the
years ended September 30, 2004 and 2003, and from November 17, 2000  (inception)
to September  30, 2004,  in  conformity  with  accounting  principles  generally
accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
has a net working capital deficiency and has not yet established a stable source
of  revenues,  that raise  substantial  doubt about its ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 1. The financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
January 7, 2005


                                      -14-
<PAGE>

                                      MEMS USA
                           (A Development Stage Company)
                                   Balance Sheet
                            September 30, 2004 and 2003

<TABLE>
<CAPTION>

                                       ASSETS                                Sept.30, 2004    Sept.30, 2003
<S>                                                                           <C>              <C>
Current Assets:
     Cash and cash equivalents                                                $    26,439      $    23,613
     Contract in progess                                                           35,000           70,000
     Prepaid expenses                                                              87,196                0
                                                                              -----------      -----------
     Total current assets                                                         148,635           93,613
Property and equipment, net                                                       332,496          153,896
Construction in progress                                                          289,740                0
Deposits                                                                           54,826           49,140
                                                                              -----------      -----------
     Total assets                                                             $   825,697      $   296,649
                                                                              ===========      ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable and accrued expenses, including
         delinquent payroll taxes of $117,495                                 $   360,399      $   313,971
     Accrued salaries to be paid by the issuance of common stock                        0          228,250
     Dividend payable                                                                   0            6,100
     Deferred revenue                                                                   0           28,333
                                                                              -----------      -----------
                                                                                  360,399          576,654
                                                                              -----------      -----------
Convertible loan payable                                                          150,000                0
                                                                              -----------      -----------
     Total Liabilities                                                            510,399          576,654
                                                                              -----------      -----------

Stockholders' equity (deficit):

Convertible preferred stock, series A, $0.001 par value, 1,200,000 shares
     authorized, 86,000 shares issued and outstanding as of
     September 30, 2003, all shares converted to common stock as
     of September 30, 2004                                                              0               86
Common stock, $0.001 par value; 100,000,000 shares authorized,
     15,091,676 shares and 8,589,533 shares issued and
     outstanding in 2004 and 2003 respectively                                     15,092            8,590
Stock subscriptions receivable                                                     (2,050)         (50,300)
Additional paid in capital                                                      3,422,911          612,824
Deficit accumulated during development stage                                   (3,120,655)        (851,205)
                                                                              -----------      -----------
     Total stockholders' equity (deficit)                                         315,298         (280,005)
                                                                              -----------      -----------
         Total liabilities and stockholders' equity (deficit)                 $   825,697      $   296,649
                                                                              ===========      ===========
</TABLE>

                                      -15-
<PAGE>

                                    MEMS USA
                          (A Development Stage Company)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                            From November 17,
                                              For the year ended             2000 (inception)
                                         Sept. 30, 2004    Sept. 30, 2003   To Sept. 30, 2004
                                          ------------      ------------      ------------
<S>                                       <C>               <C>               <C>
Revenues                                  $     83,825      $          0      $     83,825
                                          ------------      ------------      ------------

Costs
      Contract costs                           498,435            18,057           516,492
      General & Administrative               1,497,750           614,021         2,330,898
      Merger Related Expense                   357,090                 0           357,090
                                          ------------      ------------      ------------
                                             2,353,275           632,078         3,204,480
                                          ------------      ------------      ------------
 Net (Loss)                               ($ 2,269,450)     ($   632,078)     ($ 3,120,655)
                                          ============      ============      ============

Net loss per share, basic and diluted     ($      0.19)     ($      0.08)
                                          ============      ============

Weighted average number of shares
      outstanding, basic and diluted        12,145,448         8,178,472
                                          ============      ============
</TABLE>

                                      -16-
<PAGE>

                                 MEMS USA, INC.
                          (A Development Stage Company)

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                    PERIOD FROM NOVEMBER 17, 2000 (INCEPTION)
                              TO SEPTEMBER 30, 2004

<TABLE>
<CAPTION>

                                                                                                                  Additional
                                                       Common  Stock                   Preferred  Stock             paid-in
                                                 Shares           Amount            Shares          Amount          capital
                                               -----------      -----------      -----------     -----------      -----------
<S>                                            <C>              <C>              <C>             <C>              <C>
Balance at November 17, 2000                                         $                                 $               $

Issuance of common stock;
      founders shares - November 2000            2,140,704            2,141               --              --             (891)

Net loss                                                --               --               --              --               --
                                               -----------      -----------      -----------     -----------      -----------

Balance at September 30, 2001                    2,140,704            2,141               --              --             (891)
Issuance of common stock;
      founders shares - July 2002                5,565,831            5,566                                            (2,316)
Issuance of common stock: for
      services - July 2002                         301,411              301                                           175,699
Net loss for the year ended
      September 30, 2002                                --               --               --              --               --
                                               -----------      -----------      -----------     -----------      -----------

Balance at September 30, 2002                    8,007,946            8,008                                           172,492
Issuance of common stock: for
      cash - October 2002                            8,563                9                                             4,991
Issuance of common stock: for
      cash - January 2003                           44,527               45                                            25,955
Issuance of common stock: for
      cash - February 2003                          97,616               98                                            56,902
Issuance of common stock: for
      cash - March 2003                             17,126               17                                             9,983
Issuance of common stock: for
      cash - April 2003                              8,563                9                                             4,991
Issuance of common stock: for
      cash - May 2003                               25,688               26                                            14,974
</TABLE>

<TABLE>
<CAPTION>
                                                                     Deficit
                                                                      during           Total
                                                  Subscriptions     development     stockholders'
                                                    receivable         stage           deficit
                                                   -----------      -----------      -----------
<S>                                               <C>               <C>             <C>
Balance at November 17, 2000                            $                $                 $

Issuance of common stock;
      founders shares - November 2000                       --               --            1,250

Net loss                                                    --               --               --
                                                   -----------      -----------      -----------

Balance at September 30, 2001                               --               --            1,250
Issuance of common stock;
      founders shares - July 2002                       (2,050)                            1,200
Issuance of common stock: for
      services - July 2002                                                               176,000
Net loss for the year ended
      September 30, 2002                                    --         (219,127)        (219,127)
                                                   -----------      -----------      -----------

Balance at September 30, 2002                           (2,050)        (219,127)         (40,677)
Issuance of common stock: for
      cash - October 2002                                                                  5,000
Issuance of common stock: for
      cash - January 2003                              (10,000)                           16,000
Issuance of common stock: for
      cash - February 2003                              (2,000)                           55,000
Issuance of common stock: for
      cash - March 2003                                                                   10,000
Issuance of common stock: for
      cash - April 2003                                 (5,000)                               (0)
Issuance of common stock: for
      cash - May 2003                                                                     15,000
</TABLE>


                                      -17-
<PAGE>

                                 MEMS USA, INC.
                          (A Development Stage Company)

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                    PERIOD FROM NOVEMBER 17, 2000 (INCEPTION)
                              TO SEPTEMBER 30, 2004

<TABLE>
<CAPTION>
                                                                                                                  Additional
                                                       Common  Stock                   Preferred  Stock             paid-in
                                                 Shares           Amount            Shares          Amount          capital
                                               -----------      -----------      -----------     -----------      -----------
<S>                                            <C>              <C>              <C>             <C>              <C>
Issuance of common stock: for
      cash - June 2003                              34,251               34                                            19,966
Issuance of common stock: for
      service - August 2003                          3,425                3                                             1,997
Issuance of common stock: for
      cash - September 2003                        325,387              325                                           189,675
Issuance of common stock: for
      service - September 2003                      16,441               16                                             9,584
Issuance of Series "A" preferred
      stock for cash - June 2003                                                      10,000              10           12,490
Issuance of Series "A" preferred
      stock for cash - July 2003                                                      12,000              12           14,988
Issuance of Series "A" preferred
      stock for cash - August 2003                                                    34,000              34           42,466
Issuance of Series "A" preferred
      stock for cash - September 2003                                                 30,000              30           37,470
Preferred stock dividends                                                                                              (6,100)
Net loss for the year ended
      September 30, 2003                                --               --               --              --               --
                                               -----------      -----------      -----------     -----------      -----------

Balance at September 30, 2003                    8,589,533            8,590           86,000              86          612,824
Cash received for stock subscription
      October 2003
Issuance of common stock upon
      exercise of option - October 2003              5,138                5                                             2,995
</TABLE>

<TABLE>
<CAPTION>
                                                                     Deficit
                                                                      during           Total
                                                  Subscriptions     development     stockholders'
                                                    receivable         stage           deficit
                                                   -----------      -----------      -----------
<S>                                               <C>               <C>             <C>
Issuance of common stock: for
      cash - June 2003                                                                    20,000
Issuance of common stock: for
      service - August 2003                                                                2,000
Issuance of common stock: for
      cash - September 2003                                                              190,000
Issuance of common stock: for
      service - September 2003                                                             9,600
Issuance of Series "A" preferred
      stock for cash - June 2003                        (6,250)                            6,250
Issuance of Series "A" preferred
      stock for cash - July 2003                       (12,500)                            2,500
Issuance of Series "A" preferred
      stock for cash - August 2003                                                        42,500
Issuance of Series "A" preferred
      stock for cash - September 2003                   37,470          (12,500)          25,000
Preferred stock dividends                                                                 (6,100)
Net loss for the year ended
      September 30, 2003                                    --         (632,078)        (632,078)
                                                   -----------      -----------      -----------

Balance at September 30, 2003                          (50,300)        (851,205)        (280,005)
Cash received for stock subscription
      October 2003                                      48,250                            48,250
Issuance of common stock upon
      exercise of option - October 2003                                                    3,000
</TABLE>

                                      -18-
<PAGE>

                                 MEMS USA, INC.
                          (A Development Stage Company)

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                    PERIOD FROM NOVEMBER 17, 2000 (INCEPTION)
                              TO SEPTEMBER 30, 2004

<TABLE>
<CAPTION>

                                                                                                                  Additional
                                                       Common  Stock                   Preferred  Stock             paid-in
                                                 Shares           Amount            Shares          Amount          capital
                                               -----------      -----------      -----------     -----------      -----------
<S>                                            <C>              <C>              <C>             <C>              <C>
Issuance of Series "A" preferred
      stock for salaries - October 2003                                              182,600             183          228,067
Issuance of Series "A" preferred
      stock for cash - October 2003                                                   40,000              40           49,960
Issuance of common stock: for
      services - October 2003                      600,014              600                                           349,760
Issuance of Series "A" preferred
      stock for cash - November 2003                                                  29,000              29           36,221
Issuance of common stock: for cash
      October 2003 and November 2003               137,005              137                                            79,863
Issuance of common stock: for
      cash - November 2003                           5,138                5                                             2,995
      stock for cash - December 2003                                                  40,000              40           37,460
Issuance of Series "A" preferred
      stock for cash - December 2003                                                  10,000              10           12,490
Cash received for stock subscription-
      January 2004
Issuance of common stock in connection
      with Lumalite reverse merger               3,341,456            3,341                                            (3,341)
Series "A" preferred stock conversion                                              (387,600)            (388)            (276)
      issuance of common stock                     663,753              664
Issuance of common stock: for
      services - July 2004                          47,500               48                                           122,028
Issuance of common stock for cash Private
      Investment Public Entity - July 2004       1,441,846            1,442                                         1,531,494
Issuance of common stock: for
      Warrants Exercised                           210,294              210                                           262,923
</TABLE>

<TABLE>
<CAPTION>
                                                                   Deficit
                                                                    during           Total
                                                Subscriptions     development     stockholders'
                                                  receivable         stage           deficit
                                                 -----------      -----------      -----------
<S>                                             <C>               <C>             <C>
Issuance of Series "A" preferred
      stock for salaries - October 2003                                                228,250
Issuance of Series "A" preferred
      stock for cash - October 2003                                                     50,000
Issuance of common stock: for
      services - October 2003                                                          350,360
Issuance of Series "A" preferred
      stock for cash - November 2003                                                    36,250
Issuance of common stock: for cash
      October 2003 and November 2003                                                    80,000
Issuance of common stock: for
      cash - November 2003                                                               3,000
      stock for cash - December 2003                                                    37,500
Issuance of Series "A" preferred
      stock for cash - December 2003                 (12,500)                                0
Cash received for stock subscription-
      January 2004                                    12,500                            12,500
Issuance of common stock in connection
      with Lumalite reverse merger                                                           0
Series "A" preferred stock conversion                                                     (664)
      issuance of common stock                                                             664
Issuance of common stock: for
      services - July 2004                                                             122,075
Issuance of common stock for cash Private
      Investment Public Entity - July 2004                                           1,532,936
Issuance of common stock: for
      Warrants Exercised                                                               263,132
</TABLE>

                                      -19-
<PAGE>

                                 MEMS USA, INC.
                          (A Development Stage Company)

                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                    PERIOD FROM NOVEMBER 17, 2000 (INCEPTION)
                              TO SEPTEMBER 30, 2004

<TABLE>
<CAPTION>

                                                                                                                  Additional
                                                       Common  Stock                   Preferred  Stock             paid-in
                                                 Shares           Amount            Shares          Amount          capital
                                               -----------      -----------      -----------     -----------      -----------
<S>                                            <C>              <C>              <C>             <C>              <C>
Issuance of common stock: for
      services - Redwood consultants                50,000               50                                            97,450
Net loss for the year ended
      September 30, 2004                                --               --               --              --               --
                                               -----------      -----------      -----------     -----------      -----------

Balance at September 30, 2004                   15,091,676           15,092                0              (0)       3,422,911
                                               ===========      ===========      ===========     ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                   Deficit
                                                                    during           Total
                                                Subscriptions     development     stockholders'
                                                  receivable         stage           deficit
                                                 -----------      -----------      -----------
<S>                                             <C>               <C>             <C>
Issuance of common stock: for
      services - Redwood consultants                                                    97,500
Net loss for the year ended
      September 30, 2004                                  --       (2,269,450)      (2,269,450)
                                                 -----------      -----------      -----------

Balance at September 30, 2004                         (2,050)      (3,120,655)         315,298
                                                 ===========      ===========      ===========
</TABLE>

                                      -20-
<PAGE>

                                 MEMS USA, INC.
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                            From November 17,
                                                                 For the year ended          2000 (inception)
                                                             Sept. 30, 2004  Sept. 30, 2003  to Sept. 30, 2004
                                                             --------------  --------------  -----------------
<S>                                                             <C>             <C>             <C>
Cash flows provided by (used for)
  operating activities:

      Net loss                                                  (2,269,450)       (632,078)     (3,120,655)
                                                                ----------      ----------      ----------
      Adjustments to reconcile net loss to
        net cash used for operating activities:
         Depreciation                                               33,023          13,186          46,923
         Common stock issued for services                          798,290          11,600         985,890
      (Increase) decrease in assets:
         Contract in progress                                       35,000         (70,000)        (35,000)
         Prepaid expenses                                          (87,196)              0         (87,196)
         Deposits                                                   (5,686)        (49,140)        (54,826)
      Increase (decrease) in liabilities:
         Accounts payable and accrued expenses                      40,329         271,238         355,280
         Accrued salaries to be paid by issuance of
            common stock                                          (228,250)        228,250               0
         Deferred revenue                                          (28,333)              0         (28,333)
                                                                ----------      ----------      ----------
               Total adjustments                                   557,177         405,134       1,182,738
                                                                ----------      ----------      ----------
               Net cash provided by (used for) operating        (1,712,273)       (226,944)     (1,937,917)
               activities
                                                                ----------      ----------      ----------

Cash flows used for investing activities -
      Purchase of property and equipment                          (211,623)       (147,796)       (359,419)
      Construction in progress                                    (289,740)              0        (289,740)
               Total cash used for investing activities           (501,363)       (147,796)       (649,159)
                                                                ----------      ----------      ----------

Cash flows provided by financing activities:
      Convertible loan                                             150,000               0         150,000
      Common stock issued for cash                               2,066,462         307,189       2,374,851
      Series 'A' preferred stock issued for cash                         0          88,664          88,664
                                                                ----------      ----------      ----------
               Net cash provided by financing activities         2,216,462         395,853       2,613,515
                                                                ----------      ----------      ----------

Net increase in cash and cash equivalents                            2,826          21,113          26,439
Cash and cash equivalents, beginning of period                      23,613           2,500               0
                                                                ----------      ----------      ----------
Cash and cash equivalents, end of period                            26,439          23,613          26,439
                                                                ==========      ==========      ==========

Supplemental disclosure of cash flow information:
      Income taxes paid                                                800               0             800
                                                                ==========      ==========      ==========
      Interest paid                                                      0               0               0
                                                                ==========      ==========      ==========

      Common stock issued for services                             798,290          11,600         985,890
                                                                ==========      ==========      ==========
      Dividends accrued                                                  0           6,100           6,100
                                                                ==========      ==========      ==========
      Stock issued in exchange for subscriptions receivable        140,000          48,250         190,300
                                                                ==========      ==========      ==========
</TABLE>

                                      -21-
<PAGE>

(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      NATURE OF BUSINESS:

      MEMS USA,  Inc. (the  "Company") is currently a development  stage company
      under the  provisions  of  Statement  of  Financial  Accounting  Standards
      ("SFAS")  No. 7 and changed  its  domicile to the State of Nevada on April
      12, 2002. The business and operations have changed substantially since the
      last annual report.  On February 18, 2004, the Company acquired all of the
      outstanding shares of MEMS USA, Inc., a California Corporation ("MEMS CA")
      incorporated in November 2000. In May 2004, the Company  acquired from PTI
      Technologies  certain  technologies  relating  to  Intelligent  Filtration
      Systems ("IFS").  These systems are used in refineries to filter chemicals
      used to process  oil and  chemicals.  IFS  systems  are also  utilized  in
      nuclear power plants.  On October 1, 2004, the Company  acquired two Texas
      corporations,   Bott  Equipment   Company,   Inc.  ("Bott")  and  Gulfgate
      Equipment, Inc. ("Gulfgate"). In November 2004, the Company formed a joint
      venture, Can Am Ethanol One, Inc. Management believes that these strategic
      acquisitions and alliances will allow the Company to grow the businesses.

      MEMS CA is an engineering  and design firm engaged in the  development and
      sale  of  instrumentation,   blending  skids  and  Intelligent  Filtration
      Systems.  During 2004,  MEMS CA's  engineers  designed and  constructed an
      acoustic  viscometer.  This  instrument  utilizes  sound  waves  traveling
      through a fluid stream to determine the fluid's  viscosity.  To date,  the
      Company has determined  that the instrument may be utilized to measure the
      viscosity of a range of aqueous and organic fluids, including, refined and
      crude  oils.  The  Company  has  filed a  provisional  patent  application
      respecting this device and anticipates  filing one or more utility patents
      respecting this device in the near future. MEMS CA is presently developing
      a  multi-variant  pressure,  temperature  and  flow  meter  to be  used in
      industrial applications.

      During 2004, MEMS CA's engineers also developed  blending skid technology.
      One skid can mix three  organic  fluids,  in  differing  percentages  with
      extreme  accuracy.  One of the Company's  long term goals is to be able to
      utilize its blending skid  technology to mix ethanol with motor  gasoline.
      When properly mixed, ethanol and gasoline provide a higher octane, cleaner
      burning fuel for automobiles.

      MEMS CA's  engineers  have also been charged by the Company to oversee the
      Company's IFS  business.  These systems are utilized to filter wastes from
      oil or water streams.  Unlike a typical canister  system,  such as the oil
      filter in an  automobile,  which  needs to be  periodically  replaced  and
      disposed of, the filters  utilized in intelligent  filtration  systems can
      last for decades.  Furthermore,  the filter system is self cleaning.  Once
      the  system  recognizes  that its  filter is  becoming  clogged  by debris
      filtered  from the fluid flow,  it turns the fluid flow through the filter
      off and "back  flushes"  the debris  caked on the filter into a collection
      decanter.  The system then turns the fluid flow through the system back on
      through the freshly cleaned filter. The filter cleaning process takes only
      seconds to complete and repeats as necessary to assure optimum filtration.
      A facility  utilizing  IFS  technology  needn't  dispose  of  contaminated
      filters, but only need to dispose of the


                                      -22-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      NATURE OF BUSINESS:

      contaminate  itself.  Thus,  while a  filtration  system  based  upon  IFS
      technology  typically requires a greater capital investment on the part of
      the purchaser, these costs are offset in the long run by savings in filter
      replacement and disposal  costs.  The Company  anticipates  that it may be
      able to utilize its intelligent  filtration systems as an integral part of
      any  ethanol  production  facility  that it may  design.  The  Company  is
      presently  aware of three  competitors  offering  similar  technologies to
      MEMS' IFS technology.

      Presently,  MEMS CA's utilizes a combination direct sales force as well as
      commissioned sales  representatives to market and distribute its products.
      MEMS CA targets niche business  segments and is not dependent upon any one
      or a few major customers.  A typical contract requires MEMS CA to create a
      product  that  previously  did not  exist  or  improve  upon  an  existing
      technology using MEMS (Micro Electro Mechanical Systems) devices. The vast
      majority of the monies raised since the Company's  acquisition  of MEMS CA
      have been utilized to fund MEMS CA's  acquisition  and  development of new
      technologies.

      Gulfgate produces particulate filtration equipment utilized in the oil and
      power industries. Gulfgate also produces vacuum dehydration and coalescing
      systems that are utilized to remove water from ground based turbine engine
      oil. These same systems are used by electric power  generation  facilities
      to remove water from transformer oils. To help meet its customer's diverse
      needs,   Gulfgate  maintains  and  operates  a  fleet  of  filtration  and
      dehydration  systems.  Presently,  Gulfgate utilizes a combination  direct
      sales force as well as commissioned  sales  representatives  to market and
      distribute its products.

      Bott is a stocking  distributor  for various  lines of  industrial  pumps,
      valves and  instrumentation  such as those  utilized  in MEMS CA's IFS and
      blending skid systems.  Bott  specializes in the  construction of aviation
      and refueling systems,  including, but not limited to helicopter refueling
      systems on oil rigs throughout the world.  Bott also constructs  refueling
      systems for commercial  marine vessels.  Bott's customers include chemical
      plants, refineries,  power plants and other industrial applications.  Bott
      utilizes a combination  direct sales force as well as  commissioned  sales
      representatives to market and distribute its products.

      Can Am was  created to  manufacture,  own and operate  ethanol  production
      facilities.  The joint venture will utilize a synthetic biomass conversion
      process to convert waste  materials into ethanol.  The Company is aware of
      several  commercially  available  conversion  processes  which  management
      believes  will meet the  requirements  and are  presently  evaluating  the
      processes with relation to their required  capital  investment,  operating
      costs, conversion yield and product quality as a prerequisite to licensing
      or acquiring the process  technology.  It is anticipated  that the ethanol
      manufactured  by the joint  venture will be sold to companies  which blend
      ethanol  with motor fuel.  The blending of ethanol with motor fuel reduces
      emissions  and will help  countries  such as Canada meet the Kyoto accords
      for  reduced  greenhouse  gas  emissions.  The  Company  intend to develop
      several  ethanol  plants  in  Canada  that  will use a  synthetic  biomass
      conversion  process,  subject to receipt of required funding.  The Company
      estimates that each ethanol plant will require  approximately $150 million
      in capital.


                                      -23-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      NATURE OF BUSINESS:

      group,  headquartered in Westlake  Village,  California,  will develop the
      engineering  data  and  direct  the  plant  engineering  and  construction
      projects.  It is anticipated that the Company's Texas subsidiaries will be
      called  upon to supply  instrumentation  for the project and assist in its
      modular construction.

      The Company is presently in the process of integrating  the  subsidiaries,
      which  management  believes will promote  efficiency  and lower  operating
      costs.  While each of these  subsidiaries will remain a separate operating
      entity,  management  intends to optimize the resources of each.  MEMS CA's
      primary  responsibility  will be to design and  engineer  new products and
      systems for the energy  sector.  It is  anticipated  that Bott will supply
      component parts for these systems,  which will be assembled in Texas under
      MEMS CA's  supervision.  The Company has already  transferred  the IFS and
      other  technologies to Texas in order to establish lines of  communication
      and a working  relationship.  The Company also  anticipates  that once the
      necessary  funding is obtained,  the  symbiotic  relationship  between its
      subsidiaries will allow it to engineer,  design,  and partially  construct
      ethanol plants for the Canadian joint venture.

      BASIS OF PRESENTATION AND GOING CONCERN CONSIDERATION:

      The  accompanying  financial  statements  have been prepared in conformity
      with  accounting  principles  generally  accepted in the United  States of
      America, which contemplate continuation of the Company as a going concern.
      However,  the Company has no  substantial  established  source of revenue.
      This  matter  raises  substantial  doubt  about the  Company's  ability to
      continue as a going concern. These financial statements do not include any
      adjustments  relating to the recoverability and classification of recorded
      asset amounts,  or amounts and classification of liabilities that might be
      necessary should the Company be unable to continue as a going concern.

      The financial  statements do not include any  adjustments  relating to the
      recoverability  and  classification of recorded asset amounts,  or amounts
      and  classification  of  liabilities  that might be necessary,  should the
      Company be unable to continue as a going concern.

      We  have  limited  available  working  capital  and  require   significant
      additional capital in order to sustain our operations. As of September 30,
      2004,  we had total  current  assets  of  $148,600  and a working  capital
      deficit of $211,800. We believe that we require a minimum of $1,800,000 in
      order to fund our planned  operations over the next 12 months, in addition
      to the capital required for the  establishment  of any ethanol  production
      facilities.  We plan to obtain  the  additional  working  capital  through
      private placement sales of our equity securities.  However, as of the date
      of this report,  we have no commitments for the sale of our securities nor
      can  there  be  any  assurance  that  such  funds  will  be  available  on
      commercially reasonable terms, if at all. Should we be unable to raise the
      required  funds,  our ability to finance our continued  operations will be
      materially adversely affected.


                                      -24-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      FAIR VALUE OF FINANCIAL INSTRUMENTS:

      The Company  measures its financial  assets and  liabilities in accordance
      with  accounting  principles  generally  accepted in the United  States of
      America.  For certain of the Company's  financial  instruments,  including
      accounts  receivable  (trade and  related  party),  notes  receivable  and
      accounts  payable (trade and related  party),  and accrued  expenses,  the
      carrying amounts approximate fair value due to their short maturities.


      USE OF ESTIMATES:

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

      CONCENTRATION OF CREDIT RISK:

      The Company's financial  instruments that are exposed to concentrations of
      credit risk consist primarily of cash and accounts receivable. The Company
      maintains  cash with various  major  financial  institutions  and performs
      evaluations   of  the  relative   credit   standing  of  these   financial
      institutions  in order to limit the  amount of  credit  exposure  with any
      institution.  The  Company  extends  credit  to  customers  based  upon an
      evaluation of the  customer's  financial  condition and credit history and
      generally requires no collateral.  The Company's customers are principally
      located throughout North America,  and their ability to pay amounts due to
      the Company may be  dependent on the  prevailing  economic  conditions  of
      their  geographic   region.   Management   performs  regular   evaluations
      concerning the ability of its customers to satisfy their  obligations  and
      records a provision for doubtful accounts based on these evaluations.  The
      Company's credit losses for the periods  presented are  insignificant  and
      have not significantly exceeded management's estimates.

      CASH AND CASH EQUIVALENTS:

      All  highly  liquid  investments  maturing  in three  months  or less when
      purchased are considered as cash equivalents.

      CONTRACTS IN PROCESS:

      Costs  incurred on contracts  in process  consists of  development  costs,
      engineering,  materials and labor related to the  development of prototype
      products for specific  contracts  with  customers  net of reserves for any
      anticipated  contract losses.  At September 30, 2004 such costs related to
      one contract for which no reserves have been provided.


                                      -25-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      PROPERTY AND EQUIPMENT:

      Property and  equipment are stated at cost.  Depreciation  of equipment is
      provided  for by the  straight-line  method  over their  estimated  useful
      lives.  Construction-in-progress  includes  a  commitment  to  purchase  a
      general  aviation  aircraft.  Total cost of this four seat  single  engine
      aircraft is estimated at $400,000 of which $289,740 has been incurred.  It
      is estimated  that the aircraft will be put into service in fourth quarter
      2005. The aircraft has been funded with operating  capital.  This aircraft
      will provide MEMS USA management with a cost effective and efficient means
      of supporting our subsidiaries in Houston,  the joint venture in Canada as
      well as various other on-going projects.

      REVENUE RECOGNITION:

      The  Company  plans to  follow  the  percentage  of  completion  method of
      accounting for future contracts.  However, because the Company has not yet
      established  a history on which  determinable  estimates  of revenues  and
      costs can be made, the completed  contract method of accounting is applied
      for the one contract outstanding as of September 30, 2004.

      SHIPPING AND HANDLING COSTS:

      The Company expenses  shipping and handling costs as incurred and includes
      the expense in selling, general and administrative expenses.

      ADVERTISING COSTS:

      The Company will expense the cost of advertising as incurred. There was no
      advertising charged to operations for the period ended September 30, 2004.

      INCOME TAXES:

      Provisions  for federal and state income taxes are  calculated on reported
      financial  statement  income based on the current tax law. Such provisions
      differ from the amounts  currently payable because certain items of income
      and expense, known as temporary  differences,  are recognized in different
      tax periods for financial reporting purposes than for income tax purposes.
      Deferred  income taxes are the result of the  recognition  of tax benefits
      that  management  expects to realize from the utilization of net operating
      loss carry-forwards.  The amounts recorded are net of valuation allowances
      and represent management's estimate of the amount that is more likely than
      not to be realized.


                                      -26-
<PAGE>


1.    COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      COMPREHENSIVE LOSS:

      As  comprehensive  loss  consists  only  of  net  losses,  a  Schedule  of
      Comprehensive Loss has not been included in these financial statements.

      Basic loss per share is  computed  by dividing  net loss  attributable  to
      common  stockholders  by the  weighted  average  number of  common  shares
      outstanding.  Diluted loss per share is computed similar to basic loss per
      share  except that the  denominator  is increased to include the number of
      additional common shares that would have been outstanding if the potential
      common  shares had been issued and if the  additional  common  shares were
      dilutive. There were 4,882,819 shares and 4,136,263 shares of common stock
      equivalents for the year ended September 30, 2004 and 2003,  respectively,
      which were excluded because of their antidilutive effect.

      RECENT ACCOUNTING PRONOUNCEMENTS:

      In October 2002,  the FASB issued SFAS No. 147,  "Acquisitions  of Certain
      Financial  Institutions" which provides guidance on the accounting for the
      acquisition of a financial institution.  SFAS No. 147 removes acquisitions
      of financial institutions from the scope of both FASB Statement No. 72 and
      FASB  Interpretation No. 9 and requires that those transactions be account
      for in accordance with FASB Statements No. 141 and 142. Additionally, SFAS
      No. 147 amends FASB Statement No. 144,  "Accounting  for the Impairment or
      Disposal  of  Long-Lived  Assets",  to  include  in  its  scope  long-term
      customer- relationship  intangible assets of financial  institutions.  The
      adoption  of this  pronouncement  did not have a  material  impact  on the
      Company's financial position or results of operations.

      In  November   2002,  the  FASB  issued   Interpretation   No.  (FIN)  45,
      "Guarantor's   Accounting  and  Disclosure  Requirements  for  Guarantees,
      Including  Indirect  Guarantees of  Indebtedness  of Others".  Among other
      things,  the  Interpretation  requires  guarantors to  recognize,  at fair
      value,   their  obligations  to  stand  ready  to  perform  under  certain
      guarantees.  FIN 45 is effective for  guarantees  issued or modified on or
      after January 1, 2003. The adoption of this  pronouncement  did not have a
      material  impact  on  the  Company's  financial  position  or  results  of
      operations.

      In  December  2002,  the  FASB  issued  SFAS  No.  148,   "Accounting  for
      Stock-Based Compensation-Transition and Disclosure", which amends SFAS No.
      123,  "Accounting for Stock-Based  Compensation",  to provide  alternative
      methods of  transition  for a  voluntary  change to the fair  value  based
      method of accounting for stock-based employee compensation.  Additionally,
      SFAS  No.  148  amends  the  disclosure  requirements  of  SFAS  No.  123,
      regardless of which method of accounting is chosen,  to require  prominent
      disclosures  in both annual and  interim  financial  statements  about the
      method of accounting for stock-based employee  compensation and the effect
      of the method used on reported  results.  The  statement was effective for
      fiscal years beginning  after December 15, 2002, with earlier  application
      permitted in certain circumstances. The interim


                                      -27-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED:

      disclosure  provisions  are  effective for  financial  reports  containing
      financial  statements  for interim  periods  beginning  after December 15,
      2002.  The adoption of this  statement  did have a material  impact on the
      Company's financial position or results of operations.

      In January  2003,  the FASB  issued  FIN 46,  "Consolidation  of  Variable
      Interest Entities".  FIN 46's consolidation criteria are based on analysis
      of risks and reward, not control,  and represent a significant and complex
      modification  of previous  accounting  principles.  FIN 46  represents  an
      accounting  change,  not a change  in the  underlying  economics  of asset
      sales. The adoption of this  pronouncement  did not have a material impact
      on the Company's financial position or results of operations.

      During April 2003,  the FASB issued SFAS 149 - "Amendment of Statement 133
      on Derivative Instruments and Hedging Activities", effective for contracts
      entered into or modified  after June 30, 2003,  except as stated below and
      for hedging  relationships  designated  after June 30, 2003.  In addition,
      except as stated below, all provisions of this Statement should be applied
      prospectively.  The  provisions of this Statement that relate to Statement
      133  Implementation  Issues that have been  effective for fiscal  quarters
      that  began  prior to June 15,  2003,  should  continue  to be  applied in
      accordance with their respective effective dates. In addition,  paragraphs
      7(a) and 23(a),  which relate to forward purchases or sales of when-issued
      securities or other  securities  that not yet exist,  should be applied to
      both  existing  contracts  and new  contracts  entered into after June 30,
      2003. The adoption of this pronouncement did not have a material impact on
      the Company's financial position or results of operations.

      In  November  2004,  the FASB  issued SFAS No. 151  "Inventory  Costs,  an
      amendment of ARB No. 43, Chapter 4". The amendments  made by Statement 151
      clarify that abnormal amounts of idle facility expense,  freight, handling
      costs,   and  wasted   materials   (spoilage)   should  be  recognized  as
      current-period  charges  and require the  allocation  of fixed  production
      overheads  to  inventory  based on the normal  capacity of the  production
      facilities.  The guidance is effective for inventory costs incurred during
      fiscal  years  beginning  after  June 15,  2005.  Earlier  application  is
      permitted for inventory costs incurred during fiscal years beginning after
      November 23, 2004. The Company has evaluated the impact of the adoption of
      SFAS 151,  and does not  believe  the impact  will be  significant  to the
      Company's overall results of operations or financial position.

      In December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
      Time- Sharing Transactions--an amendment of FASB Statements No. 66 and 67"
      ("SFAS 152). This Statement  amends FASB Statement No. 66,  Accounting for
      Sales of Real Estate, to reference the financial  accounting and reporting
      guidance for real estate time-  Sharing  transactions  that is provided in
      AICPA  Statement  of  Position  (SOP)  04-2,  Accounting  for Real  Estate
      Time-Sharing  Transactions.  This Statement also amends FASB Statement No.
      67,  Accounting  for Costs and Initial  Rental  Operations  of Real Estate
      Projects, to state that the guidance for (a) incidental operations and (b)
      costs incurred to sell real estate  projects does not apply to real estate
      time-sharing  transactions.  The accounting for those operations and costs
      is subject to the guidance in SOP 04-2.


                                      -28-
<PAGE>

(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED:

      This  Statement is effective  for  financial  statements  for fiscal years
      beginning  after June 15, 2005 with earlier  application  encouraged.  The
      Company has evaluated the impact of the adoption of SFAS 152, and does not
      believe the impact will be significant to the Company's overall results of
      operations or financial position.

      In December 2004, the FASB issued SFAS No.153,  "Exchanges of Non-monetary
      Assets,  an amendment of APB Opinion No. 29,  Accounting for  Non-monetary
      Transactions."  The  amendments  made by  Statement  153 are  based on the
      principle that exchanges of  non-monetary  assets should be measured based
      on the  fair  value  of the  assets  exchanged.  Further,  the  amendments
      eliminate  the narrow  exception  for  non-monetary  exchanges  of similar
      productive assets and replace it with a broader exception for exchanges of
      non-monetary  assets that do not have  commercial  substance.  Previously,
      Opinion 29 required  that the  accounting  for an exchange of a productive
      asset for a similar productive asset or an equivalent interest in the same
      or similar  productive asset should be based on the recorded amount of the
      asset  relinquished.  Opinion  29  provided  an  exception  to  its  basic
      measurement  principle  (fair value) for  exchanges of similar  productive
      assets.  The Board believes that exception required that some non-monetary
      exchanges,  although commercially substantive,  be recorded on a carryover
      basis.

      By focusing the exception on exchanges that lack commercial substance, the
      Board  believes this  Statement  produces  financial  reporting  that more
      faithfully represents the economics of the transactions.  The Statement is
      effective for  non-monetary  asset  exchanges  occurring in fiscal periods
      beginning  after June 15,  2005.  Earlier  application  is  permitted  for
      non-monetary  asset exchanges  occurring in fiscal periods beginning after
      the date of issuance.  The provisions of this  Statement  shall be applied
      prospectively.  The Company has  evaluated  the impact of the  adoption of
      SFAS 152,  and does not  believe  the impact  will be  significant  to the
      Company's overall results of operations or financial position.

      In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
      Payment".  Statement  123(R)  will  provide  investors  and other users of
      financial statements with more complete and neutral financial  information
      by requiring that the  compensation  cost relating to share-based  payment
      transactions  be  recognized  in financial  statements.  That cost will be
      measured  based on the fair value of the equity or  liability  instruments
      issued.  Statement 123(R) covers a wide range of share-based  compensation
      arrangements including share options,  restricted share plans, performance
      based awards,  share  appreciation  rights,  and employee  share  purchase
      plans.  Statement  123(R) replaces FASB Statement No. 123,  Accounting for
      Stock-Based  Compensation,  and supersedes APB Opinion No. 25,  Accounting
      for Stock Issued to  Employees.  Statement  123, as  originally  issued in
      1995,  established as preferable a  fair-value-based  method of accounting
      for  share-based  payment  transactions  with  employees.   However,  that
      Statement  permitted  entities  the  option  of  continuing  to apply  the
      guidance  in APB  Opinion  25,  as  long  as the  footnotes  to  financial
      statements  disclosed  what net income would have been had the  preferable
      fair-value- based method been used. Public entities


                                      -29-
<PAGE>


(1)   COMPANY & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

      RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED:

      (other than those filing as small  business  issuers)  will be required to
      apply Statement  123(R) as of the first interim or annual reporting period
      that begins after June 15, 2005.  The Company has  evaluated the impact of
      the  adoption  of  SFAS  123(R),  and  believes  the  impact  will  not be
      significant.

      The Company has elected to follow Accounting  Principles Board Opinion No.
      25,  "Accounting  for  Stock  Issued  to  Employees",  APB 25 and  related
      interpretations  in accounting for its employee stock options  because the
      alternatives  fair value accounting  provided for under SFAS Statement No.
      123, "Accounting for Stock-Based Compensation",  ("SFAS 123") requires the
      use of option  valuation models that were not developed for use in valuing
      employee stock options.  Options granted to key consultants under the Plan
      are accounted for under SFAS 123 as  interpreted  by FIN 44. Under APB 25,
      because the exercise  price of the Company's  employee stock options equal
      or exceed the fair  market  value of the  underlying  stock on the date of
      grant, no compensation expenses is recognized.

      Pro forma information  regarding net loss and loss per share,  pursuant to
      the  requirements  of SFAS 123, for the years ended September 30, 2004 and
      2003, are as follows:


<TABLE>
<CAPTION>
                                                           2004             2003
                                                       -----------      -----------
<S>                                                    <C>              <C>
Net loss, as reported                                  $(2,269,450)     $  (632,078)
Deduct:  Total stock-based employee compensation
  expense determined under the fair value
  Black-Scholes  method with a 3% volatility and a
  6% risk free rate of return assumption                  (267,893)        (424,930)
Pro forma net loss                                     $(2,537,343)     $(1,057,008)
                                                       -----------      -----------
Loss per share:

Basic and diluted - as reported                        $     (0.19)     $     (0.08)
                                                       ===========      ===========
Basic and diluted - pro forma                          $     (0.21)     $     (0.13)
                                                       ===========      ===========
</TABLE>


(2)   PROPERTY AND EQUIPMENT:

      A summary at September 30, 2004 and 2003 is as follows:


                                                2004         2003
                                              --------     --------

            Furniture and Equipment           $ 36,050     $ 71,741
            Computer equipment                  76,076       45,447
            Lab equipment                      195,552       27,497
            Leasehold improvements              71,741       23,111
                                              --------     --------
                                               379,419      167,796
            Less accumulated Depreciation       46,923       13,900
                                              --------     --------
                                              $332,496     $153,896
                                              ========     ========


                                      -30-
<PAGE>


(2)   PROPERTY AND EQUIPMENT, CONTINUED:

      Depreciation expense charged to operations totaled $33,023 and $13,186 for
      the year ended September 30, 2004 and 2003, respectively.

(3)   INCOME TAXES:

      There is no  provision  for income  taxes for the periods  presented.  Net
      operating  loss carry  forwards  have been  offset in their  entirety by a
      valuation  allowance.  The reconciliation of the effective income tax rate
      to the Federal statutory rate is as follows:


                                                    2004         2003
                                                   ------       ------

       Federal Income Tax Rate                       35.0%        35.0%
       Current year losses:  loss for which no
       current benefit is provided                  (35.0)       (35.0)
                                                   ------       ------
       Effective Income Tax Rate                      0 %            0%
                                                   ======       ======


      The deferred tax asset results from net operating  loss carry  forwards of
      approximately  $3.1 million of which  $200,000  expires in 2017,  $600,000
      expires in 2018 and $2.3 million  expires in 2019. The resulting  asset of
      approximately  $1.1 million is completely offset by a valuation  allowance
      because of uncertainties as to its realization.

(4)   CONVERTIBLE LOAN PAYABLE:

      The  principal  amount of the  convertible  loan payable is $150,000 at an
      interest rate of 8% per annum paid quarterly. The loan is convertible into
      common stock,  at any time within two (2) years (24 months by May 2005) at
      the  conversion  price of $2.20 or 68,182  shares.  Each  share  converted
      entitles  the  holder  to  purchase  one  additional  share of stock at an
      exercise price of $3.30 within the ensuing 12 months. Because the exercise
      price of the warrant significantly  exceeded the market value of the stock
      on the date of grant,  a Black Scholes  valuation did not give rise to any
      significant value for the warrants.

      If at the end of the two-year  period the loan has not been converted into
      common stock, the principal amount becomes due and payable.

(5)   STOCKHOLDERS' EQUITY:

      In November 2000, MEMS CA issued  2,140,706 shares of its $0.001 par value
      common stock in consideration for organizational  costs incurred by one of
      the founding members.

      In July  2002,  MEMS CA issued  5,565,831  shares of its  $0.001 par value
      common stock as Founders' shares.

      In July 2002, MEMS CA issued 301,411 shares of its $0.001 par value common
      stock for cash and services.

      In  October  2002,  MEMS CA issued  8,563  shares of its  $0.001 par value
      common stock for cash.

      In  January  2003,  MEMS CA issued  44,527  shares of its $0.001 par value
      common stock for cash.

      In February  2003,  MEMS CA issued  97,616  shares of its $0.001 par value
      common stock for cash.


                                      -31-
<PAGE>

(5)   STOCKHOLDERS' EQUITY, CONTINUED:

      In March 2003, MEMS CA issued 17,126 shares of its $0.001 par value common
      stock for cash.

      In April 2003,  MEMS CA issued 8,563 shares of its $0.001 par value common
      stock for cash.

      In May 2003,  MEMS CA issued  25,688 shares of its $0.001 par value common
      stock for cash.

      In June 2003,  MEMS CA issued 34,251 shares of its $0.001 par value common
      stock for cash.

      In June  2003,  MEMS CA issued  10,000  shares of its  $0.001  Series  `A'
      Preferred stock for cash.

      In July  2003,  MEMS CA issued  12,000  shares of its  $0.001  Series  `A'
      Preferred stock for cash.

      In August 2003, MEMS CA issued 3,425 shares of its $0.001 par value common
      stock for cash.

      In August  2003,  MEMS CA issued  34,000  shares of its $0.001  Series `A'
      Preferred stock for cash.

      In September  2003,  MEMS CA issued 30,000 shares of its $0.001 Series `A'
      Preferred stock for cash.

      In September  2003,  MEMS CA issued 325,387 shares of its $0.001 par value
      common stock for cash.

      In September  2003,  MEMS CA issued  16,441 shares of its $0.001 par value
      common stock in-exchange for services.

      In  October  2003,  MEMS CA issued  5,138  shares of its  $0.001 par value
      common stock upon exercise of option.

      In October  2003,  MEMS CA issued  182,600  shares of its $0.001 par value
      Series "A" preferred stock in-exchange for services.

      In  October  2003,  MEMS CA issued  40,000  shares of its $0.001 par value
      Series "A" preferred stock for cash.

      In October  2003,  MEMS CA issued  600,014  shares of its $0.001 par value
      common stock in-exchange for services.

      In November  2003,  MEMS CA issued  29,000  shares of its $0.001 par value
      Series "A" preferred stock for cash.

      In October and November 2003,  MEMS CA issued 137,005 shares of its $0.001
      par value common stock for cash.

      In  November  2003,  MEMS CA issued  5,138  shares of its $0.001 par value
      common stock for cash.

      In December  2003,  MEMS CA issued  50,000  shares of its $0.001 par value
      Series "A" preferred stock for cash.


                                      -32-
<PAGE>

(5)   STOCKHOLDERS' EQUITY, CONTINUED:

      In December 2003, the Company  issued  3,230,000  shares of its $0.001 par
      value  common  stock in  connection  of reverse  merger with  Lumalite and
      forgiveness of debts.  In addition  111,456 shares of its $0.001 par value
      common stock were issued to its shareholders in reverse stock split of 200
      shares of Lumalite to 1 share of MEMS USA.

      In February  2004,  the Company  issued  663,753  shares of its $0.001 par
      value  common  stock in exchange  for all  outstanding  Series "A" MEMS CA
      preferred stock (387,600 shares) in a reverse merger and reorganization.

      The  preferred  shares  receive  a  dividend  of  8%  of  the  Liquidation
      Preference  Amount (i.e. face amount of shares plus unpaid  dividends,  if
      any). Dividends will accrue from the issue date with the first payment due
      on September  20, 2003 for the period  ending  September  30, 2003 and are
      payable each quarter  thereafter,  on December 20th, March 20th, June 20th
      and September 20th. The preferred  shares are convertible at any time into
      one share of the Common  Stock of Mems USA,  Inc.  at a price of $1.25 per
      share. The preferred shares are also redeemable by the Company for cash at
      any time 24 months after the Series A 8%  Convertible  Preferred  Stock is
      issued by making a cash payment  equal to $1.50 per share plus all accrued
      but unpaid dividends.  As of February 18, 2004 all outstanding  Series "A"
      preferred  stock  (387,600  shares) were  exchanged for 663,753  shares of
      $0.001 par value common stock in a reverse merger and reorganization.

      In June 2004,  the Company  issued  106,065 shares of its $0.001 par value
      common stock in-exchange for services.

      In July 2004,  the Company  issued  47,500  shares of its $0.001 par value
      common stock in-exchange for services.

      In June and July 2004, the Company issued  1,335,781  shares of its $0.001
      par value common stock through private placement of securities for cash.

      In connection with a private placement of securities, the Company received
      $1,882,880  for the sale of its shares in private  offering  transactions.
      The  transaction  originally  provided  for the  sale of up to  $1,500,000
      (subsequently  increased  by  consent  of MEMS'  board)  in  shares of the
      Company's unregistered common stock, $.001 par value per share, in minimum
      investment  amounts of $10,000,  sold to accredited  investors  within the
      meaning of Rule 501(a) of regulation D of the  Securities Act of 1933. The
      shares were priced at a 30% discount  from the closing price posted on the
      OTCBB on the day that the investment amount was received by the Company.

      In July and August 2004,  the Company  issued 210,294 shares of its $0.001
      par value common stock for warrants exercised.

      In August 2004,  the Company  issued 50,000 shares of its $0.001 par value
      common stock in-exchange for services.

      In connection with the employment  agreements  referred to in Note (6) the
      Company has the option to repurchase the 4,500,000  founders  shares for a
      three-year period of time until the Company becomes profitable, for $0.001
      per share.  These  options  expire July 2006.  In the event of a merger or
      change in control this option expires.


                                      -33-
<PAGE>


(6)   EMPLOYEE STOCK OPTIONS:

      In connection with employment agreements,  the Company has granted options
      to  certain  key  executives  to  acquire  common  stock  of  the  Company
      ("Options").  The number and the weighted  average  exercise prices of all
      options  granted  for the years ended  September  30, 2004 and 2003 are as
      follows:

<TABLE>
<CAPTION>
                                                2004                          2003
                                       --------------------------    ------------------------
                                                        Average                      Average
                                                       Exercise                     Exercise
                                           Number        Price         Number        Price
                                       ------------   -----------    ----------    ----------
<S>                                      <C>           <C>           <C>           <C>
Outstanding at beginning of the year     3,950,640     $    1.03     3,853,030     $    1.00
 Granted during the year                   152,748     $    2.07       297,610          1.33
 Outstanding at end of the year          4,100,388     $    1.55     3,950,640          1.03
 Exercisable at end of the year             54,537     $    1.08             0          1.03
 Exercised during the year                   3,000     $    1.00       200,000          1.25
 Cancelled during the year                       0                           0
</TABLE>


(7)   EXCHANGE TRANSACTION:

      On February 18, 2004 the Company  entered  into an  Agreement  and Plan of
      Reorganization  to acquire all of the issued and outstanding  common stock
      of MEMS USA, Inc. (a California  Corporation and private company "MEMS CA"
      in exchange for up to 10,000,000  shares (post split) of the  registrant's
      common stock.  Each of MEMS CA's outstanding  common shares were converted
      into  1.7125634  shares of MEMS NV (formerly  known as Lumalite  Holdings,
      Inc., a public  company with  3,385,779  shares  outstanding  prior to the
      transaction),  subject to  adjustment  for the  elimination  of fractional
      shares. No fractional shares were issued. Instead, cash equal to $2.50 per
      share of eliminated fractional shares was paid to the stockholders. At the
      closing,  MEMS  CA  became  a  wholly-owned  subsidiary  and  the  MEMS CA
      stockholders were issued 10,000,000  shares,  owning  approximately 80% of
      the  outstanding  common stock.  Since the former  stockholders of MEMS CA
      became the controlling  stockholders of the Company after the transaction,
      it was  accounted  for as an  acquisition  of MEMS NV by  MEMS  CA,  using
      reverse merger accounting.

(8)   COMMITMENTS:

      The Company  leases the  facility  used for its  operations  under a lease
      agreement expiring December 31, 2008. The following is a schedule by years
      of future  minimum base rental  payments,  excluding  operating  expenses,
      required under the operating lease, which represents  non-cancelable lease
      terms in excess of one year as of September 30, 2004:

                           Facility Lease:
                           2005                          $123,600
                           2006                           123,600
                           2007                           123,600
                           2008                           123,600
                                                         --------
                                                         $494,400
                                                         ========

      Rent  expense  amounted  to  $121,981  and  $94,810  for the  years  ended
      September 30, 2004 and 2003, respectively.


                                      -34-
<PAGE>

(8)   COMMITMENTS, CONTINUED:

      The Company has employment  agreements with certain key executives through
      2006 providing aggregate annual compensation of approximately $1,059,000.

      In  May  2004,  the  Company  acquired  from  PTI   Technologies   certain
      technologies  relating to Intelligent  Filtration  Systems ("IFS").  These
      systems are used in refineries to filter chemicals used to process oil and
      chemicals.  IFS  systems  are also  utilized in nuclear  power  plants.  A
      percentage  of  the  purchase  price  is  contingent  upon  the  sales  of
      Intelligent  Filtration  Systems (IFS) during the first five years. On May
      21, 2005 or upon sale of the first IFS system,  the Company is required to
      pay PTI Technologies, Inc. the sum of $40,000.

(9)   SUBSEQUENT EVENTS:

      In October 2004,  MEMS USA entered into a stock  purchase  agreement  with
      Bott Equipment Company, Inc. ("BEC") and Gulfgate Equipment,  Inc. ("GEI")
      (collectively, the "Companies") to purchase 100% of the outstanding shares
      of  the  two   corporations   from  the  Companies'   president  and  sole
      shareholder, Mr. Mark Trumble ("Trumble").

      On November 15, 2004, Can Am Ethanol One, Inc. was created to manufacture,
      own and operate  ethanol  production  facilities.  The joint  venture will
      utilize a synthetic biomass  conversion process to convert waste materials
      into ethanol. We are aware of several  commercially  available  conversion
      processes  which we believe will meet our  requirements  and are presently
      evaluating  the  processes   with  relation  to  their  required   capital
      investment,  operating  costs,  conversion  yield and product quality as a
      prerequisite  to  licensing  or acquiring  the process  technology.  It is
      anticipated  that the ethanol  manufactured  by the joint  venture will be
      sold to companies  which blend  ethanol  with motor fuel.  The blending of
      ethanol with motor fuel reduces  emissions and will help countries such as
      Canada meet the Kyoto accords for reduced  greenhouse  gas  emissions.  We
      intend  to  develop  several  ethanol  plants  in  Canada  that will use a
      synthetic  biomass  conversion  process,  subject to  receipt of  required
      funding.  We estimate that each ethanol  plant will require  approximately
      $150 million in capital.  MEMS USA's engineering  group,  headquartered in
      Westlake  Village,  CA, will develop the  engineering  data and direct the
      plant  engineering and construction  projects.  It is anticipated that the
      Company's Texas subsidiaries will be called upon to supply instrumentation
      for the project and assist in its modular construction.

      On November 24, 2004 the Company  implemented a stock  incentive plan. The
      name of this plan is the MEMS USA,  Inc.  2004 Stock  Incentive  Plan (the
      "PLAN").  The  purpose of the Plan is to enable MEMS USA,  Inc.,  a Nevada
      Corporation  (the  "COMPANY")  and any Parent or  Subsidiary to obtain and
      retain the services of high caliber employees,  consultants,  officers and
      Directors who will  contribute to the Company's  long range success and to
      provide  incentives  which are linked directly to increases in share value
      which will insure to the benefit of all stockholders of the Company.


                                      -35-
<PAGE>

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

      None.

ITEM 8A. CONTROLS AND PROCEDURES

      Our  disclosure  controls  and  procedures  are  designed  to ensure  that
      information  required to be  disclosed  in reports  that we file or submit
      under  the  Securities  Exchange  Act  of  1934  is  recorded,  processed,
      summarized and reported within the time periods specified in the rules and
      forms of the Securities and Exchange  Commission and that such information
      is accumulated  and  communicated to our  management,  as appropriate,  to
      allow timely decisions regarding required disclosure.  Our Chief Executive
      Officer and Chief Financial Officer have reviewed the effectiveness of our
      disclosure  controls and procedures and have concluded that the disclosure
      controls  and  procedures,  overall,  are  effective  as of the end of the
      period covered by this report. The Company did record a significant number
      of  adjustments  during the fourth  quarter to properly  state the account
      balances at September 30, 2004. The Company has subsequently remedied this
      problem  by  hiring  a  Chief   Financial   Officer  who  will   implement
      comprehensive  closing  procedures,  including  an analysis of all balance
      sheet accounts and significant income statement  accounts.  Except for the
      aforementioned  changes there were no significant  changes in our internal
      controls  or in  other  factors  that  could  significantly  affect  these
      controls subsequent to the last day they were evaluated.

ITEM 8B. OTHER INFORMATION

      None.

PART III

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

Set forth below are our directors and officers.

<TABLE>
<CAPTION>
        NAME                  AGE                                  POSITION
--------------------          ---           --------------------------------------------------
<S>                           <C>           <C>
Lawrence Weisdorn             46            Chief  Executive  Officer and Chairman of the Board
                                            of Directors

Dr. James A. Latty            58            President and Director

Daniel K. Moscaritolo         52            Chief Technology Officer, Chief
                                            Operating Officer and Director

Richard  W. York              56            Chief Financial Officer
</TABLE>


                                      -36-
<PAGE>

      Mr. Weisdorn has served as our chief executive officer and chairman of our
      board of directors from the time of our acquisition of MEMS CA in February
      2004.  Mr.  Weisdorn  also served as our  president  from February 2004 to
      September  2004 and our chief  financial  officer  from  February  2004 to
      November 2004.

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

      Mr.  Weisdorn  is a founder of MEMS CA and has  served as chief  executive
      officer and chairman of the board of  directors of that company  since its
      inception in July 2002.  From October 2000 through May 2002, Mr.  Weisdorn
      served as chief  financial  officer  and a director of  LitFunding  Corp.,
      which was engaged in the business of providing litigation  financing.  Mr.
      Weisdorn  also  served  as  chief  executive  officer  and a  director  of
      3Dshopping.com,  which was  engaged  in the  business  of  developing  and
      operating  Internet web portals  through  which  merchandisers  would sell
      their goods and services online.

      Dr. Latty assumed the  presidency of our company on September 9, 2004. Dr.
      Latty is also member of our board of directors.  Since 1992, Dr. Latty has
      been  president  of JAL  Engineering,  an  engineering  services  provider
      wholly-owned by Dr. Latty specializing in power and petro-chemical process
      technologies.  From April 2000 to June 2004,  Dr.  Latty was a director of
      business development for Rockwell Scientific , Inc.

      Mr.  Moscaritolo  has  served  as  our  chief  technology  officer,  chief
      operating  officer and a member of our board of directors  since  February
      2004. Mr.  Moscaritolo is a founder of  MEMS-California  and has served as
      chief technology  officer,  chief operating officer and a director of that
      company since its inception in July 2002.

      Mr. York has served as our chief  financial  officer since  November 2004.
      Mr. York served as controller of PTI technologies,  Inc. from 2000 through
      October 2004 and Rantec  Microwave &  Electronics,  Inc. from 1992 through
      2000. PTI and Rantec are both subsidiaries of ESCO  Technologies,  Inc., a
      NYSE-listed producer of engineered products and systems for industrial and
      commercial applications.

      All directors serve for a three-year  term and until their  successors are
      duly elected and  qualified.  All officers  serve at the discretion of the
      Board of Directors.

AUDIT COMMITTEE FINANCIAL EXPERT

      We do not have an audit committee nor do we have a financial expert.

CODE OF ETHICS

      We have adopted a code of ethics that applies to the  principal  executive
      officer and principal financial and accounting officer. We will provide to
      any person  without  charge,  upon request,  a copy of our code of ethics.
      Requests  may be  directed  to our  principal  executive  offices  at 5701
      Lindero Canyon Road, Suite 2-100, Westlake Village, California 91362.


                                      -37-
<PAGE>


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
      our officers,  directors and persons who beneficially own more than 10% of
      a registered class of our equity  securities to file reports of securities
      ownership and changes in such  ownership  with the Securities and Exchange
      Commission  (the  "SEC").   Officers,   directors  and  greater  than  10%
      beneficial  owners are also  required by rules  promulgated  by the SEC to
      furnish us with copies of all Section 16(a) forms they file.

      None of our  officers,  directors  or 10%  shareholders,  namely  Lawrence
      Weisdorn,  James A.  Latty,  Daniel  Moscaritolo,  Richard W. York or Mark
      Trumble,  have  filed the  reports  required  by  Section  16(a).  We have
      requested  that all  officers,  directors  and 10%  stockholders  file all
      required reports at their earliest opportunity.

ITEM 10. EXECUTIVE COMPENSATION.

      Cash  Compensation of Executive  Officers.  The following table sets forth
      the cash  compensation  paid by us to our executive  officers for services
      rendered  during the fiscal years ended September 30, 2004, 2003 and 2002.
      The  amounts  for fiscal  years  2003 and 2002 and part of 2004  represent
      compensation paid to Messrs.  Weisdorn and Moscaritolo by MEMS-California,
      our wholly-owned subsidiary acquired by us in February 2004.

<TABLE>
<CAPTION>

                                      ANNUAL COMPENSATION                LONG-TERM COMPENSATION
                            ----------------------------------------  ------------------------------
     NAME AND POSITION       YEAR    SALARY   BONUS   OTHER ANNUAL    RESTRICTED    COMMON SHARES        ALL OTHER
                                                      COMPENSATION    STOCK          UNDERLYING        COMPENSATION
                                                                      AWARDS ($)   OPTIONS GRANTED
                                                                                     (# SHARES)
 -------------------------- ---------------------------------------- ----------- ------------------  --------------------
<S>                         <C>     <C>        <C>     <C>           <C>          <C>                 <C>
 Lawrence Weisdorn, CEO      2004   $354,000    --         --                       1,284,343(1)
                             2003     $-0-      --      $188,750                         --
                             2002     $-0-      --         --                            --

 Daniel K. Moscaritolo,                                  $94,770
   COO & CTO                 2004   $240,000                                        1,284,343(1)
                             2003      --                $15,256                         --
                             2002      --                                                --
</TABLE>

<TABLE>
<CAPTION>

                              OPTION/SAR GRANTS IN 2004 FISCAL YEAR
                                        INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------------------------------
          NAME                   NUMBER OF          % OF TOTAL OPTIONS/SARS      EXERCISE OR      EXPIRATION DATE
                                 SECURITIES         GRANTED TO EMPLOYEES IN       BASE PRICE
                                 UNDERLYING               FISCAL YEAR               ($/SH)
                                OPTIONS/SARS
                                GRANTED (#)
-------------------------------------------------------------------------------------------------------------------
<S>                            <C>                  <C>                          <C>              <C>
Lawrence Weisdorn               1,284,343(1)                 31.7%                  $1.00             07/01/06

Daniel K. Moscaritolo           1,284,343(1)                 31.7%                  $1.00             07/01/06
</TABLE>

      (1)   Represents options originally granted by MEMS-California in 2002 and
            assumed by us in connection with our acquisition of  MEMS-California
            in February 2004.


                                      -38-
<PAGE>


               AGGREGATED OPTION/SAR EXERCISES IN 2004 FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                                NUMBER OF
                                                                                SECURITIES            VALUE OF
                                                                                UNDERLYING           UNEXERCISED
                                                                               UNEXERCISED          IN-THE-MONEY
                                   SHARES ACQUIRED                           OPTIONS/SARS AT       OPTIONS/SARS AT
             NAME                  ON EXERCISE (#)      VALUE REALIZED            FY-END             FY-END ($)
                                                              ($)            (#)EXERCISABLE/        EXERCISABLE/
                                                                              UNEXERCISABLE         UNEXERCISABLE
-------------------------------   ------------------   ------------------    -----------------    ------------------
<S>                                <C>                  <C>                  <C>                  <C>
Lawrence Weisdorn                        --                   --              0 / 1,284,343       $-0- / $2,247,600(1)

Daniel K. Moscaritolo                    --                   --              0 / 1,284,343       $-0- / $2,247,600(1)
</TABLE>

      (1)   Based on a closing  price of $1.75 per share for our common stock as
            quoted on the OTC Bulletin Board on September 30, 2004.

      (2)   Compensation of Directors. At the present time, directors receive no
            compensation  for serving as directors of the company,  however,  we
            may in the future begin to compensate our non-officer directors. All
            directors  receive  reimbursement  for  out-of-pocket   expenses  in
            attending  board of directors  meetings.  From time to time,  we may
            engage certain members of our board of directors to perform services
            on our behalf and will compensate such persons for the services that
            they perform.

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

      The  following  table  sets  forth  certain   information   regarding  the
      beneficial  ownership  of the shares of our common stock as of January 10,
      2005 by (i) each person who is known by us to be the  beneficial  owner of
      more than five  percent (5%) of the issued and  outstanding  shares of our
      common stock, (ii) each of our directors and executive  officers and (iii)
      all directors and executive officers as a group.


NAME AND ADDRESS (1)                          NUMBER OF SHARES  PERCENTAGE OWNED
--------------------                          ----------------  ----------------
Lawrence Weisdorn                                 2,752,568            16.75%

Dr. James A. Latty                                3,580,268(2)         20.54%

Daniel K. Moscaritolo                             2,593,969            15.78%

Richard W. York                                       5,000               (3)

Mark Trumble                                      2,047,393(4)          12.0%

All officers and directors as a group             8,711,061             49.9%
(four persons)


                                      -39-
<PAGE>

(1)   Address is 5701  Lindero  Canyon  Road,  Suite  2-100,  Westlake  Village,
      California 91362.

(2)   Includes options granted to Dr. Latty to purchase  1,000,000 shares of our
      common stock.

(3)   Less than one percent.

(4)   Includes  618,295  shares of our  common  stock  that may be issued to Mr.
      Trumble pursuant to the Stock Purchase Agreement, Exhibit 10.5


Equity Compensation Plans

The  following  table sets forth  certain  information  as of September 30, 2004
concerning our equity compensation plans:

<TABLE>
<CAPTION>
                                                                                               Number of Common
                                   Number of Common                                            Shares Remaining
                               Shares to Be Issued Upon          Weighted- Average          Available for Issuance
                                Exercise of Outstanding          Exercise Price of               Under Equity
      Plan Category                     Options                 Outstanding Options            Compensation Plan
--------------------------     --------------------------     -------------------------     ------------------------
<S>                            <C>                            <C>                           <C>
Equity  compensation plan                 N/A                           N/A                           N/A
approved by shareholders

Equity  compensation plan              4,853,029                       $1.20                          -0-
not approved by
shareholders (1)
</TABLE>

-----------------

(1) Represents  shares of common stock issuable upon exercise of options granted
to  our  officers,   Lawrence  Weisdorn,  Dr.  James  A.  Latty  and  Daniel  K.
Moscaritolo,  pursuant  to  written  employment  agreements.  Does  not  include
1,850,000  shares of common stock reserved for issuance under the MEMS USA, Inc.
2004 Stock Incentive Plan approved by our board of directors in November 2004.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      None.


                                      -40-
<PAGE>


ITEM 13. EXHIBITS.

(A) INDEX TO EXHIBITS

3.1   Articles of Incorporation of the Registrant, as amended

3.2   Bylaws of the Registrant

10.1  Merger Agreement and Plan of Reorganization dated January 28, 2004 between
      Registrant and MEMS USA, Inc., a California corporation

10.2  Employment  Agreement  dated July, 1, 2002 between  Lawrence  Weisdorn and
      MEMS USA, Inc., a California corporation

10.3  Employment Agreement dated July, 1, 2002 between Daniel K. Moscaritolo and
      MEMS USA, Inc., a California corporation

10.4  Employment  Agreement dated August 23, 2004 between Dr. James A. Latty and
      MEMS USA, Inc., a California corporation

10.5  Stock Purchase  Agreement  dated  September 1, 2004 among  Registrant Bott
      Equipment Company, Inc., Gulfgate Equipment, Inc. and Mark Trumble

21.1  List of Subsidiaries

23.1  Consent of Independent Certified Public Accountants

31.1  Certification  of Chief Executive  Officer  pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

31.2  Certification  of Chief Financial  Officer  pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

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


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      Our board of directors  has  selected  Stonefield  Josephson,  Inc. as our
      independent accountants to audit our consolidated financial statements for
      the fiscal year 2005.  Stonefield  Josephson,  Inc. previously audited our
      consolidated financial statements for the two fiscal years ended September
      30, 2004 and 2003.

AUDIT AND NON-AUDIT FEES

      Aggregate  fees for  professional  services  rendered to us by  Stonefield
      Josephson,  Inc. for the years ended  September  30, 2004 and 2003 were as
      follows:


                                      -41-
<PAGE>


              Services Provided                              2004          2003
              -----------------                              ----          ----
              Audit Fees...........................        $19,200       $12,600
              Audit Related Fees...................        $17,000         $-0-
              Tax Fees.............................        $ 4,000         $-0-
              All Other Fees.......................          $-0-          $-0-
                      Total........................        $40,200       $12,600

AUDIT AND NON-AUDIT FEES

Audit Fees. The aggregate fees billed for the years ended September 30, 2004 and
2003 were for the audits of our annual financial statements and reports.

Audit Related Fees. The aggregate  fees billed for the year ended  September 30,
2004 were for review of our quarterly financial statements.

Tax Fees. The aggregate  fees billed for the years ended  September 30, 2003 and
2002 for  professional  services  related to tax compliance,  tax advice and tax
retuns preparation.

All Other Fees.  There were no other fees  billed for the years ended  September
30, 2004 and 2003 for services other than the services described above.

PRE-APPROVAL POLICIES AND PROCEDURES

      We have implemented  pre-approval  policies and procedures  related to the
provision of audit and non-audit services. Under these procedures,  our board of
directors pre-approves all services to be provided by Stonefield Josephson, Inc.
and the estimated fees related to these services.


                                      -42-
<PAGE>

                                   SIGNATURES


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


                                  MEMS USA, INC.

Date:  January   , 2005           By: /s/ Lawrence Weisdorn
                                      ------------------------------------------
                                      Lawrence Weisdorn, Chief Executive Officer


      In  accordance  with the Exchange  Act, this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.


<TABLE>
<CAPTION>
Signature                                  Title                                       Date
---------                                  -----                                       ----
<S>                                        <C>                                         <C>
/s/ Lawrence Weisdorn                      Chief Executive Officer and Director        January __, 2005
---------------------------
Lawrence Weisdorn


/s/ Richard  W. York                       Chief Financial Officer                     January __, 2005
------------------------------------
Richard  W. York


/s/ James A. Latty                         Director                                    January __, 2005
---------------------------
James A. Latty


/s/ Daniel K. Moscaritolo                  Director                                    January __, 2005
---------------------------
Daniel K. Moscaritolo
</TABLE>


                                      -43-